Tribe raises concerns of food sovereignty and safety to require proper agency review KLUKWAN, Alaska
BLM Wins 9th Circuit Court Appeal - Constantine Palmer 2020 Exploration in Progress
Vancouver, British Columbia--(Newsfile Corp. - September 2, 2020) - Constantine Metal Resources Ltd. (TSXV: CEM) (OTCQX: CNSNF) ("Constantine" or the "Company") is pleased to report that on August 28th, 2020, the United States Court of Appeals for the Ninth Circuit upheld the Bureau of Land Management's approval of the Palmer Project's Plan of Operations for exploration work and road construction.
The Company is also pleased to report that 2020 field work season began in early August at the Palmer Zinc-Copper-Gold-Silver Project in Southeast Alaska ("Palmer" or the "Project"). The work represents the major portion of the 2020 budget of US $2.15 million.
BLM Wins 9th Circuit Court Appeal
In December 2017 groups aligned with the Southeast Alaska Conservation Council (SEACC) sued the Bureau of Land Management (BLM) for granting Constantine's Plan of Operations (PoO) authorizing construction of 2.5 miles of road in support of exploration, contending that the impacts of a future mine should have been part of the exploration approval process. On March 15, 2019 Judge Burgess, presiding Judge of the Federal District Court for the District of Alaska, granted summary judgment to the BLM, Constantine, Alyu Mining Co., Inc. and Haines Mining & Exploration Inc., thereby denying each of SEACC's claims. In an eight-page Decision filed on August 28, 2020 the Ninth Circuit affirmed Judge Burgess's Order.
The Company agrees with the Court's opinion that the potential impacts of a future mine were not required to authorize construction of 2.5 miles of road in support of exploration. Constantine recognizes the importance of ongoing scientific studies and stakeholder discussions during the exploration process and remains committed to quality science and meaningful engagement with stakeholders through every step of our mineral exploration, that will help us create a responsible mine proposal for consideration in the future.
Garfield MacVeigh commented that, "We believe the Ninth Circuit Court of Appeals decided correctly on this matter and are pleased with this opinion that is important for all companies conducting exploration projects in the United States."
2020 Field Program
The program includes summer field work, environmental and project permitting work for future underground exploration development and continued outreach to keep the Haines Borough and State of Alaska informed on project activities.
Surface geological work is focused on upgrading geological and prospect information to assist in advancing drill targets and resolving the offset on the Kudo fault that displaces the thickest part of the downdip South Wall deposit (CMR14-65 - 89.0 meters grading 0.79% copper and 5.03% zinc including 7.4 meters grading 2.05% copper and 10.23% zinc). Much of this work is being carried out from the new road that has been completed to an underground exploration portal site.
Additional work is also in progress on the AG deposit (Inferred Resource of 4.3 million tonnes at 4.64% zinc, 0.12% Copper, 119.5 g/t silver, 0.53 g/t gold, 34.8% barite) that is the subject of a Master of Science dissertation.
2020 Environmental Studies and Permitting Update
The Company continues to build and expand the baseline environmental science database, fulfill environmental monitoring requirements and advance project permitting for future underground exploration.
In July 2019, the Company received all the necessary approvals to proceed with an underground exploration plan for the Palmer Zinc-Copper-Silver-Gold Project, Southeast Alaska. Subsequent to approval, the Waste Management Permit ("WMP") to manage wastewater and waste rock issued by the Alaska Department of Environmental Conservation ("ADEC") was remanded to ADEC staff for further review due to a 9th Circuit Court Decision in the County of Maui vs. Hawaii Wildlife Fund. That review is continuing so that the Company can comply with the new interpretation of the Clean Water Act that arose out of the Supreme Court's April 23, 2020 Opinion in the County of Maui vs. Hawaii Wildlife Fund case. The Company, in consultation with ADEC, has been collecting additional hydrologic information and plans to submit an updated Wastewater Discharge System Design and supporting data to ADEC for final discharge authorization in the future.
About the Palmer Project
Palmer is a high-grade volcanogenic massive sulphide-sulphate (VMS) project located in a very accessible part of coastal Southeast Alaska, with road access to the property and within 60 kilometers of the year-round deep-sea port of Haines. Mineralization at Palmer occurs within the same belt of rocks that is host to the Greens Creek mine, one of the world's richest VMS deposits.
