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Petition for Partial Relea 'Financial Warranty <br /> Climax Molybdenum Company <br /> Permit #M-77 493 September 1, 1999 <br /> 1.1 Site Facilities <br /> Major components and facilities at Climax include the Storke complex, open pit, mine and mill <br /> complex, E-dump, McNulty waste rock dump, Ten Mile tailings impoundment, No. 3 dam (Ten <br /> Mile impoundment), pond shop area, Mayflower tailings impoundment, water treatment facility <br /> area, Robinson tailings impoundment, Eagle Valley borrow areas, Clinton gulch, haulage and <br /> access roads, and the extensive water routing and flood control system. Conversion of the oxide <br /> tailing impoundment area, located just below the Robinson Reservoir, to a fresh water storage <br /> reservoir for Vail Associates ski area was initiated 1993 and completed in 1998. This site has <br /> been renamed "Eagle Park Reservoir". These aforelisted facilities are subject to the financial <br /> warranty presently held by DMG. Figure 1 identifies these facilities and is the reference base <br /> map for this petition. <br /> 1.2 Financial Warranty History <br /> Following approval of the original permit in 1977 and the 1980 amendment that enhanced the <br /> detail of the original permit, Climax submitted a financial warranty to the Board of plus $25 <br /> million. The financial instrument was an insurance bond. <br /> In the mid-1980s, Climax determined that a significant savings in carrying costs could be gained <br /> by eliminating those acreages that would not be disturbed by potential future operations. <br /> Climax approached DMG (then Mined Land Reclamation Division) with this concept, and it was <br /> agreed that the permit could be amended to reduce the affected area and thus, the warranty. <br /> Approval of the 1989 amendment reduced the warranty to plus $18 million. AM-002, the 1989 <br /> amendment, also is considered as SR-001 (Surety Reduction#1) for administrative purposes. (2 - <br /> CMC and its then parent, AMAX Inc., merged with Cyprus Minerals Company at the end of w at aS t <br /> 1993. New management brought different philosophies, strategies, and personnel to CMC and 215�f✓o�r <br /> Climax, dictating reevaluations of plans, permits, and capabilities. CMC determined that those f�(Qj <br /> facilities at Climax not absolutely necessary for production operations should be closed and <br /> reclaimed. In reviewing the reclamation permit and attached amendments, Climax found that " "44 <br /> some of the acreages deleted from the affected lands area by the 1989 amendment should be 0.006 <br /> reinstated and the financial warranty raised accordingly. An amendment (AM-003) adding the w( 4 rx-cX. <br /> previously deleted acreage was submitted and approved in 1997, raising the financial warranty S 2 QC� BK <br /> for the site to $22,721,972 (also considered as SR-002). r�1P r ye �h <br /> In mid-1993, DMG notified Climax that they believed the financial warranty then in place to be <br /> inadequate. It was DMG's intent to recalculate the amount using their (then prototype) bond <br /> calculation spreadsheet model. This highly complex model had first been used to recalculate the � �© <br /> warranty for the Ironclad/Globe mines of the Cripple Creek and Victor Gold Mining Company. <br /> Following discussions with DMG, Climax internally initiated the process of recalculating the ' <br /> warranty based on its on-going and projected activities at the site. Because of the change in <br /> ownership, management, and some personnel in 1994, the process proceeded haltingly until �;It 700 <br /> 100419/Climax/Report.doc 2 <br />