Santoy 8 Satellite Mine at the Seabee Gold Mine. Technical Review Comments. on the. Environmental Impact Statement.

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1 Environmental Impact Assessment Technical Review Comments on the Environmental Impact Statement as submitted by Claude Resources Inc. Saskatchewan Ministry of Environment December, 2009

2 1. INTRODUCTION This document contains the provincial Technical Review Comments (TRC) on the environmental impact statement prepared by Claude Resources Inc. (CRI) relating to the proposed Santoy 8 satellite gold mining operation located approximately 15 kilometers east of CRI s existing Seabee gold mining and millings development (the project). Section 11 of The Environmental Assessment Act (Saskatchewan)(the Act) requires that an environmental impact statement, and a review of the statement (Technical Review Comments), be made available for public review. The Seabee (Seabee) gold mining and milling operation received ministerial approval under The Environmental Assessment Act (the Act) on 24 January, Since that time gold milling and waste management activities at Seabee have been regulated by the Saskatchewan Ministry of Environment under The Environmental Management and Protection Act, particularly The Mineral Industry Environmental Protection Regulations, The Clean Air Act and other legislation, are subject to Financial Assurances, and are located within an existing provincial surface lease. The project would involve mining the Santoy 8 gold deposit by underground methods, trucking the ore on an existing haul road approximately 15 km to Seabee, and the use of the existing gold ore milling and waste management facilities at Seabee to process the Santoy 8 ore and manage solid and liquid mill process wastes. 2. ENVIRONMENTAL ASSESSMENT AND APPROVAL PROCESS Environmental Impact Assessments (EIA) are conducted to provide the information necessary for government to determine whether, from an environmental perspective, proposed developments, or changes to existing, approved developments, should be allowed to proceed and, if so, under what conditions. Proponents of developments are required to prepare Environmental Impact Statements (EIS) which document the proponent s conclusions on potential environmental effects of the proposed developments, or changes to approved developments, and describe the measures the proponents propose to implement to mitigate any negative environmental impacts and enhance positive impacts. The Province also has a constitutional obligation to consult with affected First Nations and Métis communities before any decision is made that may adversely impact the exercise of Treaty or Aboriginal rights, particularly the rights to hunt, fish and trap. The province will utilize the EIS, and any other relevant sources of information, to inform itself of the project and any cumulative impacts of the development on traditional uses, and therefore on Treaty and Aboriginal rights, to determine the level of Crown consultation required. Mitigation proposed within the EIS may provide accommodation for any rights impacted by the proposed project. Any outstanding issues also may be addressed in consultation activities undertaken in conjunction with the environmental regulatory processes that follow the completion of the environmental assessment process and issue the approvals, licences and permits that are required prior to the commencement of construction and operation of a project. 1

3 Federal-Provincial Harmonization of Environmental Impact Assessment In accordance with the Canada-Saskatchewan Agreement on Environmental Assessment Cooperation (2005), federal and provincial environmental assessment processes are coordinated where not limited by the statutory requirements of their respective processes. As a consequence, environmental impact assessment documents are prepared by proponents to meet the requirements of both The Environmental Assessment Act (Saskatchewan) and the Canadian Environmental Assessment Act. Technical Review of Environmental Impact Assessment Saskatchewan Ministry of Environment (MOE) prepares project-specific guidelines to assist a project proponent in the preparation of an EIS. The guidelines reflect issues and concerns that are raised about the project and identify the most important information that the ministry feels should be included in the EIS. The guidelines, in draft form, are made available for public review prior to finalization. An EIS, once prepared by a proponent, is submitted to government for review. A technical review is conducted by representatives of government ministries and agencies to assess whether the EIS is technically acceptable i.e., the EIS contains all the information requested in the guidelines and is technically acceptable to be made available for public review and comment. Public Review of Environmental Impact Statement (sections 11 and 12 of The Environmental Assessment Act) The TRC, prepared pursuant to section 11 of the Act, are an evaluation of the proponent's conclusions regarding the predicted environmental impacts, the significance of the predicted impacts, and the effectiveness of identified mitigative measures. In preparing the TRC, MOE focuses on those factors that are considered to be of primary significance with respect to the proposed development and to the environment. The TRC are prepared to assist the public and the government decision-makers to review the EIS and to evaluate the environmental acceptability of the proposed development. Pursuant to section 12 of the Act, the EIS and the TRC are made available for public inspection for a period of not less than thirty (30) days. During the 30 day public review period members of the public may make written submissions to the Minister of Environment regarding the EIA. Ministerial Decision Following the public review of the EIS, submissions from the public, together with information generated during the technical review of the EIS, are submitted to the Minister of Environment for a decision as required by The Environmental Assessment Act. 2

