Kuusamo Mine Project Eia SUMMARY

Kuusamo mine project eia SUMMARY

YVA-konsultti Ramboll Finland Oy

Dragon Mining Oy 2.12.2013 KUUSAMO MINE PROJECT EIA SUMMARY

CONTENTS

1. INTRODUCTION 3 1.1 EIA procedure 3 1.2 Permitting procedure 4 2. OVERVIEW OF THE PROJECT 5 2.1 Background 5 2.2 Kuusamo deposits 5 2.3 Technical description of the project 6 2.4 Products 8 3. EIA SCOPE AND ALTERNATIVES EVALUATED 9 3.1 Northern and southern mining areas 10 3.2 Production Center - Alternative 1, Juomasuo 10 3.3 Production Center - Alternative 2, Salmijärvi 11 3.4 Production Center - Alternative 3, Kuusamo waste management centre 12 3.5 Alternative Zero 13 3.6 Processing and Product Alternatives 13 3.7 Tailings Alternatives 13 4. KEY IMPACTS, IMPACT MITIGATION AND IDENTIFIED RISKS 14 4.1 Key impacts 14 4.1.1 Discharging water 15 4.1.2 Mining waste 16 4.1.3 Activities of the mine and processing plant 16 4.2 Impact mitigation 18 4.3 Major risks identified 18 4.4 EIA key findings 19

APPENDICES

Appendix 1 Notes to the Kuusamo Mineral Resources and Competent Persons Statement

1 2 1. INTRODUCTION

1.1 EIA procedure

Dragon Mining Oy (“the Company”) is investigating the possibil- For the SIA part of the process, a survey was conducted to ity of establishing a gold production centre in the Kuusamo re- obtain local residents views on the prevailing state of the envi- gion, north east Finland (“the Project”). ronment and possible concerns related to the Project. In additi- An Environmental Impact Assessment (EIA) commenced in on to the officially required meetings with the public, meetings the spring of 2011 in order to collate the information and kno- were also arranged with the representatives of the Käylä Village wledge required to facilitate the subsequent permit processes in Farmers´ Society, tourism associations, reindeer owners’ associa- respect of the Project. The EIA process focuses on comparing the tions and the City of Kuusamo. impacts caused by the various alternatives on the environment, people and local industries. The EIA process according to Finnish legislation comprises two stages. The first stage is to develop the assessment programme and define the scope and methods to be used. During the se- cond stage the programme is executed and the results of the as- Independent EIA sessment are published. Both the assessment programme and The owner of the Kuusamo Mine Project is Dragon the report are reviewed by the responsible coordinating autho- Mining Oy. On request of the Company, Ramboll rity. The coordinating authority for the Project is the ELY Centre Finland Oy has performed the Environmental North Ostrobothnia (POPELY, Centre for Economic Development, Impact Assessment (EIA) for the Project. Technical Transport and the Environment). input data and project description have been ac- A key part of the EIA process is to ensure that relevant informa- quired from the Company. Based on the techni- tion is made available to the public as well as to provide oppor- cal description, the environmental impacts of the tunities for public contributions into the planning and decision project have been assessed independently by making stages of the Project. To facilitate stakeholder coopera- Ramboll experts based on baseline surveys, mod- tion a steering group was formed as part of the social impact as- els, calculations and professional experience and sessment (SIA) process. Representatives of the local and regional opinion. authorities, local business owners as well as residents and key or- ganizations were invited to join the steering group. The POPELY statement on the programme was issued in June 2011 and defined both the specific topics to be covered when assessing environmental impacts and also the baseline surveys to be performed. The assessment was conducted in accordance with the defined programme and takes into account the POPELY requirements. Project impacts on people, the human environment, watercourses, traffic, air quality, and industries (such as tourism, reindeer husbandry, fishing and other nature-based activities) were sur- veyed as part of the EIA.

3 1.2 Permitting procedure

On-going exploration activities, initial metallurgical investiga- The Environmental Permit will be the mechanism used by tions and preparation of preliminary designs for the mine and environmental authorities to control the impact of the Project process plant were carried out concurrently with the EIA. Upon through setting permit regulations, for example by defining completion of the EIA, detailed planning can commence. The de- threshold values for metal content of waste water. The Northern sign solution selected for development will be incorporated into Finland Regional State Administrative Agency (AVI) is the autho- the subsequent environmental permit application. rity responsible for the environmental permitting for the Project. The EIA procedure is not a permitting procedure. However, applications for the permits required to undertake mining activities cannot be submitted until the EIA process is complete. The POPELY statement closing out the EIA procedure, together with the final EIA report, are pre-requisites to commencing the Environmental Permit, the Mining Licence and Land Use Permit applications.

