1. Lupin Mines Incorporated Lupin Mine Project Type ‘A’ Water Licence Renewal Application Nunavut Water Board Technical Meeting & Pre-Hearing Conference Kugluktuk, Nunavut October 22, 2014

2. Presentation Outline 1.Roles and Responsibilities 2.Contributions to the Water Licence Review 3.Technical Review Comments 4.Additional Comments 5.Other Water Licensing Considerations 6.Conclusion 2

3. 1.Roles and Responsibilities 3 a)Manage federal public land b)Participate in water licence reviews c)Inspect and enforce water licences

4. 2.Contributions to the Water Licence Review a)Completeness review of the Type A water licence application submitted on June 9, 2014 b)Response to the Nunavut Water Board regarding the rescheduling of the Technical Meeting and Pre- Hearing Conference on July 25, 2014 c)Technical review of the Type A water licence application submitted on August 14, 2014 4

5. Technical comments and recommendations regarding the water licence application were presented in the following themes: a)General b)Tailings Management c)Waste Management d)Management Plans e)Reclamation Cost Estimate f)Care and Maintenance 5 3.Technical Review Comments continued

6. a)General Lupin Mines Incorporated (LMI) requested a licence term of 10 years. Aboriginal Affairs and Northern Development Canada (AANDC) recommends: a shorter licence term of 3 years; and that the renewed licence include timelines for additional monitoring, updated studies, submission of plan updates, and progressive reclamation. 6 3.Technical Review Comments continued

7. b)Tailings Management There is ongoing concern of uncovered and windblown tailings at the Lupin Mine and the tailings are not being managed as required under the water licence. AANDC recommends that the water licence require: a timeline for cleaning up areas affected by windblown tailings and the progressive covering of all tailings (during operations as well as care and maintenance); and a monitoring and assessment program of the tailings containment area to assess whether the system is performing as projected in 2005. 7 3.Technical Review Comments continued

8. c)Waste Management Hazardous Waste The site has accumulated a large inventory of hazardous materials. AANDC recommends that: the inventory of hazardous waste be updated annually; and the licence require annual removal of hazardous waste. Contaminated Soil There is no information on the quantities or characteristics of hydrocarbon contaminated soil or on how it will be managed. AANDC recommends a site assessment to determine the amount and type of contamination at the mine site. 8 3.Technical Review Comments continued

9. d)Management Plans AANDC requests updated management plans to: remove inconsistencies and outdated information; provide accurate information on current site conditions; and clarify information requested in the technical review. 9 3.Technical Review Comments continued

10. e)Reclamation Cost Estimate Updated Reclamation Cost Estimate AANDC reviewed the 2013 reclamation estimate and based on the information provided, the total reclamation liability is double what was estimated by the company. AANDC recommends that LMI provide an updated reclamation cost estimate for review prior to the Public Hearing. Flexibility to discount security held under the land lease Financial security will likely be required under Crown land leases. AANDC recommends that the renewed licence allow the Board to “discount” an amount of reclamation security held under a Crown land lease from the total amount of reclamation security required to reclaim the mine. 10 3.Technical Review Comments continued

11. f)Care and Maintenance LMI is in care and maintenance but requested flexibility to resume mining operations at any time. AANDC recommended that: i.commencement of mining operations be subject to Board approval; and ii.the Licensee be required to provide at least 90 days notice of the desire to resume mining and this should include: updated management plans; an updated reclamation cost estimate; any change in the amount of water use; and a schedule of planned activities. 11 3.Technical Review Comments continued

12. f)Care and Maintenance continued The inspection reports identified a number of issues that pose an increasing risk to the environment. AANDC recommends that the Board consider the outstanding issues and the licensee’s failure to meet licence requirements over the term of the previous licence. LMI requested a reduction in monitoring requirements. AANDC is concerned that limited presence on site would increase the risk of contamination and recommends that: existing monitoring requirements remain in the renewed licence; and all measures in the Mine Site Reclamation Guidelines for the Northwest Territories are implemented during Care and Maintenance. 12 3.Technical Review Comments continued

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14. 4.Additional Comments a)Submission of Management Plans b)Monitoring c)Care and Maintenance d)Progressive Reclamation e)Financial Security f)Current Status of Lupin Mine 14

15. a) Submission of Management Plans Specific issues should be addressed during the application process and not deferred until after licence renewal. Plans that are submitted or revised following licence renewal should be circulated for review by interested parties prior to approval and proposed activities should not occur until the Board approves the plan in writing. Submission timelines should provide adequate time for review and approval of plans. 15 4.Additional Comments continued

16. b)Monitoring of Water Quantity Water quantity information is required to understand changes to water quantity and flow on both Crown land and Inuit-owned land. A hydrometric network should be maintained throughout the life of the project to support water management during mining. Hydrometric information should meet national standards and be available to the public. 16 4.Additional Comments continued

17. c)Care and Maintenance Given that the site is not being properly maintained during care and maintenance, AANDC recommends a short term licence to ensure protection of water. During this recommended term, AANDC recommends prescriptive terms and conditions and schedules to ensure that the mine site is maintained in an appropriate manner during care and maintenance. The definition for care and maintenance in the licence should be updated to be consistent with the Mine Site Reclamation Guidelines. 17 4.Additional Comments continued

18. d)Progressive Reclamation LMI was required to implement progressive reclamation under their licence but no progressive reclamation was done and the risk to the environment continues to grow. More prescriptive terms and conditions for progressive reclamation are required during care and maintenance. The facilities and equipment at Lupin have likely degraded over time and it is unclear how much of it is still useable. AANDC requests LMI to submit an updated progressive reclamation plan detailing what facilities and equipment are no longer useable and provide a schedule for progressive reclamation. AANDC recommends that the licence also require progressive reclamation of facilities and equipment that have degraded to the point that they are no longer useable. 18 4.Additional Comments continued

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20. e)Financial Security The Mine Site Reclamation Policy for Nunavut requires that security at any time during the life of the mine is equal to the outstanding reclamation liability (the estimated cost to reclaim the site if abandoned by the company). AANDC reviewed the 2013 estimate and it appears to be insufficient to cover the total outstanding reclamation liability of the mine site. LMI committed to re-evaluate the reclamation cost estimate and provide additional information by the end of August 2014. The application should not proceed any further without an updated reclamation cost estimate that is equal to the total outstanding reclamation liability during the life of the project. 20 4.Additional Comments continued

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22. f)Status of Lupin Mine Manadalay Resources Corporation announced the acquisition of Elgin Mining Inc. Lupin Mine was deemed non-core to their future plans. It is unclear what this means for the Lupin Mine. AANDC recommends that LMI clarify the anticipated future use for the Lupin Mine. 22 4.Additional Comments continued

23. 5.Other Water Licensing Considerations The Department suggested proposed changes to terms and conditions of the existing water licence for the Nunavut Water Board’s consideration. Mine site management does not appear to have satisfied the vision of the Mine Site Reclamation Policy or the intent of the existing water licence. More prescriptive terms and conditions are requested to ensure that the site is maintained and that water is adequately protected. The water licence should include schedules for studies, monitoring, and progressive reclamation. Responsibility for monitoring and care and maintenance should be with the Licensee. 23

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25. 6.Conclusion The Department aimed to provide a response to the applicant’s comments regarding the technical review comments and recommendations submitted on October 10, 2014. Some significant issues need to be addressed prior to the issuance of a renewed water licence. The Department will continue to work through the water licence application review process with the aim of protecting Nunavut’s freshwater resources. 25

26. 26 Qujannamiik Thank you