4 The Minister, under section 15 of the Act, may give ministerial approval to a proposed development and may impose any terms and conditions that the Minister considers necessary or advisable or may refuse to approve the proposed development. At any time during the environmental assessment review process, before a decision on approval is made, the Minister may require public information meetings to be held or may convene a public inquiry. A development that has received ministerial approval cannot be constructed and operated until the proponent has applied for and received all the necessary permits, licences and approvals issued pursuant to regulations under The Environmental Management and Protection Act and other legislation. 2. PROPOSED SANTY 8 SATELLITE MINE AT THE SEABEE GOLD MINE In July 2006 CRI submitted a proposal to MOE to mine a new gold ore body 12.2 km. east of Seabee, known as the Santoy 8 deposit (Santoy 8). Ore from Santoy 8 would be transported by road to Seabee where it would be processed using the existing Seabee milling and waste management facilities. CRI s July 2006 project proposal noted the following points about the project: Santoy 8 is outside the current surface lease boundaries of the Seabee development; as proposed, Santoy 8 would occupy approximately 25 hectares over a 6 year mine life; the mining methodology would be similar to that used for the approved Seabee ore body; construction at the Santoy 8 site would include a 35-person camp and ancillary facilities, a mechanical/electrical shop, laydown/parking areas, consumeables storage, diesel power generation unit until a link is constructed to the power line grid, fuel storage, waste management facilities, waste rock storage areas, and water management facilities including a water treatment plant; 2 km. of haul road would be constructed to link Santoy 8 to the existing haul road that connects Seabee to the nearby Santoy 7 gold deposit. Santoy 8 ore would be processed in the approved Seabee mill. Assessment and Approval Process for the Proposed Santoy 8 Gold Project The Environmental Assessment Branch (EAB) of MOE conducted a technical review of CRI s project proposal by provincial ministries and agencies to determine the application of The Environmental Assessment Act. Because the proposed mining of Santoy 8 was not part of any previous environmental assessment reviews conducted by MOE on the Seabee development, the proposed mining of Santoy 8 represented a change that did not conform to the terms and conditions of the January 1991 approval under the Act for Seabee or of any subsequent amendments to that approval. 3