Figure 1. Summary of project phases of the Kuusamo Mine Project

4 2. OVERVIEW OF THE PROJECT

2.1 Background

Owner of the project Exploration and mining company Dragon Mining Oy (previously History of the project Polar Mining Oy) is a wholly owned Finnish subsidiary of Australian The mineral potential of the Kuusamo region has been known Securities Exchange (ASX) listed Dragon Mining Limited. In 2003, for several decades. The exploration carried out by the Company Dragon Mining Limited acquired the Orivesi Gold Mine and sev- has focused on the Käylä Anticline, which forms part of the eral exploration projects (including the Jokisivu and Kuusamo Kuusamo greenstone belt. The Käylä Anticline is a structure ex- gold deposits) from Outokumpu Oyj. tending for some 20km between Käylä and Kuontijärvi. Dragon Mining Oy now operates two gold mines in Finland, Most of the gold and other metal deposits in the Kuusamo Orivesi and Jokisivu. The ore from both mines is processed region were discovered during exploration carried out by the through the Vammala Plant located in Sastamala. Geological Survey of Finland (GTK) in the mid-1980´s. Dragon Mining Limited’s activities are focussed in Finland and Outokumpu Oyj acquired the prospecting rights over the area Sweden. Including contractors, the company employs 158 per- encompassing the five gold deposits (Juomasuo, Hangaslampi, sons in Finland, 103 in Sweden and 3 in Australia (Status 6/2013). Pohjasvaara, Sivakkaharju and Meurastuksenaho) in 1990 and continued examining mining options until 1994 (including test mining). The work undertaken did not result in a decision to commence mining activities. Exploration activities completed during 2010-2013 by Dragon Mining has produced vast amounts of new and reliable information on the geology and extent of the deposits. For example, ge- ochemical compositions have been analysed from over 24 000 rock samples. Investigations have also included geophysical, metallurgical and environmental studies.

2.2 Kuusamo deposits

The Juomasuo, Hangaslampi, Pohjasvaara, Sivakkaharju and Meurastuksenaho deposits are located within valid mining licenses with a combined total license area of 71.5 hectares. In addition to the mining licenses, Dragon Mining Oy has claim and exploration licence application areas as well as reservation areas in the region. At the end of 2012, the total Measured, Indicated and Inferred Mineral Resource estimate for the five Kuusamo gold deposits was 3.4 million tonnes grading 4.2 g/t gold (Table 1). Cobalt is Figure 2. Dragon Mining operations in Finland and Sweden. also abundant and in some areas copper, uranium and rare earth metals are present at elevated levels. The Juomasuo deposit is Red icons are mines, black icons are processing facilities and yellow icons are exploration or mine projects. the largest of the five deposits.

5 Table 1. The gold Mineral Resource estimates for the Juomasuo, Hangaslampi, Pohjasvaara, Meurastuksenaho and Sivakkaharju deposits, 31.12. 2012. Reported at a 1.0 g/t gold cut-off grade. A description of the Kuusamo resource estimation procedures and Competent Person statement is included in Appendix 1.

Measured Indicated Inferred Total Gold Gold Gold Gold Tonnes Ounces Tonnes Ounces Tonnes Ounces Tonnes Ounces (g/t) (g/t) (g/t) (g/t) Northern mining area Juomasuo 158 000 8.4 42 500 1 368 000 4.7 205 900 415 000 3.8 50 500 1 941 000 4.8 298 900 Hangaslampi 341 000 5.3 57 500 62 000 4.3 8 600 403 000 5.1 66 100 Pohjasvaara 81 000 3.3 8 600 49 000 5 8 000 130 000 4 16 600 Total 158 000 8.4 42 500 1 790 000 4.8 272 000 526 000 4.0 67 100 2 474 000 4.8 381 600 Southern mining area Meurastuksenaho 61 000 2.4 4 700 831 000 2.3 61 800 892 000 2.3 66 500 Sivakkaharju 50 000 7.2 11 500 50 000 7.2 11 500 Total 61 000 2.4 4 700 881 000 2.6 73 300 942 000 2.6 78 000 Kuusamo deposits Kuusamo total 158 000 8.4 42 500 1 851 000 4.7 276 700 1 407 000 3.1 140 400 3 416 000 4.2 459 600

2.3 Technical description of the project

The environmental impact assessment covers all phases of the project: construction, production, closure and rehabilitation. The actions and activities in various phases of the project are presented in Figure 3.

Construction phase Water management

Waste rock management Infrastructure facility and tailings manage- Overburden removal construction ment facility construction

Production phase Mining

Transportation Waste rock

Ore

Crushing Water intake

Tailings Processing Chemicals

LIFE OF MINE Water treatment Water

Product

Transportation WATER MANAGEMENT AND MONITORING WATER

Closure phase

TMF and WRMF Building and Pit closure closure infrastructure demolishing

Post-closure phase Monitoring Water treatment (if required) (if required)

Figure 3. Typical activities during the lifespan of a mine project. TMF = tailings management facility, WRMF = waste rocks management facility.

6 Construction Mining Construction can only commence after all required permits Mining activities include drilling, blasting, loading and tran- have been granted. The construction phase is expected to last sport. Waste rock will be transported to a waste rock manage- 2-3 years and may also continue during the production phase. ment area and the ore either directly to the crushing plant or to At the start of the construction phase the mine area will be fen- the Run of Mine (ROM) stockpile area. The estimated ore to be ced and required infrastructure (roads, pipeline, drainage and cla- mined annually is 0.3-0.5 million tonnes. rification ponds), crushing plant, service and office buildings and The near surface portions of the deposits are amenable to the processing plant built. Tailings and waste rock areas, dams open pit mining. The deeper parts of the Juomasuo deposit are and the water management system will also be constructed. potentially amenable to underground mining. Impacts from Before the commencement of mining the overburden mate- both open pit and underground mining activities have been as- rial from the pit area will be removed and the existing Juomasuo sessed in the EIA. test pit will be emptied. Processing The commencement of underground mining requires the Ore is to be crushed in two or three phases to produce a rock construction of a network of tunnels and shafts, as well as main- material of a size where more than 80% of the material is smaller tenance areas and storage facilities underground. than 20mm. Water will be added to the crushed ore and the mix Production will be ground to a fine grained slurry. The slurry will be pumped to the flotation circuit, during which the valuable minerals will be separated and a concentrate will be produced. The concentrate can be further processed via a leaching process to produce gold doré bars. The tailings material, which is the fine grained material left after the separation of valuable minerals, is divided into two or three fractions and pumped to the tailings management facility. The main phases of the processing are presented in Figure 4.

