mining: spring 2015

April 2015

MININGSPRING 2015 EDITION

Pershing Gold’s Relief Canyon effort pays off in ounces

MINING SPRING 2015, an April 2015 publication of Winnemucca Publishing - 3

Exploration is king in the Nevada mining industry this year. Developing mine sites and utilizing new technologies lead to new opportunities to stake claims on the future.

MINING SPRING 2015

a publication of Winnemucca Publishing General Manager: Holly Rudy-James

Managing Editor: Jen Anderson

Special Projects Director: Brittany Shober

Writers:Joyce SheenHeather HillDebra Reid

Jessica Burgess

Advertising Sales: Rhonda Coleman

Paris HamKayla Love-Koseck

Lora Mattingly-Enget Mildred Ferraro

Advertising Design: Joe Plummer Terrie Chism

Layout Design: Brittany Shober

INSIDE THIS EDITION:

Ranching and mining go hand in handStory and photos by Heather Hill Page 4

Cover StoryHighest gold to date at Relief Canyon MineStory by Debra Reid Page 10

Laser scanner helps Twin Creeks survey team see past obstacles Story and photos by Jessica Burgess Page 16

Diamond Plastics manufactures world’s largest solid-wall PVC pipeStory and photos provided by Diamond Plastics Page 24

Get ready, get set... stay ready: General MolyStory by Joyce Sheen Page 26

BLM approves Long Canyon mine projectStory provided by the Bureau of Land Management Page 42

On the cover —

An exploratory drilling rig in operation last year at the Relief Canyon Mine northeast of Lovelock. This year, exploratory drilling struck an ore deposit that could potentially produce over three and a half ounces of gold per ton of ore.

CONTENTS

1022 S. Grass Valley Road, Winnemucca, Nev. 89445

(775) 623-5011

PHOTO COURTESY PERSHING GOLD

4 - MINING SPRING 2015, an April 2015 publication of Winnemucca Publishing

From looking after miners to watch-ing over cows, Jon Laird has a full life. When he is not on the job as the mine operations superintendent at Turquoise Ridge Joint Venture (TRJV), he can be found on his cattle and alfalfa ranch just outside of Winnemucca.

An equal love of both jobs plus a supportive family keep him sane and well-balanced he said.

“Whether at home or here (at the mine), I enjoy the work I do,” he said.

As the mine operations superin-tendent, he works closely with the miners solidifying all daily plans and operations. After he holds his morning meetings with his crews, much of the days during his 40- to 50-hour work weeks consists of communicating with

other departments and focusing on the mine’s six-month to one-year outlook plan.

It is his responsibility to ensure all of the roadblocks are removed in order for the mine to achieve those plans. He spends much time coordinating with other departments and addressing the concerns of his crews to make sure they have all the tools they need to perform at their best.

Laird is going on three years at his current position but is no stranger to hard work. He began his mining career as a mechanic at the TRJV (which was Getchell Gold Corp. back then) in 1999, a trade he learned on the job.

Laird started out in the surface main-tenance shop and then moved under-

ground until 2002 when he became the front line supervisor in the mainte-nance department and from there he became general supervisor. He spent three years as the maintenance super-intendent before getting to his current position.

His duties were everything from supervising the crews to overseeing supervisors on multiple crews. He has no favorites among all of the jobs he has performed.

“I’ve enjoyed them all and I enjoy what I’m doing now,” he said. “I’m just as happy working here today as the first day I started.”

He describes his climb up the ladder as slow but he was determined and put in a lot of hours of hard work, he said. >>

Jon Laird worked his way up the ladder at TRJVBy Heather Hill, Winnemucca Publishing

Ranching and mining go hand in hand

HEATHER HILL • Winnemucca Publishing

Mine Operations Superintendent Jon Laird explains the mining process to some visitors to Turquoise Ridge.


“I feel good about it,” he says of the climb. “I think it hasn’t been all my actions. I had a lot of good support and patient bosses and good people working for me. I feel fortunate to have had the opportunities I had.”

He says putting a lot of effort into his work helped him along the way, too.

“If you do the best job you can at the job you have right now, it’s only a matter of time before people rec-ognize it and things start to progress for you,” he said.

His favorite part of work-ing for TRJV is the people with whom he works.

“It’s getting to work with a good group of people,” Laird said. “We all have a common goal. In general, here, people want to suc-ceed, themselves, and see the company succeed.”

He has never seen such a strong work ethic as the one he sees at TRJV, he added.

Back on 16-Mile Ranch, off U.S. 95 outside of Winnemucca, Laird looks after 50 head of mother cows and oversees 80 acres with parcels of alfalfa for hay. His time is spent feeding live-stock, maintaining the ranch, doctoring animals, irrigating, making sure the equipment is working and much more.

Born and raised on a ranch in Weiser, Idaho, Laird began getting back into ranching in 2007. It was always his goal to become a rancher, he said. But, he pointed out, he wanted to go into the more “glamorous” side of ranching and gave a thought to becoming a veterinarian because he has always loved animals.

He moved to Winnemuc-ca in 1988 and in 2010, his family moved from a home closer to town, also off U.S. 95, to their current residence

at 16-Mile Ranch in 2010. His wife is Holly Laird and his kids are Cassie Gomez, 23, of Winnemucca, Jacob Laird, 22, of Winnemucca, and Julia Laird, 15, a stu-dent at Lowry High School in

Winnemucca. He has three grandchil-

dren with a fourth on the way. His family has always been supportive of his min-ing career and of their ranch-ing lifestyle, which has been

good for all of them, he added.

Laird and his wife have been married for 15 years and she owns Real Deals, a home décor store in Winnemucca, that she >>

HEATHER HILL • Winnemucca Publishing

COURTESY PHOTO

Every morning, to start the day, Mine Operations Superintendent Jon Laird goes over plans with his crew at TRJV.

