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Protecting our Environment

Water

CDM holds concessions authorizing it to use 16 wells up to a combined tested capacity more than enough for the operational requirements throughout the life of mine.

The Rio Mayo river and Mocuzarit Reservoir, 3km north of the mine are the only relevant surface water in the region. The operation does not discharge process or other impacted water and does not affect surface waters. All process waters are contained within the process facilities either in holding ponds with double geomembrane liners or in lined and secure leach pads. The processing plant is designed so that any spills or leaks of process chemicals collect in the raffinate pond.

Storm water diversions have been constructed to reroute existing creeks around the operations area. The streams ultimately flow to the Mocuzarit Reservoir (their natural destination). There is no net effect on the local surface hydrologic balance. Rainwater falling on the project operational area is retained and used within the process water system.

Vegetation and Wildlife

The project area is not within or adjacent to any protected area for natural resources and net effects of the project on vegetation and wildlife in the long term have not been and are not expected to be, significant. The nearest protected area is the Sierra de Álamos-Arroyo Cuchujaqui, 10.6 km south of the Piedras Verdes site. The project currently disturbs an area of ~1,129 Ha. Corresponding salvage operations were instituted and a plant bank was established for revegetation. Field surveys revealed a limited number of protected wildlife species and when reclamation and revegetation is implemented, the original habitat will effectively be restored.

Air Quality

Air quality sampling is performed in accordance with Mexican and international standards on an ongoing basis. Water trucks are used throughout operations to suppress dust on haul roads and unpaved primary access roads. Acid mist caused by the electrowinning process is controlled by heat retention beads and balls and surfactants and volatile organic compounds originating from the solvent extraction area are minimized through roof covers and use of a diluent with a low vapor pressure. These measures are sufficient to prevent harmful effects on health. The results of air quality samples for chemicals have all been within required standards.

Waste Generation

Testing has demonstrated that the ore and waste material are not hazardous. No sample has exceeded regulatory limits. Waste streams generated by the electrowinning tank house are stored in containers and periodically shipped back to the anode manufacturer for recycling. Clean used oil is stored in a tank, filtered and used for blasting. Oily waste material that cannot be recycled is sent to an authorized confinement facility. All solid waste is handled through an arrangement with the town of Navojoa for disposal in their municipal landfill.

Reclamation Plan and Recovery

A detailed reclamation strategy was developed as the basis for the annual Asset Retirement Obligation (“ARO”) calculation. The net present value of the cost of the reclamation strategy was $15.1M for CDM and $7.0M for KM as of 4Q 2011. This cost will be incurred when mining activities are finished. The reclamation strategy includes detailed actions to prepare the land for the re-establishment of the wildlife habitat and prevent erosion.

Office and plant facilities will be sold for salvage or demolished at the close of operations and all waste materials will be removed. Tanks will be removed and the sludge or sediments that have accumulated in the bottom of the tanks will be sent to their final disposal site. With regards to leach pad reclamation, a system to cover the leach pad to prevent rainwater infiltration into acid material is planned. For process ponds, remaining sludge will be covered with sealed plastic membranes after removal of fluids to prevent water from infiltrating and to prevent plant roots from growing in the sludge. Waste rock will be used for recontouring in order to soften banks and berms. Once the mine leach and waste rock piles have been recontoured, a native soil cover will be placed over the entire surface. Native plants, especially sensitive species, have been recovered from areas of disturbance for storage and eventual return to the mine site and a seed mix of native species will be utilized for re-vegetation.

Regulatory Framework and Key Environmental Permits

Permitting processes for both the establishment of new mines and the expansion of existing ones are straightforward, transparent, and subject to specific and reasonable time limits. Most are handled via Internet portals that enable the applicant to monitor the approval process and interact accordingly. The construction and operation of mines in Mexico are regulated by federal law. Construction and similar permits are issued at the municipal level.

The SEMARNAT, Secretaría de Medio Ambiente y Recursos Naturales, is the federal environmental regulation agency. It issues Cambio de Uso de Suelo (Land Use Change, “CUS”) permits for mining activities and approves Manifestación de Impacto Ambiental (Environmental Impact Statement, “MIA”). The Comisión Nacional de Agua (National Water Commission, “CNA") has authority over all issues concerning water rights and activities that affect ground and surface water. The SEMARNAT and CNA are the two primary agencies with regards to environmental permits and regulation.

Main Regulatory Entities

Entity Function / Relevant Permits
SEMARNAT
  • The SEMARNAT is responsible for protecting and conserving ecosystems, natural resources and environmental services
  • Issues CUS permits and approves environmental impact statements and environmental risk studies
Procuraduría Federal de Protección al Ambiente (enforcement arm of SEMARNAT, “PROFEPA”) CNA
  • Ensures that industrial, agricultural and forestry activities are carried out in accordance with applicable law and the terms of SEMARNAT permits
  • National agency responsible for water supply, sanitation, water resource management, irrigation and flood protection
  • Grants water use concession titles and issues water discharge permits
Instituto Nacional de Antropología e Historia (National Institute of Anthropology and History, “INAH”)
  • The INAH is a Mexican federal government bureau established to guarantee the research, protection and promotion of the archaeological and heritage of Mexico
  • Clearance of the mine site is required from the INAH prior to the start of mining operations
Secretaría de la Defensa Nacional (Ministry of National Defense, “SEDENA”)
  • The SEDENA manages Mexico's Army and Air Force and issues licenses to use and store explosives
Municipality of Álamos
  • Local Municipality issues respective construction permits

CDM has obtained all necessary permits for the construction and operation of the mine. All required permits were obtained prior to all material construction at Piedras Verdes including (i) the approval of the MIA which involves a full environmental impact evaluation, (ii) the CUS, and (iii) environmental emergency prevention and response programs.

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