June 16, 2010 in Business

Idaho approves mining lease in Latah County

By The Spokesman-Review
 

BOISE – Idaho’s top state elected officials have voted unanimously to sign a 29-year lease of state lands for a proposed feldspar and quartz mine and mill near Bovill, Idaho, though the Canadian firm proposing the project has generated no operating income and is deemed financially “high-risk.”

Jane Wittmyer, consultant for the i-minerals USA project, told Idaho’s state Land Board the project northeast of Moscow could generate 60 to 80 new jobs in the area. “The bottom line is this is a good project that will help fund the endowments,” Wittmyer said. Idaho’s state endowment lands largely benefit the state’s public schools.

The state Land Board, which consists of the governor, the Attorney General, the Secretary of State, the state controller, and the state superintendent of schools, voted unanimously in favor of the lease Tuesday. At the recommendation of the state lands staff, it’ll be a “phased” lease, requiring increasing payments and bonding as the project progresses. The firm first applied for a lease in 2008.

Roger Kauffman of Hayden Lake, president and CEO of i-minerals USA, said in a statement, “The process to secure access to this ground was more complex and less timely than we anticipated, but we are confident that we can develop a project that will provide economic benefit to the local constituents and attractive returns to our shareholders. We are anxious to get back to work.”

The lease covers 250 acres in northeastern Latah County, not far from the Benewah, Shoshone and Clearwater county lines.

Local officials enthusiastically support the project. “It is a much-needed project for the resources and the jobs it will create to support families and livelihood in this time of high unemployment,” wrote Jack Buell, chairman of the Benewah County board of commissioners, in a letter to the Land Board. Local business owners in Deary, Helmer and Elk River signed a petition supporting the lease, and several state lawmakers are in favor of it.

At a public hearing in Deary, however, some local residents expressed concerns about the company’s finances, environmental impacts of the project and impacts on grazing in the area

Jane Wright, financial analyst for the state Department of Lands, told the board her research showed the firm is registered on the Canadian stock exchange and auditors have classified it as “an exploratory company with an ongoing concern.” She said, “To us accountants, that means it’s a very high risk.”

The company was $10.6 million in the red on its latest balance sheet and is reliant on investor funds, having not generated any operating revenue, she said.

That’s why the state negotiated a phased lease, she said. For the first three years, i-minerals would pay the state $25,000 a year, with 5 percent annual increases in the fourth and fifth years and $50,000 in bonding required. Rent and bonding requirements would rise in subsequent years; the state estimated it could earn $12 million in mineral royalties for the endowment over the 29-year term of the lease.

The mill site is a former Simplot Co. open-pit clay mine that has been reclaimed and is beginning to refill with trees and grass.

George Bacon, Idaho state lands director, said, “The worst-case scenario would be that they start construction, moving dirt and moving things around, and then can’t finish it. If that occurs, we should be adequately bonded to restore the site.”

Feldspar and quartz are used in glass, ceramics, paint, filler and high-tech industrial applications.


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