Jon Laird is shown here with his youngest daughter, Julia Laird, 15, branding a calf at his home at 16-Mile Ranch, just outside of Winnemucca.


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began in July 2014. It just moved to its new location at 16 E. Second St. Laird said his wife’s flexible hours make his job easier and having their own ranch enables the kids to take part in it.

After graduating high school in 1986, Laird attended one year of col-lege at the University of Idaho where he studied animal science. After pay-ing his way for one year, he ran out of money and went home to begin working as a mechanic for a trucking company where he received on-the-job training at the age of 19.

After doing that for a year, he came to Nevada to work for a con-struction company as a mechanical helper, installing the first fiber optic cable along the I-80 corridor, he said. His sights were already set on Nevada because he worked at a ranch in the Elko area the summer after he gradu-ated high school.

“I liked the area,” he said. When his job installing the fiber optic

cable wound down, he went to work at the Ford Dealership in Winnemucca

as a mechanic, working his way up to service manager.

After three years as a mechanic at Newmont’s Twin Creeks Mine and two and a half years of owning a mechanic shop at the old Shell Station on the cor-ner of Melarkey and Winnemucca Bou-levard in Winnemucca, he then signed on with TRJV in 1999.

“At the time I was looking for some-thing steady,” he said.

Working in ranching and mining gives him the perfect balance of physi-cal labor and desk time plus working at TRJV enables him to interact with and meet people who share his interests, he said.

“I’m happy,” he said. “There are definitely challenges but a bad day at Turquoise Ridge is still better than a good day at some of the other places I’ve worked,” he said.

As for future goals, the sky’s the limit. Once his daughter graduates high school, he and his wife are open to exploring the global aspect of Barrick which has interests all over the world.

Laird would like to see more of the world and venture to new places, he added.

For now, Laird is enjoying the life he has and loves living in Winnemucca because of the small town atmosphere. He and his wife feel like they fit in and have always felt welcome here because a lot of people who live in Winnemucca are from other areas, he said.

“The fact that a good percentage of people moved here from somewhere else, it just gives the community sort of a common bond,” he said. “I came from Idaho and I feel like this is my home. A lot of people feel that way.”

Laird attributes his success to many things including his family and being surrounded by great people.

“I try to put myself in situations where I get to do things I like to do and enjoy life and out of all that has sprung success,” he said.

Barrick’s Turquoise Ridge property is located in the Potosi Mining District, northeast of Winnemucca on the east-ern flank of the Osgood Mountains. Barrick is the operator and 75 percent owner of the mine with Newmont own-ing the remaining 25 percent, according to Barrick’s website.

Turquoise Ridge uses underhand cut-and-fill mining methods and ore is transported to Newmont’s Twin Creeks mill for processing. The refractory gold ore is treated by pressure oxidation technology and gold is recovered using conventional carbon-in-leach technol-ogy.

Barrick’s share of gold production in 2014 was 195,000 ounces of gold at all-in sustaining costs of $628 per ounce. The Turquoise Ridge mine con-tains 4.5 million ounces in reserves at an average grade of 16.9 grams per tonne — the highest reserve grade in the company’s operating portfolio and among the highest in the entire gold industry, its website states.

The mine has considerable untapped potential and could become a core operation for Barrick. The company is advancing a project to develop an additional shaft, which could bring for-ward more than one million ounces of production, roughly doubling output to an average of 500,000 ounces per year at all-in sustaining costs of about $625-$675 per ounce, the website says. <<

COURTESY PHOTO

Mine Operations Superintendent Jon Laird explains to a group of visitors how the monthly mining plans are communicated to the crews.


Pershing Gold Corporation recently announced the highest ever under-ground concentrations of gold have been discovered at the Relief Can-yon Mine northeast of Lovelock. This year, exploratory drilling struck an ore deposit that could potentially produce over three and a half ounces of gold per ton of ore.

One drill hole encountered 1.4 feet of 3.618 ounces per ton (opt) of gold (Au) within a 37 foot intercept (hole) of .148 opt according to a PGC press release dated March 3. Another “highly mineralized hole” contained 3.3 feet of 2.462 opt, 12.9 feet of .741 opt within a total 35.1 foot intercept of .289 opt Au.

The company’s 2014 and early 2015

exploratory drilling program of 134 holes includes 14 with results that con-firm significant multi-ounce gold value areas in the mine’s North Target Area. The high grade ore upgrades Relief Canyon’s potential gold production plus potential profitability for investors.

“The perception of Relief Canyon is changing from that of a lower grade gold deposit to one with multiple stacked zones of mineralization with a core of very high-grade gold mineral-ization,” Stephen D. Alfers, Pershing Gold’s Chairman and CEO, said in a press release. “We are planning future drilling in the vicinity of the intercepts to better define the orientations and ultimate extent of these important

structural zones.”Alfers was referring to underground

geological structures such as “folds and faults” in rock layers that collect and concentrate minerals including gold. Assay results from the 2014-2015 drilling program are being incor-porated into an updated resource esti-mate for Relief Canyon to be com-pleted in the second quarter of 2015 followed by an economic assessment. A “metallic screen analysis” is under-way to confirm the high-grade assays with the results to be published later on the company’s web page.

“This type of analysis is part of Pershing Gold routine Quality Assur-ance/Quality Control procedures >>

Highest gold to date at Relief Canyon MinePershing Gold hits 3.6 ounce per ton depositBy Debra Reid, Winnemucca Publishing

A driller labels core samples at the Relief Canyon Mine.

PHOTO COURTESY OF PERSHING GOLD


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whenever very high gold grades are intercepted or if coarse gold is suspected,” the statement reads.

