Tag Archives: Part 632

Why Has Aquila’s Stock Price Plummeted?

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By Mark Doremus

Aquila Resources’ stock price has dropped to a 52-week low, despite the fact that state regulators have green-lighted its Back Forty mine west of Stephenson, Michigan.

 The stock price has declined 57 percent, to 12 cents a share, since June 4, 2018, when Aquila received its fourth and final state permit for the project.
What’s going on?
The first place to look for an answer is the price of gold and zinc, experts say. Those two minerals make up 82 percent of the Back Forty’s anticipated metals production.
The price of gold is down 10 percent from its 52-week high. So, gold mining companies aren’t feeling an urgent need to seek new supplies, said investment analyst Dave Forest of Pierce Points (piercepoints.com).
Meanwhile, zinc is down 29 percent from its 52-week high.
The zinc price decline is driven by concerns about a tariff-driven trade war, and a general cooling off of the Chinese economy, which drives much of the market for global minerals, according to Forest and Prof. Gary Campbell, a mining economist with Michigan Technological University in Houghton, Mich. 
There is also a general lack of interest in the mining industry among investors, Forest said.
“Financing of mining projects is not a hot area right now,” Forest said. “There are not as many deals being done as there were five or six years ago.”
Aquila says it needs at least $263 million to open the Back Forty, on top of the $90 million it has already spent on planning and permitting. It is looking for a partner with deep pockets to capitalize the open-pit mine and mill.
So far, no one has committed big money to get the project into the construction phase.  
The lack of an immediate development deal isn’t fatal for the Back Forty project, Forest said. However, it may have disappointed investors who were hoping the project would move forward as soon as the final permit was issued, and that in turn may have affected the stock price.
Finally, investors may be reacting to the many roadblocks that face the Back Forty project, even though all the permits for the mine have now been issued.
Two administrative challenges to the project have been grinding through the hearings process for almost two years. Both target Aquila’s Back Forty mining permit. Final arguments for those contested cases are being drafted now, and administrative law judge Daniel Pulter could issue a decision before the end of the year.
As those proceedings wind down, however, three additional contested case petitions have been filed on Aquila’s recently-issued wetland permit.  The Menominee Indian Tribe of Wisconsin has also challenged the wetland permit in federal court.
And, despite the company’s claims, its permit applications aren’t completely done yet. The site plan in the mining permit must be amended so it matches the layout in the wetland permit. And the wetland permit came with 28 pages of conditions that must be met before the Back Forty gets a final go-ahead from state regulators.
There’s more. Aquila wants to cut a county road that passes through the mine site, but it hasn’t submitted a proposal yet. And Lake Township, where the Back Forty would be located, has implemented zoning-related ordinances that must be addressed at some point, either by negotiations or in a court battle.
These unresolved issues create uncertainty about the prospects for the Back Forty mine. That may be driving investors away from Aquila Resources toward other, more promising investment opportunities.

Aquila Resources did not respond to repeated requests for comment on this report, and has not issued any public statement about its declining stock price.

Aquila Opinion Letter Misleads in Many Ways

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A response by Mark Doremus

The letter from Aquila Resources’ Chantae Lessard that was published in the Oct. 12 edition of the Eagle Herald leaves out or distorts key facts to argue that Lake Township officials have enacted “illegal” ordinances to “prevent the project from moving forward.” Here’s the text of Lessard’s letter (click to view full size):

Let’s correct the record.
 
Ms. Lessard begins her letter by selectively quoting Part 632, Nonferrous Metallic Mineral Mining, of the Natural Resources and Environmental Protection Act (NREPA), presumably to support her claim that Lake Township’s mining regulations are unlawful. While it is true that the statute puts limits on local regulation of mines like the Back Forty, it also expressly allows regulations that do not “duplicate, contradict, or conflict” with the statute (MI Comp L § 324.63203(4)).
 
Furthermore – and this is key – Lake Township does not rely exclusively on Part 632 for its power to regulate mining activities. It also relies on its zoning authority and on its overarching duty to protect the public under the laws of the State of Michigan. This is all documented in the Lake Township Zoning Ordinance, Chapter 14, Special Land Uses, in the township’s Mineral Extraction Ordinance, and in two reports I’ve published on Facebook (“Lake Township Amending Zoning Regulations/Special Land Use” and “Lake Township Clarifies Authority Over Mining Operations,” www.facebook.com/back40film).
 
