$RTRAF Yesterday Euro Pacific..Romarco Minerals Inc. Review of Haile Operating Permit Requested Event: Romarco reports that the Sierra Club has requested that the South Carolina Department of Health and Environmental Control (SCDHEC) review the recently issued proposed Mine Operating Permit for the Company's 100%-owned Haile Gold project. The permit is the final major permit required for operations at Haile. ? Romarco notes that the Sierra Club’s request cited the reclamation plan and reclamation bonding. The Company says it does not believe the request has technical merit, and that the concerns raised have been fully reviewed and adequately addressed throughout the entire four-year permitting process. ? All About the Bond: Haile’s operating permit, which was issued on November 7, 2014 included provisions for the securing of a US$30M bond for reclamation and restoration after mining. Another $30M is required over the life of the mine for a total security of US$60M — 50% higher than Romarco’s consultants estimated, and the largest ever for a mine in the State. The Sierra Club reportedly doesn’t seek to stop mine development, but in its six-page request estimates US$100-500M for reclamation. Romarco notes that previous reclamation talks between it and the SCDHEC started with regulators estimating US$80M, and the Company, US$42M; the two subsequently agreed to US$60M. ? The Way Forward: Looking ahead, the stages and potential timelines for a SCDHEC Board review are as follows: ? The SCDHEC Board has 60 days to decline the request or hold a review; ? If no review is granted, or 60 days pass without a decision, the SCDHEC staff decision becomes the Final Agency Decision; ? If a review is granted, it must be held within 60 days of the request and the subsequent decision becomes the Final Agency Decision; ? Such decision can then be appealed (by either party) to the SC Mining Council within 30 days; ? A Mining Council hearing must then be held within 40 days, with a decision due within a subsequent 30 days; ? That decision could then be appealed (within 30 days) to an Administrative Law Court, where it would be subject to general litigation timelines. ? Already Passed Muster: It is important here to note that the Sierra Club reportedly last voiced concerns over the project in October of 2011, and Romarco reports that it has had no communication with the group until the recent request was filed. We also note that all major government agencies (incl. the US EPA) have signed off on Haile’s Environmental Impact Statement, which included details of the mitigation, and that all major permits have been issued. ? Timelines: Romarco currently has US$18M in cash, and has already had positive talks aimed at further extending a ~US$30M Caterpillar (CAT:NYSE, NR) equipment payment beyond March 2015. The Company says its cash position could carry it into Q315. As it stands, 85% of detailed engineering is complete, but work on the project has ceased pending outcome of the review request process. ? Valuation: With timing of the potential review process yet unknown, we refrain from altering timelines in our model, and reiterate our Speculative Buy rating and price target of $1.25/shr.
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