Romarco, Goldgroup struggle with environmental permitting

VANCOUVER — Romarco Minerals (R-T), trying to open a mine in South Carolina, and Goldgroup Mining (GGA-T), trying to open one in Mexico’s Veracruz State, have both been hit by environmental permitting setbacks recently.

Romarco has been told by the U.S. Army Corps of Engineers that a final decision will not be made on its Federal 404 wetlands permit until August 2013, much later than expected.

The company was originally targeting late 2011 to break ground on its Haile gold mine, but in July 2011 the Army Corps told Romarco it would have to complete a full environmental impact statement on how the mine might affect wetlands in the area. At the time Romarco thought the unexpected requirement would set it back about a year to the end of 2012.

But by the end of this year the Army Corps will only just be submitting its draft EIS, with the process then dragging on until the final August 2013 decision.

And while the wetlands permit is the only federal permit the company needs, it still needs to secure state-level permits including water, air quality, mining, and operating permits. The South Carolina Department of Health and Environmental Control has indicated it will schedule hearings for those permits once the Army Corps files its draft EIS in December.

The company recently updated the resource at its Haile project, which now hosts 71 million measured and indicated tonnes grading 1.77 grams gold per tonne for 4 million contained oz. gold. Reserves stand at 30.5 million tonnes grading 2.06 grams gold for 2 million oz. gold. The company expects to produce about 150,000 oz. per year in the first five years of operation.

On news of the delay Romarco’s share price dropped 24¢ or 30% to 57¢ with 4.4 million shares traded. The company was trading around $2.40 when it released its feasibility study on Haile in February last year.  

Meanwhile, Goldgroup’s change-of-soil-use permit for its Caballo Blanco gold project in Mexico has not yet been approved. Rather than approve the permit outright, the Ministry of Environment and Natural Resources has instead requested further details on a wide range of issues including environmental mitigation measures, potential ecosystem impacts of the project, and economic and social benefits of the project.

The company also still requires approval of its environmental impact statement from the same Ministry. In mid-March the government similarly requested more information on a range of environmental issues rather than simply grant the permit. Requesting further information is, however, fairly common in the environmental approval process, and Goldgroup noted that it still expects to have its two environmental permits approved in the third quarter.

The permitting process for the Caballo Blanco project rests with the federal authorities in Mexico, but some local politicians in Veracruz State have come out strongly against the project. Veracruz governor Javier Duarte de Ochoa has voiced his opposition to the project on environmental grounds. Others have raised concerns about water use, cyanide transportation, and the close proximity of the mine to the country’s only nuclear power plant.

A mid-April preliminary economic assessment on the project outlined a 20,000-tonne-per-day operation producing 687,000 oz. gold and 1.3 million oz. silver over a 7.5-year mine life. Initial and sustaining capital costs came in at US$142.8 million, while total cash operating costs came in at US$784 per oz. gold.

Based on US$1,150 per oz. gold and US$21.50 per oz. silver, the pre-tax net present value totalled US$93.9 million using a 5% discount rate and the internal rate of return was 30% with a 3.3-year payback.

Goldgroup’s share price ended down 9¢ at 39¢ on the news. The company’s share price has slipped from $1.30 in late February.