TECHNICAL FACT SHEET September 24, 2018

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1 Copperwood Resources, Inc. Page 1 Purpose and Summary TECHNICAL FACT SHEET September 24, 2018 The Michigan Department of Environmental Quality (MDEQ), Air Quality Division (AQD), is proposing to act on Permit to Install (PTI) application No A from Copperwood Resources, Inc. (Copperwood). The permit application is for the proposed installation and operation of the Copperwood Project, a copper mining and ore processing facility. The proposed project is subject to permitting requirements of the Department s Rules for Air Pollution Control. Prior to acting on this application, the AQD is holding a public comment period and a public hearing to allow all interested parties the opportunity to comment on the proposed PTI. All relevant information received during the comment period and hearing will be considered by the decision maker prior to taking final action on the application. Background Information The AQD issued PTI No on July 17, 2012, for the Copperwood Project. PTI No was voided on July 28, 2015, because construction of the facility did not begin within the required timeframe. On March 29, 2018, Copperwood submitted PTI application No A for the Copperwood Project. Proposed Facility The Copperwood Project would be a new underground copper mine with associated ore milling and concentrate production, concentrate handling, and tailings disposal facilities to be located in Ironwood and Wakefield Townships in Gogebic County. The mine would be divided into an eastern part and a western part and would be developed over the 13-year life of the mine. Underground ore mining would be done using conventional drill, blast, and mechanized room and pillar methods. Blasted ore would be placed into a hopper and a rolls/rock breaker and distributed onto belt conveyors for transport to the main mine conveyor. The main mine conveyor would transport ore to the surface for further handling and processing. The mine would have six propane fired heaters, each rated at 9 million British Thermal Units (BTU) per hour heat input. At the surface, ore would go to the transfer tower, where it would be directed to the ore stockpile or to one of four crushed ore bins in the ore bins/reclaim area for temporary storage prior to being transferred to the process plant. The ore stockpile would provide surge capacity and temporary storage of mined ore as it comes from the underground mine. From the Transfer Tower, a stacker conveyor would move ore to a surge pile located at the ore stockpile. A front end loader (FEL) would move ore from the surge pile to the ore stockpile. As needed, ore would be returned through a chute to the Transfer Tower using a FEL to load the chute.

2 Copperwood Resources, Inc. Page 2 From the ore bins/reclaim area, ore would be transferred by belt conveyor to the grinding circuit at the process plant. The grinding circuit would include a semi-autogenous grinding (SAG) Mill, a screen, a ball mill, and a cyclone cluster to achieve the desired ground ore size for the flotation circuit. At the SAG Mill, the ore would be mixed with water to form a slurry. Chemical reagents would be added in the grinding and flotation circuits to produce copper concentrate from the ore. The concentrate production process would also generate a tailings waste product that would be placed into the tailings disposal facility (TDF). Copper concentrate from the flotation circuit would be processed to reduce the moisture content to approximately 9 percent. A FEL would be used to transfer the final copper concentrate product to a loadout hopper. From the loadout hopper, the concentrate would be transferred to concentrate product haul trucks using a concentrate feeder and truck loading conveyor for shipment off-site. The copper concentrate would be the final product of the mine facility. The tailings waste product from the concentrate production process would be a slurry containing about 32 percent solids and would be discharged from the process plant through a piping system to the TDF. The TDF would be constructed in layers and stages over the 13-year life of the mine. The overall surface area of tailings within the TDF would be approximately 10,000,000 square feet at maximum development, with most of that area being within a pond. Initially, the high moisture content of the tailings would limit the particulate emissions. As the tailings dry, a crust would form at the surface that would limit the particulate matter emissions. The process plant would have propane fired space heaters. The total heat input rate for the heaters is estimated to be million BTU/hr. The facility would have three diesel-fired Cummins emergency generators to provide back-up power for the facility operations. A 1,000 kw generator would be located near the mine portal and the two 500 kw each generators would be located near the Process Plant. Present Air Quality The facility would be located in Gogebic County, Michigan, an area classified as in attainment with all of the National Ambient Air Quality Standards (NAAQS) set by the United States Environmental Protection Agency. These air quality standards are for particulate matter equal to or less than 10 microns in diameter (PM10), particulate matter equal to or less than 2.5 microns in diameter (PM2.5), ozone, carbon monoxide (CO), sulfur dioxide (SO 2), nitrogen dioxide (NO 2), and lead. These standards are set at levels designed to protect the public health. Key Permit Review Issues Staff evaluated the proposed project to identify all state rules and federal regulations which are, or may be, applicable. The tables in Appendix 1 summarize these rules and regulations. Prevention of Significant Deterioration (PSD) Regulations In order for the Copperwood Project to be subject to the PSD regulations, the criteria pollutant emissions would have to be at or above the 250 tons per year (tpy) major source threshold. As shown in Table A, the Copperwood Project criteria pollutant emissions would be less than the major source threshold and, therefore, the project is not subject to PSD review.