Ms. Lessard goes on to complain that Lake Township has enacted a resolution that prevents officials from communicating with Aquila Resources. What the resolution actually says is that business with the township shall be conducted in public, on the record and with a quorum of township officials in attendance, not in private meetings between an outside entity and individual town officials (Lake Township Resolution No. 071217A). In other words, in Lake Township the public’s business is to be conducted in public, not in secret, back-room conversations. 
 
Ms. Lessard also states that Lake Township “has turned us away when we have tried to work collaboratively with them to address their concerns” about the Back Forty project. In truth, under the town’s zoning ordinance, if Aquila submits a letter of request, and puts money in escrow to cover the township’s costs, the zoning staff will meet with Aquila and explain, on the record and in detail, what the township is looking for from the company. So far Aquila has chosen not to engage with Lake Township in these first steps toward an official review of its proposed mining project.
 
Finally, in her letter, Ms. Lessard attacks Lake Township officials for “actively opposing” the mine, “making up their own rules based on personal opinion” and violating their “moral obligation” to work with the company in good faith. In fact, the town board has not taken a position on the mine, pro or con. Instead, it has passed laws to protect the township from the potential negative impacts of a huge industrial project. That’s what elected public officials are “morally obligated” to do – regardless of what their personal opinions may be.

At the Bottom of the Eagle Mining Venture: A very rich orebody, politics, lies, and a gigantic fraud

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By Jack Parker, mine engineer and geologist | March 17th, 2014

The presence of an extremely rich orebody has been proven by thousands of feet of diamond drilling. Of that there is no doubt. An early estimate for the value of the minerals contained was around 4.7 billion dollars.

Kennecott presented their application for permits to mine in 2006. Copies of the document are available. Make sure that you do not get a modified version. With Stan Vitton, Mining Professor at MTU, I, Jack Parker, Mining Engineer and Geologist (resume on-line) was hired by National Wildlife Federation (NWF) to evaluate and report on the mining, geological and rock mechanics sections of the application.

Within a few weeks we recommended that the application be returned to sender as unacceptable. We could not believe that it had been prepared and proffered by professionals. It had not even been proofed for typos. Technically it was incomplete and incompetent, as if prepared by high school students. The regulating agency, the Michigan Department of Environmental Quality (MDEQ), did not reject it, despite a similar evaluation by their hired expert, David Sainsbury, of international consulting firm Itasca, who summed up by saying that the conclusions in the application were not supported by fact.

Stan and I continued to evaluate the proposed Eagle project after the funding had run out – I still do, after eight years. Within a year we had clear proof that the original data from the diamond-drilling had been tampered with, rather crudely, before submitting to mine designers and planners – to make the rocks and the plan look good and acceptable. The truth is that if the data input is corrected, the same plan shows a safety factor lower than 1.0, indicating probably instability of the mine structure as planned.

Instability, hence endangerment to life and limb and property and environment, is obviously not acceptable, yet MDEQ does not recognize it. They ignore it.

There is no provision for simply erasing errors and doing things differently. Part 632, the legislation governing nonferrous mining in Michigan, states that a person presenting false information in the permitting process, or knowingly accepting it, is a felon and should be prosecuted accordingly. Amendments can be submitted but they must be processed thru the initial permitting procedures – including public input.

MDEQ accepts “amendments” without public input. The Humboldt Mill must be full of them.
A legal problem is that – not many years ago – the Environmental Protection Agency (EPA) delegated jurisdiction on mining regulations to MDEQ – and MDEQ now finds themselves inextricably in bed with Kennecott and their successors – as felons. I have pursued the matter with all offices of justice from local cops and all the way to the US Attorney General, and all decline to prosecute this 4.7 billion dollar fraud – “having no jurisdiction.” More clever politics.

The longer the process is drawn out – the worse it gets. As far as I am concerned the details, such as water quality “exceedances”, will go away. At present they constitute a mild digression helpful to the criminals.

All I ask is that we check the application with a group of mining professionals, declare it illegal and fraudulent, then enforce the Michigan law – which is also available online.
Check page 14 (4) of Part 632.