Ore input 500 000 t/y

Crushing 500 - 25 mm

Ore storage

ProcessPROSES waterSIVESI circulationKIERTO Ore grinding

Secondary Gravity Flotation Low-S tailings Classi cation otation separation

Gold and/or cobalt containing Flotation product concentrate NaCN Tailings with leaching elevated uranium concentration

NaCN desctruction Gold doré bars High-S tailings (INCO process)

Figure 4. Main phases of the ore processing options with end product and tailings alternatives

7 Water management Closure and rehabilitation The water in the process will be recycled efficiently. The tail- The closure and rehabilitation plan defines the required activi- ings material (slurry) will be pumped to the tailings management ties to secure the safety of the mine area, from an environmental facility where the material is divided into two separate pools de- and public view point, once the mining is complete. The rehabi- pending on the sulphur content of the material (high and low litation activities assessed in the EIA included, among others, fen- sulphur tailings). It is also possible that tailings with elevated ura- cing of the open pits and landscaping of the tailings and waste nium concentration will be separated into a third fraction. Water rock areas. A monitoring plan will determine how the environ- from the tailings area will be pumped to separate clarification ment will be monitored and the long-term safety of the area se- ponds and then back to the processing plant. cured. Excess water from the process will be generated only infre- quently and this water will be treated in a water treatment facil- 2.4 Products ity before it is discharged into a lower waterway. Other waters in the mine area, including rain, snowmelt and water from the At present, gold is the only metal with possible economic poten- mines, will be collected into a separate pool. Only water treated tial in the Kuusamo Mine Project. The optional products gener- adequately will be discharged to the local waterways. A simpli- ated from gold production are gold bearing concentrate or gold fied water management chart is presented in Figure 5. doré bars. The EIA also includes an evaluation of the potential impacts of producing a cobalt bearing concentrate. The Company is not contemplating uranium extraction or producing uranium-based products. Uranium is regarded as a waste element, and it is on this basis that its occurrence, processing and disposal options have been assessed in the EIA.

Hangas- Waste rock Juomasuo management lampi facility Pohjas- vaara

Industrial area

Stormwater basin Raw water intake

Water treatment Low-S tailings Process plant area

Constructed Water treatment wetland High-S tailings area

Discharge

Figure 5. Mine and process water management in the Juomasuo Area (Alternative VE1).

8 3. EIA SCOPE AND ALTERNATIVES EVALUATED

The EIA sets out the possible environmental impacts resulting from the mining activities in the northern and southern mining areas, as well as for each of the three alternative concentration plant locations (situated in three different watercourse areas) (Figure 6).

Figure 6. Location of the Project Area and Process Plant Alternatives.

9 3.1 Northern and southern mining areas 3.2 Production Center - Alternative 1, Juomasuo The implementation alternatives for the Project cover gold mining in the northern and southern mining areas. The Northern Mining In Alternative 1 (VE1), ore processing would be undertaken in the Area consists of the Juomasuo, Hangaslampi and Pohjasvaara de- immediate vicinity of the Juomasuo mining area. The planned posits, which contain the majority of the gold resources of the surface area of the tailings management facility is expected to be Project. The Northern Mining Area is located between the Käylä approximately 44 ha and a separate clarification pond an addi- and Säkkilä villages, some 2 to 3 kilometres from the village cen- tional 14 ha. The crusher, process plant, storage and office build- tres and approximately 12 kilometres from the Ruka tourism cen- ings would be situated to the west of the Hangaslampi mining tre. The Northern Mining Area is visible on the horizon from the area. Road traffic to and from the area would occur via the west- top of the Ruka fell, though details of the operation are unlikely ern side of the area, through the improvement of the existing to be discernable. road network. The Southern Mining area is located 5 kilometres from Ruka The drainage water from the mine, surface run-off and pro- and is visible from the western slopes of the Ruka fell. The proba- cess water would be treated and directed south into the Ylempi bility of mining the Meurastuksenaho and Sivakkaharju deposits Välilampi lakelet through an engineered wetland that would be will depend on a number of factors, including but not limited to built in the Välilamminsuo swamp. Ylempi Välilampi is part of the the ground water conditions, the impact on the Ruka tourism re- Koutajoki watercourse. sort and the level of Mineral Resources identified.

Figure 7. Location Map - Alternative (VE1) ´Production Center in Juomasuo´.