Core samples are boxed and sealed at the drilling sites then moved to the company’s logging and sample prepara-tion facility where trained personnel log and split the cores in half using a table-fed circular rock saw. Half of the cores remain under lock and key while the other half are shipped for assays at Skyline Assayers & Laboratories or Inspectorate America Corporation, both in Sparks.

Exploratory drilling allows mining companies to pinpoint deposits and estimate extraction and production costs. Relief Canyon Mine includes three open pits and a “state of the art, fully permitted and constructed” heap-leach ore processing facility installed then upgraded by other mining companies.

Pershing Gold’s drilling program is exploring deeper and wider areas than previous mining companies to expand the Relief Canyon Mine’s potential gold resources and attract greater investment. The “very high grade drill hole inter-cepts” occurred in the Lower and Jasperoid Zones, geological layers located beneath the Main Zone that was mined in the 1980’s. Deeper deposits mean higher extraction costs.

According to the company website, Pershing Gold Cor-poration is an emerging Nevada gold producer on a “fast track” to re-open and expand the Relief Canyon Mine on approximately 25,000 acres of land surrounding the existing pits and heap leach facility. A Plan of Operations and BLM permits have been approved allowing the company to com-mence production at Relief Canyon. >>

DEBRA REID • Winnemucca Publishing

Pershing Gold employees build an antenna tower in the ore processing facility at Relief Canyon Mine.


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Pershing Gold’s Investor Relations Vice President Jack Perkins could not speculate exactly when the mine might be back in production. An economic analysis following the latest resource update must be completed before a decision possibly in late 2015 or early 2016, he said. The price of gold “looks pretty good” but Perkins said mining officials remain “apprehensive” about potentially volatile gold prices.

As for the number of employees needed for gold produc-tion, that will depend on whether Pershing Gold decides to “self” operate Relief Canyon Mine or hire a contractor, Per-kins said. Meanwhile, he and other officials will be analyz-ing the “hard data” of mine resources, costs and economic conditions. Another exploratory drilling program is planned for 2015 to further investigate and potentially increase the economic value of mineral resources before a decision is made on the timing of production, he said.

“The worst thing we could do is to start and then stop (mining operations),” Perkins said.

On April 2, gold prices hovered around $1,200 per ounce but, as Perkins implied, there are many other factors to con-sider in the fiscally conservative world of big ticket mining including capital investment. Pershing Gold is currently list-ed on the OTCQB (over the counter stock market) and has submitted an application to “up-list” to the NASDAQ stock exchange according to the March press release.

In January, 2015, Pershing Gold announced a $6 million “landmark deal” to acquire exclusive mining and surface use rights for about 1600 acres of new long-term mining leases and 74 unpatented lode mining claims on 1300 acres from Newmont USA. The transaction includes a new 20-year mining lease from New Nevada Lands and New Nevada Resources and consolidates land around the mine for greater security of long-term mining rights and full con-trol of mining facilities according to Alfers.

“With this transaction, Pershing paves the way to signifi-cantly expand the Relief Canyon Mine,” Alfers said in the January press statement. “Not only did we gain complete control of the gold discovered to date on the acquired lands, we know that the original Relief Canyon deposit extends into the acquired lands and with additional drilling we expect to expand the gold resource on these lands.” <<


“The worst thing we could do is to start

and then stop”

A view from the Relief Canyon Mine northeast of Lovelock. PHOTO COURTESY OF PERSHING GOLD


Deep in Twin Creeks’ Mega Pit with-in Cut 38 is the Fuel Barge Backfill Dump, an 800-foot tall heaping moun-tain of material growing bigger with each 250,000-ton load.

To someone not familiar with the process, the task might seem daunting and even unsafe — a haul truck driver backs up to a berm located right along the edge of the top of the backfill dump to drop each load, while hundreds of thousands of tons of rock material slide down the “mountain” and settle into place. From across the cut, one might think a thunderstorm is rolling in.

Fortunately, the mine practices and safety standards at Twin Creeks make it very unlikely that any employees are actually put in an unsafe situation.

But that’s where the Maptek I-Site 8810 Laser Scanner comes in.

According to Chief Surveyor Jim Rackley, who was excited to show off the equipment on the mine site, the safety advantages alone were reason enough to justify purchasing the tech-nology.

“The risk mitigation for the backfill dump is the main justification,” Rackley said.

Twin Creeks is the first mine in western Nevada to acquire this type of equipment, which runs at around $250,000. The mine purchased the scanner last summer.

The scanner, when mounted on one of two stands facing the backfill dump, can take 360 degree scans of the entire area while also taking a 70 megapix-el photo. Those scans are then used to look for suspect shifts in the rock material that makes up the dump. The

scanner, when used for detailed small-er-range scans, can detect individual rocks and cracks even just six inches in length.

According to geotechnical engineer Mark Jones, the 360 degree scans take about two to three minutes, while the more detailed scans take closer to 20. One of the benefits of the scanner, though, is the ease of use. Rackley said the process is simple — the surveyor mounts the scanner, presses a few buttons, then the rest of the scan takes care of itself.

Surveyor Kyle Anderson said not only is the scanner easier to use than older equipment, it also produces high-er quality (and much more) data.

Prior to acquiring the scanner, sur-veyors had to go to other measures to procure data. Those measures >>

Laser scanner helps Twin Creeks survey team see past obstacles

By Jessica Burgess, Winnemucca Publishing

JESSICA BURGESS • Winnemucca Publishing

Surveyor Kyle Anderson (left) and Chief Surveyor Jim Rackley look out over the Fuel Barge Dump from the platform the scanner is mounted to during scans.


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included driving along the bottom of the backfill in a truck with a GPS system and sometimes even walking the perimeter of the base with the rod and GPS system.

“It is so easy to justify one of these quarter-million dol-lar scanners by just not put-ting people at risk,” Rackley said. “The rock could fall at any minute.”

The scanner can detect any shifting in the rock from a safe distance, keeping sur-veyors out of harm’s way.

