Regulatory Matters and Permitting

(Information in the Current Regulatory Processess Section is posted in reverse chronological order)

Current Regulatory Processes

CZN Makes Applications to the MVLWB and Parks Canada for an All Season Road and Airstrip

On April 16, 2014 CZN made applications to the Mackenzie Valley Land and Water Board (MVLWB) and Parks Canada for permits to construct, maintain and operate an all season road from the Mine to the Liard Highway, and to build and operate an airstrip connected to the road. CZN has proposed to develop the project in two phases. Phase 1 would include all season road construction from the Mine to the already permitted Tetcela Transfer Station, approximately half way to the Highway. This will enable the haul of concentrates over the mountainous section year-round, and greatly reduce haul requirements over the winter period. An airstrip would also be built in Phase 1. Phase 2 would include completion of the all season road to the Nahanni Butte access road which connects to the Highway, and with operation of a barge on the Liard River, would allow concentrates to be transported to the market year-round. The all season road would use the same alignment as the already permitted winter road, although some minor realignments might also be considered.

The MVLWB referred the applications to the Mackenzie Valley Environmental Impact Review Board (MVRB) on May 22, 2014 for environmental assessment (EA) EA1415-001. CZN produced a draft Terms of Reference (ToR) for a Developer's Assessment Report on June 4, 2014. Community meetings to consider the scope of the EA were subsequently held in Nahanni Butte, Fort Liard and Fort Simpson over the period June 9-11, 2014 and a technical scoping meeting was held in Yellowknife on July 8, 2014. The MVRB collated scoping meeting comments, and issued their version of the draft ToR for comment on July 31, 2014. At that time, the MVRB produced a final ToR on Septemeber 12, 2014. At that time the MVRB also issued a draft Workplan which defines the proposed schedule for the EA subsequent to CZN's completion, and the MVRB's acceptance, of a Developers' Assessment Report (DAR).

Request to Amend Security Payments and Length of Permits

CZN Letter to MVLWB regarding Reclamation Liability on April 10, 2014

CZN provided responses to comments from AANDC in their IR response to the Board. At that time, CZN also noted an updated assessment of reclamation liability associated with the Surface Lease, and proposed to increase the amount of security from the current $250,000 to $1.5 million immediately and to post the remaining $7.5 million over the first two years of operation. At this time, the Board is still deliberating a decision on these matters.

CZN reply to MVLWB regarding Information Requests on February 11, 2014

CZN's response to the Information Requests (IR) provided the documents and explanations sought by the Board. AANDC replied to their IR on February 21, 2014. Following that, all documents on the issue were circulated to all parties for review and comment, and CZN was gven a final opportunity to comment.

Board reply to CZN on January 21, 2014

The Board issued an Information Requests (IR) to CZN on the security issue. A similar request was also sent to Aboriginal Affaires and Northern Development Canada (AANDC). The information request to CZN sought confirmation of previous statements made by CZN by requiring the submission of additional documents, specifically, the Release issued by the Crown to Procan. The Board also advised that the start dates of permits cannot be deferred, and the land use permits (LUPs) can only be issued for five years, but are extendable by two years. Thereafter, a new LUP must be applied for. Regarding an extended Water Licence (WL), the Board advised that CZN can make an amendment application for the Board's consideration of a longer period of validity.

CZN Letter to the MVLWB on Decemebr 22, 2013

The WL and LUP for mining operations together require CZN to post a total of $17.7 million to cover reclamation security. $9 million of this is to cover existing site liabilities. The permits require CZN to post $6 million immediately and $3 million at the start of operations. CZN bellieves the Water Board erred in setting this schedule because CZN is not liable for all existing liabilities due to a Release issued by the Crown to Procan in 1987, which limits responsibility for the existing liabilities to those associated with the Surface Lease. When CZN acquired its interests in the property, CZN inherited the Surface Lease with limited liability provisions, and no other liabilities. An Abandonment and Restoration Plan is associated with the Surface Lease and CZN has estimated the cost of implementing this at $2 million. Therefore, CZN has proposed to increase the amount of security from the current $250,000 to $2 million immediately and to post the remaining $7 million over the first two years of opereations. CZN also noted concern regarding the length of permits and that this was effectively being shortened because CZN was not yet in a position to proceed with operations. CZN also inquired as to whether the start date of permits could be deferred, or the permits extended.

Request to Defer Failure Modes and Effect Analysis (FMEA)

CZN Letter to MVLWB on October 3, 2014, responding to Party Comments

CZN noted that all parties disagreed with CZN's proposal to defer the FMEA, but stated that this was ill-concieved given that the delayed project schedule affords ample time to complete the dewatering tests and then the FMEA, and that it is important to complete the work in that order because the results of the dewatering would likely have an important bearing on the outcome of the FMEA. The Board is currently deliberating on this matter.

