STEPHENSON — Aquila Resources Inc. announced on Wednesday that it will continue to work with the Michigan Department of Environment, Great Lakes and Energy to finalize the Back Forty groundwater model in support of a revised application seeking a reissuance of the wetlands permit.

The announcement follows the Jan. 4 decision by an administrative law judge denying the prior issuance of a wetlands permit. EGLE issued the permit to the company in June 2018 following years of environmental baseline work and a review process including comment periods and public hearings and review by the U.S. Environmental Protection Agency, according to the company.

Aquila officials said they believe the judge’s decision was based largely on a strict interpretation of the administrative completeness of the permit application, rather than a specific view on the project itself.

Barry Hildred, president and CEO of Aquila, said, “While we were disappointed by the judge’s decision, we have a high level of confidence that there is a clear path to successfully permitting the Back Forty Project, regardless of the outcome of our appeal.

“Our relationship with EGLE is strong and we have made good progress addressing the conditions in the original wetlands permit. Given the current uncertain economic climate, we believe that projects like Back Forty are even more critical to providing the jobs and community support that Michigan needs, while at the same time protecting the environment.”

Aquila has appealed the judge’s decision to the EGLE environmental review panel. EGLE is expected to convene a three-person panel of experts with relevant experience within 45 days, according to the company.

The panel will then hear arguments and is expected to render a decision later this year. The panel has the authority to adopt, remand, modify or reverse, in whole or in part, the judge’s decision, according to Aquila. The decision of the panel will become the final decision of EGLE, officials said.

Through its appeal, at a minimum, Aquila is seeking to clarify certain aspects of the decision to facilitate further permitting efforts for the Back Forty Project, according to the company.

The judge found Aquila’s wetlands permit application to be administratively incomplete due to alleged lack of an agreed upon groundwater model and lack of reliable identification of potential indirect wetland impacts related to groundwater drawdown caused by pit dewatering.

The judge’s determination, Aquila said, that the project is not in the public interest and that Aquila’s alternatives analysis was inadequate, was largely based on the same alleged lack of information about indirect wetland impacts.

Aquila has been working with EGLE to satisfy permit conditions requiring further data collection and groundwater modeling to validate previous conclusions regarding indirect impacts, the company said. However, the judge found that the statute required Aquila to provide all of the information before a permit could be issued.

Aquila said it believes that there is nothing in the decision that would prevent the company from obtaining a wetlands permit for the same or a similar mine plan.

While the appeal is in process, the company said it requested, and has been granted, a stay of proceedings of the contested case related to the amended mining permit.

“It has always been the company’s intention to satisfy the original wetlands permit conditions and Aquila has made significant progress over the last two years in this respect,” company officials said in release.

Data collection and interpretation related to the groundwater model is substantially complete, according to the company. In parallel with its appeal, Aquila will continue to work with EGLE to reach consensus on the groundwater model, officials said.

If EGLE accepts the company’s model, EGLE will be in a position to evaluate a revised permit application and reissue the wetlands permit, company officials said.

Aquila will conduct optimization studies that will seek to evaluate areas of opportunity identified in the its 2020 Preliminary Economic Assessment. These include opportunities to increase gold recoveries in light of improved metal prices and optimizing the mine plan to enhance economics and reduce the open pit strip ratio.

If EGLE accepts the foundational groundwater model, the model can be applied in the context of any potential improvements to the project, according to the company.

“Over the past several weeks, Aquila management has had numerous discussions with its key stakeholders, including Osisko Gold Royalties Ltd.,” company officials said in a news release. “The stakeholders have reaffirmed their support for the project and they share Aquila’s view that while the judge’s decision represents a temporary setback, the Back Forty Project will be successfully permitted and built.”

Aquila is working with its key stakeholders and its financial advisor to secure capital that will enable the company to advance the above initiatives as well as to fund exploration activities at its Reef and Bend projects in Wisconsin, officials said.

Aquila’s flagship Back Forty Project is an open-pit volcanogenic sulfide deposit with underground potential located along the mineral-rich Penokean Volcanic Belt in the Upper Peninsula.

Back Forty contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the Measured & Indicated Mineral Resource classifications, with additional upside potential, according to the company.