In addition to all of the safety-related benefits the scanner offers, it also makes compiling and examining data much more efficient. Not to mention the amount of data that the scanner can record is nearly endless.

Because the mine has reporting requirements that must be fulfilled (both to corporate and the state), having easy access to useful data is key to mine opera-tions and productivity.

One use of the data retrieved by the scanner is the ability to quickly and easily determine slope and orientation of any point on the backfill dump. According to Jones, the ideal angle of repose for the Fuel Barge Dump (per a consultant’s design) is between 35 and 40 degrees. With the data acquired by the scanner, staff can determine the slope with just a couple of clicks of the mouse.

By making just a few cal-

culations with the raw data, it is also possible to determine the volume of material in a specific area. This is especial-ly helpful for reporting num-bers to corporate, according to Rackley. The data can also be used for comparison to determine how much mate-rial has been dumped in a given time frame. >>

ABOVE: Geotechnical engineer Mark Jones demonstrates some of the things that can be done with the raw data retrieved from the scan-ner.

RIGHT: The Maptek I-Site 8810 laser scanner is a fairly compact piece of equipment that can be transported and stored in a suitcase-sized car-rying case.

A 3D scan of a haul truck. The scan is shown to give readers a different perspective of what kind of images the scanner can produce.

COURTESY PHOTO




Over in Twin Creeks’ Vista Pit, the scanner con-tinues to help with safety by keeping surveyors off of the high walls. According to Jones, the scanner is used to check for any displacement along the walls. A whole wall can be scanned at once to create a diagram, which is then examined and used to determine any potential high wall failures, Jones said. This allows the mine planners to restructure or reorient high walls that have an indication of future problems.

Another helpful use the mine has found for the scan-ner is measuring water depth of pit lakes for reporting.

“We are continuing to come up with more innova-

tive ways to use it,” Rackley said.

The laser scanners are becoming the norm, accord-ing to Rackley, and are great-ly improving the productiv-ity, safety and efficiency of mine operations. Although the model on site at Twin Creeks was just purchased last summer, he said there is already a newer, more tech-nologically advanced version on the market than can scan while mounted on a mov-ing vehicle. It is definitely a possible future purchase, Anderson said.

It’s just like with an iPhone, if you ask Rackley, there is always something newer and better on the market. <<

BENEFITS OF THE MAPTEX I-SITE 8810• Safety: The most portable scanner for rapid survey in

dangerous of inaccessible environments• Productivity: Designed to guide survey workflow,

improving efficiency of field tasks and delivery of results

• Proven: Rated to IP65 for environmental protection• Accuracy: Detailed 3D geological mapping and reliable

volume calculations• Versatility: Short and long range scanning in one

premium, easy to use instrument• Integration: Extra long range scanning combined with

digital imaging and modeling software• Flexibility: Multiple options for scan storage and scan

management• Ruggedized: Exception temperature range for scanner

storage and operation

FEATURES OF THE MAPTEX I-SITE 8810• Laser scanner: Collects 8,800 laser points per second

at a range of up to 2,000 meters with 80 degree vertical and 360 degree horizontal fields of view

• Integrated digital camera: 70 megapixel panoramic camera, with no calibration of alignment required

• Ergonomic design: Developed for one-person operation and field portability, all features are built in

• Alignment telescope: Integrated, motorized survey grade telescope for backsighting

• Inbuilt tools: Internal digital compass and integrated GPS further streamline infield survey

• Wireless controller: Panasonic toughbook for parameter definition, scan management and viewing

TOP REASONS TO CONVERT TO MOBILE SCANNING• Coverage of larger areas in much less time• Improved line of sight over undulating ground• Safer site survey practices• Increased versatility ideal for limited survey crews

All information retrieved from maptek.com

COURTESY PHOTOJESSICA BURGESS • Winnemucca Publishing

LEFT: The Fuel Barge Dump is approximately 800-feet tall currently. The scanner is used to detect any abnormal rock shifting or deformations in the back-fill dump. RIGHT: This graphic shows a scan of the Fuel Barge Dump. The scan provides data such as slope and height, along with many other valuable pieces of information.


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The first piece of 54” solid-wall PVC pipe recently came off a new production line at Diamond’s corporate headquarters in Grand Island, Nebraska. Diamond invested 12 million dollars at its HQ plant to bring this product expansion to fruition.

“The marketplace was asking for alternative materials for larger diameter pipe. It was natural for us to expand our prod-uct offering as the nation deals with an aging underground infrastructure and drought across several parts of the country,” said John Britton, President/CEO of Diamond Plastics Corpo-

ration.This expansion of solid-wall PVC pipe to 54” will provide

proven options for large water, sewer and irrigation projects requiring corrosion free pipe. And though 54” may be new in size to the solid-wall market, the manufacturing process is no different than it would be for a solid-wall product in smaller diameters, promising the unparalleled value that PVC pipe has provided for decades.

Diamond Plastics will soon expand its product line further by adding the first ever 60” solid-wall PVC pressure and gravity pipe. <<

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The people behind General Moly believe in the future, and keep believ-ing — even when progress toward that future is much slower than they had originally hoped. General Moly is the developer of the Mt. Hope molyb-denum mining project near Eureka, Nevada.

Development of any mining proj-ect is a long and complicated process involving scores of studies that must be performed to support the development of extensive plans to meet the require-ments of multiple agencies tasked with considering approval for scores of permit applications. The agencies and the public have the opportunity to weigh in on the permit applications and mine plans. Issues raised have to be addressed or protests — up to and

including a request for court interven-tion may result.

Success with each of those steps helps put a project in position to attract the additional financial investment needed to bring the mine into produc-tion — provided the product can be mined at a cost low enough to turn a profit under current and future com-modity price projections.

