Silver Creek MolySilver Creek MolyPrePre--application Briefingapplication Briefing

Presentation by Mark Levin Presentation by Mark Levin

ToTo

Dolores County Planning Commission Dolores County Planning Commission

and theand the

Rico Planning CommissionRico Planning Commission

November 12, 2008November 12, 2008

Intro: Mark LevinIntro: Mark Levin

• Owner of Outlook Resources, Inc.

– Has controlling interest in Silver Creek Moly deposit

• Owner of Mining & Environmental Services LLC

– MS in Ecological Engineering and ME in Mining Engineering

– Founded Mining & Environmental Services in 1995

– Former Geosciences Division manager for EG&G, and Program Manager in charge of Rocky Flats Plant “Sitewide”environmental program

– Served 8 years as a Planning Commissioner in Clear Creek County & was Chairman for 3 years

Mining & Environmental Services LLC

• Technical resource on projects involving specialized underground mine evaluation, sampling and/or mapping for mineral resources, regulatory issues, physical or subsidence hazards, development cost estimation, and/or environmental evaluation at over 400 mine sites.

• Construction contractor or construction project manager for tunnel/mine/mill rehabilitation, closure, development, special project or cleanup work at over 150 sites.

• Economic or mining evaluations for projects in Arizona, Mexico, Peru, California, Colorado, Ontario, Alaska, Nevada, Mongolia.

Panoramic View of Rico, ColoradoPanoramic View of Rico, Coloradolooking up Silver Creek drainagelooking up Silver Creek drainage

Rico Molybdenum Deposit HistoryRico Molybdenum Deposit History

• 1979-1983: Anaconda drills & discovers the Silver Creek deposit. Total Anaconda exploration spending at Rico is $13.8 Million (ca. 1982 dollars).

• 1983: Geologists seek internal funding for additional drilling at Rico, butAnaconda’s parent, Atlantic Richfield Company (ARCO) terminates all exploration activities and begins process of winding down Anaconda Mining.

• 1992: Atlantic Richfield disposes of Rico mineral exploration properties to Rico Development Co., together with district exploration files.

• 2006: While performing subsidence study research, MES’ contract geologist, Susan Judy, finds Anaconda’s Silver Creek moly deposit exploration records stored in a horse barn near Dolores, Colorado.

Resource InformationResource Information

Where is it?Where is it?

Molybdenum Deposit ComparablesMolybdenum Deposit Comparables

Potential Potential ““WorldWorld--Class DepositClass Deposit””

SILVER CREEK DEPOSIT AT .2% Mo CUTOFF GRADE

Potential Local Economic BenefitsPotential Local Economic Benefits

Tax revenue

• Henderson mine 2007 property taxes were $17.6 Million

• Total Dolores County 2007 = $ 3.37 Million

Jobs

• Possible 200 to 300 employees (possibly fewer, depending on level of automation in future)

• Roughly $15-20 Million annual payroll (2007 dollars)

Property Tax Comparison

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000

2005 2006 2007

Tax Year

Dolores County - Total Collected

Henderson Mine - Total Payments

Henderson Mine Henderson Mine

““Panel CavingPanel Caving”” SystemSystem

Silver Creek MolySilver Creek Moly

Hypothetical Mine LayoutHypothetical Mine Layout

Rough EstimateRough Estimate of Future of Future

Transportation Impacts for fullTransportation Impacts for full--scale scale

Moly MiningMoly Mining

• Concentrate transport (outbound): 1-3 semi trucks per day

• Supplies (inbound) 1 - 3 semi trucks per day

• Crew Buses 4 – 6 trips per day

• Misc. Light vehicles 20 to 40 trips per day

NOTE: These are not all likely to be in or near the Town of Rico area!

ScheduleSchedule

(Rough Estimate)(Rough Estimate)

• Exploration Drilling: 3 to 5 years

• Engineering and permitting: 6 to 8 years

• Construction: 6 to 8 years (*assumes feasible resource is confirmed and market is ready)

• Production: 30 to 60 years (**depends on size of resource, moly price, and production rate)

World Class Obstacles!World Class Obstacles!

Silver Creek Molybdenum Deposit Silver Creek Molybdenum Deposit

Initial Challenging Factors for FinancingInitial Challenging Factors for Financing

• A deep and costly exploration drilling program will be required to validate Anaconda’s resource estimate.

• If an economic mineral reserve is proven, full scale mine development will be very expensive, due to depth of deposit.

