DEg‖EO‖vED

LOSLATttENⅥ RBttENTAL

September 10, 2015

Dear lnterested Party:

The Montana Department of Environmental Quality (DEQ has completed a DraftEnvironmental lmpact Statement (draft EIS) for a proposed amendment to Operating PermitNo. 00122 issued to CR Kendall Corp. for the CR Kendall Mine. You can obtain an electronicversion of the draft EIS on DEQ's web site at http://deq.mt.gov/eis.mcpx. There will be a 30-daypublic comment period for the CR Kendall Mine Closure draft ElS. DEQ will also hold a publicmeeting and accept public comments on September 30 from 6 to 8 P.M. at the Yogo lnn inLewistown, Montana.

The CR Kendall Mine is an open pit mine in closure status located on the eastern flanks of theNorth Moccasin Mountains in Fergus County, Montana. DEQ issued CR Kendall's currentOperating Permit No. 00122, covering about 1,040 acres, on September L4,1984, under theMontana Metal Mine Reclamation Act (MMRA) (Section 82-4-30L, et seq., Montana CodeAnnotated [MCA]). On July 25,20L2, DEQ received an application to amend Operating PermitNo. 00122 (Amendment 007) from CR Kendall that contained an amended closure plan for finaldesign of water management and treatment, final capping and reseeding of the former process

pads, and long-term reclamation monitoring and maintenance. On March 9, 2015, DEQ

determined that the company's application for Amendment 007 was complete and compliantand, pursuant to Section 82-4-337, MCA, issued a draft permit for the proposed closure.

Pursuant to Section 82-4-337(LXf), MCA, issuance of the draft permit as a final permit is theproposed state action subject to the environmental review required by the MontanaEnvironmental Policy Act (MEPA) (Section 75-L-20L, et seq., MCA). Section 75-1-201(1)(iv),MCA, requires the preparation of an environmental impact statement (ElS) for state actionsthat may significantly affect the quality of the human environment. The EIS must include a

detailed statement on the environmental impact of the proposed action, alternatives to theproposed action, and a no action alternative. Pursuant to this statute, the DEQ analyzed a No

Action Alternative, a Proposed Action (the company's proposed amendment), the Process Pad

Drainage Pretreatment Alternative, and the Process Pad Barrier Cover Alternative for the draftEIS.

ARM 17.4.6L7 requires DEQto include in an EIS an identification of the agency's preferred

alternative, if any, and the reasons for the preference. At this juncture, DEQ has identified theProcess Pad Drainage Pretreatment Alternative as the preferred alternative. The draft EIS is not

SEP 1 5 2015

Steve Bullock, Governor I Tom Livers, Director I P.O. Box 200901 I Helena, MT 59620-0901 I (406) 444-2544 I www.deq.mt.gov

a final decision. The preferred alternative could change in response to public comment on thedraft ElS, new information, or new analysis that might be needed in preparing the final ElS.

Comments on the draft EIS may be submitted electronically using the DEQ Public Comment

Portal at http://bit.lv/CRKendallPublicComment. Written comments, and any questions

regarding the environmental review, may also be submitted to the following address:

Jen Lane

Department of Environmental QualityP.O. Box 200901Helena, MT 59501

406-444-4956

Comments on the draft EIS must be submitted to DEQ no later than October 9,20!5.

The DEQ will make reasonable accommodations for those with disabilities who wish toparticipate in the meeting. lf you require an accommodation, please contact Lisa Peterson at

406-444-2929 or lpeterson @ mt.sov.

I welcome and look forward to your participation.

Sincerely,

-- ; 2-,,., r. : 1l

Tom Livers

Director

DRAFTCR Kenda‖ Mine CIosureEnvironmentalirnpact StatementExecutive Sunlmary

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Prepared for

State of MontanaDepartment of Environmental Quality

September 2015

Summary

S.1 Introduction

This draft environmental impact statement (EIS) was prepared for the proposed closureof the CR Kendall Mine on the eastern flanks of the North Moccasin Mountains inFergus County, Montana (Figure 1-1). On July 25,2012, the Department ofEnvironmental Quality (DEQ) received an application to amend Operating Permit No.00722 (Amendment 007) from CR Kendall that contained an amended closure plan forfinal design of water management and treatment, final capping and reseeding of theformer process pads, and long-term reclamation monitoring and maintenance(Hydrometrics & CR Kendall Corp., 201.2; CR Kendall,2012). DEQ provided adeficiency letter to CR Kendall on September 21,2012. CR Kendall responded to thedeficiency review and DEQ issued a favorable compliance determination and a DraftAmendment 007 on March 9,2015. The CR Kendall Mine closure activities described inthe Amendment 007 Application comprise the Proposed Action.