Molybdenum is a metal, but very different from the precious metals com-mon to Nevada mining, and its prices are tied to some different economic factors than are more common precious metals. Because moly is used so widely in stainless steel, demand increases when the economy is strong and there is a great deal of construction. Oil exploration and oil and energy produc-

tion are also important drivers of moly demand.

Global energy infrastructure devel-opment uses molybdenum, including pipelines, oil drilling rigs — both off-shore and in the shale reserve explo-ration – particularly the more complex horizontal and directional drilling.

China accounted for the largest per-centage of molybdenum use in the world in 2014. Europe was the second largest user, USA was next, followed by Japan, “other” countries and countries belonging to the Commonwealth of Independent States (CIS), according to MetalPowder.net.

“China is increasingly employing higher-grade steels and expanding its intensity of use, stoking additional demand for moly,” General Moly’s >>

Get ready, get set... stay ready...General Moly’s Mt. Hope project still in a holding pattern

By Joyce Sheen, Winnemucca Publishing

Pre-construction activities at Mt. Hope in 2013 included the setting of construction management office trailers (center-left) as well as storage containers at the project site (center-right). All personnel including employees, contractors, and visitors will check in and check out with security at the security trailer located on the main access road (near the center of the photo) and a storm water retention pond has been constructed above all of these facilities (cen-ter-top). Project construction can begin following full project financing and approval from the General Moly Board of Directors to commence construction. General Moly management continues to work on securing full project financing.

COURTESY PHOTO


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CEO Bruce Hansen said in a Novem-ber 2014 presentation to the Cowen Global Metals, Mining and Materials Conference.

The largest moly market end user is the oil and gas industry, which uses 20 percent of the total moly produced in the world. 14 percent usage goes to the chemical and petrochemical industries where moly is used as a corrosion inhib-itor, moly is also used as a chemical catalyst, in fertilizers, and waste water treatment. Automotive and Mechanical Engineering uses account for 13 per-cent each.

Other transportation uses including locomotive shafts and train wheels, bulkheads and hulls for ships account for another eight percent of use. Power generation — seven percent. Construc-tion of major infrastructure such as bridges, tunnels, anchors, and building materials including rebars, heating and ventilation systems add another six percent followed by aerospace and defense, electronics, medical and other uses.

(For more specific information on the uses for molybdenum see the Uses sidebar on page 30)

THE COMMODITY PRICE CHALLENGEWinnemucca Publishing last checked

in with U.S.-based General Moly in July of 2008 – seven years ago.

In 2008, worldwide demand for molybdenum supported good prices for the mineral and the company’s plans at that time called for mining to begin by 2010. Second quarter 2005 prices for molybdenum had topped $40 per pound. By 2008, the prices had settled closer to $34 per pound, still very encouraging for potential profit at Mt. Hope. The follow-ing price comparison for March 2010 to March 2015 tells the rest of the story.

By the time permitting was complet-ed in 2012 and a Record of Decision on the project was granted by the BLM, prices were much less positive.

The challenges General Moly has faced in developing the Mt. Hope mine exemplify the types of challenges faced by every mining company before the first shovel ever digs in. Many of the most difficult challenges are outside each company’s control — and the most serious of those challenges is price.

“Molybdenum, like all commodi-ties, fluctuates in price and is cyclical,” said External Communications Director Zach Spencer. “Because moly is used so widely in stainless steel production, demand increases when the economy is strong and there is a lot of construction and when there is growth in oil explo-ration and energy production.”

Spencer said currently molybdenum is $8.20 a pound, adding that last year at this time the price was $14.40.

One thing mining companies can do to protect against price swings is to get price commitments (off-take agreements) from those who buy their product. General Moly has off-take agreements that guarantee an average lowest price of $13-$15 a pound for half of the molybdenum to be produced during Mt. Hope’s first five years.

When those off-take agreements were made, the price for molybdenum

was $23-$25 a pound. Even though the Molybdenum price is lower than the off-take agreement guarantee, the customers who entered into those agreements still benefit from having a guaranteed source for high-quality molybdenum, said Spencer.

Molybdenum customers will still be interested in future off-take agree-ments, according to Spencer, and although the off-take agreement price may be lower, he said General Moly will still benefit because Mt. Hope is among the lowest cost primary producers and development projects with costs esti-mated at $6.28 a pound.

Projections continue for an increase in world demand for molybdenum. China is driving the increase in demand for moly both for steel production and for oil and gas pipelines and infrastruc-ture. China’s oil and gas pipeline system is projected to grow 40 percent in the coming year, according to a presen-tation Hansen gave last November at the Cowen Global Metals, Mining and Materials Conference.

Demand is half of the equation that determines price; the other half is sup-ply.

Supply issues in General Moly’s favor include bottlenecks hindering Latin American production (insufficient power infrastructure, lack of water and escalating labor costs.) A number of producers, including those in China, >>

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Following receipt of its Record of Decision from the BLM in November 2012, General Moly’s site preparation for construction management office trailers was completed during pre-construction activities at the Mt. Hope Molybdenum Project site in the Spring of 2013.

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Molybdenum is a metallic element used primarily as an alloy agent in steel manufacturing. When added to steel, moly enhances steel strength, resistance to corrosion, and extreme temperature performance. Within the chemical industry, moly has an important role in the petroleum refining process, acting as a cracking agent to remove sulfur from liquid fuels.

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Steel

Full Alloy Construction & Automotive industries, shipbuilding, heavy machinery, offshore pipelines

Stainless Fuel tanks, chemical and petro-leum refineries, desalination plants

Carbon Construction equipment and buildings, and transportation

Tool Steels that cut other steels, extremely hard pieces of metal

HSLA High Strength, Low Alloy, Oil and Gas pipelines, construc-tion and automotive industries, bridges

Other Metallurgical

Superalloys Supercharges, aircraft engines, gas turbines, chemical and petroleum plants

Cast Iron Diesel engine motor blocks and cylinder heads, mining milling and crushing equipment

Moly Metals & Alloys Auto parts, light bulb filaments, glass manufacturing, head shields

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How is molybdenum used?


