INSPEC35664

• Permit No: M1977342
• IBM Index Class Name: Inspection
• Doc Date: 8/5/2002
• Doc Name: Inspection Report
• From: DMG
• To: Climax Moly
• Inspection Date: 8/1/2002
• Media Type: D
• Archive: No

MINE ID # OR PROSPECTING ID#: M-1977-342 PAGE: 2
INSPECTION DATE: 8-1-02 INSPECTOR'S INITIALS: ACS
This site visit to the Henderson Mine was done in two parts. First a meeting
was held at the mine office to discuss the recent reevaluation of the amount
of required reclamation bond; second, a tour of the underground mine was
conducted to view locations where fuels, lubricants, solvents, etc. are stored
as these materials would have to be removed prior to flooding of the workings
at the conclusion of mining operations.
On July 9, 2002, the Division of Minerals and Geology (DMG) sent a letter to
Climax Molybdenum Company (CMC) as notification that the bond for the
Henderson Mine and Mill had been reviewed and a new reclamation cost estimate
had been generated. The letter was received by CMC on July 11, 2002. The due
date for submittal o£ the increased bond amount, under the terms of Rule
4.2.1(2) of the Mineral Rules and Regulations, is established as September 9,
2002. Prior to this due date, CMC will provide information that will allow
DMG to refine the cost estimate that forms the basis for the amount of bond
to be required. In particular, CMC will provide an accurate accounting of the
volumes of chemicals, fuels, and lubricants that may be stored at ttre mine and
mill and that would be required to be removed for safe disposal in the event
of a bond forfeiture. CMC will also provide documentation, in the form of a
contract with Mesa Oil, demonstrating that used oil removal is not a cost item
that should be included in the bond amount. CMC stated that no chlorinated
solvents are being used at the mine or the mill, and that used oil management
is such that the fluid is non-hazardous. CMC further stated that pine oil and
vapor oil would be removed at zero cost by a used oil contractor. In
addition, CMC will provide updated water treatment cost information based on
the operation of the Urad Plant. These costs will be based on slaked lime
treatment technology and will be more recent and more applicable than the unit
costs employed in the DMG cost estimate. There was a discussion about the
need to bond for removal of reagents still contained in original packaging.
CMC stated that their supplier of phosphorus pentasulfide (SOlutia Inc.), for
example, would retrieve unopened containers for a small restocking charge. It
has been the DMG's experience that there are substantial costs associated with
removal of reagents from a site, even if the packaging is intact. However,
if CMC provides documentation that purveyors will retrieve the unused
chemicals, DMG will take the information into consideration. CMC is also
reviewing the DMG earthworks cost estimates and may or may not suggest changes
to the equipment selections or other assumptions input to the estimating
worksheets. Finally, CMC pointed out that the unit cost for hydroseeding in
the DMG estimate was higher for seeding the conveyor alignment area than the
cost used to estimate seeding over the rest of the site. DMG will adjust the
estimate to employ the lower unit cost consistently on all of the estimating
worksheets.
In other matters relating to assumptions used in the DMG estimate, CMC
proposes to provide enforceable permit commitments limiting the storage of