Michigan approves Eagle mine (December 31, 2007)

Rio Tinto (RTP-N, RIO-L) subsidiary Kennecott Eagle Minerals will be going ahead with its Eagle nickel-copper mine in the Upper Peninsula of Michigan, following approval by the state’s Department of Environmental Quality.

The 2,000-tonne-per-day mine will operate from a decline ramp and exploit a resource of 3.6 million tonnes at grades of 3.8% nickel, 3% copper, 0.8 gram platinum, 0.5 gram palladium and 0.3 gram gold per tonne. The capital cost is estimated at US$300 million, up from US$150 million in previous estimates.

Eagle will produce an average 13,000 tonnes nickel and 11,000 tonnes copper annually, and have a mine life of 10 years.

Approvals for Eagle, under Michigan’s 2004 sulphide mining law, were stalled in March, when the state pulled preliminary approvals for the project over procedural issues. A draft report critical of Kennecott’s plan for a crown pillar over the underground stopes had not been posted on the state’s website, and opponents of the project forced the state to suspend its preliminary approval.

The new permit allows Kennecott to mine from 143 metres above sea level to 327.5 metres above sea level, a 184.5-metre vertical extent that leaves a crown pillar over the workings. Subject to further geotechnical investigation, the state may permit mining to a higher level.

Kennecott already plans to backfill all underground stopes.

Anti-mining groups, including the Sierra Club and National Wildlife Federation, continue to oppose the mine. A final permit — a lease for surface use — is scheduled for a decision from the state’s Department of Natural Resources in January.

Another company that might be affected by the development is Aquila Resources (AQA-T, AQLRF-O), which is working on a preliminary economic assessment and environmental baseline studies for its Back Forty project in Menominee Cty., also in the Upper Peninsula. Aquila released a statement calling the state’s decision to issue the permits “technically and legally appropriate.”