2012-01-23_REVISION - M1977378 - Laserfiche WebLink

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111 I 1 SUMMARY OF AGREEMENT BETWEEN SUNNYSIDE GOLD CORPORATION AND WATER QUALITY CONTROL DIVISION Sunnyside Gold Corporation's ( "SGC ") final reclamation plan for the Sunnyside Mine includes installation of bulkheads in the American and Terry Tunnels. These tunnels have discharge permits issued by the Colorado Water Quality Control Division ( "Division "). SGC and the Division disagree whether the seeps and springs resulting from filling the mine would be point source discharges of pollutants, and would require permits. SGC sued the Division, asking the state court to decide. In order to settle this dispute and to protect the water quality in the Animas River, SGC and the Division propose a point / non -point source trade in the Animas basin (trading continued permit requirements for successful remedial work in the basin). The success of the mitigation projects will be measured at the water quality reference pont, in the Animas River below its confluence with Mineral Creek, below Silverton (water quality monitoring station A -72). Both parties have agreed that concentration of dissolved zinc is the indicator water quality parameter that will be used. In order for the agreement to be successfully completed, the water quality (dissolved zinc) at A -72 will be statistically compared to baseline water quality data to determine if it has deteriorated. SGC will first plug the American and Terry Tunnels and begin to divert and treat water from Cement Creek. This will create a water quality "cushion" to protect the Animas River during the remediation work. SGC will then complete all the projects on the "A" List, which are: filling the mine with alkaline water; remediation of the mine waste dump at the south fork of Cement Creek; remediation of the surface tailings at the Eureka townsite; remediation of and closure of the bulkhead at the Gold Prince Mine; and remediation at the Koehler Longfellow portals and mine waste dump. After completion of these projects, if a statistical analysis shows that water quality at the reference point has not deteriorated, and other criteria are met, the agreement will have been successfully completed. If water quality criteria are not met, SGC can complete projects on the "B" List and other projects to remove more zinc from the system. These projects include mitigation of the Boulder Creek Mill tailings; Pride of the West tailings, the Columbus Mine portal, and London Mine portal. Once the agreement is successfully completed, SGC's discharge permits for the American and Terry Tunnels will be terminated and SGC will have no future liability in the basin for seeps and springs that result from the portal plugging. If the agreement is prematurely terminated, SGC and the Division will return to court, and for two years, SGC will treat any flows from the American Tunnel and the flow of Cement Creek up to their treatment plant capacity. If the agreement is prematurely terminated and SGC discontinues treatment, the Division will be able to continue treatment during litigation by drawing on a financial surety provide by SGC. During the term of the agreement, SGC will continue to be bound by its discharge permits and Mined Land Reclamation permit, including the monitoring requirements. In addition to those monitoring requirements, SGC will monitor dissolved metals, sulfate, hardness and pH at A -72, and where possible at, above and below four mitigation sites (Koehler Longfellow, Gold Prince Mine, Columbus Mine, and London Mine), three stream mouth locations (Animas River above its confluence with Cement Creek, mouth of Cement Creek, mouth of Mineral Creek) and other locations with the SGC's MLRB permit area.