It's the Pits

Mining made history in Victor. But will a new gold rush devour its future?

Jim Komadina first set foot on the Cresson mine site in December 1992, as a member of the Independence Mining acquisition team looking to buy into the CCV operation. It was not the best of times for the mining industry in Colorado.

Only days before Komadina arrived, the Canadian owners of the Summitville gold mine near Del Norte had declared bankruptcy and abandoned the operation, which had been leaking cyanide from its leach pad and secretly dumping acidic, copper-laden water into the Alamosa River for years. The move prompted an emergency takeover of the mine by the Environmental Protection Agency, which feared that the spring runoff could breach the mine's contaminated ponds and dump even more toxic solutions into the river. The cleanup bill for Summitville is expected to reach $150 million; the EPA is still battling to recover the expense in Canadian courts.

Komadina says he realized going into the CCV deal that Colorado would be strengthening its mining regulations in response to the public outcry over Summitville. "We understood what we were getting into," he says. "We wanted to make this mine a showplace, to show that we can work in an environmentally prudent manner. I believe we have."

A guided tour of the mine by CCV officials is peppered with phrases like "novel construction," "redundant systems" and "excruciating attention to every detail," like blurbs in a real estate brochure. Many of the featured attractions seem designed to allay fears of another Summitville. The site has no exposed tailings ponds, no glittering pools of cyanide soup to attract waterfowl. The leach pad is a triple-layered affair that Komadina describes as a "zero discharge" operation--in other words, the cyanide solution trickles through the rocks and is captured in a reservoir under the pad, then pumped into a recovery facility (sign by the door: "Pour 'Em Big!"), where the gold is electrochemically separated and the solution recycled. Buttons of gold the size of Hershey's kisses are then shipped elsewhere for further refining.

Although CCV expects to produce more than 200,000 ounces of gold this year--worth roughly $70 million on the open market--Komadina says the profit margin is a slim one, given the project's enormous up-front capital costs, $15 million annual payroll, taxes, exploration costs and the like. "This is a gold mine in name, not in terms of the business aspects of it," he says. "At current gold prices, we're just about dead break-even."

Production is expected to increase in coming years, but so is the cost of meeting state reclamation requirements. The mine has posted an irrevocable $22.5 million reclamation bond with the State of Colorado. (That's ten times the amount of the Summitville bond, Komadina notes.) Over the past three years, CCV has already spruced up several played-out areas of the site, backfilling gouged hillsides with waste rock, covering them with topsoil and adding grass seed, wildflowers, saplings and other vegetation; but the hills are slow to recover, and the patchy, slag-ridden landscape resembles the pate of an aging hippie with a scalp disease.

According to Komadina, it costs the company $7,000 an acre to reclaim land that might sell for $1,500 an acre. It's a good deal for the state, he adds, since CCV will eventually be cleaning up not only its own mess but the damage left by previous operations on the site. Even the Carlton Mill, a 1950s-era plant that's been converted into the site headquarters, won't be immune to the process; the mine plans to demolish the mill and expand the leach pad into the area, moving its base of operations into a renovated building in Victor.

Yet even a showcase operation like CCV has had its share of problems--not just with locals, but with state and federal regulators as well. One sore point has been the acidic quality of water leaving the site, primarily from storm runoff and groundwater. The Colorado Department of Health's original draft permit for the operation would have allowed highly acidic levels of water to flow from the site, levels that attorney Roger Flynn describes as "approaching battery acid." The EPA took strong issue with the proposed permit last year, and the state health department responded by toughening the standard.

CCV promptly filed an administrative lawsuit challenging the terms of the new permit. Komadina says the mine has since reached an "understanding" with the state over the storm runoff in one area. (Last month the EPA filed an objection to the state's shifting position on the matter, saying that the decision was reached without appropriate public comment and runs contrary to the EPA's own stringent discharge guidelines for mine sites.)

CCV is still haggling with the state over the quality of the water it releases into Arequa Gulch, a stream that feeds into Cripple Creek. Komadina says the acidic, zinc-laced groundwater flowing into the gulch doesn't come into contact with any of the water used in the leaching process but is "naturally" polluted by its complex interaction with the geology of the area. "We say it's natural," he says. "Whatever's contained in it is what God put into it."

"Our position is that it is not natural," counters Dave Holm, director of the water-quality-control division for the state health department. "It's been influenced by their operation and by historic mining activities."

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