5 A change to an approved development is subject to the provisions of section 16 of the Act. CRI was directed to seek approval for the mining of the Santoy 8 ore body pursuant to section 16(2)(c) of the Act. Under section 16(2)(c) Claude was required to conduct an environmental impact assessment (EIA) of the proposed mining of Santoy 8 and prepare and submit an environmental impact statement (EIS) to the Minister of Environment. Project-specific guidelines for the environmental impact assessment for the project were provided to CRI in July The guidelines were provided in draft form to the public for review and comment from June 6, 2007 to July 6, 2007 before they were finalized. The guidelines identified that the EIS should address general impact assessment elements, including: potential impacts on the local and regional hydrogeology, including; o any implications of mine dewatering; o potential metal contaminant species and mass flux loadings to the groundwater regime; o re-establishment of levels following completion of operations; evaluation of the potential impacts on surface waters e.g., effect on water quality and lake levels in Pine Lake, Laonil Lake, Lizard Lake including effect of abstraction of water for industrial uses; results from environmental impact pathway and contaminant transfer pathway models, including predictions for contaminant flows and concentrations in any potentially impacted ground and/or surface waters; contingency plans if contaminant migration predictions are not met; monitoring programs for potentially-affected surface and ground waters; and potential effects of malfunctions, accidents or spills and contingency plans for mitigation and cleanup. The guidelines also identified that a key element in the proposal to mine the Santoy 8 ore body is the need to expand the tailings management storage capacity at the Seabee site to accommodate the storage of tailings generated by the milling of the Santoy 8 ore. The quantity and quality of treated effluents were identified as critical issues for environmental protection to be addressed in the EIS, e.g., details of any changes to current operational levels for amounts/balance of reagents used, concentrations of reagents (or their breakdown products) in effluents or waste streams, and volumes of treated waters released; anticipated short and long term aquatic environmental effects of contaminant loadings on receiving waters and predicted mixing effect zone (water quality and sediment quality change); results of any studies currently being undertaken that are related the potential impacts of treated effluent release on receiving waters and biota. 4

6 The guidelines noted that impact assessment for the project should be discussed in the context of criteria for the design of operational monitoring programs and decommissioning, reclamation and abandonment planning. The guidelines included requirements to ensure that the information in the EIS would be sufficient to address the approval and regulatory concerns of Saskatchewan. Environmental Impact Statement In February 2009 CRI submitted an EIS, Report on Environmental Impact Statement for the Proposed Santoy 8 Satellite Mine at Seabee Gold Mine, Saskatchewan, February 25, 2009, to MOE for technical review. In May 2009 the MOE provided a compilation of preliminary technical review comments on the EIS to the proponents and requested responses. In November 2009, CRI submitted an addendum to the EIS containing responses to the preliminary technical review comments Santoy 8 Satellite Mine at Seabee Gold Mine Addendum to the Environmental Impact Statement, November 13, Public Review of Environmental Impact Statement In November 2009, MOE notified CRI that the technical review of the environmental impact statement for the Santoy 8 satellite mine was complete and that the EIS was considered technically acceptable to be made available for public review. The public review period was set for 30 December, 2009 to February 5, ENVIRONMENTAL IMPACT STATEMENT FOR THE PROPOSED SANTOY 8 SATELLITE GOLD MINE The EIS describes the proposed Santoy 8 satellite mine and its contribution to CRI s continued gold production at the Seabee site. The EIS also identifies that CRI has conducted exploration for new gold resources within the area surrounding the Seabee operations. This exploration has identified other zones of gold mineralization that could extend the life of the existing Seabee mine. It should be noted that any development of these other gold zones would be subject to future and separate reviews under The Environmental assessment Act. The EIS describes the major components of the project including construction of the underground mine, mining procedures, ore storage and transport to the Seabee mill, management of waste rock, tailings management, effluent management and operational management. The EIS also identifies the components of a conceptual decommissioning plan for the project. These components include salvage of economic items, demolition and removal of structures, site stabilization, site re-vegetation, and post-decommissioning monitoring. The conceptual plan also identifies revision of the Seabee Mine Decommissioning and Reclamation Cost Estimate Report to include the cost of decommissioning the Santoy 8 satellite mine. 5

