IRP Montana Resources Expansion Final Report

IRP-DesignDocumentforExpansionofYDTINovember202017

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ReportoftheIndependentReviewPanel

DesignDocumentforExpansionofYankeeDoodleTailingsImpoundment

MontanaResources,LLPButteMontana

November202017

PanelMembers:Dr.LeslieSmith,P.Geo.Mr.JamesSwaisgood,P.E.Dr.DirkvanZyl,P.E.


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1.INTRODUCTION1.1PanelChargeToobtainapprovalforexpansionoftheYankeeDoodleTailingsImpoundment(YDTI),the Montana Code Annotated (MCA) requires the owner Montana Resources LLP toappointanIndependentReviewPanel(IRP)toundertakeareviewoftheDesignReportpreparedfortheexpansion.TheMontanaDepartmentofEnvironmentalQuality(DEQ)approved themembership of the Independent Review Panel prior to the start of thereview. The charge of the Panel is to provide an evaluation indicating whether theproposed YDTI expansion is designed, and will be operated, monitored, and closedusing the most applicable, appropriate, and current technologies and techniquespracticable,givensite-specificconditionsandconcerns.Section 82-4-377 of MCA requires that the Panel review the design document, theunderlying analysis and assumptions for consistency with code requirements. ThePanelisalsotoassessthepracticableapplicationofcurrenttechnologyintheproposeddesign. The Panel has formed its opinions on the basis of: (i) consideration of thedesignconceptsaspresentedintheDesignReport,(ii)siteinvestigationsundertakentofurthertheunderstandingofthegeologic,geotechnicalandhydrogeologicconditionsofthesurficialandbedrockunitsinthearea,(iii)siteinvestigationsundertakentofurthercharacterizethegeotechnicalpropertiesoftheexistingYDTIembankmentsandtailingsdeposit,(iv)analysesundertakentodemonstratetheexpansionwillmeettherequiredfactors of safety for embankment stability for both static and groundmotion due toearthquakeloadingconditions,and(v)measurestobeimplementedintheexpansiontocontainprocesswatersandtailings.ThePanelhasevaluatedthereasonablenessoftheconcepts, assumptions, and assessments contained in the Design Report, but it wasconsidered outside the scope of the Panel to independently reproduce designcalculations.InaccordwiththeDesignReport,elevationsreferencedinthisreportarebasedontheACC (AnacondaCopperCompany)datum. The raise of theNorth-South embankmentand the East-West embankment of the YDTI to El. 6450 ft. has been previouslyauthorized. ThepermitamendmentapplicationbeingsubmittedbyMRisrequestingapproval to construct theWest Embankment to El. 6450 ft. and to operate theWestEmbankment Drain (WED). Construction of the WED has already proceeded underseparate authorization. The raise to El. 6450 ft. will provide for approximately 12additionalyearsofminelife(toyear2031),storinganadditional300Mtoftailings.TheIRPtakestheview,consistentwiththatenvisionedintheDesignReport,thatthePanelreviewmust include consideration of the YDTI as a single structure and not just theelements requiring permit amendments to proceed. An approved plan exists for themanagementofwasterocktobeproducedthroughthistimeperiod.In this report, MCA code requirements are indicated by “red square bullets” while“blackcircularbullets”areusedtoidentifyPanelobservations.IRPrequeststhatfollowonfromthereviewoftheDesignReportarehighlightedinitalic.


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1.2ActivitiesofthePanelMontana Resources LLP (MR) made a decision to engage with the IRP while sitecharacterizationanddataanalysiswasongoingtosupportthepreparationoftheDesignReport.ThePanelfavoredthisapproach;asitprovidedtheopportunityfordiscussionofsiteinvestigationrequirements,findingsfromthesiteinvestigation,designconcepts,and alternative tailings management strategies with the design team prior tocompletionoftheDesignReport.Four meetings were held during the course of the Panel’s activities. ParticipantsincludedMontanaResourcesLLP,KnightPiesold (KP),Hydrometrics (hydrogeologicalconsultanttoMR),andthePanel.Mr.KenBrouwerofKPistheEngineerofRecordforYDTI(since2015)andDesignConsultantfortheproposedexpansionofthefacility.Meetingonewasheld inButteMontana from July6 - 9, 2015. Thevisit afforded theopportunity to view theYDTI (embankments, tailingsoperations,watermanagement,hydrogeologic setting and seepage) and Continental Pit, and to receive a series oftechnicalpresentationscoveringsitehistory,proposeddesigns for theexpansion, siteinvestigation plans and early results, and hydrogeology. Representatives of theMontanaDepartmentofEnvironmentalQuality(DEQ)attendedthecloseoutmeeting.Meeting twowas held inVancouver, British Columbia fromNovember 23 - 25, 2015.TheintentofthismeetingwastoprovidetheopportunityfortheDesignConsultanttopresenttotheIRPaprogressreportonthedevelopmentofthevariouscomponentsoftheDesignReport, and to review findings fromsite investigationprograms related tothe existing embankments and foundations, the tailings properties, and West Ridgehydrogeology.MeetingthreewasheldinButteMontanafromMay10-13,2016.PresentationsweregivenbyKPandHydrometricstoupdatetheIRPonprogresstowardcompletionoftheDesignReport.ThisvisitalsoenabledthePaneltoreturntotheWestRidgetodiscussthe on-going drilling program occurring there to refine the understanding of thestructuralfeaturesandgroundwaterflowsysteminthebedrockthatformstheridge.ItwasalsopossibletoinspecttheinitialstagesofconstructionoftheWestEmbankmentDrain.RepresentativesoftheDEQjoinedthisfieldtour.An initial draft of the Design Report (Rev. 0 encompassing 10 separate reports)wasdistributed to thePanelover theperiod fromDecember232016 to January272017.TheRev.0DesignReportenvisionedanembankmentcrestofEl.6500ft.MeetingfourwasheldinVancouveronJanuary312017,wherethePanelpresenteditsobservations and preliminary conclusions on the content of the Design Report.MontanaResourcesLLP,KP,Hydrometrics,andDEQ(byWebex)attendedthemeeting.AlsoinattendancewererepresentativesofAtlanticRichfieldCompany(ARCO),ownersoftheYDTIpriortoMontanaResourcesLLP.Anumberofthedesignreportswerere-issued as Rev. 1 documents in response to information requests from the IRP at theJanuarymeeting.


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SubsequenttotheJanuary2017meeting,MontanaResourcesmadeadecisiontore-castthe Design Report to support a permit amendment to operate the YDTI to anembankmentcrestelevationof6450ft. ThePanelreceivedtheRev.2documentsthatpresentedthatdesignintheperiodbetweenJune30andSeptember7,2017.ThePanelalso received a letter report that KP prepared in response to comments made byconsultants engaged by ARCO and Remediation Management Service Company(referencedhere as theARCO report) to evaluate environmental conditions and risksassociatedwiththeYDTIforanembankmentcrestatthe6500ft. level. AcopyoftheARCOreportwasincludedwithKP’sDesignReport.ThePanelprepareditsfinalreportfromSeptembertoNovember2017.1.3OrganizationoftheIRPReportThe IRP report is structured in terms of the nine KP reports and one report byHydrometricsthat,takentogether,constitutetheDesignDocument.ThelastsectionofthisreportincludesIRPcommentsonKP'sresponsetotheARCOreport.

• AlternativesAssessment• DesignBasisReport• SiteCharacterization• StabilityAssessment• WaterManagement• HydrogeologyofWestRidge• DesignofWestEmbankmentDrain• ConstructionManagementPlan• DamBreachRiskAssessment• ReclamationOverview• EngineerofRecordResponsetoARCOReport

2.ALTERNATIVESASSESSMENTTailingsmanagementatMR isbasedupondischargeof slurry tailings to theYDTI. Asingle point discharge located near the southeastern corner of the East-WestEmbankment (Station 8+00 West) has been in place for much of the past YTDIoperations. When examining alternative tailings strategies, the Panel considers itimportantthatthelonghistoryofoperatingexperienceatYDTIbeacknowledgedasanimportant factor in the evaluation (construction beginning in 1963). In addition, theaverageannualwaterdeficitatthesite,andtheavailabilityoffreshwaterimportsfromSilverLakeonanas-neededbasis, areviewedas important factors to consider in theevaluationoftailingsmanagementalternatives.TheMCArequiresanevaluationindicating:

§ Theproposedtailingsstoragefacilitywillbedesigned,operated,monitoredandclosed using the most applicable, appropriate and current technologies andtechniquespracticable,givensitespecificconditionsandconcerns.