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are facing costs of production that are near the current price.While market supply and demand conditions have moved

the price of molybdenum around, General Moly has contin-ued working toward mine development.

COMPLETING THE REQUIRED PERMITTING

“Six years and two months transpired from the time we submitted our Plan of Operations to the BLM in September of 2006 and our receipt of the Record of Decision from the Department of the Interior, BLM in November of 2012,” said Pat Rogers, Vice President of Mt. Hope’s Environmental Permitting and Compliance. Of course, by the time the Plan of Operations was submitted, years of work and a great deal of money had gone into the documents involved in the mine plan of operations.

The Record of Decision came after extensive review and development of the Environmental Impact Statement (EIS) by BLM and cooperating agencies and the U.S. Environmental Protection Agency.

Rogers said completing approximately 25 required resource and cultural clearance studies and preparing the documents required for the EIS required several thousand worker-hours and assistance from dozens of consulting companies.

Hansen called the Record of Decision an “important per-mitting milestone,” and thanked “regulatory agency partners for being so responsive and diligent in carrying out the per-mitting process.”

In addition to the federal permits — Rogers said several state permits were required, including a Bureau of Recla-mation Permit from the Nevada Division of Environmental Protection (reclamation cost estimate $73 million — bonding required,) NDEP also approved Water Pollution Control and Air Quality Permits.

Water applications were approved by Nevada Division of Water Resources State Engineer Jason King in July 2011. Water permits were approved in Dec. 2011 and Jan. 2012. The 3-M plan (water monitoring, management and mitiga-tion) was approved June 11, 2012.

Upon receipt of all permit approvals, Hansen said, “We want to continue to work closely and collaboratively with all of our stakeholders to develop Mt. Hope in an environmen-tally and socially responsible manner.”

The collaborative process wasn’t enough to avoid appeals and court challenges to water permits and BLM’s Record of Decision. The initial challenges were unsuccessful in U.S. District Court, which upheld the State Engineer’s water per-mit approvals and the BLM’s Record of Decision. However, appeals have taken the cases all the way to the Nevada Supreme Court. (For more on this, see the Court Challeng-es side-bar on page 40)

Although the Nevada Supreme Court has not yet ruled, the development of the Mt. Hope mine and use of permitted water can move forward, provided the company can attract needed investment capital.

THE EFFORT TO ATTRACT INVESTMENT CAPITAL“A world-class project, fully permitted — currently seeking

financing,” could be appropriate wording for a classified >>

General Moly’s fully permitted Mt. Hope Molybdenum Project is located in north-central Nevada approximately 23 miles northwest of the town of Eureka. A portion of Mt. Hope can be seen in the upper right quadrant of this photo. The Mt. Hope Molybdenum Project is shovel ready and contains one of the world’s largest undeveloped molybdenum deposits.

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licly traded company with annual financial reports on the Internet, and 20 percent by POSCO, a South Korean steel company — fifth largest global steel producer in the world. The name of the joint-venture is Eureka Moly LLC. POSCO has already contributed $211 million to the development of the Mt. Hope project.

“It’s high stakes, not for the faint of heart,” said Rogers.“We remain confident in the progress being made toward

full Mt. Hope Project financing,” the company’s CEO said.In the meantime, Private Placement financing and the

release of $36 million from joint venture partner POSCO will support the efforts needed to keep Mt. Hope fully ready to move when financing comes through.

“Looking into 2015 and beyond, our improved liquidity position substantially enhances the Company’s ability to sup-port the Mt. Hope Project, including maintaining our permits and other care and maintenance needs while preserving the ability to rapidly restart construction activities when full financ-ing is achieved,” Hansen said.

GET READY, GET SET...STAY READY...Staying ready includes the continuing work of environ-

mental monitoring – particularly water monitoring and com-pliance with permit reporting requirements, said Spencer. The mine property has to be maintained safe and secure, including areas where substantial progress was made in early 2013 on preliminary construction activities, including >>

Zach Spencer, Director of External Communications (center) and Pat Rog-ers, V.P. of Environmental & Permitting (right), speak with a local stake-holder at the Eureka Opera House during one of General Moly’s Town Hall Meetings regarding its development of the Mt. Hope Project.


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early well field development, clearance and grubbing of terrain. In addition the company has all the financial dis-closure and accounting requirements of any publicly traded company. Some contracts for purchase of mining equip-ment have already been filled, and the equipment is warehoused — other con-tracts for purchase or lease of additional equipment are in suspension awaiting full funding.

When might that be? Roberts said that’s difficult to answer,

as it is a work in progress.“It’s a high-risk industry; even when

you have a world-class project that is fully permitted,” he said. “It’s a lot of work and a lot of money.”

Once financing is received and approval granted by the General Moly Board of Directors, construction can commence and is expected to take between 18 and 24 months.

The project will provide employment for a very large workforce.

“During the construction period, we anticipate a combined average of around 600 construction and opera-tion workers on site,” said Spencer. He

added, “During a 3-month peak begin-ning at the eighth month of construc-tion there will be a total of about 800 combined construction and operations workers on site.”

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“Our goal is to hire qualified candi-dates who are local whenever possible and encourage employees to live in the local community,” said Spencer. >>

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“However, we expect many of the employees will commute from Lander, White Pine, Elko, Hum-boldt, and Nye Counties.”

“We have a lot of interest from people who want to work at General Moly and people who want to work with General Moly,” Spencer said. “Not every day do you get to be at a company and start at the ground floor. “When we do get our financing and hire our people, they also will be able to get in on the ground floor.”

General Moly’s leadership team represents a great deal of experience.

