2012-04-30_HYDROLOGY - M1985112 - Laserfiche WebLink

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not owned by Loloff but are leased. Loloff does own Loloff Section 4 Ditch decreed in Case No. 87CW153 for 4.0 c.f.s. that can be used in the SWSP. It is however a junior water right and is not in priority in dry years. Loloff has investigated obtaining a court approved plan of augmentation to replace out of priority water depletions from the operation. The Division generally expects a plan of augmentation to be in place prior to issuing a permit and prior to excavation but this was not a requirement in 1985. Loloff should have the opportunity to use an augmentation plan to mitigate depletions. The cost of purchasing replacement water for an augmentation plan, while not inexpensive, is less expensive than the cost of a slurry wall liner. In 2011 Applegate Group, Inc., water engineers, estimated the cost of water acquisition including legal and engineering for a decreed augmentation plan to be $650,000 for the Loloff Mine if at the end of mining there are 34 acres of exposed water surface. Loloff proposes under Mineral Rules and Regulations (MMR) Rules 4.3.6 and 4.9.1 that the Division accept a Deed of Trust or security agreement on the Loloff mine property. The current estimated value of the property is $690,000. In addition Loloff proposes under MMR Rules 4.3.8 and 4.11 to establish an Individual Reclamation Fund (IRF) which will be funded by period cash payments from receipts from mining and sales of the mine product. The purpose of the IRF would be to assure the accumulation of sufficient funds to purchase the replacement water and prosecute the augmentation plan until decreed. If at any time replacement water is available for purchase, and to the extent, the IRF had sufficient cash, the some of the funds would be released to make a purchase of water rights or shares specifically to be used in the augmentation plan. The water rights or shares would replace the cash in the IRF. The water would be used by Loloff in the annual SWSP approved by the Division of Water Resources. Loloff would file a plan for augmentation with the Water Court once all the water rights needed were acquired. A plan could also be filed when a majority of the needed water had been purchased combined with a long term lease of water. In that case as the balance of the water was acquired it could be added to the decreed plan. The average production for the last 5 years was 157,865 tons yielding an average income of $77,254.61 for the same 5 year period. Using those figures the price per ton is $0.48. At completion is it estimated the mine will produce 3,500,000 tons of material. If the average of 157,865 tons is mined each year it will take 22 years and a few months to complete the mine. 3,500,000 tons at $0.48 yields $1,680.000. 39% of the estimated $1,680,000 will yield the $655,200 estimated for the augmentation plan costs. Therefore Loloff proposes that 39% of the receipts from mining and sales of the mine product will be placed in the IRF every year. If mining proceeds faster than expected or the price increases per ton the IRF will be fully funded more quickly.