by Gabriel Caplett

December 15, 2008

Menominee, Michigan – Canadian junior mining exploration company, Aquila Resources, hosted a public information meeting at the VFW Hall, Monday, to present its opinion on a controversial topic: acid rock drainage. The company has been exploring its Back Forty Project under intense opposition from local residents and elected officials. The company recently sold its Humboldt Mill facility to Kennecott-Rio Tinto. The company also supplied Kennecott with state mineral leases for its proposed Eagle Project mine over a decade ago.

Aquila hosted “guest speaker” Al Trippel, an environmental consultant with Environmental Resources Management (ERM), based out of London, England. Trippel acted as the mining company’s representative throughout Michigan’s “Part 632” statute and rules process that crafted legislation regulating the metallic sulfide mining industry. Trippel is currently on Aquila’s payroll, conducting baseline environmental studies necessary prior to submitting a mine application.

Aquila’s advertisement for the presentation, in the Menominee County Journal, noted that the meeting was being held “in response to public requests for unbiased, educational, fact-driven information from an expert.”

Teresa Bertossi, Marquette County resident and part-time employee at Save the Wild UP, claimed that publicity surrounding the event showed a lack of “integrity” at Aquila. According to Bertossi, the advertisement did not disclose that Trippel works for the mining company and, in order to be truly unbiased, the company should “have brought in a university professor or a scientist that does not work for Aquila” to present information.

“I think all of us are biased”, responded Trippel. “I think all of us have a perspective and bias that may have to do with…who we work for.” Trippel insisted, “The work that I do is unbiased.”

According to Trippel, the presentation was intended to introduce local residents to the basics of acid rock drainage and how it can be prevented from occurring in a mining operation. Trippel listed both mining projects that have generated significant acid runoff as well as mines that he considers to have operated without significant acid drainage problems. “Mining’s legacy is both good and bad,” said Trippel. “There’s very definitely bad mining legacy from historic mining operations and, in some cases, from current ones.”

Trippel explained that acid drainage only occurs when three substances come into contact: sulfides, water and air. Removing one or more of these ingredients precludes the possibility for acid generation. According to Trippel, a mining operation can avoid acid mine drainage problems by preventing sulfide ore from contacting groundwater and surface water through the use of liner systems and water treatment facilities. If the problem cannot be contained, a company can “minimize the amount of acid rock drainage that would be created,” “minimize its potential to seep into the ground” or clean up the mess “if the designs intended to avoid and minimize the impact weren’t good.”

In response, one local resident commented that Trippel brought up “some pretty big ‘ifs’.”

Acid rock drainage commonly occurs at mining operations that encounter certain sulfide deposits, primarily those containing iron pyrite which, when it contacts air and water, forms sulfate. Recently, the government of Norway, one of mining giant Rio Tinto’s largest shareholders, divested its $890 million stake in the company, citing major concerns regarding extensive acid mine drainage at the company’s Grasberg Mine, in West Papua. In explaining its controversial move, Norway’s Council on Ethic’s referred to acid mine drainage as “one of the most serious mining-related environmental problems across the world.”

Trippel introduced Kennecott-Rio Tinto’s Flambeau Mine, in Rusk County Wisconsin, as an example of a successful metallic sulfide mine that has not created acid drainage. According to company documents, elevated levels of iron, manganese and copper in groundwater flowing into the Flambeau River are expected to occur, above baseline levels, for at least another 4,000 years. Levels of sulfates are expected to continue for over 3,000 years.

Bertossi took issue with hailing Flambeau as a successful operation. Kennecott-Rio Tinto and the Wisconsin Department of Natural Resources data “show that there is acid rock drainage as well as high copper levels and high manganese levels,” said Bertossi. “But it’s under the mine site and, based on the statute in Wisconsin, they can pollute groundwater beneath the mine to any limit.”

Lake Township supervisor, Bob Desjarlais, commented that the majority of Trippel’s list of “good” mines began operations in the 1800s when there was very little enforcement of mining operations. “These mines must have been rather low in sulfides that if you consider them to be fairly good mines that they could be open in the 1880s and 1927, I mean long before EPA regulations came out on acid rock drainage,” said Desjarlais. “So, how can we say these are significant mines without significant acid rock drainage when they probably didn’t have any to begin with.”

Trippel maintained that the intent of his presentation was not to compare his listed mines that he considered successful with either the Kennecott-Rio Tinto’s Eagle Project or the Back Forty project.

Trippel also introduced the White Pine Mine as an example of a deposit containing high sulfides that was mined without creating reported acid mine drainage. However, according to sources familiar with operations at White Pine, acid mine drainage was never expected to occur at the facility because the ore was located in a copper sulfide deposit and was surrounded by natural calcium-containing buffering agents. Orvana Minerals Vice President of Corporate Development, Bill Williams, recently told the Marquette Mining Journal that ore found within the White Pine deposit is classified, under Michigan law, as “nonreactive.” According to Williams, Orvana has found “no obvious indications” that the deposit contains iron pyrite, which could cause acid drainage.

Aquila’s Back Forty Project consists of a “massive sulfide” gold-zinc deposit near the Menominee River, outside of Stephenson, Michigan. The ore body extends under the river, which is shared with neighboring Wisconsin, possibly introducing purview under that state’s metallic mining requirements, which are more stringent than Michigan’s.

The company plans to use a cyanide leaching process to extract gold from the deposit.

Aquila’s stock is currently worth less than one US dime, per share [as of this writing], and the company is looking to form a joint-venture partnership with a larger mining firm in order to extract and process the ore. According to Aquila President, CEO and Director Tom Quigley, the company will be “looking at a variety of partnerships” if Aquila lacks access to sufficient capital. The company projects a total cost of between 120 and 140 million dollars needed to open the mine.

Quigley said that Aquila has solicited a resource assessment from Toronto-based SRK Consultants and will announce the results by early January. Aquila has been pursuing a preliminary economic assessment and expects Trippel’s baseline environmental studies to be finalized in time for the company to submit a mining application by late 2009. Aquila has also been relocating its drill cores from a field office, in Daggett, to a new building south of Carney.

According to Quigley, the economic downturn is “something that could potentially impact our progress and development” and Aquila may have to layoff staff and postpone some “development activities.” According to some local citizens, the company has already layed-off its lead geologist.