10 3.3 Production Center - Alternative 2, Salmijärvi

The Salmijärvi alternative location for the Production Centre (VE2) lies in the north-western part of the Kuusamo municipality, bor- dering the Posio municipality. In VE2, the ore would be transported by truck approximately 40km from the mining area, to be processed at a separate process plant area. Utilisation of the Salmijärvi alternative (VE2) would require the construction of a new road connection. The tailings management facility would be located to the west of National Road 5, between the Salmijärvi and Kontiojärvi lakes. The surface area of the tailings management facility is expected to be approximately 44 ha. The eastern end of the Salmijärvi lake could be used as a clarification pond, having a surface area of some 16 ha. The crusher, process plant and storage buildings would lie east of the tailings management facility. From the Salmijärvi lake, the treated water would be directed into the Lauttajärvi lake. The Salmijärvi and Lauttajärvi lakes form part of the Kemijoki river watercourse area.

Figure 8. Location map - Alternative (VE2) ´Production Centre south-east of Salmijärvi lake´.

11 3.4 Production Center - Alternative 3, Kuusamo waste management centre

The third alternative location for the Production Facility (VE3) lies to the south of the City of Kuusamo, close to the existing waste management centre. In VE3, ore would be transported approximately 30 to 50 kilometres, using existing roads, to the process plant. The tailings management facility would be situated east of National Road 20 (the Oulu Road). The surface area of the tailings management facility is expected to be approximately 44 ha, with the separate clarification pond being around 14 ha. The crusher, process plant and the stockpiles would be situated to the east of the tailings management facility. Treated process water from the process plant and surface run-off would be directed into the Koivulampi lakelet, through a new pipeline that is to be built un- derneath the road, and further directed into the Kurkijärvi lake. Both lakes are in the Iijoki watercourse area.

Figure 9. Location map - Alternative (VE3) ´Production Center south of the City of Kuusamo waste management centre´

12 3.5 Alternative Zero

Pursuant to the requirements for the EIA, all alternatives assessed need to be compared to the so-called Alternative Zero. This is where the project is not undertaken, no mining operations commence in the areas in question and no processing or related activities occur. The prevailing natural conditions and the natural environment in the project area remain in their current state. The employment and business opportunities related to mining activities in the Kuusamo region would be lost. The Projects’ positive contribution to furthering the EU’s and Finland’s mineral policies would also be lost.

3.6 Processing and Product Alternatives

The EIA covers different technical implementation alternatives for the beneficiation of the gold bearing ore. Two alternatives were assessed with respect to the final end product from the concentration process – gold bearing concentrate or gold doré bars. Concentrate would be produced using a flotation process and the concentrate subsequently delivered to a smelter for further processing. Producing doré bars would require further processing of the gold bearing concentrate using a leaching process.

3.7 Tailings Alternatives

The EIA covers the assessment of possible alternatives of the tailings material and their storage. The tailings will be divided into low and high sulphur fractions, and it is also possible that tailings with elevated uranium concentrations will be separated into a separate fraction. The tailings generated from the mining and concentrating activities will contain low levels of naturally occurring radioactive elements, including radium and uranium. The tailings generated from the treatment of ore are expected to be classified as Low Activity Waste (LAW). The EIA covers the impacts of different disposal alternatives for the LAW tailings, mixed disposal or separate disposal in order to enhance manageability.

13 4. KEY IMPACTS, IMPACT MITIGATION AND IDENTIFIED RISKS

4.1 Key impacts

Based on the EIA the key impacts identified fall upon the natural environment, traffic (Alternatives 2 and 3) and social environment. Based on the SIA, it can be concluded that the local population is concerned over the project’s impacts on natural environment, waterways and tourism. The sources and the impacts are described and summarized in Table 2.

Table 2. Sources of impacts, descriptions and characterisation of impacts.

Source of impact Description Characterisation of impact Discharging water Treated waste waters from processing Treated surplus waters could contain for example, solid particles, nitrogen, sulphates and metals. Impacts caused by treated surplus waters occur Treated run-off waters from the mine site and the mainly in the closest lakelets of the alternative operation sites. Impacts processing plant area, and waters pumped out diminish further from the sites. of the mine Negative impacts on fish stocks caused by flow changes may occur in the nearest waterways (Pohjaslampi, Salmijärvi, Koivulampi) from the processing plant alternatives.

No impacts on fish stocks, fishing or recreational uses are expected further from the sites. Mining waste Waste rock generated in mining activities is sto- Waste rock piles and tailings areas are visible in the landscape. The sout- red at the waste rock area hern mining area is visible from the peaks of the Ruka fell and Valtavaara.

The long distance from Ruka and Valtavaara to the northern mining area will reduce the visual impact. Tailings generated in the process is placed at the tailings area Other alternatives will only have minor landscape impacts because of scarcity of population and sparse use of the areas for recreational purposes. Dust is generated in processing waste rock and tailings Dust induced impacts are limited to the immediate vicinity of the activities. Activities of the mine Footprint of the activities and the impact of that Every alternative location affects areas that contain endangered bog fau- and processing plant on drainage na, water springs, and/or bog flora, which requires application for a special permit Mining and breaking of oversized rocks Mining and production centre areas are unavailable for reindeer mana- Crushing and loading gement, which reduces pasturage areas and may result in cost and labor increases for the reindeer owners’ associations. Transportation of products, equipment and ore Noise, vibrations and dust generated by mining activities are mainly limited Closure of mine and processing plant to the mining areas. In certain unfavourable weather conditions temporary adverse conditions may affect the closest houses and residential building areas.

