Kennecott Eagle Project

Kennecott completed its 2003 “minimum impact” exploration drilling program in October. During the campaign twelve holes were drilled from eight sites to provide 11,700 feet of core.
The first four holes were drilled from sites beside existing roads. The other eight holes were drilled from four sites on a new, permitted, access track. This track was formed by laying clean gravel on top of a ‘geomembrane’. Both the gravel and membrane will be removed and the area reclaimed, eventually leaving no evidence of drilling activities.
Kennecott removed all drill cuttings from the eight sites and rehabilitated each site.
Inspectors from the State Department of Environmental Quality and members of the public visited the sites a number of times to observe activities and our best practices being implemented to protect the environment. Kennecott fully complied with all exploration permit conditions.
An independent consultant measured water quality and quantity in the streams around the project to ensure our work did not impact these streams (no effect was registered) and to provide baseline data for ongoing environmental management. Soil samples are also being collected for this purpose.
Database review studies were conducted to identify any record of threatened or endangered plants or animals that might be in or associated with the project area so that action could be taken to protect these important species if needed. 

 Eagle Timeline: 2003—2004

The Eagle Project Time Line is unchanged since the August Update Circular. Community engagement will be conducted in an open and transparent manner, and the broad coalition of interests on the Community Advisory Group will have significant input into the future operation, its footprint, and the nature of post operational land use and stewardship. As with other operations, the community will be able to measure our deeds and compare them with our words. We at Kennecott believe that a promise made is a promise to be kept. 

Flambeau Copper Mine, Wisconsin

Kennecott Minerals Company developed and operated the Flambeau Copper Mine in Wisconsin between 1993 and 1997. In that period, sulfide ore containing 162,000 tonnes of copper and 328,000 ounces of gold was mined. In contrast to inaccurate financial information reported by others, actual Flambeau economic results were:

Capital Investment	$ 60M
Net Sales	$341M
Operating Costs (incl. payroll,    supplies, services, environmental)	$151M
Local, State, Federal Taxes	$ 64M
Net Income	$126M
Reclamation, Rehabilitation	$ 20M

After mining was completed in March 1997, the pit was backfilled to the original land surface and the site was fully reclaimed. 
Throughout its operations, the Flambeau mine complied with all environmental regulations and permit conditions. The Flambeau River located 140 feet from the mine was, and remains fully protected – one of many promises kept by Kennecott. Kennecott also promised to keep the Flambeau River frontage property it owns in an undeveloped state, creating a river front corridor open for public use as part of the Wisconsin Northern Rivers Initiative. The quality of water treated from the mine and returned to the Flambeau River was better quality than the natural river water. Kennecott is committed to a groundwater monitoring program lasting 40 years to ensure long-term environmental protection after it receives a Certificate of Completion that is expected in the fall of 2005. No environmental impacts have been registered in the six years since mine closure.

What is Kennecott Doing Now?

At our local office in Negaunee we are identifying and recording the rock types and the minerals found in the drill core. 

Once the core is logged, it is sawn lengthwise: a section is kept for reference and a section is sent to laboratories for analyses to determine what amounts of metals are present. Nickel and copper are the principal metals of interest but some small amounts of cobalt, platinum, palladium and gold are also present.

From this information a three-dimensional, geological model will be constructed. The analytical results will be transformed into three-dimensional models for each metal and deposit tonnage and grade will be calculated.

We also analyze the samples for sulfur and other elements, which could be present in amounts that will be important for environmental impact assessment and management. This work is specifically aimed at preventing and if necessary controlling potential Acid Rock Drainage or ARD. 

Samples of mineralization are being tested to see if the metals of interest can be recovered and how best to do that, and what the non-mineralized material comprises.
We expect the models and testwork results will be available by the end of 2003. This will form the basis of the Order of Magnitude Study.ronmental Protection Act: part 631  to include underground mines. 

Flambeau Recognized by US BLM

The US Department of Interior, Bureau of Land Management, recognized Kennecott Mineral’s efforts at Flambeau with a sustainable development “Award for Community Outreach and Economic Security” in October, 2003. This award acknowledges “the concern shown for community responsibilities and the economic benefits of mineral development”, and was presented to Adrian Jackman (President, Kennecott Minerals Co.) For specific details visit www.osmre.gov or www.blm.gov.

Question: Was this expected?
Answer: It was always expected that there would be a potential for crushed ore to contaminate soils in the crusher and ore stockpile/loading area. Both of these areas and a portion of the rail car staging area were underlined with impervious High Density Polyethylene (HDPE) liners to protect the areas from becoming contaminated with copper ore. The contaminated soils and liners were removed during reclamation activities under WDNR’s observation before regrading; topsoil replacement and seeding took place. Conversion of the 0.9-acre surge pond into the passive treatment biofilter was done to address any potential impacts the remaining rail ballast material west of Hwy 27 and the WDNR administration office parking lot could have on the quality of surface water runoff from these areas. A conscious decision was made not to remove the surge pond, to convert it to a biofilter and continue to monitor its effectiveness. It was expected that the system design would function in containing the non-hazardous contamination and prevent it from migrating off site. As the monitoring shows, this area did indeed have a source of contamination and presented a source for long-term monitoring and the need to eventually remove the ballast material. Therefore, KMC removed this material as part of the rail crossing removal requested by WDOT. 
Question: Any suggestions to prevent this from happening again?
Answer: There are many practical means to prevent ore spillage from rail cars in an active rail car staging area. It is KMC’s belief that the actions taken to contain, treat and monitor runoff from the west rail spur and parking lot areas were more than adequate to protect the water quality of Meadowbrook Creek and the Flambeau River. Nevertheless, removing the upper 2 feet of material from the entire length of the west rail spur should reduce the need for the biofilter and long-term monitoring requirements. This removal action could have been achieved as part of the final reclamation and not become a separate activity that has led to much speculation and misleading information from a few individuals.
 