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KPundertook a broad-based studyof tailings alternatives. The approach adopted issimilar to other alternative assessments that members of the IRP have reviewed forother mine projects. For each tailings alternative, a five-factor rating system wasadopted to rank the alternative. The factors considered were safety, technicalexecution, environmental impacts, economic factors, and closure considerations. ThePanelacceptsas reasonable this suiteof factors forevaluationof thealternativesandthescoringsystem.KPsetouta trainof logic for thealternativeassessment thatcanbesummarizedasafive-stepevaluation(A-Ebelow).Thehighest-rankedalternativeateachdecisionpoint(asrankedbyKP)ishighlightedinboldtext.ABCDE____________________________________________________________________________________________________LocationTailingsBeachSeepageWestEmbankmenttypedevelopmentcontrolDamdesign_____________________________________________________________________________________________________onsiteslurrysinglepointnozonationoffsitethickenedtailingsmultipointWestRidgecore/cutofffilteredtailingsdrain(WED)BerkeleyPitThePanelobserves:

• The most viable option for additional tailings storage is a site located in the

catchment within which YDTI is located. Importantly, sites located off-sitewould require substantial disturbance of land currently undisturbed, incomparisontoon-siteoptions.

• NoadvantageisapparenttothePanelintheuseofthickenedtailingsattheMRoperation, with placement in the YDTI, when compared to slurry tailings.Significantcostsareaddedwithoutsubstantiveoff-settingbenefits.

• MRdoesnotownasufficient landarea inthecatchmentupslopefromYDTIto

develop a filtered tailings storage facility large enough to meet projectrequirements. A stack of filtered tailings (eventually up to 550 feet high),locatedbetweentheexistingYDTIandContinentalPit,andincloseproximitytothe rim of Berkeley Pit, is not viewed by the Panel as a suitable location forfilteredtailingsstorage. TailingsproducedfromminingtheContinentalPitarepotentiallyacidgenerating,whichwouldrequireengineeringcontrolstoreducerates of sulfide mineral oxidation and seepage controls to manage contactwaters.


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• It is understood there would be complex environmental and legal issuesinvolvedinobtainingagreementsandpermitsfordisposaloftailingsinBerkeleyPit.ThePanelexpectstherewouldbeconsiderableuncertaintyindevelopingafirmtimelineforresolvingthese issues. Additional tailingsstoragecapacity isrequiredby2020toallowuninterruptedminingoperationsinContinentalPit.

• With respect to an expansion of the existing tailings facility,multipoint spigot

discharge enables better beach formation that will result in the water pondlocated well away from the embankments, reducing geotechnical risksassociated with pond contact with the embankments. Amulti-spigot systemprovides formuchgreater control of pond location relative to the single-pointdischarge systemused in thepast. This strategyalsoaddsbenefit in reducingseepage flows to the WED and enhancing hydrodynamic containment, bycreationofawidebeachinfrontoftheWestEmbankment.

• TheWestEmbankmentDrainisthemostapplicableandappropriatetechnologyfor controlling seepage at the West Ridge. This design emphasizes sourcecontrol (hydrodynamic containment) rather than the other alternativesconsidered; which rely upon interception of contact water using extractionwells.

The Panel agrees with the analysis at each decision point (A to E) in the selectionprocess, leading to the conclusion that the most viable alternative for the additionalvolumeoftailingsstoragerequiredistoraisetheYDTIfromEl.6400ft.to6450ft.3.DESIGNBASISREPORTTheDesignBasisReportpresentsthekeycriteriathatunderpinthedesignofaraiseoftheYDTItoacrestelevationof6450ft.Thecurrentcrestelevationis6400ft.,withthepond elevation in September 2017 at elevation 6345 ft. The Design Basis Reportincludes consideration of issues related to the local climate, the design of theembankment raise, including freeboard requirements, and selection of the designearthquake.3.1ClimateMCA requires consideration of a design storm event for operation and closureconforming to current engineering best practice for the type of facility proposed. Inparticular,theMCArequires:

§ Arationalefortheselectionofthedesignstormevent

§ Themagnitudeofthedesignstormevent

§ Themagnitudeoftherunoffgeneratedbythedesignstormevent

§ Considerationofthedynamicnatureofclimatology.


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The design basis for the existing YDTI, and the operational plan for the proposedembankment raise, is toprovide the capacity to contain thePMFandmeet freeboardrequirement.ThePanel'sfocusinreviewingtheselectionoftheinflowdesignfloodisonthetotalrunoffvolumeandnotthecriticalrunoffflowrateobtainedfromtherunoffhydrograph.ThePanelobserves:

• Procedures used for estimation of site precipitation, sublimation of thesnowpack,andevapotranspirationarebasedoncommonpracticeandlocaldata.

• Proceduresused forestimationof extreme24-hourprecipitationevents (for2yearto1000yearreturnperiods)arebasedonastandardstatisticalapproach(Log-PearsonTypeIIIfrequencydistribution),usingthelongrainfallrecordforButte. The rainfall estimates for the different return periods were comparedwitha regionalanalysisofextremeprecipitationevents inMontana,publishedby theUSGS (1997). Thehigherof the twovalues for each returnperiodwasselectedfordesign.ThePanelacceptsthebasisforselectionofthedesignstormevent.

• The Panel concurs with the decision to adopt the Association of Professional

EngineersandGeoscientistsofBritishColumbia(APEGBC)professionalpracticeguideline when accounting for the influence of climate change in floodassessments, which is to increase the estimated precipitation totals for eachreturnperiodby15%.

3.2ExtremePrecipitationEventsMCA requires consideration of a design storm event for operation and closureconforming to currentengineeringbestpractice for the typeof facilityproposed, thatincludes:

§ Determination that theproposedexpansionmeets theminimumrequirementsinMCAtomanagestormorfloodevents.Theminimumstoragerequirementisbased on the maximum operating water level, plus the PMF, with sufficientfreeboardforwaveaction.

MRchosetoadoptthecoderequirementsforevaluationofanewtailingsfacility,ratherthan the option applicable for a facility expansion. The Panel concurs with thisapproach.ThePanelobserves:

• Estimates of the magnitude of the PMP event were derived from PMP mapsprovided inHydrometeorological ReportNo. 57 (PacificNorthwest States), anaccepted approach in Montana for PMP estimation for high hazard dams.Considerationwasgiventorecommendationscontainedintherecentreportby


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theMontanaExtremeStormStudyGroup (2016). That reportacceptsHMR57foruseatexistingdamsandsuggestsconsiderationbegiventodevelopmentofasite specific PMP for a new facility. KP concluded that derivation of a site-specificPMPwasnotwarranted,as theestimatedvolumebasedonHMR57, incombinationwitha site-specific snowmeltevent, is alreadyanextremely largeevent. For closure, a spillway will be constructed to manage extreme runoffevents.

• An extreme value probability distribution was applied for estimation of thesnowwater equivalentof the annualmaximumsnowpack. Snowpackdata fortheMoultonReservoirSnowSurveyStation, in theYDTIdrainage,wasusedtoestimate the water equivalent snowpack for a range of return periods. ThePanelacceptsthisapproachasareasonablebasisfortheestimate.

• ThePanelconcurswiththeselectionofthePMFeventasthe24-hourPMP,withthe assumptions of 100% runoff in catchment, the PMP event coincidentwithmeltofa1:100yearsnowpack,andfailureoftheMoultonReservoir locatedinthe same catchment as the YDTI. The snowpackwas assumed to yield all itswateroverthesame24-hourperiodastherainfallevent(25%infirst8hours,50% in thenext8hours, and25% in the last8hours). Themagnitudeof thePMP event (14.4 inches) is similar to the 100-year return period annualmaximum snowpack water equivalent (14.6 inches). Sufficient sensitivitystudies on anticipated runoff volumes were conducted to assess the range inuncertaintyinrunoffvolumeandsupporttheselectionofthePMFevent(19,000acre-ft.duringoperations).

• ThePanel concurswith thedecision to adopt theAPEGBC recommendation to

account foreffectsofclimatechange in floodassessments,which is to increasetheestimatedPMFrainfallvolumeby15%fortheclosureperiod.Thisyieldsaninflow design flood of 20,000 acre-ft. for the PMF for post-closure conditions.The PMF rainfall total was increased to account for climate change, with the1:100yearsnowpackestimateheldatthevalueusedfortheoperationalperiod.

• ThePanel accepts the view that, for the twelve year operational period of theproposedexpansion, it isnotnecessarytoadjust theestimateof thevolumeofthePMFforimpactsofclimatechange.

• The Panel accepts the analysis indicating that the design, construction, and

operating plan for the YDTI meets the minimum storage requirements formanagementofextremefloodeventsduringoperations.

• The Panel is strongly supportive of the decision to incorporate a post-closure

spillwayinthedesignfortheYDTItomanageextremeevents.


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3.3DesignEarthquakeMCArequires:

§ An analysis showing that the seismic response of a new tailings storagefacilitydoesnotresultintheuncontrolledreleaseofimpoundedmaterialsorother undesirable consequences when subject to the ground motionassociatedwiththe1in10,000-yearseismicevent,orthemaximumcredibleearthquake,whicheverislarger.

§ Adoptionofeitherofthefollowingforanexistingtailingsstoragefacility:o Ananalysisshowingtheproposedembankmentconfigurationmeets

theminimumdesignrequirements foranewtailingsstoragefacility(theaboverequirements).

o An analysis showing the proposed embankment configuration doesnot reduce the original design factors of safety and seismic eventdesigncriteria.