3 Copperwood Resources, Inc. Page 3 Table A Project Potential to Emit and PSD Major Source Threshold Potential PSD Major Source Emissions* Pollutant Threshold** Tons Per Year (tpy) (tpy) Subject to PSD? Oxides of Nitrogen No Volatile Organic Compounds (VOC) No Particulate Matter (PM) No PM No PM No SO No CO No Lead No * The potential emissions do not include fugitive emissions because the proposed facility is not one of the 28 source categories listed in the regulations that is required to include fugitive emissions in the potential to emit. ** The major source threshold for the proposed facility is 250 tpy because the project is not one of the 28 source categories listed in the regulations that has a major source threshold of 100 tpy. Federal NSPS Regulations Each crusher, screen, conveyor belt transfer point, enclosed storage area, truck unloading station, and truck loading station would be subject to the federal Standards of Performance for New Stationary Sources (NSPS) 40 CFR Part 60 Subpart LL for metallic mineral processing plants. NSPS Subpart LL sets mass and opacity emission limits for these various operations. It also establishes specific reporting and testing requirements. The emergency generator engines would be subject to the federal NSPS 40 CFR Part 60 Subpart IIII Stationary Compression Ignition Internal Combustion Engines. NSPS Subpart IIII sets mass emission limits for the engines as well as testing and operational requirements. Federal NESHAP Regulations - The facility would be a minor source of hazardous air pollutants. Each emergency generator would be subject to the area source requirements of the National Emission Standards for Hazardous Air Pollutants (NESHAP) 40 CFR 63 Subpart ZZZZ for Stationary Reciprocating Internal Combustion Engines. For these emergency engines, compliance with 40 CFR Part 60 Subpart IIII will satisfy the requirements of 40 CFR 63 Subpart ZZZZ, with the exception of the notification requirements. Rule 224 TBACT Analysis The MDEQ Rules for Air Pollution Control require that best available control technology for toxics (T-BACT) be applied to new or modified emission units. The AQD determined that the emissions of toxic air contaminants (TAC) from the facility would meet Rule 224 with the proposed fresh water sprays at the underground feed hopper and underground conveyor transfer points, the enclosed conveyor transfer points, the enclosed process building, the water spray on the SAG Mill transfer point, and the fugitive dust control plan. Rule 225 Toxics Analysis The MDEQ Rules for Air Pollution Control require the ambient air concentration of TACs be compared against health-based screening levels.

