Natural Resources Research Institute Technical Report

This report summarizes a Natural Resources Research Institute supported study (Zanko, 1988) in which the tax and royalty policies of Minnesota, Michigan, South Dakota, Idaho, Utah, Nevada, and the Canadian province of Ontario were examined and their impact on the cost of mining evaluated. The evaluation was accomplished by applying the policies of each state and province to three hypothetical non-ferrous mining operations and performing an after tax economic analysis. The analysis demonstrated that such policies have a profound effect on mining costs, and also showed that policy differences between each state and Ontario are potentially significant enough to influence mineral exploration and mineral investment decisions. However, and perhaps most importantly, the analysis also revealed that Minnesota is no longer a high tax state with regard to non-ferrous mining activity, and in fact compares very well with states recognized for their lower tax burdens.Natural Resources Research Institute, University of Minnesota Duluth, 5013 Miller Trunk Highway, Duluth, MN 55811-144

Environmental Particulate Matter Characterization

The NRRI characterization studies provide physical (size and shape), mineralogical, chemical, geological, geographical, and historical context to the findings of the University of Minnesota’s School of Public Health (SPH) and the University of Minnesota Medical School (UMMS). The SPH and UMMS findings (Finnegan and Mandel, 2014) showed that mesothelioma is associated with working longer in the taconite industry. However, the SPH and UMMS investigators “…were not able to state with certainty that the association with EMPs and mesothelioma was related to the ore dust or to the use of commercial asbestos or both.” The NRRI findings indicate the following: 1) Low concentrations of PM10, PM2.5, and EMPs in Mesabi Iron Range community air. 2) Elemental iron concentrations in MIR communities were similar to elemental iron concentrations in background sampling locations when taconite mines/plants were inactive. When taconite mines/plants were active, the elemental iron concentrations within communities were found to be statistically higher. 3) Mineralogically and morphologically, the EMPs identified in MIR communities and taconite processing plants were dominated by particles that did not fit the “countable”/”covered” classification criteria. Of the 145 “covered” EMPs identified within the six MIR taconite processing plants, a total of 8 were “countable” (NIOSH, 2011), representing 1.1% of the total number of EMPs, out of 691 total. These EMPs were detected in two taconite plants (seven in one plant and one in another); no other “countable”/”covered” EMPs were detected in the other four plants. 4) The lake sediment study returned similar results, in which 4 of the study’s 790 identified EMPs found in the lake sediment samples met the “countable”/”covered” classification. 5) In comparison to the NIOSH standard, for countable particles, the results from this study show that the community air has significantly lower amounts than the standard. 6) Only one plant and two areas in this plant had countable EMPs above the NIOSH benchmark. 7) The highest particulate matter found was for the Minneapolis reference site in comparison for the Range communities and the other two reference sites. 8) The use of MOUDI sampling techniques is a good method for better understanding not only what is in the air, but also the size of the particles that are in the air. 9) Study of lake sediment can be used to interpret some of the impacts of past industrial activities and to gain a better understanding of the impact of local geology