CZN Letter to the MVLWB on August 25, 2014

CZN advised the Borad of a revised project development schedule, indicating that operations would not now start until 2016 at the earliest. Given the delay, CZN again asked the Board to defer the FMEA because financing to suppport underground mine rehabilitation, including dewatering, was delayed by several months, and that the dewatering would occur in the fall. CZN requested that the FMEA be deferred to June 30, 2015. The Board circulated CZN's request for comment by parties.

CZN Letter to MVLWB on December 9, 2013

Part H, Condition 2 of WL MV2008L2-002 requires a FMEA to be completed six months from the effective date of the WL. The analysis is mostly related to confirming that water storage capacity will be sufficient for all potential circumstances. CZN has requested that the FMEA be deferred until after CZN had performed dewatering tests on the underground workings, planned for summer 2014, which would generate important data on mine inflows which ultimately determine water storage requirements. The Board circulated CZN's letter to all parties for comment. CZN provided a response on January 31, 2014. On March 7, 2014 the Board agreed to defer the FMEA to on or before December 31, 2014.

Issued Permits

Extensive time and effort has been expended in permitting processes, and numerous Environmental Assessments have been carried out for various activities involving exploration and development.

A brief summary of the status of the operating permit process and each active permit follows with a link to the Mackenzie Valley Environmental Impact and Review Board ("MVEIRB" or "MVRB") and/or the Mackenzie Valley Land and Water Board ("MVLWB") websites for a comprehensive list of documentation on the public registry relating to the particular permits. 

Permitting Status Overview

Permit

Agency

Number

Comments

Operating Permits

Type "A" Mine Water Licence

Mine Land Use Permit

Liard Transfer Facility LUP

MVLWB

MVLWB

MVLWB

MV2008L2-0002

MV2008D0014

MV2008T0012

Permit issued

Permit issued

Permit issued

Winter Road Operating LUP

MVLWB

MV2012F0007

Permit issued

Winter Road Operating Water Licence

MVLWB

MV2012L1-0005

Permit issued

Winter Road Operating LUP

Parks Canada

Parks2012-L001

Permit issued

Winter Road Operating Water Licence

Parks Canada

 Parks2012_W001

Permit issued

Tetcela Transfer Facility LUP

Parks Canada

Parks2012-L001

Permit issued

Explosives Plant

Natural Resources Canada

n/a

Application pending

Quarry permit - Mine

AANDC

n/a

Application pending

Quarry permit - Road

AANDC

n/a

Application pending

Bridge Crossings (2) NWPA

Transport Canada

n/a

Not required

Exploration Phase Permits

Underground Decline LUP

MVLWB

MV2012C0008

Issued

Underground Decline Water Licence

MVLWB

MV2001L2-0003

Amended and extended

Road Land Use Permit

MVLWB

MV2003F0028

Issued

Road Land Use Permit

Parks Canada

2009-L02

Issued and extended

–Road Water Licence

Parks Canada

2009-W02

Issued

–Phase 4 Drilling LUP

MVLWB

MV2013C0002

Issued

 

Permitting - Public Hearings in Fort Simpson

Public Hearings January 30 2013, in Fort Simpson with the Mackenzie Valley Land and Water Board

Regulatory Process Leading up to the Issue of Operating Permits

Applications for Operating Permits

The Company's principal focus has been to advance the Prairie Creek Property towards receiving a Type “A” Water Licence and associated Land Use Permits, through the regulatory process established under the Mackenzie Valley Resource Management Act, to regulate the further development and subsequent mine production at Prairie Creek. In May 2008, CZN applied for operating permits. The applications were subsequently referred to an environmental assessment (EA).

After successful completion of a nearly four year environmental assessment process, the Mackenzie Valley Environmental Impact Review Board (“Review Board”) issued its Report of Environmental Assessment and Reasons for Decision for Canadian Zinc’s proposed Prairie Creek Mine on December 8, 2011.

The Review Board concluded that the proposed development of the Prairie Creek Mine as described in the Report of Environmental Assessment, including the list of commitments made by Canadian Zinc during the proceedings, is not likely to have any significant adverse impacts on the environment or to be a cause for significant public concern.

The Review Board concluded that an environmental impact review of this proposed development is not necessary and that the Prairie Creek Mine project should proceed to the regulatory phase for the issue of permits by the Mackenzie Valley Land and Water Board (“Water Board”).

