Grass Valley, Calif. Dec. 2, 2009 - In a news release published on Tuesday, Emgold Mining Corporation announced it had entered into a lease and option to purchase agreement with Nevada Sunrise LLC (www.nevadasunrise.com)to acquire the "Buckskin Rawhide gold-silver property" located about 40 miles southeast of Fallon, Nevada. According to the announcement, the property "is within the mineral rich western Nevada Walker Lane structural zone and gold belt, which is reportedly a regional shear zone of right lateral strike slip faulting."
The news release states that "historic mining occurred on the Property, mostly between the years 1906 and 1920" and "modern exploration at the Property reportedly began in 1982... most of which was done by Kennecott Minerals."
Emgold -- a junior mining company from Canada that has yet to own or operate a producing mine in the 20 years it has been trading on the Toronto Venture Exchange -- also wants to explore for gold at the abandoned Idaho-Maryland mine on private land in Grass Valley, Calif., a historic mining town that abandoned the extractive model of economic growth more than a half century ago. The mine has been shuttered since 1956 and is now surrounded by hundreds of homes and businesses and a community very wary of returning to the days of dirty industry. In the meantime, Emgold has run out of money to continue to pay for the environmental review process required by local, state, and federal agencies for mine exploration on private land in California. The review process in Grass Valley will remain at a standstill until Emgold raises the funds to pay for a new Draft Environmental Impact Report.
Unlike its leased property in Grass Valley, the property in Nevada is not on private land; it is located on BLM land and, according to the news release, consists of 46 unpatented lode claims on 920 acres. The mining claim is currently owned by Nevada Sunrise LLC Mining, which is 75% owned by Nevada Sunrise LLC, a private Nevada company, and 25% owned by Maurice and Lorraine Castagne.
The Buckskin Rawhide property, like Emgold's other holdings, is not producing any cash flow from the sale of minerals because it is not an operating mine. Emgold defines the Buckskin Rawhide property as an "early stage exploration property."
Mining activities on lands owned by BLM are governed by the 1872 Mining Law. Left virtually unchanged since it was signed by Ulysses S. Grant 136 years ago, the law allows hardrock mining companies -- even ones owned by foreign companies like Emgold -- to take minerals from public lands for free, without paying any royalties to American taxpayers. Oil, gas, and coal companies are required to pay royalties.
Emgold has agreed to lease the property from Nevada Sunrise LLC, subject to the following payments:
Year
Advance Royalty Payment
2009
US$10,000 (1)
2010
US$10,000 (1)
2011
US$10,000 (1)
2012
US$20,000 (1)
2013
US$40,000 (1)
2014
US$60,000 (2)
2015
US$60,000 (2)
2016
US$60,000 (2)
2017
US$60,000 (2)
2018
US$60,000 (2)
2019
US$60,000 (2)
Note: (1) Lease payments may be paid in either cash or Emgold common shares based on an average price of shares traded during the calendar month prior to the payment due date.
(2) Lease payments may be paid in Emgold common at the discretion of Nevada Sunrise based on an average price of shares traded during the calendar month prior to the payment due date.
During the lease period, Emgold will be allowed to explore for minerals and, "if warranted," to conduct a NI 43-101 feasibility study.
Canadian National Instrument 43-101 is a rule developed by the Canadian Securities Administrators that governs how scientific and technical information about mineral projects is disclosed to the public. These definitions include: "measured", "indicated", and "inferred" mineral resources. As Emgold states in the disclosure language on their website (www.emgold.com), these resource definitions do not guarantee economic viability and are not accepted for use by American securities regulators. Emgold's disclosure statement about the proposed Idaho-Maryland mine in Grass Valley states, "We advise U.S. investors that while such terms are recognized and permitted under Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves."
On completion of a NI 43-101 feasibility study, states the release, Emgold will be able to acquire 100% ownership of the Buckskin Rawhide property by paying Nevada Sunrise an additional $250,000 USD which Nevada Sunrise is then required to use to purchase the retained 25% interest from Maurice and Lorraine Castagne per an underlying property agreement and to transfer that title to Emgold Mining Corporation. If the mine ever opens for commercial production, and after Emgold buys 100% interest in the property, Nevada Sunrise would be entitled to a 2.5% net smelter royalty on production from the mine.
At the bottom of the release Emgold states "at the same time we continue to pursue the permitting process for our core asset, the Idaho-Maryland Project, located in Grass Valley, CA. The Idaho-Maryland Project is at an advanced stage of permitting and the Company remains committed to completing the permitting process and reopening the Idaho-Maryland Mine."
Emgold did not return YubaNet's call for more information prior to publication time. It is not known why Emgold chose to take on a new exploration venture prior to being able to complete the environmental review process started in Grass Valley in 2005 and in which it has invested close to a million dollars. What is clear is that the antiquated 1872 Mining Law makes it far easier for Canadian junior mining companies to conduct potentially environmentally-damaging exploration activities on public land in Nevada than in the middle of a thriving California city that is trying to attract the clean, green industries of tomorrow.