CEO Bruce Hansen formerly held multiple exec-utive roles at Newmont and Santa Fe Pacific Gold mining companies.

CFO Dave Chaput has 30 years financial and operational experience in the metals and mining industry.

COO Bob Pennington has 34 years experience in mine operations, project engineering and con-struction.

Pat Rogers Vice President of Permit and Envi-ronmental Compliance has 25 years industry expe-rience; he formerly was Operations Environmental Manager with Newmont.

Mike Iannacchione has 30 years mining experi-ence, previously working as Operations Manager at Goldcorp’s Marigold Mine and General Man-ager at Round Mountain Mine for Barrick and Kinross Gold joint venture.

External Communications Director Zach Spen-cer has been on board for it all. Asked if it’s dif-ficult to continue to wait and stay optimistic, he said, “There are positive developments every day. We continue to be encouraged by the interest expressed and by the quality of the deposit. That’s keeping us motivated. We’re confident we’re going to get this project financed, constructed and in operation.”

“We are continuing to progress toward our goal of becoming the largest pure play primary molybdenum producer in the world,” confirmed Hansen. <<

“We had it all arranged in the spring of 2010,” said Gen-eral Moly’s External Communica-tions Director Zach Spencer of the financing to bring General Moly’s Mt. Hope project on line.

Although things looked good in 2010, and through 2011, it takes a long time before arrange-ments turn into reality.

Spencer said it commonly takes considerable time to go through the very thorough vetting and research process to get financing in place.

“It’s a big contract and it was a very thorough process; it’s just the way modern mining works now,” he commented.

Hanlong Finance, in coopera-tion with the China Development Bank agreed to enter into negoti-ations to provide the financing for the Mt. Hope project.

In April 2011, General Moly’s CEO, Bruce D. Hansen and CFO David A. Chaput traveled to Chengdo China to meet with Hanlong and Chinese banking officials pertaining to Hanlong’s previously-announced agreement to procure a $665 million bank loan for the Mt. Hope project. In May 2011 General Moly execu-tives and Hanlong finance hosted representatives from the China Development Bank on a due dil-igence trip to visit with the Mt. Hope engineering consultants in Arizona and tour both the Mt. Hope and Liberty mining prop-erties in Nevada. Translating the Mt. Hope feasibility study into Chinese was just one of the chal-lenges overcome.

During the time the financing deal was being processed, charges were brought against the Chinese business mogul Liu Han, who was

the primary financier for the deal. “Detainment of Hanlong

Founder Liu Han in 2013 result-ed in China Development Bank suspending loan negotiations. In August of 2013 General Moly terminated the Hanlong agree-ment,” reported MINING.com.

“Liu, who was charged along with dozens of other associates, was board chairman of Hanlong Group,” according to an article on MINING.com. “In addition to mining, the group had interests in electricity, energy, finance, and real estate securities,” MINING.com reported.

Chinese authorities said Liu Han was running a mafia-style gang; and he was sentenced to death and executed along with four other defendants (including his brother.)

While attracting needed financing is always challenging for any mining company, the chal-lenges for the Mt. Hope project have been unique, company prin-cipals agreed.

General Moly is still looking in China for financing.

“It makes the most sense,” said Spencer. “That’s where the majority of steel is produced and molybdenum consumed.”

Hansen said they’re also eval-uating other potential financing sources including capital markets, domestic and international credit markets and bank project financ-ing.

Company representatives firm-ly believe another opportunity will be found.

“We believe we’ll get the financing because it is a world-class asset, and the only such asset that’s fully permitted and shovel-ready,” said Spencer. <<

Project financing setback


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Nevada State Engineer Jason King approved Eureka Moly LLC’s water use appli-cations for 11,300 acre feet of ground water annually for mining purposes in July of 2011.

Eureka Moly LLC is the corporation name for the Mt. Hope project, which is owned 80 percent by Gener-al Moly and 20 percent by a South Korean steel company named POSCO which is the fifth largest global steel pro-ducer in the world.

Eureka Moly water per-mits for 7,000 gallons per minute of groundwater were approved in Dec. of 2011 and Jan. of 2012. The use of the water applications and permits were to be subject to 3M plan approval, which was granted in June of 2012.

The 3M plan encompasses

water rights Management, Monitoring and Mitigation.

“There has been con-cern locally about our water use because in the adjacent basin, over pumping for agriculture has caused large draw-downs in the water table,” said General Moly’s Vice President of Environ-mental Permitting and Com-pliance, Pat Rogers. “We will get most of our water from a separate basin that his-torically has been pumped very little. “We are planning to mitigate some low-duty water rights that will likely be affected, but our studies indicate that we won’t have substantial or basin-wide impacts. There are uncer-tainties in any water study and the 3M Plan is very extensive and is intended to measure aquifer response to

pumping and identify any impacts that could occur.”

Rogers explained how Eureka Moly’s 3M plan is supposed to work. “The Water Advisory Committee (WAC) is an important com-ponent of the Monitoring Management and Mitigation (3M) Plan and is responsible for establishing and carry-ing out policy under the 3M Plan. The WAC has met sev-eral times since its inception; entities represented include the Nevada State Engineer (Chairman), Eureka Coun-ty, Eureka Moly LLC, the Eureka Producers Coop, the Diamond Natural Resources Protection and Conservation Association, and the Kobeh Valley ranching community. The initial meetings have focused on reviewing com-mittee requirements, estab-lishing the Technical Advi-sory Committee (TAC), (another component of the 3M plan intended to provide participation and transpar-ency to local stakeholders), and reviewing the status of monitoring and moni-toring data compilation.” Monitoring data collected under the 3M Plan will be reported to the State Engi-neer and provided to the WAC/TAC, and will also be posted on the State Engi-neer’s website, available for public review. Eureka Moly has already collected several years of baseline data.