4 Copperwood Resources, Inc. Page 4 The first step in the TAC evaluation showed the proposed emission rates of most TACs are less than their Allowable Emission Rates (AER) determined according to Rule 227(1)(a) and, therefore, comply with the requirements of Rule 225. For copper and phosphorous, the TACs with proposed emission rates that exceed the AERs, Copperwood conducted air dispersion modeling to determine the predicted ambient impacts. The AQD staff reviewed Copperwood s air quality modeling and evaluation of the copper and phosphorous impacts. The review found that copper and phosphorous show impacts less than the established health-based screening levels and will comply with the requirements of Rule 225. See Table B for the TAC air quality modeling results. Toxic Air Contaminant Averaging Time Table B - Toxic Air Contaminant Modeling Screening Level (µg/m 3 ) Screening Level Type Predicted Impact (µg/m 3 ) Percent of Screening Level (%) Copper 8-hr ITSL Phosphorous 8-hr ITSL Phosphorous Annual ITSL µg Microgram m 3 Cubic meter Criteria Pollutants Modeling Analysis - Copperwood conducted, and the AQD verified, criteria pollutant computer dispersion modeling to predict the impacts of air emissions from PM2.5, PM10, SO 2, NO 2, CO, and Lead. Emissions from the proposed facility were evaluated first against the Significant Impact Levels (SILs). For pollutants with impacts less than the SILs, the emissions are presumed to also comply with both the NAAQS and the PSD Increments. The NAAQS are designed to protect human health and the environment. The PSD Increments are designed to allow industrial growth while ensuring the area will continue to meet the NAAQS. As shown in Table C, the predicted impacts of SO 2 on a 3-hour average, 24-hour average, and annual averaging are below their respective SILs. Pollutant Table C - Preliminary Modeling Impacts PSD Significant Impact Level (µg/m 3 ) Averaging Time Predicted Impact (µg/m 3 ) Additional Modeling? PM hr Yes PM2.5 Annual Yes PM10 24-hr Yes PM10 Annual Yes SO 2 1-hr Yes SO 2 3-hr No SO 2 24-hr No SO 2 Annual No NO 2 1-hr Yes NO 2 Annual Yes CO 1-hr 2,000 8,648 Yes CO 8-hr 500 3,396 Yes Note there is no SIL for lead

5 Copperwood Resources, Inc. Page 5 Generally, only those pollutants with predicted impacts above the SIL would be further evaluated. However, Copperwood conducted additional modeling for all of these pollutants. As shown in Table D, the predicted impacts of PM2.5, PM10, SO 2, and NO 2 are less than the PSD Increments. Note a PSD Increment analysis includes both the emissions from the proposed facility as well as nearby emission sources. However, the AQD did not identify any emission sources near the proposed facility. Table D - PSD Increment Analysis Pollutant Averaging Time PSD Increment Predicted Percent of (µg/m 3 ) Impact (µg/m 3 ) Increment (%) PM hr PM2.5 Annual PM10 24-hr PM10 Annual SO 2 3-hr SO 2 24-hr SO 2 Annual NO 2 Annual Note there are no PSD increments for 1-hour average SO 2, 1-hour average NO 2, CO, or lead. As shown in Table E, the predicted impacts of PM2.5, PM10, SO 2, NO 2, CO, and lead are less than the NAAQS. Note a NAAQS analysis includes the emissions from the proposed facility, emissions from nearby sources, and background concentrations. However, the AQD did not identify any emission sources near the proposed facility. Pollutant Table E - National Ambient Air Quality Standards (NAAQS) Analysis Predicted NAAQS Impact + Averaging Time (µg/m 3 ) Background (µg/m 3 ) Percent of NAAQS (%) PM hr PM2.5 Annual PM10 24-hr SO 2 1-hr SO 2 3-hr 1, NO 2 1-hr NO 2 Annual CO 1-hr 40,000 14, CO 8-hr 10,000 4, Lead 3-Month * 27 Note there are no NAAQS for annual average PM10, 24-hour average SO 2, and annual average SO 2. * The lead impact is a monthly average, rather than a three-month average, which is a worst-case assumption. The dispersion modeling analysis demonstrates that the criteria pollutant emissions from the proposed facility are below the PSD Increments and the NAAQS.