For their analyses, KP developed an analysis based on the minimum designrequirements foranewfacilityandengagedLindaAlAtikandNickGregor in2016toperform site-specific probabilistic and deterministic seismic hazard analyses for theYDTI.TheirreportisincludedinAppendixBoftheSiteCharacterizationReport–Rev2.Asdescribedinthatreport,twosignificantfaultsourcesareincloseproximitytothesite; the Continental fault, which intersects the site and has an estimated maximummagnitude(Mmax)of6.5,andtheRockerfaultlocatedwithin10kmofthesitewithMmaxof7.0.Al Atik and Gregor’s deaggregation analyses of themean seismic hazard data for theYDTI site for the Peak Ground Acceleration (PGA) for the 10,000-year return periodfoundtheContinentalFaulttobethemaincontributor.Thecalculatedmedianand84thpercentileresponsespectraforthedeterministicanalysisfortheContinentalFaultweresignificantly larger than that for the Rocker Fault. In addition, the deterministicMaximumCredibleEarthquake(MCE)spectraexceededthosefortheprobabilistic1-in-10,000-yearevent. Accordingly, theContinentalFaultMCEwasselectedasthedesignearthquake for analyses. Peak Ground Accelerations (PGAs) were calculated for theNorth-SouthEmbankment,wherethefaultisadjacenttothestructure(0.1kmdistance)and for the maximum section of the East-West Embankment (1.2 km distance). KPsummarizedtheMCEparametersinthefollowingtable:


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Al Atik and Gregor (2016) also calculated the potential displacement along theContinentalfaultasaconsequenceoftheMCEevent.Medianand84thpercentilevaluesfortheaveragedisplacementontheContinentalfaultwereestimatedas0.51and1.44m,respectively.ThePanelobserves:

• MRhas chosen tomeet theminimumdesign requirements for evaluation of a

new tailings facility, rather than the option applicable to an expansion of afacility.ThePanelconcurswiththisapproach.

• KPengagedwell-qualifiedseismicexpertstoperformtheseismichazardstudy.

• AlthoughthereisuncertaintyregardingthepotentialactivityoftheContinentalFault, the Panel considers it prudent engineering to assume it is active andagreeswith KP's decision to design the YDTI expansion towithstand such anevent.

• The Panel accepts the methodology used by Al Atik and Gregor (2016) to

developthedesignearthquakeparameters.

• The Panel accepts the selection of the deterministic MCE as the designearthquake,withthedesignparametersas:MagnitudeMw=6.5,medianPGA=0.45g,84thpercentilePGA=0.84g.

• ThePanel accepts the estimateddisplacements along theContinental Fault as:median=0.51mand84thpercentile=1.44m.

3.4EmbankmentDesignTheMCArequires:

§ Adescriptionofthetailingsstoragefacilitycapacityovertimeandtheestimatedultimatecapacity.

§ Specificationsforimpoundmentconstruction,includingthespecificationsforthefoundation, abutments, embankment, means of containment and the borrowmaterials.

The enlargement of the YDTI embankments to crest elevation 6450 ft. will providestorageforanadditional12yearsofminelife.TheDesignBasisReportcontainstablesthat list the storagecapacitywith respect to timeand indicate thatatEl.6450 ft., theultimate capacitywill be approximately860million tons of tailingsplus25,000 acre-feetofpondcapacity.TheDesignBasisReport (Rev. 2, June30, 2017) contains anumberof representativedesignsectionsfortheNorth-SouthEmbankment,theEast-WestEmbankment,andthe


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WestEmbankment.ThesesectionsprovidedetailsonthestructureofboththehistoricconstructionoftheNorth-SouthandEast-Westembankments,andtheproposedraises.Since initial construction in 1963, a variety of methods were used to raise theembankments(downstreamconstruction,centerlineconstruction,a limitedamountofupstream construction). More recent additions to theNorth-South Embankment andEast-WestEmbankmentshavebeenraisedusingcenterlineconstructionmethods.Fortheexpansion, theEast-WestEmbankmentwill continue tobe raisedusingcenterlinemethods, the North-South raise will use downstream construction, and the WestEmbankmentwillbebuiltinoneliftusingthedownstreammethod.Thecapacityof theraise toEl.6450 ft. isbasedonadailyproductionof50,000shorttons (18millionshort tonsperyear). It isexpected that the initialdrydensityof thedepositedtailingswillbe85pcf.ThePanelobserves:

• The filling schedule and capacity of the raises are based on experience gainedovermanyyearsatYDTI. Thevolumetriccapacityof theYDTI is sufficient forthe period of design at the planned mine production (to 2031). Staging ofembankmentraisesisexpectedtobereliableasitisbasedonconsiderablepastexperience.

• Foundation conditions have been adequately considered in developing theembankmentdesignandconstructionplans.

• Constructionmaterials for theembankmentsaresourced fromtheContinentalPit, as for previous raises. Specific controls are in place for the selection ofzonedmaterialsusedintheWestEmbankment.

• DrainrockandfiltermaterialswereobtainedfromaquarryeastofButte. ThePanelviewedthesematerialsduringasitevisitandtheyareofgoodquality.

4.SITECHARACTERIZATIONMCArequires:

§ A site geotechnical investigation commensurate in detail and scope with thecomplexityofthesitegeologyandproposedtailingsstoragefacilitydesign.

§ The investigation must include a geological model of site conditions and arationalizationofthesiteinvestigationprocess.

4.1EmbankmentFoundationsTherehavebeenseveralsite investigationscompleted in thevicinityof theEast-Westand North-South Embankment, spanning five decades. The investigations were


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completed by different engineering consultants using a variety of methods incoordination with the mine operator of the time. More than 30 drill holes werecompletedandsampledwith testing to characterize the foundationmaterialsprior to2012whenKPbecameinvolvedingeotechnicalaspectsoftheYDTI.In2015,KPdrilledfive sonic holes into the East-West Embankment and two sonic holes in the WestEmbankmentarea,allofwhichpenetratedthefoundation.TheWest Ridge andWest Embankment foundationswere evaluatedwith a series ofdrillholesandtestpits.Atotalof19monitoringwells,21drillholes,33testpitsand26testtrencheswereadvancedalongtheWestRidgeoveraseriesofhydrogeologicalandgeotechnicalsiteinvestigationprogramsconductedbetween2012and2016.AlluviumoccursatthebottomofthestreamchannelsintheWestRidgearea.Itoverliesbedrock that is composed of the Butte Quartz Monzonite, cut by many alaskite andaplitebodiesofvarioussizes,shapes,alterationsandtextures.Thebedrockconsistsoftwodistinctzones;aweatheredorleachedzone,andacompetentzone.Theweatheredzone constitutes the uppermost portion of the bedrock immediately underlying thealluvium,wherethealluviumispresent.Thecompetentzoneunderliestheweatheredzoneandisveryhardrock.TheSiteCharacterizationReport–Rev2containsmapsofthelocationsofthedrillholesandtestpitsanddetailedsectionsthatportraythefoundationgeologicalconditionsasinterpretedbyKP.ThePanelobserves:

• A comprehensive review of historic geologic and geotechnical foundationdatawascarriedoutandincorporatedwithinthegeologicmodelforthesite.

• The Panel is satisfied with the scope of both past and present foundationinvestigations. This comment applies to both the field and laboratoryinvestigations.

• The Panel concurs with the interpretation of the data with respect togeometryandcharacteristicsofbedrockandsurficialdeposits.

4.2East-WestandNorth-SouthEmbankmentConditionsExtensivedrilling, sampling, and testinghavebeen completed to investigate theEast-West andNorth-South embankments,with themost recent being in 2017when foursonicholeswereadvancedthroughtheEast-WestEmbankment(threeonSection0+00andoneonSection12+00W).Basedontheirreviewofhistoricinvestigationdata,andtheir interpretationof siteobservationsand reviewofdrill logs,KP characterized theembankments as obliquely stratified heterogeneous rockfill structures, and that the


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drillingandmonitoringconfirmsthepresenceoflocalizedperchedwaterlevelswithinthelargelyunsaturatedrockfillembankment.1KPprovidedpreliminarydatatothePanelfromoneofthesonicdrillholescompletedin2017 (DH17-01 near the toe of the embankment along Section 0+00) and thereferenced drawing was used to illustrate the varied, angular fabric of the structure(Figure 1). Based on their review of the historical construction sequences, KPinterpretedthecomplexorientationsofthelayersintheembankmentsasbeingfurtheramplified by the construction of multiple embankments with upstream anddownstream sloping layers and basal layers of cobbles and boulders. The 2017 siteinvestigationprogramincorporateddownholegeophysicaltesting(P-waveandS-wavesuspensionlogging).Futuresiteinvestigationprogramsmayincorporatethistechniqueprovidedthe2017dataisvaluable. Completeresultsfromthe2017site investigationprogramareanticipatedtobeavailablebeforetheendoftheyear.MRplanstoinstallanother setofboreholesona second transect through theEast-WestEmbankment in2018.