 
 

Kennecott has also requested proposals from respected environmental consulting firms to cover the scope of a staged environmental baseline study. The proposals have just been received, and are being reviewed.

The models and test work results will be used to determine what mining, processing and infrastructure options may exist and the capital and operating costs that would apply to each of these options. We will then be able to begin assessing the potential impacts of these options on the environment and the community.
From these studies, Kennecott will be closer to knowing if any economically viable project concepts exist and if so, will present the best of these concepts to the community for comment and input. 
If viable and environmentally-sound project concepts are identified, Kennecott Exploration Company will hand over the Eagle Project to its sister company Kennecott Minerals Company to take the project through the next stages of project development. At this time, Kennecott Minerals Company will move forward with forming a Community Advisory Group to facilitate public input and comment on the project.
 

EPA Head Leavitt Comments on the Toxic Release Inventory

Beware of claims that state companies like Kennecott are big polluters.

Mike Leavitt stated, in response to questions from the Senate Environmental and Public Works Committee during his recent confirmation hearing, “It is recognized that some industries, such as mining, must sometimes remove large volumes of waste rock in order to reach the orebody. Since TRI requires reporting of this removal of waste rock, the TRI will, by law, include large volumes of releases. These are not measures of violations of environmental law or damage to the environment. They are a reflection, for example, of the actions necessary to conduct mining operations.” 
By the same measure government roads, highways, schools and airport construction operations would be major polluters. Some people who are opposed to Kennecott’s exploration activities in Michigan have misrepresented Kennecott’s public reporting under TRI by stating: “Kennecott is on record with the EPA as being the worst polluter in the United States”. Such statements are simply not true.

The Facts About Flambeau

During its four year life, the mine hired 81.4% of its workforce from local communities within a 10 mile radius of Rusk County. Local governments received various revenues as a direct result of the Flambeau mine:

* Direct net proceeds tax payments of $17 million.
* Leverage funding in grants of $10 million.
* Private funding for common projects of $8.7 million.
* Income and payroll taxes paid.
A City of Ladysmith internal report stated: “Community development activity is being done in a way that will be self perpetuating. It has been stimulated by wise use of taxes paid by the Flambeau mine; of other funds leveraged by use of these funds; and, of grant moneys from funds capitalized by taxes paid by the mine. Over $27 million of development activity in Rusk County can be linked directly or indirectly to use of mining revenues.
* 185 jobs have been already retained or created; and, over 400 more are projected as a result.
* Over $8 million in private investment has been stimulated.
* At least $6.5 million in new tax base will be generated.
* Over $4.5 million in facilities which have been developed are expected to be sold.
* Over 425,000 square feet of manufacturing space will have been reclaimed or created.
* Nearly $0.5 million in annual revenue is expected to be realized over the next 20 years as a result of projects developed.
* 80 acres of multipurpose recreational trails which have been in place for four years are slated to be extended into another 200 acres.”
You are encouraged to contact the City of Ladysmith for details.

The Flambeau mine donated 80 acres of land for the expansion of the Ladysmith Industrial Development Park. Nearly $1 million was directly donated to local organizations, including $0.5 million toward a new $1.3 million community library, funds for a fire truck, school playground equipment and annual high school scholarships that continue today. 
Flambeau provides a good example of how the economic, social and environmental components of sustainable development work. Along with economic benefits listed above, the community benefited from investment, education, employment provided and the job multiplier effect while the environment was fully protected.

Flambeau shows it is possible to develop and operate sulfide mines in an environmentally responsible manner, and to create new wealth for communities.

Wealth Creation

Every community creates wealth by utilizing its natural resources, its human skills, and its capital resources. Mining provides a good opportunity for new wealth creation and it can be done without irreversibly impacting the environment. Using Rio Tinto, Kennecott’s parent company as an example, for every $1000 of minerals and metals it mined and sold in 2002, it created more than $328 of new wealth for the communities in which it operated. Rio Tinto had total sales of $10.8 billion in 2002.
Rio Tinto paid $124 from each $1000 of sales to its employees as salaries, wages and benefits. These employees then spent most of their earnings in their communities on housing, education, food, clothing, travel, entertainment, sports, as well as supporting governments through their taxes. This multiplier effect on average yields three or four community jobs for every mine employee. Rio Tinto employed more than 35,000 people on average in 2002. See www.riotinto.com.
A number of US based diversified mutual funds are Rio Tinto Shareholders (NYSE / RTP).