DEQ is the lead agency and prepared this draft EIS to present the analysis of possibleenvironmental consequences of four closure alternatives: the No Action Alternative, theProposed Action, the Process Pad Drainage Pretreatment Alternative, and the Process

Pad Barrier Cover Alternative. The two process pad alternatives include additionalmitigation measures developed by DEQ.

S.2 Purpose and Need

CR Kendall conducted mining activity under Operating Permit 00122, which wasoriginally issued to Triad Investments on September 1,4,7984 and allowed minedevelopment within a179 acre permit area. The permit was subsequently amendedseveral times, was acquired by Canyon Resources following a bankruptcy, andcurrently covers about 1,040 acres. The mine was permitted under the Montana MetalMine Reclamation Act ([MMRA]; 82-4-301., et seq., Montana Code Annotated IMCA]).Amendment 007 is a closure plan for the CR Kendall Mine and primarily focuses onwater management and treatment. The amendment also addresses final capping of theformer process pads, and long-term reclamation monitoring and maintenance.

The Montana Environmental Policy Act (MEPA) requires an environmental review ofactions taken by the State of Montana that may significantly affect the quality of thehuman environment. This EIS was prepared to fulfill the MEPA requirements. The

Director of DEQ will decide which alternative should be approved in a Record ofDecision (ROD) based on the analysis in the final EIS. The final EIS will includecomments received on the draft EIS and the agency's responses to those comments.

S-1

Summary

s.3 Issues of Concern

From the public involvement, two relevant issues were identified that should be

addressed through the alternatives analysis process for the closure EIS- (1) the effects

of the mine closure actions on surface water and groundwater quantity and quality; and(2) the effects of the mine closure actions on soils and reclamation. These issues will be

evaluated in detail to address impacts to resources ancl to help determine reasonable

alternatives for mine closure, including the Proposed Action. The specific components

of the two relevant issues are:

Issue 1: Effects on quantity and quality of suface water and groundwaterresources:

Discharges from the mine to surface water and groundwater may exceed waterquality standards for certain contaminants: arsenic, antimony, selenium,thallium, cyanide, and nitrate.

Pumpback of contaminated groundwater and capfure of surface water havereduced downgradient water quantity in four watersheds. Water management atthe mine may continue to reduce downgradient water quantity.

Pumping clean groundwater from water wells WW-6 and \A/W-7 may havereduced water quantity in downgradient wells.

. The mine facilities have intercepted natural drainages that channeled stormwaterand snowmelt that no longer reach drainages below the mine.

Water quantity in each drainage could need augmented by rerouting drainagechannels and developing springs and other groundwater sources.

Water and sediment from the mine may contribute arsenic to the Boy Scout ponddowngradient of the permit boundary in South Fork Last Chance Creek.

o The underdrain in the process valley could be receiving impacted water.

Issue 2: Effects on soils and reclamation

. Reclamation efforts may have resulted in inadequate vegetation in some areas,

erosion on steeper slopes, and excessive infiltration through the cover systems.

o Application of reverse osmosis (RO) brine on the leach pads may have causedelevated levels of salts and other potential contaminants possibly affecting thereclamation cover system and future revegetation.

. Insufficient and unsuitable on-site reclamation materials may limit reclamationcover system alternatives.

s-2

Summary

s.4 Alternatives Analyzed in Detail

Four alternatives are described and evaluated in detail in this draft EIS: the No ActionAlternative; the Proposed Action (Application for Amendment 007); the Process PadDrainage Pretreatment Alternative; and the Process Pad Barrier Cover Alternative.Brief summaries of the four alternatives are presented below. Detailed descriptions ofthe alternatives are provided in Chapter 2.