Figure1-CoreexemplifyingthecomplexnatureoftheYDTIembankments

1Inthisreport,thePaneladoptstheterm“unsaturatedrockfill”tobeconsistentwithterminologyusedintheDesignReport,butnotesthatthistermindicatesthewaterpresentintherockfillisheldintension(negativepressure)ratherthanindicatinganabsenceofwaterintheporespacesoftherockfill.


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ThePanelobserves:

• The Panel is satisfied that the scope of historic and current investigations issufficient toproperlycharacterize thegeotechnicalandhydrologicalaspectsoftheEast-WestandNorth-Southembankments.

• ThePanel agreeswithKP's interpretationof thehistoric and current geologic,

geotechnical, and hydrologic data with respect to the geometry andcharacteristicsoftheYDTIembankments.

• Recent drilling through the embankments has added significantly to the

understandingof thedistributionofmaterials,materialproperties,water tableconfigurationandporepressuresinsaturatedzones.

• ThePanelwas informed that thepreliminaryresultsof the2017embankmentinvestigation (three sonic boreholes on section 0+00 and one on section12+00W through the East-West embankment) yielded observations consistentwith theearlierdrillingprograms.ThePanelconsiders theembankmentshavebeencharacterizedinsufficientdetailtoassesstheincrementaleffectoftheEl.6450ft.damraiseonthestabilityoftheembankments.

• ThePanelrequeststhatthereportsoftheon-goingsiteinvestigationsbeprovidedtothePanelasfinalresultsbecomeavailable.

4.2TailingsTailingscharacterizationbetween2012and2015consistedofconepenetrationtestingthatwasperformedfromspeciallyconstructeddrillingplatformsonthetailingsbeach,fromabargewithinthesupernatantpond,anddirectlyonthesandytailingsbeachareawhere access was possible without drilling platforms. Initial testing focused onmaterials closer to the embankment. Some of these areaswere subsequently loadedwith rockfill to establish platforms for the centerline construction of embankmentraises. Further testingwasperformed following the loading toobtain informationonpotential changes in tailings behavior as a result of the loading. Testing was alsoexpanded to sites further along the tailings beach toward the pond to obtaininformationaboutthesematerials.Astandardsuiteofseismicconepenetrationtestinghas been carried out in all these locations. This information provides betterunderstandingoftheshearstrengthandconsolidationbehaviorofthetailings. Italsoprovidedinformationaboutporepressure,fluidflow,andliquefactionbehavior.ThePanelobserves:

• Recentinsitutestoftailingshasprovidedimportantnewinsightstothephysicalbehaviorofthedeposit.

• The Panel concurs with the assessment of the strength and consolidationcharacteristicsofthetailings,aswellastheirliquefactionpotential.


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5.STABILITYASSESSMENTMCArequiresdemonstrationthat:

§ The tailings, embankment and foundationmaterials controlling slope stabilityarenotsusceptible to liquefactionor tosignificantstrainweakeningunder theanticipatedstaticor cyclic loadingconditions, to theextent that theamountofestimated deformation under the loading conditions would result in loss ofcontainment.

§ Aprobabilisticanddeterministicseismicevaluationfortheareaandassessmentofpeakhorizontalgroundacceleration.

TheMCAprescribesthefactorsofsafetytobenotlessthan:-1.5(staticloadingsundernormaloperations)-1.3(staticloadingunderconstruction)-1.2(postearthquakestaticloading).The analysismust include consideration of the anticipated groundmotion frequencycontent, fundamental period and dynamic response, potential liquefaction, loss ofmaterial strength, settlement, ground displacement, deformation, and potential forsecondaryfailuremodesKPpreparedasummaryofallpreviousstabilityevaluationsandperformedasignificantnumber of laboratory and in situ tests to better characterize the shear strengthparameters for the foundation,embankmentandtailingsmaterials. Itwasdeterminedthatthetailingscouldliquefy.Slopestabilityanalyseswereconductedforfivesectionsofupstreamanddownstreamconditionsaswellaspost liquefactionandundrainedstrengthconditions.All factorofsafety results exceed the requirements listed above. Deformation analyses were alsoconsidered.ThePanelobservesthat:

• The approach adopted for assessment of the critical failure surface (loss ofcontainment)isacceptedforbothupstreamanddownstreamfailuremodes.

• Post earthquake shear strengths and liquefied tailings were included in thestability and deformation analyses; this meets the MCA requirements forconsiderationofliquefactionandstrainweakening.

• In consideration of both embankment construction methods, and the currentindication that zonesof saturation locatedabove themainwater table arenotlaterally continuous, it is considered unlikely that the embankment materialswill liquefy. However, regular monitoring of pore pressures in key zones


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throughout the structure is an important element of the embankmentsurveillanceprogram.

• The proposed design satisfies the required factors of safety for all stability

conditions.

• The Continental Fault passes beneath the North – South embankment. ThePanelhasconcludedfromthestabilityanddeformationanalysespresentedthattheanticipatedgroundmotioninaseismiceventistolerable.

• The seismic deformation analyses are considered conservative. This isappropriate.

6.WATERMANAGEMENTA comprehensive plan formanagement of processwater andwater inflows from thesurroundingwatershed, and seepage control, are key elements in tailings operations.MCArequirestheidentificationandconsiderationof:

§ A description of the chemical and physical properties of the materials andsolutionsstoredinthetailingsfacility.

§ Adetailedwaterbalance.

§ Stormwatercontrols.

§ Water,seepageandprocesssolutionrouting.

§ Managementplansforextremestormevents.MR has a long period of operational experience to draw upon to update the watermanagement strategy to accommodate the proposed expansion. In addition, there isconsiderabledataon the seepageofwater from theYDTIatHorseshoeBend (1996–2015),withcontinuousmineoperationandreliablemonitoringintheperiodfrom2007–2015.Theconstructionschedulerequiresraisingtheembankmentataratethatwillcontainthemaximumoperatingpond level, thePMF,andhonor freeboardrequirements. Theprincipal new features of the water management system are theWest EmbankmentDrain and multi-spigot tailings discharge. The Panel considers multi-spigot tailingsdischargeakeyelementoftheexpansionplan,andnotesMRhasbegunto implementthisplan.FreshwaterimportsfromSilverLakeforuseintheConcentratorareanintegralpartofthe mine site water balance. Due to water quality constraints associated with oreprocessing,theoperationcannotrelysolelyonrecyclewaterfromtheYDTI.Figure6.1in Appendix B of theWater Management Report presents the base case used in the


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watermanagementmodel; projectingwater volumes in theYDTI for the period from2018 to 2082. This period includes the post-closure period. Uncertainty bounds onstoredvolumesareexpressedintermsof5%and95%probabilityvaluesforanygivenyear.ThePanelacceptsthismetricasareasonablechoice.Thebasecasepredictionforthewatervolumeheld inYDTIhasbeencalculatedusingthecurrentrequirement for freshwater import fromSilverLakeof2.0Mgpd. At thisrate, Figure6.1 in theWaterManagementReport indicates that it isunlikely thatMRwillreachthestatedobjectiveofanoperatingpondvolumeof15,000acre-ft.duringtheoperatinglifeoftheEl.6450ft.facility.ThePanelstronglysupportsthestatedintenttoreducetheoperatingpondvolumefromthecurrentvolumeof31,000acre-ft.to15,000acre-ft. This condition will reduce the likelihood of water ponding against theembankments during extreme storm events, reducing the risk profile for internalerosion and piping in the embankments. It is understood that MR has initiated aprogramtoreducefreshwaterimportrequirementsintheConcentratorplant.The reduction in the current pond volume should proceed in a timely manner,recognizing that other factors such as dusting on the exposed beach also need to becontrolled. TheIRPrequiresthewaterbalancemodelforYDTIbeupdatedonanannualbasisduringtheoperationalperiod,andwishestobeinformedofstrategiesandprogressinreducingthefreshwaterimportdemandtotheConcentrator.The post-closure water management plan incorporates pumping at the WestEmbankmentDrainandconstructionofaclosurespillway forextremerainfallevents.KPadoptedtheassumptionthat theeffectsofclimatechange inwesternMontanaareanticipatedtohaveanet-neutraleffectonthecurrentaverageannualdeficitconditionofthepond.Thisassumptionisbasedonpublishedliteraturefortheregion.ThePanelobserves:

• The probabilistic water balance model KP developed, which is based onrepeatedcyclingthroughthevariabilityinrainfallincorporatedwithinthe119-yearprecipitationrecordatButte,isaccepted.Itisuncommoninwaterbalancemodeling forminingprojects tohave this longaprecipitation recordavailableforanalysis.TheButteprecipitationdatahasbeenextrapolatedtotheelevationoftheYDTIusingaconventionalmodelingtechnique.

• Runoff coefficients used inwater balancemodelingwere calibrated using sitecatchmentdata from2004–2015. This is consideredanadequatecalibrationperiod.

• Estimatesofparameter values in thewaterbalancemodel forwhichdatawas

not available, such as water losses due to sublimation, have been based onliteraturevaluesandKPexperience.ThePanelconsidersthevaluesadoptedtobereasonableestimates.