Water applications, per-mits, and the 3M approval were first challenged with an appeal in District Court by Eureka County and two parties of water rights hold-ers in Diamond Valley and Kobeh Valley. When the District Court denied the appeal petition and upheld

the water rights and water permits in June 2012, Eureka County and the two water rights holders appealed to the Nevada Supreme Court.

Current Eureka Coun-ty Commission Chairman JJ Goicoechea said he wasn’t yet on the board when the commissioners filed their initial appeal to the water permits and the 3M plan but said he is familiar with the entire process because he was on a NEPA (Nation-al Environmental Policy Act) Committee.

Goioechea said when he became a commissioner, the county proposed a plan that, had the company agreed, would have forestalled the request for court interven-tion.

“When I was first elect-ed, I went to Eureka Moly principles and proposed they amend their EIS to move the well field,” Goicoechea said. “It wouldn’t have been far – maybe about a mile. If they had been willing to do that there would have been no impacts to existing water rights.”

Asked about that propos-al, External Communications Director Zach Spencer said Eureka Moly’s position was well-explained in company news releases. Those news releases indicated company representatives felt they had gone through the permit-ting process correctly and believed the permits would be upheld in court.

“Our permits for our water rights were granted after 3 formal hearings,” Spencer said. “The process was close-ly scrutinized and there is no doubt that the State Engi-neer’s decision was made in complete accordance with >>

COURT CHALLENGES: General Moly


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Elko, Nev. – The Bureau of Land Management (BLM) Elko District, Wells Field Office has issued the Record of Decision for Newmont Mining Corporation’s Long Canyon Mine Project to be located on the eastern side of the Pequop Mountain Range in Elko County, Nev., about 30 miles east of Wells.

The decision allows the mining operator to construct and operate a new heap leach gold mine that would consist of one open pit, one heap leach pad, a waste rock storage facility, a tailings storage facility, a natural gas pipeline from the existing Ruby Pipeline, onsite power generation plant and other ancillary facilities. The asso-ciated disturbance would be approximately 1,707 acres of public land, including 480 acres of split estate lands of federal surface and private subsurface.

The BLM decision was to select the North Facilities Alternative with the appli-cant-committed environ-mental protection measures and the mitigation measures outlined in the Long Can-yon Mine Mitigation Plan,

Appendix 2C to the Final Environmental Impact State-ment (EIS). The North Facili-ties Alternative was designed in response to environmen-tal issues raised during inter-nal and external scoping for the project. This alternative addresses impacts to sev-eral wildlife species, includ-ing sage grouse, cultural resources, and responds to requests from the cities of West Wendover, Neva-da, and Wendover, Utah, related to potential impacts to their water supply, Big Springs and the ground water aquifer.

The Notice of Availability for the Long Canyon Mine Project Final EIS was pub-lished in the Federal Register on Jan. 9, 2015, initiating a minimum 30-day public availability period. The FEIS is available online at http://on.doi.gov/1xYFnbB.

This decision may be appealed to the Interi-or Board of Land Appeals (Board), U. S. Department of the Interior (DOI) Office of Hearing and Appeals in accordance with the regu-lations contained in 43 CFR, Part 4. <<

BLM approves Long Canyon Mine Project

BLM Release

An aerial view of Newmont’s Long Canyon project.

COURTESY PHOTONevada water law. We have and will continue to commit to mitigating impacts and have offered to pre-emp-tively mitigate for impacts considered likely.”

Goicoechea said the mine plan indicated “the pump-ing would impact just a cou-ple of livestock springs but drying up those couple of springs amounts to putting someone out of business.”

“People think Eureka County doesn’t want this project and other develop-ment projects; that’s just not true. Eureka doesn’t want to kill this project but we have to protect existing rights,” said Goicoechea.

Jake Tibbets, Eureka County Natural Resource Manager said the Nevada Supreme Court’s ruling in this case will clarify how the court views Nevada water law.

“We’ll have clear direc-tion moving forward,” he commented, adding he believes the Nevada Supreme Court’s ruling in this case will set precedent.

“Issues we’ve identified in this case are very similar to those raised in actions proposed by the Southern Nevada Water Authority (SNWA),” Tibbets said.

“The Nevada Supreme Court will address a lot of issues with their ruling on this appeal,” said Tibbets.

Both Tibbets and Goicoe-chea said repeatedly that Eureka County is not opposed to development of the Mt. Hope project.

“We really do want to see the project move for-ward,” said Tibbets. “It’s a great thing for this com-munity, a long-term project and a great project; we just want to see the company handle the water rights cor-rectly.”

The suit brought by Eure-ka County and the water rights holders is one of two Mt. Hope-related suits cur-rently before the Nevada Supreme Court.

In February 2013, Great Basin Resource Watch and the Western Shosho-ne Defense Project filed a Complaint, and a Motion for Preliminary Injunction, against the U.S. Depart-ment of Interior and BLM in U.S. District Court in Neva-da, seeking relief under the National Environmental Pro-tection Act and other fed-eral laws challenging BLM’s issuance of the Record of Decision for the Mt. Hope Project.

“The Project will have immediate, irreparable, and permanent impacts to the local ranching and farming communities and families which have lived there since the 1860s and to the critical environmental, historical, cultural and wildlife resourc-es that will be outright eliminated or significantly degraded by the Project,” the motion states.

Eureka Moly filed to intervene in the case and opposed the Motion for a Preliminary Injunction. Pres-ently the Court has not ruled or set a hearing date for the motion.

“The process for issu-ing the ROD involved an exhaustive environmental analysis and review that lasted more than 6 years, and included extensive pub-lic and cooperating agen-cy input,” General Moly stated in a news release. “The Company supports the very robust and legally and technically defensible work completed by the BLM and believes that the ROD com-plies with all federal statutes and rules.” <<

mining: spring 2015

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