Natural Resources Research Institute Technical Report

Plates 1-7B mentioned in the report are also attached to this record. Disks 1-4 have not been located yet.Minnesota has a variety of clays and shales that have potential as industrial clays. These clays are: 1) Precambrian clays; 2) Paleozoic shales; 3) pre-Late Cretaceous primary (residual) and secondary kaolins; 4) Late Cretaceous ball clays and marine shales; 5) Pleistocene glacial clays; and 6) Recent clays. Minnesota clays are currently used for brick and as a portland cement additive. Other potential uses include filler and coating grade kaolins, ceramic tile, refractory products, lightweight aggregate, sanitaryware, and livestock feed filler. Precambrian clays occur in the 1 .1 Ga Keweenawan interflow sediments of the North Shore Volcanic Group, the Middle Proterozoic Thomson Formation and in the Paint Rock member of the Biwabik Iron-Formation on the Mesabi Iron Range, all in northeastern Minnesota. The Paint Rock clays have potential as red coloring additives and glazes. Paleozoic shales in southeastern Minnesota are primarily kaolinitic and illitic shales that are interbedded with limestones. The Ordovician Decorah and Glenwood Formations are marine shales that, in the past, have been used to make bricks, tile, and lightweight aggregate. The thickness of these shales ranges from 10-90 feet. The Decorah Shale has the lowest firing temperature with the best shrinkage and absorption characteristics of all the Minnesota clays. The pre-Late Cretaceous primary and secondary kaolins are found in the western and central portions of Minnesota; the best exposures are located along the Minnesota River Valley from Mankato to the Redwood Falls area and in the St. Cloud area. The primary or residual kaolinitic clays are the result of intense weathering of Precambrian granites and gneisses prior to the Late Cretaceous. Subsequent reworking of these residual clays led to the development of a paleosol and the formation of pisolitic kaolinite clays. Physical and chemical weathering of the saprolitic kaolinite-rich rocks produced fluvial/lacustrine (secondary) kaolinitic shales and sandstones. Recent exploration activity is concentrated in the Minnesota River Valley where the primary kaolin thickness ranges from 0 to 200 + feet, and the thickness of the secondary kaolins ranges from 0-45 + feet (Setterholm, et al, 1989). Similar kaolinitic clays occur in other areas of Minnesota, e.g., St. Cloud and Bowlus areas. However, less information is available on their thickness, quality, and areal distribution due to varying thicknesses of glacial overburden. Cement grade kaolin is extracted from two mines in the residual clays in the Minnesota River Valley, and a third mine there yields secondary kaolinite-rich clays that are mixed with Late Cretaceous shales to produce brick. During the Late Cretaceous, Minnesota was flooded by the transgressing Western Interior Sea, which deposited both non-marine and marine sediments. These sediments are characterized by gray and black shales, siltstones, sandstones, and lignitic material. Significant occurrences of Late Cretaceous sediments are found throughout the western part of the state, with the best exposures located in Brown County, the Minnesota River Valley, and the St. Cloud area. In Brown County, the maximum thickness of the Late Cretaceous sediments is > 100 feet. These sediments thicken to the west and can be covered by significant thicknesses ( > 300 ft.) of glacial overburden in many areas. Current brick production comes from the Late Cretaceous shales in Brown County. In the past, the Red Wing pottery in Red Wing, Minnesota, used Cretaceous and some Ordovician sediments to produce pottery, stoneware, and sewer pipe. Glacial clays occur in glacial lake, till, loess, and outwash deposits, and these clay deposits range in thickness from 5 to 100 + feet. Much of the early brick and tile production (late 1800s and early 1900s) in Minnesota was from glacial clays. The last brickyards to produce from glacial lake clays, e.g., Wrenshall in northeastern Minnesota and Fertile in west-central Minnesota, closed in the 1950s and 1960s. There has also been some clay production from recent (Holocene) fluvial and lake clays that have thicknesses of 2-10 + feet. Both recent and glacial clays are composed of glacial rock flour with minor quantities of clay minerals. Carbonates can be a significant component of many of these clays. Glacial lake clays in northwestern Minnesota (Glacial Lake Agassiz - Brenna and Sherack Formations) begin to bloat at 1830 ° F due to the presence of dolomite and smectite clays. These clays are a potential lightweight aggregate resource. Geochemistry, clay mineralogy, particle size, cation exchange capacity (CEC), raw and fired color, and firing characteristics are useful in distinguishing different potential industrial uses for Minnesota clays. These physical and chemical characteristics help to distinguish potentially useful clays from those with less desirable characteristics, e.g., high quartz or silica content, high shrinkage or absorption upon firing, undesirable fired color, too coarse-grained, CEC of < 5 milliequivalents, etc. Certain clays, e.g., the bloating Decorah and Brenna Formation clays, and the high alumina, refractory, pisolitic clays of the Minnesota River Valley, have physical and chemical characteristics that indicate further exploration and product research are necessary to fully evaluate the potential of these clays.Natural Resources Research Institute, University of Minnesota Duluth, 5013 Miller Trunk Highway, Duluth, MN 55811-1442; Funded by the Legislative Commission on Minnesota Resource

Natural Resources Research Institute Technical Report

There still exists in the non-ferrous minerals industry a perception that Minnesota is a hightax state, making it unattractive for hard rock mineral investment. This perception is reflected by the most recent industry survey performed by the Canada-based Fraser Institute, in which Minnesota was ranked near the bottom in the categories of: 1) mineral potential, 2) policy potential, and 3) investment attractiveness, relative to several U.S. states, Canadian provinces, and most other foreign countries. To address this negative perception issue, an up-to-date, rigorous, and objective comparative economic analysis is being performed to quantify the economic impact that Minnesota’s current tax and royalty policies have on potential non-ferrous mining projects. This ongoing analysis uses hypothetical mining project models that are patterned after realistic mining operations worldwide, with an emphasis on Cu ± Ni ± PGE and PGE deposits, given Minnesota’s widely acknowledged mineral potential for both. Both underground and open pit mining methods are addressed in what will ultimately be a multi-state (Minnesota, Wisconsin, Montana, Arizona, Alaska, and Nevada) and multi-province and country (Ontario, British Columbia, Western Australia, Chile, and Sweden) comparison, against which the tax and royalty policies of each regime are applied. Economic measurement tools - like discounted cash flow rate of return (DCFROR) and sensitivity analyses - are used to provide quantitative results. Multiple economic scenarios will provide a range of outcomes that can be evaluated by both the private and public sector. For example, the specific example presented herein shows that Minnesota compares well with the Canadian province of Ontario with respect to mining taxes and royalties