A Preliminary Economic Assessment (PEA) presents a low capex, low operating cost, high margin underground mining operation with attractive environmental attributes (see news release dated June 3, 2019). Exploration has resulted in the discovery of the new AG deposit and continued to grow the resource base to its current estimated size of 4.68 million tonnes indicated grading 5.23 % zinc,1.49 % copper, 30.0 g/t silver, 0.30 g/t gold and 9.6 million tonnes inferred grading 4.95 % zinc , 0.59 % copper, 69.3 g/t silver, 0.39 g/t gold. VMS deposits are known to occur in clusters, and with at least 25 separate base metal and/or barite occurrences and prospects on the Project, there is abundant potential for discovery of multiple deposits.
The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that PEA results will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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“As disappointing the 9th Circ. decision is, it will not stop us from the battle to protect the Chilkat River which is very vital to our traditional subsistence lifestyle that we have treasured for at least two millennia. We are so mandated to protect this precious lifestyle that it runs through our very veins. We will and must continue.
Chilkat Indian Village
Vice-Pres.
Jones Hotch Jr.
Cornejo to step down from Constantine, work as consultant
Cornejo to step down from Constantine, work as consultant: A deeper look at the ebb and flow of the industry by Kyle Clayton, June 25, 2020
Constantine Metal Resources has reduced its share of the Palmer Project and vice president of community affairs Liz Cornejo stepped down from the company.
Dowa Metals and Mining, Constantine’s joint venture partner at the Palmer Project, is financing more that its 49% share of summer work, reducing Constantine’s ownership in the joint-venture project, according to a Wednesday morning news release. Cornejo, who has resigned effective June 30, will still work as a part-time Haines-based consultant to the company.
Cornejo is the fourth company manager to resign since December. She said Constantine expects the dilution to be less than 1%, which would leave its majority interest in the project intact.
With reduced summer exploration plans, stock prices hovering around 12 cents a share, a weak metals market, a remanded permit and no new capital from outside investors, Constantine, and its Palmer Project, faces an uncertain future, which is typical, according to industry experts.
As of Jan. 31, according to its first-quarter financial statement, Constantine had a cash balance of $689,379 versus liabilities of $465,650. The company’s quarterly operating losses averaged $250,000 to $300,000 until the first quarter of this year. Constantine president and CEO Garfield McVeigh said last week that the company cut this year’s first-quarter losses to around $200,000 as of April 30.
But without additional capital, which exploration companies need each year, Constantine appeared to have less than a year of operating cash on hand. In March, Cornejo said the company had been unsuccessful in attracting investors to fund the company’s underground exploration tunnel at the Palmer Project.
In October 2019, Constantine took out an unsecured, five-year $630,000 loan at 12 percent interest from an investment group to pay for operating costs. In 2019, Constantine’s six-person management team earned more than $700,000 in combined pay. McVeigh and Cornejo earned about $240,000 in salaries between them in 2019.
In August, Constantine spun off all of its gold prospecting assets in Alaska and Canada to High Gold, a new company staffed now by three former Constantine managers, leaving the Palmer Project as Constantine’s sole project.
In December, Constantine vice president of exploration Darwin Green resigned and became the CEO of High Gold. In March, Constantine’s vice president of advanced projects and its vice president of investor relations, Ian Cunningham-Dunlop and Naomi Nemeth, resigned and assumed new positions at High Gold. McVeigh and a financial officer now serve as Constantine’s current management team. Green still performs work for Constantine as a consultant.
McVeigh said the spinoff aimed to provide new opportunities for employees and benefits to shareholders, but that it had the added benefit of cutting operating costs at Constantine during a time of reduced exploration. Constantine shareholders had the option to trade three Constantine shares for one share of High Gold. Constantine’s stock price declined after the spinoff.
Long-time mining industry expert Jim Kuipers, a Montana-based consultant who was recently hired by Rivers Without Borders to analyze Constantine’s preliminary economic assessment (PEA) of the Palmer Project, said company management moving around is common with junior exploration companies like Constantine. Kuipers worked as a mining engineer and project manager at mines in Montana, Nevada and Alaska before starting his own consulting company. He said an industry norm is that for every 10 advanced exploration projects, one will become an operating mine.