S.4.1 No Action Alternative

For this EIS, the L989 Plan of Operations and 1995 Soils and Revegetation Plan alongwith the pumpback and water treatment plans are considered to be the No ActionAlternative. The No Action Alternative reflects the current CR Kendall Mine operationsunder Operating Permit 00722, including six Amendments and 23 minor revisions upthrough Minor Revision 11-001. Most reclamation activities under the permit have beencompleted. Major disturbed areas have been reclaimed, including the Horseshoe Pit andHorseshoe Waste Rock Dumpi Muleshoe Waste Rock Dump; Barnes-King Pit; KendallWaste Rock Dump, and most of the Kendall and Muleshoe Pits. Minor Revision 11-001

was approved in 2011 and allowed CR Kendall to place a 17-inch layer of growth mediadirectly over the basal layer on process pads 3 and 4 as an interim reclamation measure.

Under this alternative, CR Kendall would address the remaining reclamation items atthe mine, including spreading the remaining stockpiled soil, completing someadditional revegetation work, and providing long-term reclamation monitoring anclmaintenance.

Other mine facilities will be retained until water treatment is no longer needed,including pumps and piping; ponds 28,38,7, and 8; stormwater controls; watertreatment and maintenance facilities; roads; power lines; and land application disposal(LAD) facilities.

5.4.2 Proposed Action

The Proposed Action is the proposed Closure Water Management Plan CR Kendallsubmitted in their Application for Amendment 007 to Operating Permit No. 00122. The

Proposed Action primarily addresses the long-term water freatment of the process paddrainage and captured groundwater. The alternative would retain the installedvegetated soil cover authorized under Minor Revision 11-001 and outlines reclamationmonitoring and maintenance activities. The main items different from the No ActionAlternative are:

. The process pad drainage and all captured groundwater would be combined fortreatment by filtering to remove particulate, treating with zeolite adsorption toremove thallium, and discharged to groundwater through the Kendall Pit. The

option for LAD is retained as a contingency.

s-3

Summary

o No additional growth media (soil) would be placed on the regraded areas of the

Kendall Pit with slopes less than 2:1or the lower slopes in the Muleshoe Pitwith poor vegetation establishment. No additional reseeding is planned.

o Most buildings would remain for private use after closure.

S.4.3 Process Pad Drainage Pretreatment Alternative

A separate piping system would collect the drainage water from process pads 3 and 4

for pretreatment prior to blending the drainage water with other mine waters. Arsenicis one of the contaminants in the process pad drainage water, and is projected toexceed groundwater standards even after the drainage water and capturedgroundwater are combined. The pretreatment system could remove arsenic and othercontaminants, if necessary to comply with discharge criteria.

The likely pretreatment system would involve the oxidation and adsorption of arsenic

onto an adsorbent compound (ferric chloride, iron filings, or other). The pretreatmentprocess would most likely be developed specifically for the CR Kendall process paddrainage water to effectively remove arsenic. After pretreatment, the water would be

combined with the other captured groundwater for thallium removal through thecurrent method of zeolite adsorption. Treated water would be discharged togroundwater through the Kendall Pit.

New water treatment equipment would be required to pretreat the process paddrainage water. The annual average flow rate after installing the current process padscaps (2009 to201,4) ranged from 11.3 gallons per minute (gpm) to 20.5 gpm, with an

average rate of 13.7 gprn.

The specific pretreatment technology chosen by CR Kendall to remove arsenic couldgenerate a contaminated treatment media, or byproduct, that requires proper disposal.Because the specific technology has not been chosen or designed, the possible disposaloptions for the contaminated media could include: (1) shipping it back to themanufacturer when exhausted; (2) shipping it off-site for disposal; or (3) burying it on-site if confirmed as non-hazardous.

Similar to the No Action Alternative the remaining stockpiled soil, in excess of thequantity required to complete reclamation of facilities required for long term watertreatment, would be placed on regraded slopes in the Kendall Pit and on the lowerslopes in the Muleshoe Pit and the areas reseeded.