7 These costs would cover project management, engineering, transportation of salvageable components and reagents, implementation of specific decommissioning and reclamation activities and any site re-vegetation activities. The EIS provides a description of the existing environment, identifies potential environmental effects of the project, presents an assessment of predicted effects during construction, operations and decommissioning and describes proposed mitigation procedures. Other issues discussed include biophysical effects, worker health and safety, malfunctions and accidents, inspections and monitoring, follow-up programs, and socio-economics. The EIS outlines the community and stakeholder consultation programs conducted by CRI and socio-economic issues in the study area. The EIS states that the Seabee mine currently employs 256 workers of whom 130 are on-site at all times. Another 20 workers are at Santoy 7 satellite mine site. Approximately 14% of the underground workforce and 38% of the surface workforce are Saskatchewan northerners. Approximately 17% of the workers are female. The EIS notes that earnings of surface workers tend to be in the $35-80,000 range with underground workers earning in the $80-150,000 range. Highly specialized workers, such as jumbo drill operators earn upwards of #200,000. The EIS identifies that CRI s total expenditures on goods and services is approximately $33.6 million of which $7.5 million is for goods and services purchased from northern vendors, including Northern Explosives Limited and Northern Resources Trucking. The Santoy 8 satellite mine, with an anticipated life of approximately 6 years, would extend Seabee s current economic contribution to employment and business opportunities for Saskatchewan northerners. 4. GENERAL TECHNICAL COMMENTS The technical review of the EIS for the proposed Santoy 8 satellite mine identified various issues related to potential environmental impacts and environmental management that required additional information and/or clarification before the EIS was considered to be technically acceptable to proceed to the public review stage of the environmental assessment process. These matters were addressed in the November 2009 Addendum submitted by CRI. CRI was requested to comment on a number of issues including: waste rock characterization and management strategy, mine water pond construction and management, mine water inflows, site water balance, tailings management strategy, including components, construction and management, reclamation strategies for waste rock, groundwater issues, effluent management, surface water quality issues and biological sampling procedures Other comments on the EIS related to relatively minor points. Clarification of these points was requested to improve the quality and accuracy of the EIS and add to its acceptability for public review. 6

8 The responses provided by CRI to the deficiencies identified during the technical review of the EIS were considered acceptable. As a consequence, the EIS was considered technically acceptable and could proceed to public review. Should the proposed Santoy 8 satellite mine receive Ministerial Approval, the potential environmental impacts identified in the EIS, and any minor concerns noted during the technical review, would be addressed in detail by provincial licensing and regulatory procedures. Regulatory requirements that would have to be met if the project receives environmental assessment approval would include: 1) All construction, alterations, installations, extensions, upgrades, operating or decommissioning developments must obtain prior approval through a written application to the minister and may be subject to the following acts, regulations and guidelines: The Environmental Management and Protection Act, 2002 The Water Regulations, 2002 The Mineral Industry Environmental Protection Regulations, 1996 The Forest Resource Management Act and Regulations Guidelines For Decommissioning, Cleanup And Reclamation Of Northern Mine Sites, March 20, 1995 (SE 1995; Note: under revision) Draft Construction Guidelines for Pollution Control Facilities at Uranium Mining and Milling Operations, October 2000 (SE 2000) Mine Rock Guidelines Design and Control of Drainage Water Quality (Saskatchewan Environment and Public Safety, April 1992) 2) Hazardous waste (e.g., diesel) and waste dangerous goods storage will require approval by the minister if necessary and must conform to The Hazardous Substances and Waste Dangerous Goods Regulations. 3) Water withdrawal from nearby lakes will require approval from the Saskatchewan Watershed Authority. 4) An aquatic habitat protection permit for any works near water will be required (i.e. the habitat compensation at the crossing on the access road). 5) A Preliminary Reclamation and Decommissioning plan and financial assurance will need approval pursuant to The Mineral Industry Environmental Protection Regulations, ) The construction of facilities at site may require the clearing of trees. Pursuant to The Forest Resource Management Act, a forest product permit will be required by the Proponent prior to beginning any of the clearing activities on Crown land. Exact locations must be provided for sites when applying for the permit. 7) A detailed Environmental Monitoring Program reflective of the construction and operational phases of the project will be required. 5. BIOPHYSICAL CONSIDERATIONS The EIS states that the Santoy 8 satellite mine would disturb approximately 10 hectares of land surface within a 50 hectares boundary. A 15 km. access road from Santoy 8 to the Seabee site currently exists and will be maintained as an all-weather road for ore haulage to the Seabee mill. 7