Elevated traffic increases the risk for accidents on the transportation route. The effect is most significant in the Waste Management Centre Alternative (VE3).

14 4.1.1 Discharging water

Waste water comprises water from the processing plant and the plant areas. Calculated impact results refer to the worst possible tailings management facility, as well as rain and snowmelt that case. In general, an impact may result in quantitative changes in will be collected for treatment from the operating area. The base the water flow due to water intake and discharge, or qualitative assumption in the EIA has been that all the waters that are dis- changes due to discharge of the treated water. For the Project, charged from the area are treated in a separate water treatment the primary impacts on watercourses which were identified con- before discharge into a waterway. sist of both qualitative and quantitative impacts arising from raw The assessment has been conducted taking into account two water intake and discharge of treated water. expected water discharge situations: Concentrations are compared to the receiving watercourses’ 1. Standard operation of the mine, when only treated water quality criteria which are defined separately for each water- rain and snowmelt from the industrial area and waste way. The criteria are determined based on the viability of fish and rock management facility, together with mine drainage benthic fauna. The Project’s impacts on waterways will mainly be water, will be discharged limited to the upper reaches of the waterways. For Alternative 2. Occasional situations when it is necessary to discharge 1 (Juomasuo) flow changes may cause negative impacts on water from the closed circuit into a watercourse via the fish stocks in the Pohjaslampi lakelet. Impacts further down the water treatment process waterway are assessed to be low. In Alternative 2 (Salmijärvi) Separately, a worst-case scenario assuming an emergency sit- flow changes may cause negative impacts on fish stocks in the uation was also assessed. In an emergency situation, due to an Salmijärvi lake. Impacts further down the waterway are assessed overflow or some other hazard there may be an uncontrolled dis- to be low. In Alternative 3 (waste management centre) flow chan- charge of water from the tailings management facility into a wa- ges may cause significant negative impacts on fish stocks in the tercourse without being treated properly first. Koivulampi lakelet. Further down the waterway impacts are as- The assessment of the water impacts was based on the base- sessed to be low. line surveys of water quality and fish resources together with the A comparison showing impacts on surface water, groundwa- expected quality of the treated water from the mine and process ter and fish stocks for each alternative can be found in Table 3.

Table 3. Comparison of impacts on water courses, groundwater and fish stocks for each alternative.

Northern Mining area (Juomasuo) Southern mining area Alternative Northern mining area concent- Salmijärvi concentration Waste management centre, al- Southern mining area ration plant alternative VE1 plant, alternative VE2 ternative VE3 (all alternatives) Impacts on watercour- Minor requirement for intake Need for intake water from Need for intake water from the No water intake. ses due to changes in water from the Pohjaslampi la- the Salmijärvi lake at the con- Kurkijärvi lake at the concentra- Changes in water flow the water flow rate kelet. Drainage waters expected centration plant. Drainage wa- tion plant. Drainage waters from rate minor. No impact on to be usable in the process ters from the northern mining the northern mining area dischar- the Kesäjoki river. plant. Changes in the water flow area will be discharged to the ged to the watercourse. Due to rates detectable primarily in the watercourse. Low flow rates the very low flow rates of the wa- upper reaches of the watercour- in the watercourse make the tercourse the impacts on the flow se close to the mine. percentage change high. rates relatively high. Effects of drainage Load and impacts mainly focus- Impacts on the water quali- Impacts primarily focused on the Load minor. In Kesälahti water discharges on ed on the upper reaches of the ty in lake Salmijärvi and the Koivulampi lakelet, the effects the impacts due to the the watercourses un- watercourses, i.e. the lakelets lakes downstream from it decrease downstream of the wa- drainage water load are der normal operation, of Ylimmäinen Välilampi and likely to remain fairly minor tercourse (sulphate, metals). not distinguishable from process waters are Alimmainen Välilampi (solid (sulphate) the normal fluctuations recycled matter, sulphate). No impact on the Kitkajoki river is expected. Impact on fish resour- Changes in flow rate and water Flow rate and water level Impacts due to changes in water Impacts on fish resources ces level may have a harmful effect changes as well as dam- quantity may be significant in the very minor on fish stocks in the Pohjaslampi ming up the east end of the Koivulampi lakelet. In other res- lakelet. In other watercourses Salmijärvi lake will cause pects the impacts are assessed to the impacts remain minor. significant impacts on the remain minor fish stocks. In other respects the impacts are assessed to remain minor. Groundwater impacts No classified groundwater areas No connection to the close- No classified groundwater areas, A classified groundwa- or privately owned wells wit- by groundwater area used no privately owned wells used for ter area used for water hin the range of 1 km – minor for water supply by the water water supply in the area of in- supply within the area of impact cooperative – minor impact fluence – minor impact influence – impact dee- med unlikely

