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Application for an Amendment (AM -05) to a Section 112d -3 Reclamation Permit <br />4638 Acres Affected Land in Lake Summit and Ea 1 ounties <br />Climax Mol bdenum Com s an Climax Mine Permit . M- 1977 -493 <br />Mining Plan <br />Since the approval of Permit Amendment AM -02 in 1989, the Climax Mine has been permitted as a <br />swing producer of molybdenum concentrates. The term "swing producer" is defined in the approved <br />permit as: <br />An operation maintained in a ready state with the ability to come on -line quickly in response to <br />market demand. <br />The 1989 molybdenum market referenced by this language was almost exclusively dominated by <br />demand from metallurgical applications. Subsequently, a market for chemical applications of <br />molybdenum products, which require higher -grade molybdenum concentrate than metallurgical <br />applications, has emerged. The Climax Mine is a primary molybdenum mine, unlike copper mines that <br />produce molybdenum as a secondary product. Molybdenum concentrates from the Climax Mine are <br />purer and command a premium for chemical applications, as opposed to metallurgical applications. <br />The Henderson Mine, which is a Climax Molybdenum Company facility, is an active operation with an <br />estimated additional twenty to twenty -five years of viable ore body. The Climax Molybdenum <br />Company currently meets the demands of its chemical sales book from Henderson production as the <br />chemical market dictates. <br />Substantial ore reserves remain at the Climax Mine. Climax Molybdenum Company is conducting <br />planning and permitting activities that will enable the Climax Mine to operate as a swing producer for <br />chemical application uses in the near term, if market demand so justifies, and as a replacement to the <br />Henderson Mine in the long term. The Climax Mine's reserves will be used to replace Henderson <br />production in a twenty to twenty -five year timeframe. AM -05 is designed to acknowledge the current <br />and future viability of the Climax Mine for the production of molybdenum within this timeframe. In <br />the meantime, reclamation activities at the Climax Mine are ongoing, with over $25 Million having <br />been spent on reclamation at the Climax Mine since 1993. <br />For the reasons stated above, the operation and permitting of the Climax Mine as a swing producer in <br />response to demand from the metallurgical market is an obsolete strategy that is out of touch with <br />current market realities. The following language is provided in the Amendment AM -05 application to <br />replace the definition of swing producer in the mining plan, as it applies to the current status of the <br />Climax Mine: <br />The Climax Mine will be operated in response to demand for molybdenum concentrate by <br />Climax Molybdenum Company's chemical application customers. A major factor in the <br />Climax Mine's operations will be the extent to which chemical application demand can be <br />satisfied by the Henderson Mine. Based on current market conditions, it is expected that near <br />the end of the life of the Henderson Mine the capitol investments will be made at the Climax <br />1 <br />