• The water balance model appears to be reasonably calibrated (Water

Management Report, Fig 5.1, Appendix B). The calibration is based on a


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comparison of the calculation of the volume of water in the YDTI using themodelwithanestimateofpondvolumederivedfrombathymetricsurveydata.Thisisacommonapproachtotestingawaterbalancemodelforaminesite.

• Plans for surfacewater and seepagewater routing at YDTI during operations

andintheclosureperiodareaccepted,foraverageconditionsandfloodevents.

• Managementoftheextremestormeventinthepost-closureperiodisbasedonaspillway,directingflowtotheContinentalPit.ThePanelsupportsthetechnicalbasisforthisconcept.Thedesignbaseforthespillwayisabedrockchannelontheeastsideofthefacility.Thespillwaywouldbeoperationalonlyforextremerunoff events. The spillway capacitywill bedesigned for thePMF. ThePanelacceptsthisconceptualdesigncase.

• Duringmineoperations,futuretailingspropertiesandpondwaterchemistryareanticipatedtobesimilartocurrentconditions,whicharewellcharacterized.Alltailings tobesent to theYDTIwilloriginate fromminingofore inContinentalPit.

• Asimpleloadbalancemodelwasusedtopredictconcentrationsofselectsolutesin the YDTI pond for the period following the end of mine operations.Concentrations were predicted using mixing cell (load-balance) calculationswithout account for geochemical reactions. The tailings are classified aspotentially acid generating, although some test samples fall in the “uncertaincategory”.Thewaterqualityestimateforthepost-closurepondisbasedontheassumptionthattherewillbenolong-terminfluencefromsulphidemineralsinthe tailings. Thisassumption in turn isbasedonanestimatedthree-year timelagforthemostreactivetailingsbeforetheonsetofacidification(anassumptionbasedonkinetictestdataonsamplescollectedoveranumberofyears)andthatthecoverforclosurewillbeplacedwithinthat3-yearperiod.Itisalsoassumedthat the placement of a dry coverwill significantly reduce both the long-termoxidationofsulphidemineralsinthetailingsandreducecontactofrunoffwaterwiththetailingsbelowthecover.ThePanelisconcernedthatthisviewpointmaybe overly optimistic and requests that MR undertake a more comprehensiveevaluation of the projected chemistry of the post-closure pond, including anassessment of the sensitivity to assumptions made in the calculation. This taskshouldbecompletedintimeforthenextupdatetotheIRP(seeSection12).

7.HYDROGEOLOGYANDIMPOUNDMENTSEEPAGETheYDTIislocatedwithintheSilverBowdrainagebasin.MCArequires:

§ A detailed description of how undesirable constituents contained in theimpoundmentwillbeisolatedfromtheenvironment.

Aconceptualhydrogeologicmodelwasdevelopedtocharacterizegroundwaterflowinthe watershed. Basin topography (high relief) creates natural hydrodynamic


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containment on the northern and eastern sides of the YDTI. Two principle seepagepathwaysrequireassessment. OnepathwayisatHorseshoeBend,whichisexpressedasoutflowsandzonesofseepageintheHorseshoeBendcollectionareaandattheNo.10seeplocatedapproximately250feetabovethetoeoftheembankmentslope.Watermanagement and water quality in Horseshoe Bend is regulated under an alternateframeworkthanMCAandisnotinthescopeofthePanelreview.Thesecondpathwayis atWestRidge,which introducesapotential seepagepathway to abasinpreviouslywithnoimpacttogroundwaterorsurfacewaterfromtheYDTIoperations.7.1HorseshoeBendThePanelobserves:

• The Design Report adopts the assumption that there will be no significantchange inseepage flowstoHorseshoeBendduring theoperationalperiodasaconsequenceoftherisingpondlevel.Thisassumptionisbasedontherecordedflows atHorseshoeBend,whichhavebeen stable thepast 10 years,while theYDTI impoundment has been raised approximately 70 feet. Several factorsinfluence any change in the seepage flux at Horseshoe Bend; including beacharea,pondlocation,andspigotlocations.

• Forclosure,KPassumesthattheflowintheHorseshoeBendareaandtheNo.10seepwillcontinue,butatadiminishedrate.

• The IRP requests thatatanappropriate time,MontanaResourcesLLPprovideamemo summarizing how the flow at Horseshoe Bend (both the main collectionareaandNo.10seep)changesasthesingle-pointspigotsystemisreplacedbythemulti-spigot system. In conjunctionwith thatdata,any changes in flowratesasthe phreatic surface in the tailings deposit and East-West embankment evolveshouldbeexamined.

7.2WestRidgeAcomprehensive field investigationwascarriedoutonWestRidge in2015and2016(structural geology, hydrogeology). Through the course of the investigation, the IRPwasapprisedofresultsoftheinvestigationsandparticipatedindiscussionsofpotentialmodifications in the field program, test plans, and preliminary interpretations of thedata. The Rev. 2 Hydrologic Evaluation Report by Hydrometrics incorporates waterleveldatacollectedthroughJune2017.The Panel concurs with the overall interpretation presented by Hydrometrics of thehydrogeologicalsettingatWestRidge.Acomplex,structurallycontrolledgroundwaterflowsystem ispresent in theWestRidge. Key featuresof the systemare: (i) awatertablelowinthecentralregionoftheridge,wherethehydraulicheadisapproximately6380ft.,(ii)east-weststrikingshearzonesactingtocompartmentalizetheflowsystem,and(iii)thepresenceofadeepfracturezoneinthecentralareaoftheWestRidgewithslightlylowerhydraulicheadvaluesthaninadjacentareas(the“deepisolatedfracturesystem”).


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Under current conditions, topographically controlled hydrodynamic containmentprevents any pondwater from seeping beneathWest Ridge to the basinwest of thisridge(pondat6345ft.).WithexpansionoftheYDTI,thepondlevelwilleventuallyriseabovetheelevationofnaturalhydrodynamiccontainmentforasegmentalongtheWestRidge,where thehydraulichead isapproximately6380 ft. Theprojectedelevationofwater table against West Embankment at final pond height has been estimated byHydrometrics tobe6400 ft., in the absenceof anymeans tomanage thewater levelsotherthanmaintenanceofawidebeachinfrontoftheembankment. Thiswaterlevelwouldcreateazone,approximately1500 to2000 ft. in lengthalong the ridgeat finalpond height, where natural hydrodynamic containment would not be met (ignoringpotentialincreasesintheWestRidgewatertableinresponsetotherisingpondlevel).Consequently,controlmeasuresalongthewesternmarginoftheYDTIarerequiredtomaintainhydrodynamiccontainment.A large set of hydraulic conductivity datawas collected at theWest Ridge, indicatingmoderate to low hydraulic conductivity for the bedrock (approximately 10-7 m/s).Theseestimateswerebasedonnumerouspackertestsingeotechnicalboreholes,threeshorter-termpumping tests, anda14-daypumping test in the “deep isolated fracturesystem”.Hydrometricsconcludedtheinterpretationofthepumpingtestsfavorsadualporosity model for fractured bedrock however this characteristic is not of primeimportance for evaluation of hydrodynamic containment (although it is important inderivingestimatesof thehydraulicconductivityof thebedrock). ThedeeperbedrockbeneathWestRidgehasbeendemonstrated tohavea lowspecific storage. Thedeepisolatedfracturesystemwasindicatedtobehighlyfracturedbasedonobservationsofcore, and in situ testing indicating a hydraulic conductivity about one order ofmagnitudehigherthanthesurroundingrockmass.ThePanelobserves:

• AgreementwiththeviewthattheWestEmbankmentDraincanbeanticipatedtomaintainhydrodynamiccontainmentat theWestRidgeasthepondlevelrises.Thereisprecedentforthistypeofhydrauliccontrolmeasureatatailingsfacility.Inconjunctionwiththehydraulicheadvaluesthatwillbeestablishedalongthedrain alignment, the eastward direction of the hydraulic gradient at the ridgecrestduetolocalrechargeisexpectedtoprecludeseepageofpondwatertothevalleylocatedwestofWestRidge.

• Sufficient redundancy is incorporated in the design of theWest EmbankmentDrain.

• The contingency mitigation plan for the deep isolated fractured rock zonesuggestedbyHydrometricsappearsviable,involvinglong-termaugmentationofthe deep isolated fracture system at a low flow rate (by gravity) to buildhydraulicheadandmaintainhydrodynamiccontainment.

• Monitoringof thehydraulicheadresponse intheWestRidgeasthepond level

riseswillprovidedatathatarekeytoverificationofthecurrentinterpretationof


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the groundwater flow system and the performance of theWest EmbankmentDrain in maintaining containment. It will be about 4 - 5 years (from 2018)before natural hydrodynamic containment in West Ridge is challenged: (i)allowing MR to verify the current conceptual model of the hydrogeologicalsystemasgroundwaterlevels intheridgerespondtotherisingpondlevelandoperationoftheWestEmbankmentDrain,and(ii)providinganopportunitytoreacttounforeseenconditionsinatimelymanner.