15 4.1.2 Mining waste

The most significant waste components from the mining opera- The most significant impacts due to tailings are caused by tions consist of waste rock from mining and fine-grained tailings clarified waters discharged from the tailings management facili- from processing. Waste also includes the fine aggregate accumu- ty, leachate from the basins, potential dust generation, and after- lated on the bottom of the rain water pond and the sediment closure impacts. The large area of the tailings management faci- from the water treatment plant. Waste rock will be stored at the lity and the loss of natural state vegetation will impact the visual waste rock management facility and other waste components aspects of the landscape and the natural environment. mentioned will be stored at the tailings management facility. The The tailings management facility might fall under the super- landscape impacts of mining waste are discussed in chapter 4.1.3. vision of the environmental authorities and the Radiation and Waste rock Nuclear Safety Authority. Tailings generated from mining activi- Waste rock is defined as mined rock that doesn’t include me- ties will probably be classified as low activity waste and will in- tals in such amounts that the rock would be economically exp- clude naturally occurring radioactive elements, especially eleva- loitable. Waste rock will be stored at the waste rock management ted concentrations of uranium and radium. There are no signi- area. Waste rock produced at the Northern mining area is ex- ficant environmental impacts expected from the management pected to be used as stope backfill during the Juomasuo under- of low activity waste and, according to the relevant regulations, ground mining phase. When mining activities cease waste rock such waste can be managed without special, radiation-related will be used for landscaping the mine area. Waste rock can also be safety measures. utilized in construction projects taking into consideration its en- In the Salmijärvi alternative (VE2), it is proposed that the east vironmental properties and suitability for construction material. end of Salmijärvi lake will be used as a clarification basin due to its Tailings area natural geometry and this would result in a major change in the Tailings are the remnants of crushed and milled ore, from natural condition of the area. which valuable minerals have been removed during the process. After the process, the slurry of fine-grained tailings will be pum- 4.1.3 Activities of the mine and processing plant ped into the tailings management facility to allow the settling of suspended solids from the slurry and their subsequent storage in Impacts on nature the tailings basins. From the tailings management facility, the cla- The Project’s most significant impacts on animals and vegetation rified process water will then be directed into clarification ponds fall on endangered bog flora and fauna. A brown bog-rush oc- where remaining solid matter will be deposited. From the clarifi- currence located in the Juomasuo area and a yellow marsh saxi- cation ponds the clarified process water will be recycled into the frage occurrence at the Southern mining area fall under the pres- concentration process. During the closure phase of the mine, the ervation provision in the Nature Conservation Act. There are also tailings management facility may be covered by earth layers, or stream channels and water springs at or in the immediate vicinity other suitable materials with low permeability. of all the project areas. According to the current best practice recommendations, tai- The impacts on the endangered flora and fauna are most sig- lings should be classified into two different fractions: low-sulphur nificant at the mining areas. The choice of location for the proces- tailings (low arsenic and sulphur content) and high-sulphur tai- sing plant will have some influence on how much habitat of the lings (high arsenic and sulphur content). The separation of an ad- endangered plants will be disturbed. ditional fraction, containing higher levels of radioactive material At bird species inventories observations of species mentioned and disposed of in a dedicated basin, was also considered in the in EU’s nature directive, Finnish bird species with special require- EIA. ments and endangered species were made at each alternative lo- In the preliminary processing tests, the share of the low- cation. The project alternatives do not vary considerably in terms sulphur tailings was approximately 80% and high-sulphur tailings of impacts on bird species values. approximately 20% of the total. In all project alternatives, the to- Landscape impacts tal surface area covered by the tailings management facility and The most significant impacts on the visual aspects of the post-clarification basins extends to around 60 ha. If the separati- landscape will be caused by the waste rock stockpiles, the con- on of tailings with elevated uranium concentration occurs this se- centration plant and heating plant exhaust stacks and their parate tailings area would cover around 4 to 5 ha, which is under steam plumes. The size of the tailings management facility may 10% of the total surface area. also impact the visual landscape despite being at ground level.

16 Figure 10. Illustration of the Northern mining area during operation in case the processing plant is located at the Juomasuo area, alternative VE 1.

The visibility of the Southern mining area from the Ruka tourist In terms of traffic safety the most critical road points are inter- centre is likely to be the most significant landscape impact, even sections and steep curves on narrow roads. When heavy traffic though the mining areas, based on the current Mineral Resource significantly increases on narrow roads and especially at curves, estimates, are small in size. The tailings and waste rock facilities of for example the Viipuksentie road and on the beginning of the the northern mining area may also be visible along the northern Sallantie road, dangerous situations can occur. horizon, from the peaks of the Ruka fell and Valtavaara. However, When reviewed as a whole, the smallest changes in traffic le- the long distance between the areas will significantly reduce this vels, impacts on traffic safety and the carrying capacity of the impact. The landscape impacts related to other alternative pro- road network occur for the alternative VE1 in which the proces- cess plant locations will be minor because of the scarcity of po- sing plant is located at the Juomasuo area. In all of the alternati- pulation in these areas and the fact that recreational activities in ves, the relative increase in heavy traffic amount is most signifi- the vicinity of these sites are very limited. Impact due to the waste cant on the Viipuksentie road that leads to the Southern mining rock facilities in the Northern and Southern mining areas will re- area. main similar regardless of the process site alternative. Noise, dust and vibration impacts Road Traffic impacts Mining causes moderate vibrations in areas with recreatio- The amount of traffic attributable to mining activities is reaso- nal houses and residential buildings. Effects are detectable by air nably small overall, but can cause relatively significant changes on pressure fluctuations. Mining will be planned in such a way that roads that currently have small amounts of traffic. Compared to allowable limits for vibrations are not exceeded. the current situation, heavy traffic will increase most significantly Noise limit values will be exceeded at one holiday house in the on the Viipuksentie road (Road Number – 18894) that leads to the Southern mining area. At all other areas noise levels will be under Southern mining area and on the Sallantie road (Road Number – the limits and the effect is small. 950) that leads to the Northern mining area.