In a Decision dated June 8, 2012, the Minister of Aboriginal Affairs and Northern Development, on behalf of the responsible Ministers with jurisdiction, including the Minister of the Environment, the Minister of Fisheries and Oceans, the Minister of Environment and Natural Resources, the Minister of Transport Canada and the Minister of Environment and Natural Resources of Government of the Northwest Territories, advised the Review Board of the Decision that the Ministers will not order an environmental impact review of the proposed development of the Prairie Creek Mine, nor will they refer the proposal to the Minister of the Environment for a Canadian Environmental Assessment Act joint panel review.

The Company’s Developers Assessment Report (DA) which explains the proposed mine and road developments and assesses the potential environmental impacts is available online in the public registry at http://www.reviewboard.ca/registry/project_detail.php?project_id=70&;doc_stage=5

The Review Board’s Report of Environmental Assessment and Reasons for Decision document for Canadian Zinc Corporation’s Prairie Creek Mine EA0809-002 is available online in the public registry at http://reviewboard.ca/registry/project_detail.php?project_id=70&;doc_stage=11

 

Permitting - Review Board Tech Session

Mackenzie Valley Review Board's Technical Session in Dettah 

  

Work Plan and Directive on Type "A" Water Licence (Operations)

In January 2012, following the completion of the Environmental Assessment in December 2011, the Water Board commenced the regulatory process for the issue of a Type “A” Water Licence and Land Use Permits for the operation of the Prairie Creek Mine. In February 2012, the Company submitted a Consolidated Project Description (CPD), highlighting the changes that resulted from commitments made by Canadian Zinc during the environmental assessment process.

The Water Board completed its review of the information contained in the application, Environmental Assessment and the CPD, and in May 2012 issued a Directive and Workplan requiring additional information to be submitted on a specified timetable.

During the course of the previous Environmental Assessment the Company committed to further water quality/treatment studies. The water quality/treatment studies are based on products generated from representative bulk rock and water samples previously collected from site which have been processed utilizing a milling process circuit developed from previous metallurgical studies by SGS Lakefield.

The Company collected a 700 kg bulk composite sample of mineralization from the 870 m and 930 m underground levels at Prairie Creek. The material was shipped to SGS Minerals Services in Vancouver for processing. The locked cycle tests were performed with water that was collected and shipped down from the Prairie Creek Mine in order to produce representative process water. The sample was crushed and sorted then sent to SGS Lakefield to undergo Dense Media Separation and then returned to Vancouver.

SGS carried out a number of locked cycle tests in order to generate mineral concentrates, waste tailings and waste water. The process water then underwent further treatment studies conducted by CEMI Inc. along with toxicity studies by Nautilus Environmental. Other generated products, such as the tailings, are slated for further engineering studies related to paste backfill.

In October 2012, the Company filed its last response to the Water Board’s Directive. In a submission in November, the results of additional water quality/treatment studies received from SGS and CEMI were provided.

In November 2012, a series of technical sessions were held in Yellowknife to review the Company’s submissions to the Water Board. The sessions triggered 24 additional Information Requests which the Company responded to in December 2012. Follow-up meetings to further discuss the Information Requests and the replies were held in Yellowknife and Fort Simpson during the week of December 20th .

Formal written interventions to the MVLWB were submitted by the Intervening Parties on January 11, 2013. CZN submitted a response to the Interventions on January 18th. During the period January 29-31st, 2013, the Company and Intervenors attended Public Hearings held in Fort Simpson, adjudicated by the Water Board. A Public Hearing scheduled to be held in Nahanni Butte on February 1st was postponed due to weather preventing air access. A teleconference was held instead on February 8th, 2013.  Final closing statements by all Intervenors were filed by February 15th and the Company filed its’ closing statement on February 22nd, 2013. A draft Water Licence was issued for review on March 15th, 2013. CZN provided review comments on April 19th. A final licence was issued on July 5th with a term of 7 years, with Reasons for Decision issued on July 30th. Ministerial approval is pending but is expected before September 28,  2013.

Water Licence for Prairie Creek Mine Operation (MV2008L2-0002), awaiting Ministerial approval

Land Use Permit for Prairie Creek Mine Operation (MV2008D0014), issued

Land Use Permit for Liard Transfer Facility (MV2008T0012), issued

Click here and then click on 2008 when in the Mackenzie Valley Website: Public Registry MV2008L2-0002, MV2008D0014 and MV2008T0012.

