Permitting

Permitting efforts and baseline data collection at the Copper Flat Mine began in June 2010.

The Company is focused on obtaining its required permits. In the United States, federal and state laws ensure mine operations are conducted responsibly. The Company is committed to achieving state and federal standards for data collection, regulatory compliance, public involvement and environmental protection. Our stakeholders (the public, community leaders and government officials) are invited at multiple stages to participate in the permitting and evaluation processes of the mine.

The mine is located on a combination of federal, state and private lands. In order to approve the use of the federal lands and in compliance with the National Environmental Policy Act (NEPA), an Environmental Impact Statement (EIS) is being developed by an independent third party contractor. The Bureau of Land Management (BLM) is the lead federal agency for the NEPA process in coordination with a number of state agencies that regulate mining and protect natural resources. The EIS process is currently underway with completion expected in 2018.

The public has helped shape the EIS evaluation by providing comments during initial local public meetings (called “scoping meetings”). Following publication of the draft EIS on November 25, 2015, the BLM hosted two public meetings in Hillsboro and Truth or Consequences to gather feedback on the DEIS and invited public comment over a 120 day comment period.

Public interests are also protected through a financial assurance bond, which is required by state and federal agencies: The New Mexico Mining and Minerals Division (MMD), the New Mexico Environment Department (NMED), and BLM. The financial assurance bond will be jointly held by NMED, MMD and the BLM. In the event that the Company was unable to properly reclaim the land following mining, the MMD, NMED, or BLM, as applicable, would be able to oversee and finance land reclamation.

Permitting and reporting milestones achieved to date include:

Environmental Studies

  • Baseline Data Report was submitted in 2012 followed by supplemental studies in 2013. Studies included over a year of datacollection on wildlife, vegetation, soils, surface water, ground water, cultural resources and air quality among others, with additional surveys conducted in 2013 and 2015. Additional baseline studies of birds and vegetation on millsite claims near Production wells were completed in 2016 per state agency requests and reports were submitted in 2017.
  • A significant aquifer test was completed to provide accurate site specific data for groundwater modeling in December of 2012. Ths aquifer test collected data on aquifer response to pumping water from the Company’s Production Wells.
  • A groundwater model was used to create predictions of the impact of mine operations on the aquifers in the area and submitted for use in the BLM’s analyses. The model and its results were reviewed by hydrologists at the Office of the State Engineer as well as by the third party EIS contractor responsible for writing the Environmental Impact Statement and the BLM. The model has been deemed sufficient by reviewing parties and is conservative in its predictions (impacts are likely to be less severe than those predicted).

New Mexico State Permitting

Copper Flat Mine will require five main state permits from three state agencies to operate, with input from other agencies as appropriate. Several smaller permits will also be necessary. The Company has secured one of these permits and is working through the process of providing each of these agencies the applications, background information and plans necessary to obtain each of these permits.

The Mining and Minerals Division oversees New Mine Permits. The New Mexico Environment Department Groundwater Quality Bureau oversees Discharge Permits and the New Mexico Environment
Department Air Quality Bureau oversees Air Permits. The Office of the State Engineer oversees permits to appropriate and pump water and the Office of the State Engineer Dam Safety Bureau oversees new dam permits.

New Mine Permit Status with the Mining & Minerals Division

  • A Revised Mine Operation and Reclamation Plan was submitted to the Mining and Minerals Division (MMD) in October 2016. In response to technical comments and questions from MMD additional details and revisions were submitted in July 2017.
  • The Mining & Minerals Division(MMD) is reviewing technical documents and responses to comments from theCompany.
  • MMD is waiting for two additional elements to complete the Permit Application Package: a report on the Probable Hydrologic Consequences of the proposed operation and an Environmental Evaluation Report.These documents are in process.
  • The New Mine Permit is expected in 2018.

Discharge Permit Status with the New Mexico Environment Department

  • A revised Discharge Permit Application was completed and submitted to the NMED on December 11, 2015.
  • The NMED determined the permit application to be administratively complete and the Technical Review Period was started on December 22, 2015.
  • Responses to technical comments and questions from NMED were submitted in June 2016, August 2017, and October 2017. Once the permit application is deemed technically complete the NMED will draft a Discharge permit based on the application details.
  • A Discharge Permit is expected in 2018.

Air Permit Status with the New Mexico Environment Department

  • The Company obtained an Air Permit in June of 2013.
  • The Company will submit an application to revise this permit to match the ultimately decided mine plan of operations once other major permits are in place.

Permit to Appropriate Water Status with the Office of the State Engineer

  • The Company obtained water rights associated with the previous operation of the Copper Flat Mine in 2011.
  • The Office of the State Engineer and the Company are in the midst of an expedited inter se water rights trial over disagreement about the amount of water the Company may pump. The judge heard oral arguments on the matter in March and June of 2016 and will render a decision when he is ready to do so.
  • It is not known when the judge will render his decision but it is hoped this will come in late 2017 or early 2018.

New Dam Permit Status with the Office of the State Engineer

  • The Company will apply for a New Dam Permit once time and resources allow.


Federal Evaluation

  • A proposed Mine Plan of Operation was submitted to the BLM in 2010 and revised in 2011. In response the BLM kicked off an evaluation of the proposed mine plan impacts via development of an Environmental Impact Statement.
  • Scoping meetings were held in early 2012 and over three years of collected baseline data have been assembled by the BLM’s EIS Contractor to develop a Draft Environmental Impact Statement.
  • The BLM’s Draft Environmental Impact Statement was published on November 25, 2015, opening a public comment period which ended in April of 2016.
  • BLM held public meetings to solicit comment on the Draft Environmental Impact Statement in Hillsboro and Truth or Consequences in December of 2015.
  • Consulting Parties were assembled by the BLM, including the New Mexico State Historic Preservation Office and a Programmatic Agreement regarding resolution of adverse effects to historic properties at the mine site in compliance with Section 106 of the National Historic Preservation Act was created through collaboration with all consulting parties. The Programmatic Agreement was signed in November of 2016.
  • The BLM is evaluating the likelihood and severity of possible effects to Federally-listed compliance with Section 7 requirements of the Endangered Species Act and is in consultation with the USFish & Wildlife Service.
  • Based on public comments and review, the BLM asked the Company to prepare additional technical information which has been provided by the Company to the BLM in 2016 and 2017.
  • The BLM and its independent third party contractor have drafted responses to all public comments, which are being reviewed internally. The BLM is expected to decide on whether to move to creating a Final Environmental Impact statement or a Supplemental Draft Environmental Impact Statement based on its review and consideration of allresponses to public comments.

PERMITTING SCHEDULE

Below is a Permitting Schedule comprised of the studies and permits required: