A Portland mining firm owned mostly by a U.K. company wants to explore the nickel laterite potential in the Rogue River-Siskiyou National Forest.
The Red Flat Nickel Corp. has proposed exploratory drilling at two sites in the forest, including one near the southeastern tip of the Kalmiopsis Wilderness Area.
St. Peter Port Capital Ltd. on the island of Guernsey has a controlling interest in Red Flat Nickel Corp., owning 80 percent of its ordinary shares, according to the Guernsey firm's half-year report issued Dec. 21, 2012.
Although the island is off the coast of France, the company's country of operation is the United Kingdom.
The company has a loan to the Portland firm, with "repayment due from this loan now being around U.S. $15 million," the report said.
As part of a restructuring plan for the Portland firm, the Guernsey company has agreed not to "determine the loan" before October, it said, adding that Red Flat Nickel Corp. was preparing a fundraising effort.
Describing it as a newly incorporated investment company, the St. Peter Port's report indicated it saw a lot of potential in exploring for nickel in the national forest.
"We have recruited a management team with strong expertise in the exploitation of nickel laterite and funded some further surface exploration work," the report said. "This has shown the presence of potentially economically attractive percentages of scandium in the nickel-bearing rock. This should considerably enhance the commercial potential of the nickel deposits."
— Paul Fattig
Dubbed the Cleopatra site, it is about a dozen miles west of O'Brien as the crow flies. The proposed mining area is just west of Taylor Creek, a tributary to Baldface Creek.
The other proposed exploratory drilling site is on the Red Flat area on the far west side of the forest in the Hunter Creek drainage.
Both sites are in Curry County within the Gold Beach Ranger District.
"It's an exciting project," said John Magliana, attorney representing the corporation, whose office is in Portland. "But it's not certain how far things will go. As anyone knows who has done business in the U.S., especially in mining, there are many hurdles to overcome before you can even think about drilling.
"We are working our way through the formal processes right now," he added. "My client is very sensitive to the environment and the attitude of Oregonians."
The proposed test drilling in the Cleopatra site has raised the hackles of those wanting to preserve the area as part of a proposed extension of the wilderness, a largely roadless block known as the South Kalmiopsis.
Forest officials are now studying the proposed exploration drilling.
"They do have a plan of operations for test drilling," forest spokeswoman Virginia Gibbons said. "They are trying to make sure it's a viable deposit before moving a lot of equipment in."
The firm has agreed to pay for required environmental studies, she said.
"We will be doing an environmental analysis — the company will pay for that," she said. It's uncertain what the analysis would cost, she added.
The test drilling on the Hunter Creek site would take advantage of existing roads, while the Cleopatra site would require the use of helicopters for access, she said. Test drilling on the Cleopatra site is expected to cover less than an acre, she said.
In February, the Oregon Department of Water Resources issued a limited water use license to the firm for the Cleopatra area.
The license is for March 31 through Nov. 1 of this year, allowing the use of 10 gallons a minute from an unnamed stream, which is a tributary to Taylor Creek. The license is only for exploration drilling, the department noted.
Daily water withdrawal is estimated to be about 3,000 gallons, according to the firm's application. Total water extraction for the project is estimated to be 100,000 gallons, it noted.
The water would be pulled out of the stream by a pump and be piped to three 1,500-gallon water bladders, the application added.
The firm has 139 claims in the proposed Cleopatra mining area, according to U.S. Department of Interior mining claim records.
But members of the Friends of the Kalmiopsis say the mining operation could threaten the environment. They are also concerned it would undercut efforts to add the South Kalmiopsis roadless area, which encompasses the Baldface Creek drainage, to the Kalmiopsis Wilderness.
"This is a valuable watershed for the north fork of the Smith River and Baldface Creek," said Barbara Ullian of Grants Pass, coordinator for the Friends of the Kalmiopsis. "This is some of the best quality fishery habitat we have in Oregon.
"The area is known for its outstanding water quality," she added. "It is of major importance to the world-class fishery in the Smith River."
The proposed mining activity could threaten that salmon and steelhead fishery, as well as rare plants native to the area, she added.
"This is right on the California border," she said. "Just across the border is the Smith River Recreation Area. That whole watershed was withdrawn from mineral entry.
"But in Oregon we have the best quality fishery habitat, and it is still open to mineral entry," she added.
She noted that in a study released in November 1993, the Siskiyou National Forest staff concluded the area deserved additional protection.
"Baldface Creek provides some of the best water quality and fisheries habitat known on the Siskiyou National Forest," the report stated. "The world-class fishery on the Smith River depends on the water and fish produced in the Baldface drainage.
"More numbers of fish were counted on this creek than any other" on the district, it added. "This watershed could be used as a model of the desired conditions for restoration projects in other watersheds."
Moreover, Ullian noted that on July 8, 2004, the Bush administration announced its support for adding the South Kalmiopsis to the existing wilderness. Then-Agriculture Secretary Ann Veneman proposed to Congress that the 34,000-acre tract be added.
"These lands have been noted for their outstanding wilderness characteristics for many years, and there has been long-standing public interest in providing greater protections in this area," Veneman said at the time.
"The Bush administration is pleased to move this important proposal forward and will begin work with Congress this session to provide this designation."
However, the effort failed in Congress, she noted.
The point, Ullian said, is that it isn't just environmental activists who want to see the area protected.
"This is a very unique area that needs to be protected," she said. "Its fishery and botanical values are extremely high ... They are much more valuable than the minerals."
Reach reporter Paul Fattig at 541-776-4496 or email him at email@example.com.