6 Copperwood Resources, Inc. Page 6 Fugitive Sources - Fugitive particulate emissions would primarily be produced by ore handling on the surface, the ore stockpile, concentrate handling, vehicles traveling on facility roads, and the TDF. A variety of control practices are proposed to reduce the fugitive emissions, including enclosed conveyor transfer points, applying water or chemical dust suppressants to facility roadways, limiting vehicle speed on facility roadways, and a truck wash for the concentrate trucks after they are loaded. Fugitive emissions are addressed in the draft Fugitive Dust Control Plan which is included as an appendix to the proposed draft permit conditions. Key Aspects of Draft Permit Conditions Emission Limits (By Pollutant) The proposed permit includes PM, PM10, and PM2.5 emission limits for each mine vent, a CO emission limit for the facility, and criteria pollutant emission limits for the emergency engines based on NSPS IIII. Material Limits - The proposed permit limits the facility heaters to propane fuel only, limits the moisture content of the concentrate, limits the silt content of the ore in the ore stockpile, limits the amount of emulsion that can be used, and limits the amount of propane that can be burned in the mine heaters. Process/Operational Restrictions The proposed permit limits the number of concentrate and water transport trucks allowed to enter and leave the facility, limits the hours of operation of the emergency engines, requires a malfunction abatement plan for air pollution control equipment, and requires a fugitive dust control plan. Federal Regulations The proposed facility is subject to NSPS Subpart LL for metallic mineral processing plants, which sets opacity emission limits and establishes specific reporting and testing requirements for the facility. These requirements are included in the proposed permit conditions. The proposed emergency engines are subject to NSPS Subpart IIII for stationary compression ignition internal combustion engines, which sets mass emission limits and testing and operational requirements for the engines. These requirements are included in the proposed permit conditions. Emission Control Device Requirements The proposed permit includes emission control requirements, as follows: dust suppression systems, including water sprays, are required in the underground mine, all conveyor transfer points must be enclosed, and the SAG Mill transfer point must be equipped with a water spray system. Testing & Monitoring Requirements The proposed permit requires testing of the PM, PM10, and PM2.5 emissions from the east and west mine vents and testing the silt content of the ore in the ore stockpile. The proposed permit requires records of the start-up and shut-down of each mine vent, records of the concentrate moisture content, records of the reagents used, records of the number of concentrate and water transport tucks passing through the facility, records of the facility CO emissions, records of the amount of propane burned in the mine heaters, and records of the amount of emulsion used.

7 Copperwood Resources, Inc. Page 7 The proposed permit also requires Copperwood to keep records of any visible emissions observed and any actions taken to reduce visible emissions. Notification Requirements The proposed permit requires Copperwood to notify the AQD of the start of underground blasting and the start-up of each mine vent. Conclusion Based on the analyses conducted to date, staff concludes that the proposed project would comply with all applicable state and federal air quality requirements. Staff also concludes that this project, as proposed, would not violate the federal NAAQS or the state and federal PSD Increments. Based on these conclusions, staff has developed proposed permit terms and conditions which would ensure that the proposed facility design and operation are enforceable, and that sufficient monitoring, recordkeeping, and reporting would be performed by the applicant to determine compliance with these terms and conditions. If the permit application is deemed approvable, the delegated decision maker may determine a need for additional or revised conditions to address issues raised during the public participation process. If you would like additional information about this proposal, please contact Mr. Andrew Drury, AQD, at