9 On the Santoy 8 site an 800 m. road will be required to access Lizard Lake, vent raises and other facilities. Existing exploration trails will be upgraded for the access road. All disturbed areas associated with project activities, including stream crossings, would be subject to regulatory approval. Waste rock from mining activities will be managed based on the potential for acid generation. Non-acid generating waste rock will be stored at Santoy 8 on a waste rock pad. Potentially acid generating waste rock will be either hauled to Seabee for storage on a waste rock pad or taken to Santoy 7 where it would be stored underground. Ore mined at Santoy 8 will be stored on an ore pad until transport to the Seabee mill. It is anticipated that water requirements for the Seabee mill will not change. As noted previously the project-specific guidelines for the Santoy 8 satellite mine identified that a key element in the proposal to mine the Santoy 8 ore body is the need to expand the tailings management storage capacity at the Seabee site to accommodate the storage of tailings generated by the milling of the Santoy 8 ore. Tailings generated by the milling of ore from initial mining operations at Seabee were stored in the East Lake Tailings Management Facility. In 2002 an additional tailings storage facility, the Triangle Lake Tailings Facility, was approved for storage of tailings from the Seabee operations. Tailings storage in to East Lake ceased in The EIS describes the components of CRI s plan to manage the storage of tailings generated by the milling of the Santoy 8 gold ore. These components were discussed further in the Addendum. CRI identified a number of tailings management options to provide the required tailings storage capacity. These options were: development of a new tailings management facility; stacking tailings on the existing East Lake tailings management facility; raising the containment dams at the existing Triangle Lake tailings management facility; raising the containment dams at the existing Triangle Lake tailings management facility resulting in an expanded land surface footprint of the facility; and stacking tailings on the existing Triangle Lake tailings management facility. Of these tailings management options, CRI proposed two options that were pursued in more detail. 1. raising the containment dams at the existing Triangle Lake tailings management facility resulting in an expanded land surface footprint; and 2. stacking tailings on the existing East Lake tailings management facility. In the EIS CRI states that the need for tailings storage capacity to accommodate the Santoy 8 satellite mine and the continued operations at Seabee, i.e., from 2009 to 2015, would be met by stacking tailings on the surface of the existing East Lake facility and raising the containment dams at the existing Triangle Lake facility. 8

10 Storage capacity to accommodate tailings generated past 2015 would require further, detailed analysis of the other identified tailings management options. The EIS addresses the potential impacts of the Santoy 8 satellite mine and proposed mitigation measures. The EIS also addresses potential impacts of the environment on the project, cumulative impacts, and an assessment of residual impacts after the application of mitigation measures including the decommissioning of the satellite mine. The EIS concludes that the environmental assessment conducted of the Santoy 8 Project did not identify any significant residual environmental consequences and that, given proposed environmental diligence and pro-active planning, including decommissioning and reclamation, the proposed Santoy 8 Project would have a negligible impact on the environment in the long term. The EIS did not identify any heritage resources in the proposed Santoy 8 satellite mine area. The EIS noted that there are no communities located within 30 km. of the Proposed Santoy 8 satellite mine area and evaluated the project for any consequent potential changes to socioeconomic and land use components. The analysis identified that there was no indication of occurrence of traditional land use activities in the Sntoy 8 satellite mine area. The EIS describes the proposed liquid effluent management procedures, including monitoring, treatment, and release to the receiving environment for the Santoy 8 satellite mine. Saskatchewan Ministry of Environment, under the Mineral Industry Environmental Protection Regulations, 1996, regulates all aspects of the operations at mine sites. Should the Santoy 8 satellite mine be approved, operating approvals would be put in place regulating the Santoy 8 satellite mine. These regulatory approvals would address liquid effluent management procedures and establish liquid effluent discharge limits for treated water at project sites. Limits would be included in the Operating Approvals issued by the Ministry of Environment to ensure that the quality and quantity of treated water released would not affect the aquatic habitats and fisheries in receiving watersheds. The points of discharge and timing of releases to the receiving environment would be carefully regulated. 6. OCCUPATIONAL HEALTH AND SAFETY The EIS addresses worker health and safety. The EIS states that the Santoy 8 satellite mine would not require any changes to the existing programs that are required for worker health and safety, monitoring, training modules, environmental instrumentation, environmental protection and awareness. The EIS notes that CRI pursues continuous improvement policies related to health, safety, emergency preparedness, and environmental practices. 9