• Market: moly price collapsing in wake of global financial crisis

– Climax mine re-opening postponed

– Production cutbacks and layoffs announced at Henderson

• Perception of Colorado as CLOSED to new mining projects

Mineral Development StagesMineral Development Stages

• Exploration

• Development

• Production

• Reclamation

Existing Mine/Mill AreaExisting Mine/Mill Area

Tailings ReTailings Re--vegetation Issuesvegetation Issues

Blaine AditBlaine Adit

Underground HazardsUnderground Hazards

Historic MillHistoric Mill

Transformer Oil AreaTransformer Oil Area

Junk & Scrap!Junk & Scrap!

NearNear--Term Action PlanTerm Action PlanOBTAIN INDEPENDENT ENVIRONMENTAL EVALUATION ( “All

Appropriate Inquiries”)– in progress by EME

IMPLEMENT PRUDENT ACTIONS TO LIMIT RELEASES:

• TUNNEL DRAINAGE: Investigate / resolve as necessary – (temp measures completed, long term measures pending)

• TRANSFORMER OIL SPILL: – Tested for PCBs – OK

• TAILINGS: Develop supplemental revegetation specifications & plans – In progress by EME

NearNear--Term Action Plan, ContTerm Action Plan, Cont’’d.d.

• TRASH CLEANUP • planned for Spring, 2009

• PHYSICAL HAZARDS:

– Secure open adits • Temp. closures done, permanent closures 2009

– Secure the mill building • Done

– Install fencing and signage to control site. • partially completed, remainder in 2009

Next StepsNext Steps• Obtain County “Land Development

Agreement” for re-activation of historic mineral land use

Scope:

– Exploration drilling program

– Re-utilization of some / all existing structures and construction of new structures for mineral uses

– Recognize land as suitable for future mining.

– Recreational use of portions of surface as interim, additional, or post-mining land use?

Exploration DrillingExploration Drilling

Typical Core Drilling RigTypical Core Drilling Rig

Core SamplesCore Samples

Mineral ExplorationMineral Exploration DrillingDrilling

• Core Drilling is part of “Prospecting” (also called “Exploration”)

• Unlike Oil and Gas drilling holes, mineral exploration drill holes are not a permanent land use.

• The drill program is adapted by the results of previous holes.

• Prospecting is highly regulated by Colorado Division of Reclamation, Mining and Safety (DRMS)

– State regulates technical details– Reclamation bond for full 3rd party cleanup cost is required– Technical data and hole locations, etc. CONFIDENTIAL by state statute– State requires drill holes to be properly “abandoned” (sealed with grout).

• Transportation impact during exploration expected to be only a few pickup/SUV trips per day, with very occasional larger truck trips.

Planning ConsiderationsPlanning Considerations

• Site, and underlying mineral deposit, is entirely in un-incorporated Dolores County

• IGA factors:– Exploration does not require “additional road, water, sewer

service”– Outside of Rico’s “Urban Growth Boundary”– Owners do not want annexation at this time

• In the absence of a county zoning code, some means of permanently assuring mineral land use rights is necessary for attracting required exploration investment for this long term project

• Property package consists of historically mined patented and unpatented mining claims, located in the federally designated “Pioneer Mining District”. (Last activity was 1983)

Planning Considerations, contPlanning Considerations, cont’’d.d.

• State has primacy over the technical details of mining and prospecting (see CMA vs. Summit County)

• Existing land uses include:o Inactive mine site with significant physical hazards

o Informal Shooting Range

o Illegal Trash dump

o Un-managed Mine waste pile

o Impromptu Off-Road vehicle practice area

• The site cannot be seen from Town of Rico

• The site is below Rico’s water intake.

Additional Reviews Required for MiningAdditional Reviews Required for Mining

• Actual mining, if an economically feasible deposit is confirmed, will require many more permits, with extensive additional opportunities for public comment.

o Lower-tier Dolores County land use agreements required for any specific new developments (buildings, etc.)

o Colorado DRMS Mining permit process

o NEPA / Environmental Impact Statement (for major projects)

o Numerous “minor” permits (NPDES, APENs, ACOE, etc.)

o USFS: Plan of Operations

Goals and Guiding PrinciplesGoals and Guiding Principles

• Integration and responsible stewardship of the land and the underlying mineral resources

• Meet all state and federal standards for protection of environment

• Seek development of the moly deposit in a manner that is aesthetically harmonious with the Colorado environment

• Be a “good neighbor”

• Resource development should provide durable benefits to the community that last beyond the period of mineral extraction