Natural Resources Research Institute Technical Summary Report

Technical Summary Report, NRRI/TSR-2011/01, May 2011. Natural Resources Research Institute, University of Minnesota Duluth, 5013 Miller Trunk Highway, Duluth, MN 55811This summary report compares capital and operating costs associated with hypothetical underground and surface mining operations located on Minnesota’s Western Mesabi Iron Range. Spreadsheet cost models developed by the author are used for generating the comparative cost data.* The models are based in part on underground and surface mine cost information provided in InfoMine USA, Inc. Mining Cost Service. Model output is intended to provide only an approximation of capital and operating costs associated with both underground and surface mining, and should be viewed accordingly. “Ore” is considered to be restricted to sub-members Lower Cherty 4 and Lower Cherty 3 (LC-4 and LC-3). Note that the stripping ratio increases from about 4:1 to 6:1 approximately one mile to the south of the Biwabik Iron Formation’s southern subcrop extent. Currently, the stripping ratio at active Minnesota iron ore (taconite) surface mining operations is at about 1:1. Based on the Biwabik Iron Formation’s overall dip of 5-10° to the south in the area of interest, for every mile that mining progresses down-dip, the depth to ore increases by about 700 feet. Therefore, the ore zone (LC-4 and LC-3) of any mine developed more than one mile to the south of historic iron ore mining activity will be more than 1,000 feet below ground surface.Natural Resources Research Institute, University of Minnesota Duluth, 5013 Miller Trunk Highway, Duluth, MN 5581

Natural Resources Research Institute Technical Summary Report

October 2007 Progress Report To the Minerals Coordinating Committee; October 2007; Funded by: the Minerals Diversification Program of the Minnesota Legislature, Administered by the Minerals Coordinating Committee (MCC), Minnesota Department of Natural Resources (MDNR), Budget Number 187-6565 (MCC), Natural Resources Research Institute, University of Minnesota Duluth, 5013 Miller Trunk Highway, Duluth MN 55811-1442Every year, Minnesota’s taconite mining industry generates over 125 million tons of mining byproducts, a figure that is more than double the entire state’s annual aggregate usage. Since 2000, the Natural Resources Research Institute (NRRI), University of Minnesota, Duluth, has been investigating how these vast quantities of taconite mining byproducts can be used for construction aggregate purposes on an expanded basis. However, if taconite-based aggregate is to be competitive beyond the Mesabi Iron Range, cost-effective rail transport options will be needed, and rail-related economic and logistical barriers must be identified, quantified, and overcome. The reality is, lower value/higher volume commodities like construction aggregates are often economically limited by their distance to market, due to the cost of transportation. Consequently, this study is focusing on rail transport by reviewing/identifying transportation networks, logistics, equipment availability, costs, and potential difficulties associated with moving taconite aggregate through that network. Truck, barge, and Great Lakes shipping are also being addressed. By identifying the key transportation and market-related issues, this study will give potential end-users inside and outside Minnesota a better understanding of how taconite aggregate could be an important alternative to “conventional” aggregate sources. Likewise, taconite producers will have a better understanding of the relative ease or difficulty of marketing and/or moving various types of aggregate, and the potential economic benefit(s) thereof. By improving our understanding of what the supply, demand, and movement dynamics are (and how they interrelate), the prospect for expanded use of taconite aggregate will be enhanced - a development which will ultimately be important for both the economy and the environment, a dual benefit measurable in both a dollars (economic) and tons (resource conservation) sense. This Technical Summary Report describes project activities and progress through October of 2007.Funded by: the Minerals Diversification Program of the Minnesota Legislature, Administered by the Minerals Coordinating Committee (MCC), Minnesota Department of Natural Resources (MDNR), Natural Resources Research Institute, University of Minnesota Duluth, 5013 Miller Trunk Highway, Duluth MN 55811-144

Natural Resources Research Institute Report of Investigations

Natural Resources Research Institute, University of Minnesota Duluth, 5013 Miller Trunk Highway, Duluth, MN 55811-1442For over 40 years, taconite tailings, a by-product of taconite iron ore processing, has been used in northeastern Minnesota road construction projects as aggregate. The dominant uses have been as fill materials and in bituminous pavements. Over 125 million tons of tailings are produced annually by Minnesota’s iron mining industry (Oreskovich et al., 2007). The Natural Resources Research Institute (NRRI), University of Minnesota Duluth, has been involved in a multiplephase project to evaluate the quality and use of this material. When used as aggregate for bituminous pavements, the taconite tailings grains are encapsulated in the asphalt mix that separates the tailings from contact with water. As fill, taconite tailings can be in contact with water, intermittently, seasonally, or continuously. Do taconite tailings affect water quality? In an effort to evaluate this question, a compilation and review of existing groundwater and surface water chemistry associated with tailings in contact with water has been completed. We evaluate water quality by comparing existing water sample chemical analyses data to published State of Minnesota ground and surface water standards. Data utilized for this study include: Minnesota Department of Natural Resources (DNR) reports from 1989 and 1999, Minnesota Pollution Control Agency (MPCA), Keetac Pollutant Discharge Elimination System (NPDES) permit water sampling data from several mines, and previous investigations completed by the Natural Resources Research Institute (NRRI). Based on our review, the data from water quality and taconite tailings revealed the following findings: 1. Most Minnesota water quality standards are met. The exceptions include arsenic, cobalt, iron, and manganese. Iron and manganese exceed secondary drinking water standards that are based on attributes of the water like taste, odor, and appearance, and not because of health risk issues. Arsenic and cobalt exceed the MPCA’s 2A chronic standard for surface waters of 2 ppb and 2.8 ppb, respectively. These elements do not exceed the drinking water standards or Class 7 surface water standards; 2. Mercury is typically an environmental concern. Based on the NPDES data reviewed, the following information was noted. Chemical analyses completed on surface water collected at three of the mines had the following reported numbers: maximum value 7.24 ng/L, minimum value 0.45 ng/L and a median value of 1 μg/L. Minimum and median reported mercury values meet the most stringent surface water standard, the Great Lakes Initiative, of 1.3 ng/L. Thirty-four water samples were analyzed for total mercury. A total of 678 NPDES water sample data were reviewed. DNR reports do not contain mercury data for water samples. Atmospheric mercury could add to the amount detected by chemical analyses in surface water samples; 3. Iron formation contains arsenic, cobalt, manganese, and iron; 4. Taconite tailings do contain arsenic, cobalt, manganese, and iron. Arsenic occurs at a minimum value of 8.8 mg/kg, maximum value of 39.4 mg/kg, and a median value of 17 mg/kg. Cobalt occurs at a minimum value of 4.4 mg/kg, maximum value of 15.4 mg/kg, and a median value of 7.7 mg/kg. Manganese and iron were not reported as trace metals but were included in whole rock analyses; 5. NRRI completed Toxicity Characterization Leaching procedure (TCLP) and Synthetic Precipitation Leaching Procedure (SPLP) chemical analyses on three samples of taconite tailings. Results indicated that arsenic results ranged from < 2 μg/L to 4.3 μg/L, slightly above the surface water quality chronic standard of 2.0 μg/L for 2A waters; 6. Further evaluation is recommended. Testing on taconite tailings samples, as well as other typical aggregates, should include physical and chemical parameters. Testing on samples of aggregate and water should be done to evaluate all sites by the same methods and current detection limits. Analytes should include: RCRA metals as well as cobalt. Additional testing should include grain size analyses and hydraulic conductivity; and 7. Mechanisms for the potential release of metals into surface water by tailings are dependent on water characteristics such as pH, Eh, time, hydrology, and reduction (redox) potential. Therefore, it is site specific. Additional testing of leachate from taconite tailings is suggested using SPLP test methods and could include pH dependent leaching and liquid to solid (L/S) ratio dependent leaching as described by Jambeck and Greenwood (2007) and Kosson (2002). Data derived from these test methods may produce results more applicable to use of taconite tailings as fill material in contact with wet environments.Funding for the taconite aggregate resource study is provided by grants from Department of Commerce, Economic Department of Administration with additional support from the Permanent University Trust Fund, Iron Range Resources, Minnesota Power, the Blandin Foundation, and Minnesota Technology, Inc. This project is part of the larger study