The Panel requires Montana Resources LLP, on an annual basis, to submit a memosummarizingchangesingroundwaterlevelsintheWestRidge,andtoincludeasynthesisof these data in the context of the rising pond level in YDTI and operation of theWestEmbankmentDrain.7.3WestEmbankmentDrainDesignThe design and construction of the West Embankment Drain (WED) has beenproceedingunderanauthorizationalreadyheldbyMontanaResourcesLLP.Thefocusfor the IRP centersonanevaluationofwhether thedrainwill providehydrodynamiccontainmentatWestRidgeasthepondlevelriseswiththeproposedexpansionofYDTI.TheinvertelevationoftheWEDstartsatelevation6,352ft.onthenorthendandslopesat0.25%alongthedrainalignmenttothesouth.Itdrainsintoanextractionpondatitssouthend.Thedrainhasbeendesignedtoconvey4,500gpm,the98thpercentileofthehistoricseepageflowsobservedatHorseshoeBend.MultiplelinesofdefensehavebeenincludedintheWEDsystemconsistingofanExtractionBasinwithbottomelevationofabout6,320ft.fromwhichanother4,500gpmcanbepumped,plustwodrainpodsthatcanbeaccessedinthefuture(ifnecessary)bydrillingpumpingwells toallowfurtherredundantwaterrecoverycapacity.ThePanelobserves:

• The location of theWest Embankment Drain adjacent to the current westernlimit of the pond is appropriate. It provides the capacity to maintain lowgroundwater levelsagainst theWestRidgeandwill thereby reduce the riskofseepagefromtheYDTIflowingthroughtheRidge.

• This alignment of the drain establishes the elevation of the head control(approximatelyEl.6348ft.andlower)inthepondwaterinterceptionsystem.

• Thedesigncapacityof theWestEmbankmentDrain isbasedon themaximum

flow rates observed in the historic seepage in Horseshoe Bend. This is anacceptable,ifnotconservative,approach.

• There will be a need to refine the PAG metric used for zone D1, once

construction is underway. The report presenting the design of the WestEmbankment Drain indicates the most suitable rock available at time of liftconstruction will be used, and MR will measure the acid potential (AP) andneutralization potential ratio of placed rock. The selectedmaterial for the D1


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zone will comprise a material with a relatively low AP. The constructionmanagement plan indicates that a database will be developed to quantify theacceptable level for the AP. The IRP wishes to review this aspect of theconstructionmanagementplanoncethemetrichasbeensetinplace.

8.CONSTRUCTIONMANAGEMENTPLANTheMCArequires:

§ Aconstructionmanagementplan that includes,ataminimum,parametersandlevels of acceptability to bemonitored during construction for quality controland quality assurance purposes. The frequency of sampling, the amount ofoversight,thequalificationsoftheoversightpersonnel,andtheroleofthePanelduringandafterconstructionmustbespecifiedandagreedtobythePanel.

The construction management plan (CMP) is based on Montana Resources longexperience constructing ongoing raises to the YDTI. The plan describes theorganizational structure and the documentation that will be collected and developedduring future liftconstruction. TheQualityControlandQualityAssuranceaspects fortheembankmentsandothercomponentshavebeendescribed.Asignificantpartoftheconstruction management consists of the material specifications for the variousmaterialsthatwillbeusedforconstructingthefutureraisesoftheYDTI.The construction management plan considers the construction of each of thecomponentsof theYDTIexpansion, includingearthworks,geotextiles,concreteworks,pipeworkandappurtenances,geotechnicalinstrumentationandreclamation.Foreachofthesecomponents,whereappropriate,theCMPincludessectionsthat:

o Complementthedetaileddesigndrawings(includedintheDesignBasisReport)bydescribingthetechnicalspecificationstowhichtheYDTIistoberaised.

o Set the parameters and levels of acceptability to be monitored duringconstructionforQualityControl(QC)andQualityAssurance(QA)purposes.

o Describes the testing specifications and frequency of quality control andassurancesamplingandtesting.

o Describes the collection and submittal of all required quality records todemonstrate the construction has been completed as per the designdocumentation.

o Describes the degree of oversight, responsibilities and qualifications of all thekeyparties.

o Describes the role of the Independent Review Panel (IRP) during and afterconstruction.

Theconstructionmanagementplanfollowsstandardengineeringpracticeinpresentingthe various components. Further information on the levels of acceptability forparameter QA/QC purposes are not clearly stated and should be developed andprovidedinfutureannualreports.


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ThreepotentialmethodcompactionspecificationsareproposedforzoneD1.Atestfillisproposedaspartoftheconstructionmanagementplan.TheIRPwouldliketoreviewthetestfillreportwhenavailable.ThePanelobservesthat:

• TheConstructionManagementPlancontainsspecificationsforallcomponentsof

the planned raise of the YDTI, including the specifications for the foundation,abutments, embankment, means of containment and the borrow materials.These provisions have been drawn from up-to-date, internationally acceptedstandardsand,whenfollowed,canbeexpectedtoresultintheconstructionofarobuststructure.

• The YDTI storage capacity curve with time appears to be reasonable. The

elevation-area-capacity curves and the filling-time schedule have beenestablished taking into account historical tailings production rates, settlingdensitiesofthetailings,andoperatingpondvolumes.

• Expectationsforrigorinthedocumentationofconstructionrecords,operational

procedures, and lines of responsibility are increasing as a consequence oflessons learned from several recent failures of tailings dams in the Americas.The Panel is comfortable with the documentation requirements and QA/QCproceduresthathavebeensetdownintheconstructionmanagementplan.

• The future role of the IndependentReviewPanel is discussed in Section12of

thisreport.9.DAMBREACHRISKASSESSMENTTheMCArequiresthefollowingwithrespecttoadambreachriskassessment:

§ Adambreachanalysis,afailuremodesandeffectsanalysisorotherappropriatedetailedriskassessment.

§ Anobservationalmethodplanaddressingresidualrisk.

§ A list of quantitative performance parameters for construction, operation, andclosureofthetailingsstoragefacility.

KPchosetoconductadetailedriskassessmentofpotential failuremodestomeet theMCArequirements.Theevaluationappliesbasicriskassessmentcomponentstypicalofa failuremodes and effects analysis, however it is presented withmore quantitativeevaluations. The assessment examines foundation and embankment instability,overtopping, and internal erosion and piping. Loading considerations include thoseduring maximum normal operating conditions, loading from seismic events, floodevents,andmalfunctionsofthereclaimwaterandtailingsdistributionsystems.


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ThePanelobserves:

• ThePanelacceptsthisapproachforthepurposeoftheAmendmentApplication.

• Theanalysesoffailuremodesareconsideredsufficient.

• Theriskassessmentconcludesthatforthefailuremodesexamined(foundation

andslopeinstability,overtopping,internalerosionandpiping),withoperationalcontrolsinplace,thelikelihoodoftailingsreleaseduetotheembankmentraiseisverylow.

• The proposed observational method introduced to address residual risk is

adequateanditisforeseenthatthiswillberefinedduringongoingoperations.Itis theresponsibilityof theEngineerofRecord for the tailings facility toassuretheappropriateapplicationoftheobservationalmethodatYDTI.ThePanelwillreviewtheactivityoftheEngineerofRecordinthisregardasconstructionmovesforward.

• ThePanelfindsthelistofquantitativeperformanceparametersadequate.

10.RECLAMATIONOVERVIEWThePanelwasinterestedinunderstandingtheextenttowhichtheclosureplanfortheEl. 6450 ft. facilitywould need to bemodified relative to the closure plan for the El.6400ft. facility. Thereclamationstrategy isbasedonre-gradingembankmentslopes,placement of an amended alluvial cap on the tailings facility, and re-vegetation. Aclosurescenario isplanned for thenorthernportionof the tailings impoundmentthatincludes a pond and surroundingwetland thatwill be inundated on a seasonal basis.The pond is estimated to hold a volume of approximately 500 acre-ft. of waterapproximately40yearsafterclosure.AreviewoftheclosureplanforYDTIisnotwithinthescopeofthePanel;thefocusisonevaluation ofwhether the additional requirements to be imposed on the reclamationplan due to the embankment raise have been given adequate consideration. Theexpansioncreatestheneedformanagementofadditionalembankmentandbeacharea.KPhasquantified the sizeof theseadditional areas,which is largelyexpressedas theadditional beach area that will need to be reclaimed. The area of open pond andwetlandsareanticipatedtodecreaseincomparisontoclosureoftheEl.6400ft.facility.Thevolumesofadditionalborrowmaterialrequiredforcappinghasbeenestimated.MCArequiresidentificationandconsiderationof:

§ Designintegrationwithaclosureplanthatmaximizesmaintenance-freeclosuretogreatestextentpossible.