“A lot of these folks are on multiple boards, multiple companies and things of that nature,” Kuipers said. “The mining industry is transient. Few people stay with one company very long. It’s an indication that folks are looking for greener pastures. If you’ve got a project that you think is going to be a going concern, that’s what you stick with because your rewards are quite good.”
Kuipers said last week, prior to the announcement of financing from Dowa, that Constantine’s balance sheet, paired with market conditions and the PEA, indicates that something is likely to change at the Palmer Project, including the possibility of new ownership.
“The economics of the company would appear that somebody needs to step in sooner or they could in fact be in trouble,” Kuipers said. “Very rarely do these assets disappear. Somebody will end up with them. Something’s got to happen. That might be what tells us all where this is going, what does happen over the next six months or so. There’s not a lot of cash available right now.”
In a follow-up interview, Kuipers said Dowa’s additional financing indicates it is now the most likely party to develop the mine.
Constantine signed the joint venture with Dowa in 2013. Dowa contributed $22 million over four years, gaining ownership of 49 percent of the project’s claims. Since then, Constantine has maintained its status as the operator by funding 51 percent of exploration.
Constantine president Garfield McVeigh said changes to ownership in projects related to financing or other third-parties acquiring a project interest is normal.
“Ultimately, for a small company like Constantine to retain a 30% interest in a project like Palmer is attractive,” McVeigh said. “Constantine needs to continually evaluate funding in terms of project equity (cost of dilution) versus share equity (issuing shares for money). Constantine does not like to raise money at a low share price because it dilutes their shareholders.”
Share prices fell in August 2019. Shareholder returns have been down 72% during the past year, while returns have fallen by 1.1% industrywide, according to simplywall.st, an online stock analysis website.
“We are in a COVID-19 base metal market that perceives a period of reduced demand and metal inventory buildup looking ahead the next year or two,” McVeigh said. “We like to avoid raising share capital at low share prices, especially a large amount of capital when there is low investor interest in your commodities.”
Last summer, Constantine released the PEA, intended to help attract investors, highlighting a high-grade project with good economics. Kuipers questioned its assumption for selling barite, as well as its low capital and operating cost projections. Russ White and Cindy Buxton, local geologists with a background in mining and operate a consulting business, said they found Kuiper’s analysis reasonable, especially regarding projected operating costs.
“It looks to us as if the operating costs are significantly too low, as compared to nearby mines,” Buxton said. “Operating costs directly affect the profitability of the mines.”
White and Buxton said although PEAs are allowed to be optimistic, mining exploration is inherently risky and project advancements are determined by a combination of factors.
“They could find a lot more ore. The metal prices could change. Right now, it doesn’t look economic to us. It doesn’t mean it won’t be. It’s a very risky business,” Buxton said. “It’s important for the readers to understand that it is no guarantee that there will be a mine.”
“If all the environmentalists left town, there’s still no guarantee that there will be a mine,” White added.
Tim Murray, an Australian “short-seller,” an investor who bets on a stock price falling and co-founder of the investment group J Capital Research, called Constantine’s high-interest loan a desperation move. From his perspective, if Constantine didn’t come up with additional capital, the company will be broke in six months.
“Since Constantine put out this PEA their share price has fallen more than 70 percent,” Murray said. “That indicates to me that nobody believes in this.”
Murray last month issued a report skeptical of NovaGold and its proposed Donlin gold mine in the Yukon-Kuskokwim region, raising similar warnings as he has for the Palmer Project. NovaGold refuted Murray’s assertions.
Bob Loeffler, professor of public policy at the University of Alaska Anchorage and former director of the Division of Mining, Land and Water for the Alaska Department of Natural Resources, said it’s common for junior exploration companies like Constantine to take a hiatus for a year a two depending on market conditions.
“It doesn’t mean a project is doomed or abandoned, but sometimes it does,” Loeffler said. “Predicting the future profile of small mining companies, if I could do it, I would be a wealthy person.”
He said of every 10 exploration companies that advances a PEA, one becomes an operating mine. Of every three that advance beyond a feasibility study, Constantine’s next step, only one becomes an operating mine.