11 Current activities conducted by CRI at Seabee have to meet Saskatchewan Labour standards for occupational health and safety. These standards are cited in the Occupational Health and Safety Act, 1993, the Occupational Health and Safety Regulations, and in the Saskatchewan Mines Regulations, Should the Santoy 8 satellite mine be approved all aspects of the project would have to meet these same standards. Given the results of current monitoring programs, and the monitoring programs that would be put in place should the Santoy 8 be approved, the review did not foresee any negative impact on worker health and safety or public health. These issues were included in presentations given to public meetings held in communities directly potentially affected by the project. 7. PUBLIC INVOLVEMENT AND SOCIO-ECONOMIC CONSIDERATIONS Saskatchewan Environment is satisfied that regional residents and organizations were notified about the proposed Santoy 8 satellite mine and were provided with the opportunity to be involved with the environmental assessment process. CRI held public meetings in Stanly Mission, Sandy Bay, La Ronge and Pelican Narrows in June Notices were sent to communities prior to the meeting dates. The meetings were informal, commencing with a presentation with questions addressed throughout. No new or significant issues were raised by attendees, nor was any opposition to the project voiced. Questions asked related to a variety of issues including project life, job opportunities, waste management, air quality monitoring, project area fish species, training, water quality and financial benefit to the community. Details of these meetings are provided in the EIS. The issues raised during the June 2008 public meetings reflected similar issues and concerns raised during previous public meetings held by CRI in 2006 and 2007 regarding CRI S Santoy 7, Island, and Santoy 8 mining projects. Formal opportunities for public participation also were provided by the public reviews of the draft project-specific guidelines and the environmental impact statement that form part of the Saskatchewan environmental impact assessment process. 8. ENVIRONMENTAL MONITORING The EIS describes components of conceptual environmental monitoring programs for the Santoy 8 satellite mine that address operational monitoring for the mill and tailings facilities, mine site and camp facility. The proposed programs incorporate the major parameters that would be required in the comprehensive monitoring plan that would be part of the Operating Approvals if the proposed Santoy 8 satellite mine is approved. 10

12 Should the Santoy 8 satellite mine be approved, specific details of the required monitoring programs would be determined in consultation with the Industrial, Uranium and Hardrock Mining Unit, Saskatchewan Ministry of Environment during regulatory licensing. 9. DECOMMISSIONING, RECLAMATION AND ABANDONMENT PLAN The EIS describes components of a conceptual decommissioning and reclamation plan for the Santoy 8 satellite mine. Detailed plans for decommissioning, reclamation, and abandonment would be developed in consultation with the regulatory agencies during licensing if the proposed Santoy 8 satellite mine is approved. These plans would be a component of the applications submitted by CRI for operating approvals and would provide the basis for calculation of financial assurances to ensure that works associated with the Santoy 8 satellite mine could be decommissioned and reclaimed without cost to the province. Should the proposed Santoy 8 satellite mine be approved, CRI would be required to submit final decommissioning plans to Saskatchewan Ministry of Environment for approval prior to the commencement of any decommissioning or reclamation activities. These plans are required by the provincial Mineral Industry Environmental Protection Regulations (1996). Detailed requirements for decommissioning, reclamation and postoperational environmental monitoring then would be determined in consultation with the regulatory agencies. The Industrial, Uranium and Hardrock Mining Unit, Saskatchewan Ministry of Environment would issue final approvals for the Santoy 8 satellite mine project and all related site activities, including decommissioning and reclamation work and post-decommissioning monitoring. CRI would not be released from their responsibilities for these sites until the potential long-term environmental effects have been evaluated and are considered acceptable. 11