8 Copperwood Resources, Inc. Page 8 Appendix 1 STATE AIR REGULATIONS State Rule R R R R to R R to R R R R R and R R to R R R R R R Description of State Air Regulations Requires an Air Use Permit for new or modified equipment that emits, or could emit, an air pollutant or contaminant. However, there are other rules that allow smaller emission sources to be installed without a permit (see Rules through below). Rule also states that the Department can add conditions to a permit to assure the air laws are met. Outlines the permit conditions that are required by the federal Prevention of Significant Deterioration (PSD) Regulations and/or Section 112 of the Clean Air Act. Also, the same types of conditions are added to their permit when a plant is limiting their air emissions to legally avoid these federal requirements. (See the Federal Regulations table for more details on PSD.) New or modified equipment that emits toxic air contaminants must use the Best Available Control Technology for Toxics (T-BACT). The T-BACT review determines what control technology must be applied to the equipment. A T-BACT review considers energy needs, environmental and economic impacts, and other costs. T-BACT may include a change in the raw materials used, the design of the process, or add-on air pollution control equipment. This rule also includes a list of instances where other regulations apply and T-BACT is not required. The ambient air concentration of each toxic air contaminant emitted from the project must not exceed health-based screening levels. Initial Risk Screening Levels (IRSL) apply to cancer-causing effects of air contaminants and Initial Threshold Screening Levels (ITSL) apply to non-cancer effects of air contaminants. These screening levels, designed to protect public health and the environment, are developed by Air Quality Division toxicologists following methods in the rules and U.S. EPA risk assessment guidance. These rules list equipment to processes that have very low emissions and do not need to get an Air Use permit. However, these sources must meet all requirements identified in the specific rule and other rules that apply. Limits how air emissions are allowed to look at the end of a stack. The color and intensity of the color of the emissions is called opacity. The particulate emission limits for certain sources are listed. These limits apply to both new and existing equipment. Material collected by air pollution control equipment, such as dust, must be disposed of in a manner, which does not cause more air emissions. Limit the sulfur dioxide emissions from power plants and other fuel burning equipment. Volatile organic compounds (VOCs) are a group of chemicals found in such things as paint solvents, degreasing materials, and gasoline. VOCs contribute to the formation of smog. The rules set VOC limits or work practice standards for existing equipment. The limits are based upon Reasonably Available Control Technology (RACT). RACT is required for all equipment listed in Rules through New equipment that emits VOCs is required to install the Best Available Control Technology (BACT). The technology is reviewed on a case-by-case basis. The VOC limits and/or work practice standards set for a particular piece of new equipment cannot be less restrictive than the Reasonably Available Control Technology limits for existing equipment outlined in Rules through Nitrogen oxide emission limits for larger boilers and stationary internal combustion engines are listed. Air pollution control equipment must be installed, maintained, and operated properly. When requested by the Department, a facility must develop and submit a malfunction abatement plan (MAP). This plan is to prevent, detect, and correct malfunctions and equipment failures. A facility is required to notify the Department if a condition arises which causes emissions that exceed the allowable emission rate in a rule and/or permit.

9 Copperwood Resources, Inc. Page 9 State Rule R to R R to R Prevention of Significant Deterioration (PSD) Regulations Best Available Control Technology (BACT) R to R and R Description of State Air Regulations Allow the Department to request that a facility test its emissions and to approve the protocol used for these tests. The PSD rules allow the installation and operation of large, new sources and the modification of existing large sources in areas that are meeting the National Ambient Air Quality Standards (NAAQS). The regulations define what is considered a large or significant source, or modification. In order to assure that the area will continue to meet the NAAQS, the permit applicant must demonstrate that it is installing the BACT. By law, BACT must consider the economic, environmental, and energy impacts of each installation on a case-by-case basis. As a result, BACT can be different for similar facilities. In its permit application, the applicant identifies all air pollution control options available, the feasibility of these options, the effectiveness of each option, and why the option proposed represents BACT. As part of its evaluation, the Air Quality Division verifies the applicant s determination and reviews BACT determinations made for similar facilities in Michigan and throughout the nation. Applies to new major stationary sources and major modifications as defined in R These rules contain the permitting requirements for sources located in nonattainment areas that have the potential to emit large amounts of air pollutants. To help the area meet the NAAQS, the applicant must install