2011-03-31_REVISION - M1977493 (3)

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CLIMAX PRE-HEARING STATEMENT AM-06 APPLICATION, PERMIT No. M-1977-493 MARCH 31, 2011 Climax's relationship with objector Eagle Park Reservoir Company and its shareholders began in about 1993, when Climax entered into a purchase agreement with Vail Associates, Inc., a future shareholder in Eagle Park Reservoir Company, as Climax was contemplating converting Eagle Park Reservoir into a freshwater storage facility. 13 This contract was a precursor to the 1998 Reservoir Purchase Agreement among Vail Associates, Eagle Park Reservoir Company, and Climax. 14 Because the Eagle Park Reservoir, formerly known as the moly-oxide pond, had previously stored mine tailings at Climax, Climax undertook major reclamation efforts to convert the reservoir to a freshwater facility. As part of the agreement with Eagle Park Reservoir Company, Climax committed to undertake all reclamation responsibilities, including a five-year warranty regarding water quality; to build outlet works from the reservoir dam (known as 4-Dam); and to construct the Robinson Seepage Pumpback facility, which was to be "adequate to capture and pump back to Climax's industrial process water system any and all groundwater, surface water, seepage or other water released or escaping from Robinson Reservoir" upstream of Eagle Park Reservoir. 15 Climax reclaimed Eagle Park Reservoir, and the Division released Climax from further reclamation activities, deeming the reservoir appropriate for freshwater storage. 16 Climax's reclamation work on Eagle Park Reservoir won the Year 2000 Mined Land Reclamation Award and was noted as a benefit to the environment. 17 Also pursuant to contract, Climax constructed the 4-Dam outlet works, which were certified by the Division as an Environmental Protection Facility in November 1996.18 Climax also completed the Robinson Seepage Pumpback facility in 1996 and later upgraded this facility in 2001.19 Not only was Climax contractually obligated to build facilities to protect water quality in Eagle Park Reservoir, but also it is contractually obligated not to operate in a is See Ex. 11, 4/9/93 Purchase Agreement between Climax and Vail Associates. 14 See Ex. 18, 6/18/98 Purchase and Sale Agreement (Eagle Park Reservoir). 15 See id at 3, CMC000882 (emphasis added). 16 See Ex. 67 at CMC001597-1598, June 17, 2003 ltr from Division to Climax re: Surety Reduction Revision, SR-02, Climax Mine, Permit M-1977-493. 17 See id. at CMC001598. 18 See Exhibit 84, 11/l/96 ltr from Division to Climax Re: Eagle Park Reservoir, Climax Mine, Permit No. M-77-493. 19 See generally, Ex. 67 for documentation of the 1996 and 2001 activities regarding Robinson Seepage Pumpback. 7