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§ Post-closuremonitoring,inspections,andreviews.Duringdevelopmentof theDesignReport, severalmodificationswere introduced thatled to improvements in the Closure Plan: (i) a gravity drainage system for theWestEmbankmentDrainwasadopted foroperationsand inclosure,and(ii)apost-closurespillwayforextremerainfalleventswasincorporatedinthedesigntoreducetherisksassociatedwithwater ponding against the embankments. TheWEDExtraction PondwillbelinedandwaterreportingtothatpondwillrequireactivepumpingtotheYDTIafterclosure,aslongasnecessary.ThePanelobserves:

• ThePanelacceptsthereclamationconceptsintheDesignReportandconsiderstheyareconsistentwithexistingclosurerequirements.

• The volume of water reporting to the West Embankment Drain during theclosureperiodhasnotbeenquantified,butthePanelanticipatestheflowtobesignificantly less than the flows thatwill occur during the operational period,given the absence of slurry discharge and the smaller water pond. MR hasestimatedthattheWEDwillberequiredtoprovidehydrodynamiccontainmentfor about 20 years following closure, before drain-down of the tailings massleads to a water table in the tailings below the elevation of the West Ridgepotentiometric low. Observations of flow during the operational period willlikelyprovidethebestmeansfordevelopingrefinedestimatesofflowatclosure.Local infiltration of precipitationwill continue to yieldwater to theWED thatmustbemanaged.

• The Panel accepts the design criteria and conceptual layout presented for the

closurespillwaywithasidechannelweirintake.Waterfromtheclosedfacilityisintendedtoenterthespillwayonlyunderextreme,andrare,rainfallconditions.The invert of the spillwaywill be set so that aminimum800 footwide beachwould separate thepond from the embankments. ThePanel concurswith thislogicinsettingtheinvertelevation.

• A conceptual monitoring plan and site inspection plan for closure has beenoutlined,withthedetailspendingcompletionofthereclamationprogram.ThePanelconcurswiththisapproach,andconsiderssufficientinformationhasbeenprovided at this time to define the scope of the program. In addition, thecommitmentstobeundertakenduringtheclosureperiodbyMontanaResourcesLLP, theEngineerofRecord for the facility,andthe IndependentReviewPanelhavebeenspecified.

11.ENGINEEROFRECORDRESPONSESTOARCOTobeincludedintheDesignReport,MCArequires:


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§ Anyother information,drawings,maps,detaileddescriptions, ordata to assistthePanelindeterminingiftheneworexpandedtailingsstoragefacilityprotectshumanhealthandtheenvironmentshouldbeprovided.

In January 2017, ARCO engaged a group of consultants to evaluate environmentalconditions and risks associatedwith the proposed YDTI enlargement. At the time oftheir review, it was planned to construct the embankments to El. 6500 ft. TheconsultantswereDr.NorbertMorgensternandAECOMengineersMr.RichardDavidsonand Dr. Brian Hippley. They visited the site on 24 January 2017, took part in threemeetings in February,March, andApril 2017,withARCO,MR, andKP and presentedtheir comments in a report, “Final Report – Yankee Doodle Tailings Impoundment –Butte,Montana”;datedMay3,2017.KPundertookadetailedassessmentoftheARCOreportandintheirletterreporttoMR,“Response by the Engineer of Record to Comments Submitted by Atlantic RichfieldCompany”, dated September 8, 2017, they addressed 81 individual comments in textandintabularform.TheirresponseisincludedintheDesignReport.IntheviewofthePanel,themostsignificantARCOcommentsandthecorrespondingKPresponsescanbesortedintosevenmajorcategories:

o WaterandSeepageConditionsintheEmbankmento GeotechnicalCharacteristicsoftheEmbankmentRockfillo FaultingandSeismicConsiderationso StabilityofEmbankmentso Instrumentationo FailureConsequencesandRiskMitigation

11.1WaterintheEmbankmentandSeepageARCOCommentsandKPResponses:ARCO comments that variousperchedwater levels and a basal phreatic surfacewereobservedintheembankmentandconstantseepage isobservedat thetoeandatSeep10, some 250 feet above the toe of the embankment. This seepage supports theiropinionthat“significantzonesofsaturationexistwithintheembankment”.IntheApril2017discussions,ARCOexpressesthethoughtthat“thesaturatedzoneadoptedforpaststability studies is likelymore complex thanportrayed in thepermitdocuments” and“additionalstudiesshouldbeperformed”.KPrespondedthatvariousperchedwaterlevelsareexpectedintheobliquelystratifiedheterogeneousrockfillembankmentandthat thedrillingandmonitoringconfirmsthepresence of localized perched water levels (saturated zones) within the largelyunsaturated rockfill embankment. In the opinion of KP, previous and currentembankmentinvestigationsandmonitoringreadingsindicatethatthesaturatedzoneinthe base of the East-West Embankment “exists in the bottom 50 to 120 feet ofembankmentrockfill”. KPstatesthattheconstantseepageatthetoeistobeexpectedasitispartofthedesignedembankmentdrainagesystemandthat“relativelylocalized


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perched seepage flows, such as those observed at Seep 10, are expected duringoperations”.KPalsostatesthatthehydrogeologicalmodelwillcontinuetoberefinedasadditionalinvestigationandmonitoringdataareobtained.ARCOalsocommentsthat,“Lackofconsistentseepagecontrolmeasures(i.e.filterzoneonupstreamslope)hasallowedtheintroductionoftailingsfinesintotheembankmentreducingtheintendedfree-drainingcharacteristicoftheembankment.”KPdescribes incidents in their2016EORAnnual InspectionReportwherewater andtailingswereobservedtoflowthroughtheNorth-SouthEmbankmentalongthecoarsebasezoneofthestructure.Thiswastheresultoftheactivetailingsstreambeingatthesameelevationasthecoarserockbasezone. Theinspectionreportindicatesthatthiscondition was corrected and that the design of the next stage includes a facing ofalluviumtomitigatepotentialtailingsmigration.ThePanelobserves:

• Based on site observations and review of the drill logs, the Panel agreeswithKP's characterization of the East-West Embankment as an obliquely stratifiedheterogeneousrockfillembankment.AphotopresentedinSection4.2oftheSiteCharacterizationReport(seeFigure2below)showsacutintoanearbyrockfilldump constructed at a similar time with similar methods as the YDTIembankments. The photo shows the angular fabric of the structure. Thecomplexorientationsofthelayerswasfurtheramplifiedbytheconstructionofmultiple embankments with upstream and downstream sloping layers asindicatedinSection8+00WincludedinKP’sAugust2017SiteCharacterizationReport(seeFigure3below).

• It is the Panel’s opinion that the embankment composition pattern makes itunlikely that large-scale,continuoushorizontal layersofsaturated fine-grainedmaterials exist within the embankments, at elevations above the basal watertable.

Figure2-PhotoofcutinthenearbyGreatNorthernDumpshowingangularorientationofrockfilllayers


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• Basedon reviewofpiezometricdataanddrill logs, thePanel agreeswithKP's

interpretationof theEast-WestEmbankment as being "relatively unsaturated"withseveral isolatedperchedsaturatedzoneswithdownwardgradientsandabasalsaturatedzoneinthebottom50to120feetofthestructure,asshowninFigure3.ThePanelacceptsasreasonabletheKPinterpretationthatSeep10isdue to the presence flow along an old haul road or pipe ramp that wasincorporated in the downstream shell, and is therefore not an indicator of alargezoneofsaturationlocatedwellabovetheelevationofthebasalsaturatedzone.

Figure3-East-WestEmbankmentatSection8+00W

• ThePanelwasinformedthatleaksofwaterandtailingsthroughtheNorth-SouthEmbankmentarenotroutineoccurrencesandthattheyhavebeenappropriatelyrepaired.However,itshouldbeanticipatedthatsometailingssandsandslimesof uncertain volume have entered the embankment over the years. KP hasdesignedthenextstageofallembankmentswithanalluvium-facinglayerontheupstreamslopetopreventanyfurthermigrationof tailings intothestructures.IntheviewofthePanel,thisalluvialfacinglayerfortheembankmentraisetoEl.6450ft.isanessentialelementofthedesign.

• The design intent for the YDTI embankments is that they are free-draining

structures. The uncertainty inherent in mapping the occurrence of perchedzonesinthehighlyheterogeneousmaterialsformingtheembankments,andtheuncertainty in characterizing the volume of fine tailings that may havepreviously infiltrated into the embankment, leads thePanel to conclude that adiligentprogramtomonitorevolvingfluidpressureswithintheembankmentisakeyrequirementforYDTI.Aspartofthesiteinvestigationprogramtosupport


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the permit amendment to raise all the embankments to El. 6450 ft., MR hasproceededwithasignificantexpansionoftheembankmentmonitoringsystem.