17 Dust impacts will be limited mainly to the mine site. It’s pos- Visual impacts can be minimized by leaving forested zones be- sible that in unfavourable weather conditions temporary dust tween the operation areas and residential areas and roads. When impacts may occur in the closest holiday house and residential operations are ceased and the mine enters closure phase, land- building areas. Emissions from the heating plant, machinery and scaping becomes the key method for mitigating landscape im- traffic do not affect the air quality of the area. As a whole the impacts. pacts on air quality are minor in all project alternatives. Road traffic increases caused by mining and impacts on the Social impacts road network and traffic safety can be regulated through improv- Putting the project into action may affect the residential en- ing the existing traffic network and if necessary, reprioritising the vironment through noise, dust or traffic. Many locals are worried measures presented for highways 5 and 20 in the Kuusamo’s traf- about the effects of mining activities into operational precondi- fic safety plan. tions of tourism. On the basis of the different impact assessments Potential health impacts occur mostly as secondary impacts conducted (natural environment, health, community, landscape and they can be addressed through the same measures used for and utilization of natural resources) mining activities do not pose mitigating primary impacts (i.e. noise and dust formation and a risk operational preconditions of tourism. If the Project pro- spreading). Monitoring can be used to make sure that no such ceeds it will have positive effects on employment and businesses. changes in the environment are caused that could lead to health impacts. Informing and interaction enhancement play a key role 4.2 Impact mitigation in mitigating social impacts. Impacts on reindeer management can be lessened through Harmful impacts caused by the Project can be mitigated through fencing of the operating areas, monitoring the pasturage behav- careful planning and taking appropriate action. The best oppor- iour of reindeers and establishing a collaboration forum to en- tunities to reduce project impacts are related to decisions tak- hance interaction between parties. Mining’s impacts on tourism en early in the process, for example when choosing the location can be addressed by delivering a realistic image of the operation for the processing plant and project design. During the operat- and its impacts. Appropriate communication based on facts and ing phase of the mine, emissions and impacts can be mitigated study results of the impacts should be used to prevent false and through various technical and structural solutions. This EIA has unjustified claims being associated with the Project. been conducted assuming that the emission and impact mitiga- Impacts on utilization of soil and rock can be addressed tion methods described in the technical description of the EIA re- through utilizing the overburden and waste rock generated by port will be in place. mining as much as possible. Impacts on lower waterways and fish stocks can be addressed through circulating the process water as efficiently as possible 4.3 Major risks identified and treating all surplus waters prior discharging to the lower waterways. Structural protection of the tailings management facil- A Project risk assessment was conducted for each of the different ity can be used to mitigate impacts to the surface waters, soil project phases: construction, operations and closure. The aim of and groundwater. Nature impacts can be reduced through de- the risk assessment was to cover the standard mining operation sign and construction of the operating areas so that unnecessary and related discharge risks, as well as risks to the environment and draining is prevented. Appropriate logging and soil excavation people in emergency and accident situations. As a rule, the risk timing minimizes the impacts caused. assessment was limited to the risks to the environment and resi- Noise impacts on the surrounding areas can be efficiently miti- dents surrounding the mining area. gated through design and timing of operations. Pit walls, forests The risk assessment indicated that the emergency situations and waste rock piles can act as noise barriers during operation. potentially having the most severe consequences could be dam Additional noise barriers can be built to further reduce the dis- failure in the tailings basin, fire hazards, fuel and waste oil tank persion of noise. Vibration caused by mining can be regulated ruptures, pipeline and valve failures, unexpected excessive dust through careful planning of charging and timing of blasting. Dust generation from the tailings facility and failure of the crusher dust emissions and impacts can be reduced through blasting tech- control system. These situations could lead to the dispersion of niques, water spraying and covering the crushing plant. detrimental substances into the environment. Impacts caused by the changes in land use can be addressed The risk of a major, uncontrollable dam failure was assessed through land use planning, where sufficient buffer zones are ap- to be low during the operating phase of the mine and with applied to the surrounding areas of the mine and new residential propriate closure the residual risk would be even further reduced. and recreational areas are situated a sufficient distance away from Though consequences of dam failure can be severe, the probabi- the mine. Landscape impacts can be mitigated by restricting the lity of such a failure was assessed low, because the dams would height of waste rock piles and the tailings management facility. be subject to regular internal and external monitoring.

18 The relatively long distance from housing areas and other sen- sitive land use reduces any potential impacts arising from che- mical spills, fires, noise or dust. A risk management plan and pre- cautions for exceptional situations will be designed to address the major risks identified. Possible exceptional situations are ta- ken into consideration in the planning and construction phases.

4.4 EIA key findings

The Kuusamo mine project was evaluated from an environmental, sociological and social perspective. The evaluation was based on results from different impact assessments. The technical processes proposed are widely applied and re- cognized with no true technical risk. The project is considered environmentally feasible when proposed actions for reducing impacts are included. Based on the EIA work no significant effects on living comfort, the state of the environment, nature recreation opportunities or tourism opportunities (which are a concern for residents and ent- repreneurs in the area) are expected. Open, continuous and regular interaction with the wider community, providing information on the true impacts and the results from monitoring after operations has commenced, are required in order to gain a social licence for the Project.