Language in Constantine’s own financial statement, which began appearing in its reports last year, indicates the inherent risk involved in the industry. “These matters indicate the existence of material uncertainties that may cast significant doubt about the company’s ability to continue as a going concern,” the company’s financial reports say.
The company’s auditor, who drew attention to the language in his audit of Constantine’s annual report, said such language is common with junior exploration companies.
“It’s not overly great news obviously,” the Canadian-based auditor said. “The only time we don’t put that in is if someone did a large financing and it’s quite clear they can last another year without requiring that. That hasn’t been the case for anyone for quite a while.”
Kuipers agreed that it’s common for junior exploration companies to be in Constantine’s situation.
“Most of the balance sheets for juniors are not much different. They’re living from investor to investor to investor,” Kuipers said. “This could be one of those times where the investors run out and people have to begin walking away from projects like this. That has happened historically when the market planed out. I wouldn’t want to be trying to run a speculative mine right now.”
“Time is always important,” McVeigh said of the next few months for Constantine. “Right now, it is a time for patience.”
The company isn’t currently drilling and the planned excavation of an underground tunnel for advanced exploration has been put on hold after Constantine’s permit was remanded by the Alaska Department of Environmental Conservation last fall. The company is currently waiting for test results that indicate whether its planned groundwater discharge would connect to nearby surface waters. If it does, the company will likely need to apply for a more stringent and costly federal permit to drill its underground tunnel.
Buxton said for Constantine to continue exploring in earnest and to create a feasibility study, the company has to build the underground tunnel and better define the ore vein.
No drilling is planned this summer. The company will be evaluating prospects for future drill targeting, the news release said.
Constantine’s local staff is now one full-time position and three part-timers. Last year, the company employed 22 people here.
In 2019 the company spent about $4.5 million on the Palmer Project expenditures including more than $1.8 million to Haines- and Alaska-based suppliers. They’re spending $2.1 million this year. Constantine and its partners have invested more than $50 million into the project since 2006.
Proposed mine challenged on environmental grounds: DEC reviews U.S. Supreme Court decision as it relates to the Palmer project
By Margaret Bauman, Cordova Times
June 5, 2020
Canadian backers of a mining project in the Chilkat Valley of Southeast Alaska say it holds potential to become a future high-grade, underground copper-zinc, silver, gold and barite mine.
Further exploration and evaluation work are still needed though for Constantine Metals’ Palmer project, located south of the Haines Highway, at the headwaters of the Chilkat River, critical spawning habitat for all five species of Pacific salmon, including a renowned coho run.
The Haines Fishermen’s Alliance, Southeast Alaska Conservation Council, Rivers Without Borders and the Chilkat Indian Village of Klukwan have voiced concerns that the mine would threaten critical fish spawning habitat. They have asked the Alaska Department of Environmental Conservation to take a second look at the project, in light of a recent U.S. Supreme Court decision in the case of County of Mau v. Hawaii Wildlife Fund.
The Maui decision recognizes that polluters cannot avoid the Clean Water Act’s permit requirements just by pumping pollution into the ground where doing so is the functional equivalent of discharging that pollution directly into streams, lakes and oceans.
According to Gershon Cohen, project director of the Alaska Clean Water Advocacy in Haines, Constantine should not have applied for a groundwater discharge permit for the release of hundreds of thousands of gallons a day of wastewater into a gravel bed so close to surface waters, including Hangover, Waterfall and Glacier creeks.
“The Ninth Circuit had already ruled a much more rigorous surface water discharge permit would be required,” Cohen said.
“Constantine has the responsibility to apply for the correct permit,” he said. “DEC is not forbidden from giving them the ‘wrong’ permit, but they have a practical and ethical responsibility to make it clear to an applicant that they have asked for the wrong permit.”
Alaska Department of Fish and Game data shows that the Chilkat River supports commercial, sport and subsistence fishing for salmon and that 90 percent of Chilkat Valley residents rely on salmon for subsistence. The area is also critical habitat for bald eagles and black and brown bears, all of whom come to feed on the salmon. The Alaska Chilkat Bald Eagle Preserve lies just downstream of the Palmer Deposit.