5.4.4 Process Pad Barrier Cover Alternative

The Process Pad Barrier Cover Alternative was developed to minimize the process paddrainage flows that require treatment. Adding a barrier liner to the process pads couldeffectively reduce drainage water flows. CR Kendall would select the effective covermaterials to use; however, DEQ would have final review and approval. DEQ would

S-4

Summary

require the barrier liner be of HDPE or a similar product rather than a geosyntheticclay liner (GCL). The current 17 inches of soil would be temporarily removed and ageomembrane liner installed. The geomembrane liner would consist of a texturedHDPE liner overlaid with a geocomposite drainage net. The salvaged soil would bereplaced over the geomembrane liner and the process pads reseeded.

As with the Proposed Action, the process pad drainage and all captured groundwaterwould be combined for treatment by filtering to remove particulate, treating withzeolite adsorption to remove thallium, and discharged to groundwater through theKendall Pit. The option for LAD is retained as a contingency.

Similar to the No Action Alternative and the Process Pad Drainage PretreatmentAlternative, the remaining stockpiled soil in excess of the quantity required tocomplete reclamation of facilities required for long term water treatment, would be

used for reclamation.

S.5 Summary of Impacts

Table S-1 summarizes and compares the impacts of the four alternatives consideredand evaluated in detail.

5.6 Preferred Alternative

The rules and regulations implementing MEPA (ARM 17.4.617) require agencies toindicate a preferred alternative in the draft EIS, if one has been identified. DEQ has

identified the Process Pad Drainage Pretreatment Alternative as the preferredalternative for the reasons discussed below.

The Process Pad Drainage Pretreatment Alternative is the only alternative that ensurescompliance with all groundwater standards for all water to be treated and discharged.This would be achieved through the development of an additional water treatmentsystem to specifically remove arsenic from the process pad drainage. The systemwould be modified as necessary to include treatment for other elements, such as

selenium, which may require treatment in the future to comply with groundwaterdischarge standards.

s-5

Summary

Mixing models developed for the Proposed Action predict the combined drainagewater and captured groundwater would not meet groundwater standards for thalliumand arsenic, but only treatment for thallium was proposed. CR Kendall assumed (1)

either the natural background arsenic concentration in the Madison Limestone aquiferis also above the standard, or (2) dilution provided by mixing of the effluent from thetreatment plant with groundwater moving through the aquifer would result incompliance with groundwater quality standards after mixing.CR Kendall has notcollected data from the local Madison Limestone aquifer to document the validity ofeither assumption, which might allow for effluent limits higher than groundwaterstandards.

The Process Pad Barrier Cover Alternative is intended to reduce the rate of infiltrationinto, and drainage from, the process pads. Reduced flows from the process pads andcombining this water with other captured groundwater may result in sufficientdilution of constifuents, other than thallium, so that no other water treatment would be

required to achieve standards. However, reclamation of process pads using barriercovers may not reduce seepage to levels where treatment is no longer required. It isalso possible the total amounts of contaminants in the residual seepage may notdecrease in proportion to the reduced flows. Therefore, the Process Pads Barrier CoverAlternative does not provide assurance that it would eliminate the need for additionalwater treatment steps in order to achieve compliance with groundwater dischargestandards.

The Process Pad Drainage Pretreatment Alternative provides for better growthmedium to support vegetation on the process pads compared to the Process Pad

Barrier Cover Alternative. The existing 17 inch process pad soil cover overlies 6 inches

of subsoil amended with bentonite and L2 inches of unamended subsoil. Plant rootsare able to penetrate the entire soil profile, and thus should be more tolerant ofdrought. Plant roots may extend into the underlying spent ore. In contrast, the Process

Pad Barrier Cover Alternative would restrict plant roots to the upper 17 inches of soil,resulting in the vegetation being more susceptible to drought. There would also be anincreased potential for soil slumping along a saturated zone on top of the liner andincreased potential for exposure and damage to the barrier cover from toppling ofshallow-rooted trees. Additional impacts to soils and vegetation would be expecteddue to salvage, stockpiling, andreplacement of the soil materials on the process padbarrier cover.

The Process Pad Drainage Pretreatment Alternative would result in some additionalacres of revegetated land compared to the Proposed Action. CR Kendall would use theremaining stockpiled soil, other than the soil reserved for the eventual reclamation ofroads and facilities, on the remaining areas of pit backfill that have not previouslyreceived soil.

s-6

TABLE S-1

COⅣ[PARISON OF CR KENDALLヽ 41NE CLOSURE EIS ALTERNATIVES

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