11.2GeotechnicalCharacteristicsoftheEmbankmentRockfillARCOCommentsandKPResponses: ARCOcommentedthattherockfillappearstobepronetoweatheringthatmayresultinreduced shear strength and that additional embankment height may accelerate thereductioninstrength.ARCOalsopointedoutthat“thewasterockhasahistoryofbeingleachedandthattheEORshoulddeterminewhetherthedegradedrockfillisreallyfreedrainingandifitpossessahighenoughdegreeofsaturationandsufficientfinescontentto behave in an undrained manner near the base and elsewhere and be potentiallyvulnerabletothehighseismicloadingatthesite.”KP responded by stating that they have “conducted extensive investigations andanalyses to evaluate the nature and characteristics of the free draining rockfill asreported in the Site CharacterizationReport (Rev. 2), and (have) also considered sitespecific seismic loading and the potential for undrained conditions in the StabilityAssessmentReport(Rev.2).”ThePanelobserves:

• ReviewoftheSiteCharacterizationReport(Rev.2)indicatesthatthedrillingand sampling program and themonitoring of piezometers has establishedthat the East-West Embankment is adequately free draining with onlyisolatedperchedwaterzonesabovethesaturateddrainagelayeratthebase.

• BasedonareviewoftheStabilityAssessmentReport(Rev.2)itisapparentthat KP has considered lower bound undrained strengths that wereseismically triggeredalongacontinuous layerofsaturatedoverburdenandrockfill in the base of the embankment. Their analyses indicated that theembankment is expected to remain stable taking into account theseconditions.

11.3FaultingandSeismicConsiderationsARCOCommentsandKPResponses:ARCOstated“Thereareuncertaintiesregardinglocalfaultsthatmayhaveconsiderableeffects on seismic loading of the tailings impoundment.” ARCO pointed out that theSeismic Hazard Assessment study by Linda Al Atik and Nick Gregor recommended afaultstudy,whichapparentlywasnotdone. Furthermore,“theprecedentofassumingfault activity without field confirmation can lead to excessively conservative results”


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andthat“MRandtheirconsultanthaveadoptedtheconservativepositionthatthefaultisactive”.In response, KP indicated that it relied on information from the Montana Bureau ofMinesandGeologyandotherpertinentinvestigations,whichconcludedthatitcouldnotbe determined conclusively that the local Continental Fault and other nearby faultswereeitheractiveor inactive. Therefore,KPchoseto taketheconservativeapproachandconsiderthefaultstobepotentiallyactive. IffutureinvestigationsdeterminethattheContinentalFaultwastobedeemedinactive,KPwouldconsiderthoseimplicationsintheirdesigns.ThePanelobserves:

• The Panel agreeswith the approach that KP has taken regarding potentialfaultactivity. Thedesignsresultingfromthisassumptionareconsideredtobepractical.

11.4StabilityofEmbankmentsARCOCommentsandKPResponses:ARCOperformed“screening-level”analysesofstabilitybasedoninformationfromKP’sstabilityreportissuedinNovember2016(Rev.0).ThemodelthatwasusedisshowninFigure4below.

Figure4-StabilitymodelusedinARCO’sscreeninglevelanalysesThese screening level analyses resulted in calculated Factors of Safety (FoS) rangingfrom0.89to1.01,therebynotmeetingrequiredstabilitycriteria.Itispointedoutherethat these analyses were conducted prior to the time that ARCO had additionalinformation from KP that resulted in ARCO commenting that “the saturated zone


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adopted forpaststabilitystudies is likelymorecomplex thanportrayed in thepermitdocuments.”KP responds by remarking that the results of the analyses presented in StabilityAssessmentReport–Rev.2,(usingupdatedphreaticconditions)confirmstheMCAFoSrequirements for static loading are achieved for both current and future normaloperatingconditions.TheYDTIembankmentsarestablewithaFoSof2.0orgreater.Inrecentdiscussions,KPstatesthattheMCArequirementofaFoSofatleast1.2forpost-earthquakeconditionsismet;evenif lowerboundundrainedstrengthswereassumedto exist. In addition, KP states that “selective and strategic placement of rockfill tofurthermitigatethevery lowriskassociatedwiththisconditionshouldbeconsideredwhile evaluating options for storage of excess rockfill produced duringmining of theContinentalPit”.ThePanelobserves:

• It is the Panel’s opinion that the stability analyses performed by KP asdescribedintheirAugust15,2017StabilityAssessmentReport(Rev2)arerepresentativeoftheconditionsastheyarepresentlyunderstoodtoexistattheYDTI facility and for theplanned raise toEl. 6450m.Accordingly, it isbelieved that the MCA Factor of Safety requirements have been met orexceeded.

• It is anticipated that with the conversion to the multi-spigot tailings

distributionsystem, therewillbea reduced infiltrationrate into theupperpart of the upstream face of the East-West embankment, and a greatercomponentofflowenteringtheembankmentfaceatdepth.

• ThePanelagreeswithKP’sconceptregardingtheuseofexcessrockfillfromtheContinentalPittofurtherminimizeriskofunstableconditions.

11.5InstrumentationARCOCommentsandKPResponsesARCOcommentsthat,“Moreinstrumentationsectionsandmonitoringdevicesarewarrantedtoadequatelymonitorthefacilityinthefuture”.KP states that they concur with this recommendation. ”A phased site investigationprogram began in 2015 and is presently underway to supplement the existingembankment monitoring network. The monitoring network will be progressivelyexpanded as required to meet the monitoring and surveillance requirements asstipulatedbytheEORwithinputfromtheIndependentReviewPanel(IRP)".ThePanelobserves:


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• ThestabilityoftheEast-WestandNorth-Southembankmentsisdependentupon the rockfill remaining in a free draining condition. Therefore,monitoringof fluidpressures in theembankments,andconfirmationof theelevation of the zone of continuous saturation, is a principal focus of themonitoringprogramgoingforward.

• MR is currently conducting a site investigation program that incorporates

the installation of 4 additional boreholes along north-south transectsthrough theEast-Westembankment (Sections0+00and12+00W). Resultsfromthisprogramareanticipatedtobeavailablebeforetheendoftheyear.ThePanelrequeststhattheresultsfromthissiteinvestigationbeforwardedtothe Panelwhen complete, and that any further additions ormodifications totheexistinginstrumentationnetworkbeprovidedforreview.

11.6FailureConsequencesandRiskMitigationARCOCommentsandKPResponsesARCOcomments that “Thewaterquantitycurrentlyretainedwithin theembankment,combinedwith the infrastructureandactivitiesdownstreamof the impoundmentandinthetownnearby,mayresultinsevereconsequencesifafailureoccurs”.Additionally,“Ifadambreachconsequencereportisnotgoingtobeprepared,informationregardingthepotential consequencesof a breach is still needed to evaluatepotential actions tomitigatetherisk”.Inresponse,KPpointsoutthattheMontanaregulationsrequire“developmentofadambreachanalysis,afailuremodesandeffectsanalysisorotherappropriatedetailedriskassessment,andanobservationalmethodplanaddressingresidualrisk.AdetaileddambreachriskassessmentwasconsideredthemostappropriateandapplicableapproachfortheYDTIfacilityamendmentapplication.TheDamBreachRiskAssessment(Rev2)ispartoftheYDTIDesignDocumentpackage.”ARCOcommentsthatshort-termriskmitigationmeasuresmaybewarrantedincludingreduction of water in the tailings impoundment, development of alternative disposallocations,buttressing,and/oralternativedisposaltechnologies.KPrespondedbystatingthatthecurrentreclamationstrategyincludesacappinglayerover beaches and a reduction of the supernatant pond. Also “selective and strategicplacement of rockfill to further improve embankment stability and to supportreclamationobjectiveswillbeconsideredwhileevaluatingoptionsforstorageofexcessrockfillproducedduringminingoftheContinentalPit.”ThePanelobserves:

• BasedonareviewoftheKPDamBreachRiskAssessmentreport,thePanelissatisfiedthattheMCArequirementsforriskevaluationhavebeenmet.


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• The Panel agrees that consideration of buttressing the embankmentswith

wasterockfromminingoperationsisanappropriatetask.ThePanelwishesto be kept up to date on the progress of potential buttressing studies. Asfeasible, the Mine Plan should accommodate production of waste rockamenable for construction of an E-W embankment buttress as an importantfactorintheplanningprocess.

12.IRPONGOINGREVIEWThereareanumberofongoingactivitiesattheYDTIthatincludeconstruction,furtherdrilling, installationof instrumentation,anupdateddepositionplan,andthe like. TheIRP consider that review of the progress of activities and especially updates of themonitoring results will be appropriate on an ongoing basis starting in the secondquarter, or so, of 2018. Anumberof operatingquantitativeperformanceparametersand objectives are further described in the TOMS and the IRPwould also propose toreviewthoseconditions.13.IRPSTATEMENTONADEQUACYOFTHEDESIGNREPORTIntheviewoftheIndependentReviewPanel,thedesigndocumentforexpansionoftheYankeeDoodleTailings Impoundment addresses allMCA requirements. Based on theselectionofappropriateparametersandsoundtechnicalevaluations,theIRPaccepttheadequacy of this design. Panel requirements for ongoing information updates thatsupportthisopinionhavebeenhighlightedinitalicwithinthereport.

LeslieSmith

JamesSwaisgood

DirkvanZyl

IRP Montana Resources Expansion Final Report

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