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Gold/Mining/Energy : Royal Oak-RYO -- Ignore unavailable to you. Want to Upgrade?

To: JERRY GACH who wrote (672)	2/16/1998 11:22:00 PM
From: roger fontaine	Read Replies (1) \| Respond to of 1706

Another small surprise for RYO shareholders which isn't very positive.I have decided to put RYO as a hold for the present.I was going to accumulate soon but because of several uncertainties I am not going to accumulate any more shares for now. Royal Oak faces possible delay in mine startup Applies to divert water from B.C. lake Monday, February 16, 1998 By Allan Robinson Mining Reporter Royal Oak Mines Inc. is facing a possible delay in the proposed April startup of its $427-million Kemess gold and copper mine in north-central British Columbia because of a shortage of water. In mid-December Royal Oak applied to the B.C. Ministry of Environment, Lands and Parks for approval to drain two million cubic metres of water from Duncan Lake during February and March, but approval has not yet been granted. The water project would require construction of a 3.7-kilometre access corridor for a pipeline and electric power supply system to allow water pumping. "It's only a precautionary measure we are taking," Graham Eacott, a spokesman for Royal Oak, said yesterday. "At this stage it's possible that we won't need the project." Mr. Eacott said Royal Oak's preliminary figures suggest the pipeline would cost $750,000 and it would mean a possible delay in the startup of Kemess of only two weeks. He added that Royal Oak, which is based in Kirkland, Wash., is waiting for the construction permit and expects to make a final assessment on the water diversion project within two weeks. In the application for the permit, Larry Connell, the manager of environmental services for the Kemess project, said the company's consultants estimate that -- based on average levels of precipitation -- the amount of water required by the mill will exceed the amount of water projected to accumulate in the mine's tailings pond by 3.6 million cubic metres. That estimate covers water needs from April, 1998 to March, 1999. "Realistically, precipitation runoff would not be available to make up this shortfall until mid-May and June of 1998," Royal Oak told the government. That would necessitate a delay in the startup of the mine, planned for "on or before April 1," and is not a preferred option, Royal Oak said. "I can't comment on that [report]," Mr. Eacott said when asked about Royal Oak's filing to the government. Royal Oak estimates that the drainage project could reduce the water level of Duncan Lake by at most 0.8 metres, and would have no effect on fisheries and wildlife. Environment ministry officials, however, say the scheme potentially could affect another lake and stream system into which the water would be diverted for use by Royal Oak. The ministry has completed a technical review and recently passed on the proposal for review by the Tsay Keh Dene Band, which has retained consultants to study the impact of the proposed lake drainage on their environment, Peter Freeman, the lawyer for the band, said. Last June, Royal Oak obtained an injunction permitting the company to remove a roadblock set up by the band to stop haulage to the mine construction site. The Indian community lives on the western shore of Lake Williston, about 350 kilometres north of Prince George. Royal Oak's original plan had assumed that enough natural water runoff would have been collected in the tailings pond to allow the mine to start up in April, said ministry official Egon Weger. Royal Oak attributed the water shortage to delays in completing the construction of its dam for the tailings pond in the fall of 1996 because of a change in location and design. In its application to the government, filed on Dec. 17, Royal Oak said it intended to start constructing the pipeline in late December, and begin pumping on Feb. 1. The water would be siphoned from Duncan Lake to Kemess Lake and then to the company's tailings pond. Mr. Eacott said the water drained from Duncan would be replenished by the spring runoff. The amount of water being drained from Duncan Lake exceeds the total volume of water in Kemess Lake. Royal Oak said in its filing that it needs the additional water before it can begin milling operations in April, in order to "sustain milling operations through to the spring freshet [a rush of spring water caused by melted snow] in June of 1999." Royal Oak's consultants, Knight Piesold, said in December that based on its studies, and using "optimistic projections," the amount of water now available at Kemess mine is about three million cubic metres less than the amount needed to sustain operations for the first full year.