ELKO - General Moly has agreed to set up a trust fund of up to $12 million for a cooperative of growers in Eureka County in exchange for the growers agreeing not to protest the company's proposed Mt. Hope molybdenum mine.
The agreement is between Eureka Moly LLC and the Eureka Producers' Cooperative for a trust aimed at enhancing agriculture in Diamond Valley.
The trust's sustainability efforts may involve buying and retiring water rights, according to General Moly, which is 80 percent owner of Eureka Moly. Korean steel producer POSCO owns the other 20 percent.
"I am pleased that we could reach this significant milestone that creates a Sustainability Trust for the farming community and ends the EPC's opposition to the Mt. Hope Project," Colorado-based General Moly Chief Executive Officer Bruce Hansen said Thursday.
"This trust will, over time, materially reduce water consumption and help sustain the Diamond Valley aquifer," he said.
"We appreciate the efforts that Eureka Moly has put forth in communicating with the EPC and understanding our concerns," said Jim Gallagher, a spokesman for the growers.
"The Sustainability Trust will benefit the agricultural industry and the community of Eureka. We are eager to get the Mt. Hope Mine into production," he said.
Eureka Moly will fund the trust over several years based on the achievement of certain milestones, including timing of the U.S. Bureau of Land Management's approval of the proposed Mt. Hope molybdenum mine 22 miles north of the town of Eureka, General Moly reported.
The new trust can purchase and retire water rights in an effort to provide more balance to water usage in Diamond Valley, according to the announcement.
The trust's activities will be governed by a five-member board, including one Eureka Moly representative.
Water rights can be retired if the trust notifies the State Engineer's Office that it bought the rights and declares them abandoned, said Susan Joseph Taylor, chief of the hearing section for the State Engineer's Office.
"Water rights are the holders' real property to dispose of any way they want to," she said.
Hearings are still pending for General Moly water rights applications, Joseph Taylor also said Thursday.
She also said water rights in Diamond Valley are over-appropriated.
Zach Spencer, manager of external relations for General Moly, said Diamond Valley is allocated 130,000 acre feet per year, the pumping rate is 55,000 acre feet a year, and the recharge rate is 30,000 acre feet a year.
Eureka County and growers protested the company's water rights applications and won over their contention that the State Engineer's Office had more updated models on which to base a decision than did the county.
A district court ruling sent that issue back to State Engineer Jason King.
Eureka County Commission Chairman Leonard Fiorenzi said Thursday he hadn't yet seen General Moly's announcement on the trust but commissioners "will review it and do what we feel is best for the county."
Under the agreement, the Eureka Producers' Cooperative will dismiss its judicial appeal and withdraw its protests to Eureka Moly's water applications and will not file any further protests to any change applications Eureka Moly files prior to production from the Mt. Hope Project.
Eureka Moly is seeking changes based on the latest modeling for the best placement of wells.
Additionally, the producers have agreed not to oppose, delay, or protest any of Eureka Moly's mining and milling plans detailed in the plans filed with the BLM, including permitting efforts with federal, state and local authorities, the General Moly announcement stated.
The company also reported that under the agreement, the producers will support Eureka Moly in its efforts to convince other protesters to end their protests or appeals to any permits or approvals for Mt. Hope.
"This is truly a cooperative agreement that provides benefits to the entire Diamond Valley agricultural community, helps assure all possible impacts of Mt. Hope's anticipated water usage are fully mitigated through the trust retiring active water rights or other conservation methods, and helps us develop Mt. Hope as quickly as possible," said Tim Arnold, general manager of the Mt. Hope Project.
Fiorenzi said Gallagher is on the Eureka County committee looking at the proposed Mt. Hope operation. The county is a cooperating agency in the BLM process.
In a separate announcement Thursday, General Moly said the BLM has released a preliminary draft environmental impact statement, and Hansen said that was a milestone for the company, which hopes to receive BLM approval for Mt. Hope in mid-2011.
Cooperating agencies will review the preliminary draft before the BLM releases a draft EIS to the public later this year.
According to General Moly, the agreement links publication of the draft EIS and project approval to the funding for the trust.
Base funding amounts for the trust can be reduced by 25 percent or 50 percent if Eureka Moly obtains its water rights and other permits, but appeals delay the project.
In all cases, at least 50 percent of the contributions will be provided upon receipt of full financing and the company board's decision to proceed with construction.
The remaining payments will be split evenly, with one payment due not later than 150 days from the commencement of production at the Mt. Hope Project and the remaining payment due one year later, according to General Moly.
"The Mt. Hope Mine will be a neighbor for over 40 years in this community, and it is extremely important that we support the sustainability of the agricultural business community," Hansen said.
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