equipment that achieves the Lowest Achievable Emission Rate (LAER). LAER is the lowest emission rate required by a federal rule, state rule, or by a previously issued construction permit. The applicant must also provide emission offsets, which means the applicant must remove more pollutants from the air than the proposed equipment will emit. This can be done by reducing emissions at other existing facilities. As part of its evaluation, the AQD verifies that no other similar equipment throughout the nation is required to meet a lower emission rate and verifies that proposed emission offsets are permanent and enforceable. FEDERAL AIR REGULATIONS Citation Section 109 of the Clean Air Act National Ambient Air Quality Standards (NAAQS) 40 CFR Prevention of Significant Deterioration (PSD) Regulations Best Available Control Technology (BACT) Description of Federal Air Regulations or Requirements The United States Environmental Protection Agency has set maximum permissible levels for seven pollutants. These NAAQS are designed to protect the public health of everyone, including the most susceptible individuals, children, the elderly, and those with chronic respiratory ailments. The seven pollutants, called the criteria pollutants, are carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter less than 10 microns (PM10), particulate matter less than 2.5 microns (PM2.5), and sulfur dioxide. Portions of Michigan are currently non-attainment for either ozone or sulfur dioxide. Further, in Michigan, State Rules to are used to ensure the public health is protected from other compounds. The PSD regulations allow the installation and operation of large, new sources and the modification of existing large sources in areas that are meeting the NAAQS. The regulations define what is considered a large or significant source, or modification. In order to assure that the area will continue to meet the NAAQS, the permit applicant must demonstrate that it is installing BACT. By law, BACT must consider the economic, environmental, and energy impacts of each installation on a case-by-case basis. As a result, BACT can be different for similar facilities. In its permit application, the applicant identifies all air pollution control options available, the feasibility of these options, the effectiveness of each option, and why the option proposed represents BACT. As part of its evaluation, the Air Quality Division verifies the applicant s determination and reviews BACT determinations made for similar facilities in Michigan and throughout the nation.

10 Copperwood Resources, Inc. Page 10 Citation 40 CFR 60 New Source Performance Standards (NSPS) 40 CFR 63 National Emissions Standards for Hazardous Air Pollutants (NESHAP) Section 112 of the Clean Air Act Maximum Achievable Control Technology (MACT) Section 112g Description of Federal Air Regulations or Requirements The United States Environmental Protection Agency has set national standards for specific sources of pollutants. These New Source Performance Standards (NSPS) apply to new or modified equipment in a particular industrial category. These NSPS set emission limits or work practice standards for over 60 categories of sources. The United States Environmental Protection Agency has set national standards for specific sources of pollutants. The National Emissions Standards for Hazardous Air Pollutants (NESHAP) (a.k.a. Maximum Achievable Control Technology (MACT) standards) apply to new or modified equipment in a particular industrial category. These NESHAPs set emission limits or work practice standards for over 100 categories of sources. In the Clean Air Act, Congress listed 189 compounds as Hazardous Air Pollutants (HAPS). For facilities which emit, or could emit, HAPS above a certain level, one of the following two requirements must be met: 1) The United States Environmental Protection Agency has established standards for specific types of sources. These Maximum Achievable Control Technology (MACT) standards are based upon the best-demonstrated control technology or practices found in similar sources. 2) For sources where a MACT standard has not been established, the level of control technology required is determined on a case-by-case basis. Notes: An Air Use Permit, sometimes called a Permit to Install, provides permission to emit air contaminants up to certain specified levels. These levels are set by state and federal law, and are set to protect health and welfare. By staying within the levels set by the permit, a facility is operating lawfully, and public health and air quality are protected. The Air Quality Division does not have the authority to regulate noise, local zoning, property values, offsite truck traffic, or lighting. These tables list the most frequently applied state and federal regulations. Not all regulations listed may be applicable in each case. Please refer to the draft permit conditions provided to determine which regulations apply.