Weather Forecast


Mining board members split on issue

By Bob Mercer

Capitol Correspondent

PIERRE -- Wharf Resources wants to use its parent company's net worth as financial assurance against cyanide pollution and post-closure problems at its Black Hills gold mine.

That's what company officials told the state Board of Minerals and Environment Thursday.

The company could save money by switching from the traditional methods of posting cash or, in the case of Wharf, irrevocable letters of bank credit.

But the change seemed to be a no-go Thursday among the long-time members of the state board whose memories remain fresh about the environmental disaster that happened the last time they did it with a different company.

A decade ago, the Gilt Edge mine was designated a Superfund site needing federal assistance with its acid pollution problems. That came after its operator, Brohm, went bankrupt and couldn't fulfill its reclamation and post-mining obligations.

The state board didn't make any decisions Thursday. Some newer board members said they were willing to look at proposals from Wharf's parent, Goldcorp, while the board members remaining from the Gilt Edge period showed zero interest.

Board chairman Richard Sweetman, of Sioux Falls, described the Gilt Edge situation as "a debacle."

He said a company that is operating smoothly doesn't really need a bond but the challenge is down the road. "We have been through the issue where suddenly the company disappeared," Sweetman said.

Mike McClelland, from Goldcorp's corporate center in Toronto, spoke to the board, as did Wharf's local legal counsel, attorney Max Main.

"It will result in significant savings," Main said.

Main said corporate bonds aren't available any longer as financial assurance for reclamation. State law also allows cash or government securities. Main said Wharf has provided an irrevocable letter of credit from a bank.

However, financial assurance as protection in case of cyanide leaching can be provided under state law through a company's net worth, according to Main. The same is true for post-closure care and maintenance of a mining site, he said.

Currently, there are irrevocable letters of credit as financial assurance for cyanide leaching and post-closure. Main said Wharf wants to change to company net worth as assurance for those two categories.

"It's been a tough year in the gold market," McClelland said. "The bottom line is we're just trying to be more efficient."