Road Permits

In January 2013, the Water Board issued the Company LUP MV2012F007 for the establishment and operation of the access road that will service an operating Prairie Creek Mine. The Land Use Permit was issued for a period of five years ending in January 2018, but can be extended for 2 further years, and permits the construction, maintenance, operation and use of the portions of the access road connecting the Prairie Creek Mine to the Liard Highway situated outside the expanded Nahanni National Park Reserve. This permit allows the outbound transportation of the zinc and lead concentrates to be produced at the Mine and the inbound transportation of fuel and other supplies during the actual operation of the Prairie Creek Mine. The new road permit incorporates realignments of the original route which will improve access and further reduce the potential for environmental impact.  Associated with this LUP, the MVLWB also issued Type “B” Water Licence MV2012L1-0005, valid for a period of seven years, to allow the limited use of local water resources and disposal of waste during road construction and operations.

Land Use Permit for Prairie Creek Mine Access Road (MV2012F0007), issued

Water Licence for Prairie Creek Mine Access Road (MV2012L1-0005), issued

Click here and then click on 2008 when in the Mackenzie Valley Website: Public Registry MV2012-F0007 and MV2012L1-0005.

The Company applied for an additional Land Use Permit and Water Licence for operations relating to the portion of the access road that connects the Prairie Creek Mine to the Liard Highway through the expanded Nahanni National Park Reserve.

In April 2012, the Company met with Parks Canada at a two day technical session in Fort Simpson, NWT, to discuss the applications associated with road access through the Nahanni National Park Reserve. The Nahanni Butte Dene Band and the Dehcho First Nations were represented at the technical session..

In July 2012, Transport Canada confirmed that two bridges proposed to be built for stream crossings within the NNPR do not require authorization according to the Navigable Waters Protection Act.

Further specific field information was collected in September 2012 and submitted on November 19th, 2012. Following a meeting in Yellowknife on December 19th, additional information was forwarded to Parks Canada on February 13, 2013. Draft permits were issued on May 13th, to which CZN provided comments on May 27th. A period of reclamation liabilities assessment then followed, with cost estimates produced by Parks Canada and CZN, and subsequent review and revision. Following the conclusion of this exercise, final permits were issued on August 30th, 2013.

Land Use Permit for Prairie Creek Mine Access Road (in NNPR), issued

Water Licence for Prairie Creek Mine Access Road (in NNPR), issued

Land Use Permit for Tetcela Transfer Facility (in NNPR), issued

Exploration Phase Permits

New Mine Decline Land Use Permit Issued (Exploration)

In May 2012, the Water Board issued a new Class ‘A’ Land Use Permit, MV2012C0008, for the activity of underground decline development, valid for a period of five years commencing May 10, 2012 and expiring on May 9, 2017. The new Land Use Permit entitles CZN to conduct mining exploration and associated activities, including underground decline development, at the Prairie Creek Mine.

The new decline and underground development will be strategically located to facilitate the drilling of key areas and also to allow integration of the underground development with that required to further access the mine resource, and to enable drilling of the under-explored portions of the deposit at depth during the period leading up to mine construction.

Issued Exploration Permits

The Company has continued with exploration on its claims and leases using existing exploration permits while simultaneously advancing applicatiuons for production permits. The Company presently has an active LUP to diamond drill anywhere on the property. In addition a LUP and associated WL was secured which, if the Company chose to move forward on, enables advanced exploration in the form of a second underground decline and allows for the discharge of treated mill water from the mine.

New Mine Decline Land Use Permit Issued (Exploration)

In May 2012, the Water Board issued a new Class "A" Land Use Permit, MV2012C008, for the activity of underground decline development, valid for a period of five years commencing May 10, 2012 and expiring on May 9, 2017. The new Land Use Permit entitles CZN to conduct mining exploration associated activities, including underground decline development, at the Prairie Creek Mine.

The new decline and undereground development will be strategically located to facilitate the drilling of key areas and also allow integration of the underground development with that required to further access the mine resource, and to enable drilling of the under-explored portions of the deposit at depth during the period leading up to mine construction.

Class “B” Water Licence Amended and Extended (Exploration)

The Water Board also approved an amendment and extension to the Company’s existing Class “B” Water Licence, MV2001L2-0003, for the management, treatment and discharge of mine water from the mine site. The Water Licence has now been amended to cover the underground development of the new decline from the existing 870 m level, including pumping, treatment and discharge of water inflows using the existing water treatment infrastructure, and placement of waste rock on an existing waste rock pile. The term of the Water Licence has been extended to September 9, 2019.

With the issue of an amended Water Licence, a new Minewater Contingency Plan was submitted for review. An application request to further revise this Water Licence compliance levels to be comparable to the Metal Mining Liquid Effluent Regulations was made in August and approved by the Water Board in January 23rd, 2013 for a period of one year, after which it reverts back to the original licence compliance levels on January 23, 2014.