According to Gene McCabe, an environmental program manager with DEC, the agency is conducting an informal review of the Supreme Court decision as it relates to the Palmer project. “The division continues to review the supreme court opinion released on April 23 with interest,” McCabe said on Monday, June 1. “We have not received a final dye tracer study from Constantine Metals. The information in the approved study is one of the numerous data points we’re reviewing during the remand. Remands do not have a regulatory timeline, and the division continues to evaluate the permit and topics highlighted in the informal review requests.”
DEC has endorsed Constantine’s approach so far by granting a waste management permit in July 2019, over the objections of several conservation and tribal entities. DEC agreed to reconsider its decision once the Supreme Court decided the Maui case, which was pending at the time, but declined to suspend the permit for the interim period.
Mine opponents meanwhile hired veteran mine consulting engineer Jim Kuipers, of Wisdom, MT, to produce an independent analysis of Constantine’s preliminary economic assessment of the Palmer project, an analysis they say casts doubt on the economic viability of the project.
That report, released on June 1, casts doubt on the economic viability of the mine.
“Constantine’s assessment is based on unsupported assumptions, a highly speculative plan to sell barite and overly optimistic estimates of metals prices and operating costs,” said Chris Zimmer of Rivers Without Borders, one of several entities opposed to the mine. “Constantine’s stock price has been on a steady decline since the assessment was released in July 2019, so there must not be much investor confidence in the company. This project is risky for investors and risky for Haines to pin its hopes on as a revenue source.”
According to Kuipers’ research, Constantine’s preliminary economic assessment is based on unproven mineral resources that are speculative and do not have demonstrated economic viability. Constantine’s cost estimates assume no acid mine drainage that would require treatment, but “there is reason to believe this assumption will not be correct,” Kuipers said.
The Palmer project dates back to 1969, when Haines prospector Merrill Palmer began staking claims. The prospect was explored with limited success by several mining firms, including Anaconda Copper, Cominco and Kennecott. Then in 2007, Constantine drilled high-grade copper and zinc mineralization in areas now known as the RW and South Wall Zones.
In 2013, Constantine signed an agreement with Dowa Metals & Mining Co. Ltd. of Japan, giving Dowa a minority 49 percent interest in the project by funding $22 million in exploration over four years. In 2017, Constantine and Dowa formalized a joint-venture business partnership on the project.
Supreme Court Leaves the Clean Water Act Intact
Supreme Court ruling could be setback for proposed mine near Haines
April 29, 2020 by Claire Stremple, Alaska's Energy Desk - Haines
A view up Glacier Creek towards Saksaia Glacier and the mountains that hold copper-zine-silver-gold-barite deposits that Constantine Metal Resources is planning to mine. A Supreme Court decision in April 2020 regarding the Clean Water Act could be a set-back for the project. (Photo by Claire Stremple/KHNS)
The Supreme Court ruled last week that the Clean Water Act applies to pollutants that reach protected waters, even from a distance. Conservationists say it’s a win for clean water. It could mean stricter permitting is required for Constantine Metal Resources’ expansion plans for a mine project near Haines. But, state regulators remain tight-lipped about what might happen next.
Conservation groups have been waiting on the outcome of the federal case County of Maui v. Hawaii Wildlife Fund to see how far the Clean Water Act goes.
Hawaii Wildlife argued that even if someone pumps polluted water into the ground, they’re responsible for where it ends up. And if it ends up in surface waters, like the ocean, it’s regulated by the national Clean Water Act. Six out of nine justices agreed, and closed what some called a loophole in the law.
“This decision is important to us here in the Chilkat Valley, but it’s also important across the country,” said Shannon Donahue, the Upper Lynn Canal Organizer for Southeast Alaska Conservation Council (SEACC).
The decision is important to her because she wants the copper-silver-zinc mining project near Haines to be more strictly regulated in their next phase of construction.
“We’d like to see the permit revoked,” she said. “And we’d like to see Constantine apply for the appropriate permit.”
SEACC is among the green groups that told state regulators they approved the wrong permit for Constantine’s project. They argue that the mining company’s plan for wastewater jeopardizes a major source of salmon for the region. They say that even though the company plans to pump wastewater into the ground, it’s close enough to a nearby stream that it has the same effect as if they were dumping directly into the stream.