19 Appendix 1 NOTES TO THE KUUSAMO MINERAL RESOURCES AND COMPETENT PERSONS STATEMENT

The Juomasuo Mineral Resource was completed by independent Competent person statement: consultants RungePincockMinarco Limited in October 2012 us- The information in this report that relates to Mineral Resources ing Ordinary Kriging grade interpolation constrained by resource is based on information compiled by Mr Trevor Stevenson, a outlines using a nominal 0.5 g/t gold cut-off and minimum 2 me- Fellow of the Australasian Institute of Mining And Metallurgy and tre down hole length for the gold resource and a nominal 1% a Chartered Professional (Geology) who is a full time employee of sulphur and 0.015% cobalt cut-off and a minimum down hole RungePincockMinarco Limited and Mr Aaron Green Bsc(Hons), length of 2 metres for the cobalt resource. Block dimensions used a Member of the Australian Institute of Geoscientists, former- in the model were 6m NS x 2m EW x 5m vertical. Statistical anal- ly an employee of RungePincockMinarco Limited. The Juomasuo, ysis determined that high grade cuts of 120 g/t and 130 g/t gold Hangaslampi, Pohjasvaara, Meurastukasenaho and Sivakkaharju were applied to the main zones of mineralisation. The remaining Mineral Resources have remained unchanged since they were re- zones were assigned a high grade cuts ranging from 18 to 50 g/t leased to the Australian Stock Exchange on27 March 2013 – Annual gold. Statistical analysis determined that a high grade cut of 2% Report 2012. cobalt was appropriate. The Mineral Resource for gold was reported at a cut-off grade of 1 g/t gold and the Mineral Resource Mr Neale Edwards BSc (Hons), a Fellow of the Australian Institute for cobalt was reported at a cut-off grade of 0.05% cobalt. of Geoscientists and Mr Matti Talikka MSc (Geology), a Member of The Hangaslampi Mineral Resource was completed by inde- the Australasian Institute of Mining and Metallurgy, who are full time pendent consultants RungePincockMinarco Limited in June 2012 employees of Dragon Mining Limited and have sufficient experien- using Ordinary Kriging (OK) grade interpolation, constrained by ce which is relevant to the style of mineralization and type of depo- resource outlines on mineralisation envelopes prepared using a sit under consideration and to the activity which they are underta- nominal 0.5 g/t gold cutoff grade and a minimum down hole king to qualify as Competent Persons as defined in the 2004 Edition length of 2 metres for the gold resource and a nominal 1% of the Australasian Code of Reporting for Exploration Results, Mineral sulphur and 0.01% cobalt cut-off grade for the cobalt resource. Resources and Ore Reserves, verify the form and context in which the Block dimensions used in the model were 6m NS x 2m EW x 5m information regarding the Juomasuo, Hangaslampi, Pohjasvaara, vertical. Statistical analysis determined that high grade cuts of Meurastukasenaho and Sivakkaharju Mineral Resource has been 70 g/t gold for the gold resource and 0.5 % cobalt for the cobalt reported and consider it to be consistent with the release on the 27 resource were appropriate. The Mineral Resource for gold was re- March 2013. ported at a cut-off grade of 1 g/t gold and the Mineral Resource for cobalt was reported at a cut-off grade of 0.05% cobalt. The information in this report that relates to Exploration Results is The Pohjasvaara Mineral Resource was completed by indepen- based on information compiled by Mr Neale Edwards BSc (Hons), a dent consultants RungePincockMinarco Limited in January 2011 Fellow of the Australian Institute of Geoscientists and Mr Matti Talikka using Ordinary Kriging grade interpolation constrained by resour- MSc (Geology), a Member of the Australasian Institute of Mining and ce outlines using a nominal 0.5 g/t gold cut-off and minimum 2 Metallurgy, who are full time employees of Dragon Mining Limited metre down hole length. A high grade cut of 30 g/t gold was and have sufficient experience which is relevant to the style of mi- applied to all objects. Reported at a cut-off grade of 1 g/t gold. neralization and type of deposit under consideration and to the ac- The Meurastuksenaho Mineral Resource was completed by in- tivity which they are undertaking to qualify as Competent Persons dependent consultants RungePincockMinarco Limited in January as defined in the 2004 Edition of the Australasian Code of Reporting 2011 using Ordinary Kriging grade interpolation constrained by for Exploration Results, Mineral Resources and Ore Reserves. Mr Neale resource outlines using a nominal 0.5 g/t gold cut-off combined Edwards and Mr Matti Talikka consent to the inclusion in the report with a nominal 0.05% cobalt cut-off and minimum 2 metre down of the matters based on their information in the form and context in hole length. A high grade cut of 37 g/t gold was applied to all which it appears. objects. Reported at a cut-off grade of 1 g/t gold. The Sivakkaharju Mineral Resource was completed by independent consultants RungePincockMinarco Limited in January 2011 using Inverse Distance to Power 2 grade interpolation constrained by resource outlines using a nominal 0.5 g/t gold cut-off and minimum 2 metre down hole length. No high grade cuts were applied. Reported at a cut-off grade of 1 g/t gold.

20 Kuusamo mine project eia SUMMARY

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