Land Use Permit (MV2003F0028)

 

Permitting - Access Road

Access Road

An application for LUP MV2003F0028 was submitted to the MVLWB on September 25 2003, to reopen the winter access road from the Liard Highway to the Prairie Creek Mine on the existing alignment in order to replenish supplies to sustain multi-year exploration. The road was previously permitted prior to 1984 when the Mackenzie Valley Resource Management Act (MVRMA) was enacted. Therefore, the Company considered the permit application to be exempt from screening for EA, or ‘grand-fathered’, according to Part 5 of the Act. However, the MVLWB took a contrary view, and referred the application to EA. The Company contested the referral, and a Judicial Review took place on December 9, 2004 in the Supreme Court of the Northwest Territories. A decision in favour of the Company was handed down May 6, 2005 and the MVLWB were instructed to proceed with the permit process.

The MVLWB subsequently received letters from the Nahanni Butte Dene Band who contend that the issue of a permit for the road would be an infringement of their aboriginal and treaty rights, protected by Section 35 of the Constitution Act, 1982, and that the Crown had not consulted them on the matter. The MVLWB decided to suspend the permit process until the Department of Indian and Northern Affairs (INAC) had informed them that appropriate consultation had taken place between the Crown and the Band. The MVLWB received a consultation report from INAC on February 15, 2007. The MVLWB then circulated the application in order to receive further comments on conditions of a LUP and subsequently issued the LUP on April 11, 2007 with an expiry date of April 10, 2012. CZN subsequently applied for and was granted an extension to the permit for a further two years. CZN does intend to use the permit to open the whole road, but the permit does allow CZN to carry out maintenance of the all season road bed near the mine.

Public Registry MVLWB MV2003f0028

Access Road Rehabilitation: Class "B" Water Licence (MV2007L8-0026)

Subsequent to receiving LUP MV2003F0028, a preliminary technical assessment of the road conditions took place which determined that during the course of over 3 years of time that passed in the regulatory process, a number of flood events had occurred which caused significant washouts to occur over the Prairie Creek/Funeral Creek all season sections of the road. These sections needed to be rebuilt with the addition of suitable rock armour to provide protection from future washouts. This work would be completed in during the summer/fall, and would substantially reduce the work that would be required during the winter season to re-establish the road base in these sections. Since significant amounts of material were required to be moved to creek bed locations below the ordinary high water mark, a Class B Water Licence needed to be applied for from the MVLWB.

An application was submitted on June 7, 2007 to the MVLWB and a Water Licence was issued March 20, 2008. In addition to this, an application seeking authorization from the Department of Fisheries and Oceans Canada (DFO) was required. This DFO application for authorization was also submitted in early June 2007 and an authorization to proceed with the rehabilitation work was issued from DFO on July 15, 2008. The majority of the rehabilitation work was completed during the summer of 2008.

Click here and then click on 2008 when in the Mackenzie Valley Website: Public Registry MVLWB MV2007L8-0026

Parks Canada Access Road Land Use Permit and Water Licence

With the expansion of the Nahanni National Park Reserve (“NNPR”), approximately half of the access road now crosses the Park. Subsequent to Park expansion, Parks Canada issued permits for the existing road comparable to those issued by the MVLWB (LUP 2009-L02 and Water Licence 2009-W02). Parks Canada has issued two2 year extension to the original road permit. 

 

Permitting - Jurisdiction Area

Map Showing the Access Road and Regulatory Jurisdiction Area

In July 2012, Parks Canada extended the existing Land Use Permit for the portion of the road that passes through the expanded Nahanni National Park Reserve for an additional term of two years to April 2014. This will allow CZN to undertake road rehabilitation work and prepare the road for operational use. The permit allows use of the road for the re-supply and maintenance of the mine, but does not provide for the planned operational use of the road.

Phase 4 Drilling Permit (MV2013C0002)

With the expiry of Phase 3 Drilling LUP MV2004C0030, the Company applied for LUP MV2013C0002 (Phase 4 Drilling) as its replacement, and to be identical in terms of scope and conditions to the expired LUP. The MVLWB agreed that, because the LUP applied for was the same as the expired permit, no environmental assessment was required, and the new permit was issued on April 25th, 2013 for a five year term. This will allow the Company to drill anywhere on the existing mineral claims.

 

Permitting - Drill Rig

Longyear 38 Diamond Drill

Public Registry MVEIRB

Public Registry MVLWB MV2013C0002

and Parks Canada for an All Season Road and Airstrip

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