State regulators listened. They put the permit under review last September, and said that their final permit decision hinged in part on the outcome of the Supreme Court Case.
“And what this means is that they’re going to have to apply for a new permit rather than just allowing Constantine to operate under that waste management permit,” Donahue said.
But Gene McCabe, the manager of the state’s wastewater program, wrote in an email that it’s too soon to tell if the Maui case applies to Constantine. He and other regulators are still waiting on the results of a tracer dye study they requested from the company. The study’s results should reveal whether or not there’s significant connectivity between the groundwater and the surface water.
Gov. Mike Dunleavy made a visit to the potential mine project site with Alaska Department of Environmental Conservation Commissioner Jason Brune last September, just as the agency pulled the initial permit back for review. The agency made it clear to Constantine that the permit was in effect while under review.
Constantine’s Vice President of External Affairs Liz Cornejo said the company will comply with whatever state regulators decide.
Report on socioeconomic impact
A report commissioned by the Friends of the Chilkat and Klehini Rivers predicts the social impacts of mining projects on small communities.
The report was completed by Thomas Power of Power Consulting a Montana-based company. It draws from about 24 studies Appalachia, Canada, and Australia.
The report suggests that mines in rural communities tend to be followed by increased rates of crime, substance abuse, domestic violence and sexual assault. The studies also suggest that the influx of workers leads to decreased availability of local services and larger income differentials.
The full report is available at the Haines Public Library.
For more information, see the following news article:
Wastewater treatment permit remanded
On Aug. 9 the Alaska Department of Environmental Conservation (DEC) remanded Constantine’s wastewater treatment permit which was initially issued in July as part of the Palmer Projects phase II plan.
The decision comes after the Ninth Circuit Court of Appeals ruled on a case in Hawaii. They determined that the discharge of wastewater into navigable waters requires a permit from the Environmental Protection Agency.
The original permit issued to Constantine did not receive federal approval.
It is unclear how this will impact the Palmer Project.
State Attorney’s Generals throughout the country - including Alaska - requested that the US Supreme Court review the decision because it infringes on state’s rights to manage waterways, according to the Juneau Empire.
The DEC has 90 days to review the permit.
Further reading on the issue can be found in the following articles:
https://www.juneauempire.com/news/hawaii-lawsuit-could-have-big-implications-for-alaska/
Governor visits Palmer Project without informing Chilkat Indian Village
On Monday Sept. 9, Governor Dunleavy visited the Palmer Project and met with Constantine representatives without informing the Chilkat Indian Village, the Chilkoot Indian Association, or the Haines Borough other than a brief meeting with the mayor.
Haines Mayor Jan Hill claimed she was unaware of Governor Dunleavy’s visit until the day of when a previously scheduled meeting with Constantine’s Liz Cornejo brought her to the airport where she spoke with Dunleavy for ten minutes.
Governor Dunleavy was joined by Alaska Department of Environmental Conservation Commissioner Jason Brune and Chief of Staff Ben Stevens.
Further reading can be found at the following news articles:
Chilkat Indian Village appeals wastewater treatment permit
After The Alaska Department of Environmental Conservation (DEC) approved Constantine’s Wastewater Treatment Plan for their next phase, the Chilkat Indian Village’s Environmental Team appealed the decision through a request for an informal review.
The Chilkat Indian Village is concerned about two components of Constantine’s wastewater treatment plan. First, Constantine fails to present sufficient evidence showing that the proposed wastewater treatment system will prevent contaminated groundwater from mixing with surface water that drains into the Klehini River before entering the Chilkat River and eventually the Inside Passage. Second, Constantine fails to present sufficient evidence showing that the wastewater treatment system will remain functional during earth events such as earthquakes, avalanches, and landslides, all of which are common in the area.
CIV requests that agencies suspend or rescind the permit until Constantine proves that contaminated wastewater will never mix with surface water and that the wastewater treatment system will remain stable through all possible earth events. Specific requests include the use of tracer dye to track the connections between proposed diffused water and surface water connected Glacier Creek.
The informal review process is used by DEC to quickly and simply appeal (question) a decision made by staff, according to DEC’s website.
Within seven business days, the request will be granted or denied by the director, according to DEC.
CIV expects DEC’s response by August 9.