1 WEK'EEZHII VALLEY LAND 2 AND WATER BOARD 3 4 PUBLIC HEARING FOR 5 DIAVIK DIAMOND MINES INC. 6 WATER LICENCE RENEWAL 7 8 9 10 11 Panel Members: 12 Facilitator Violet Camsell- 13 Blondin 14 Member Alfonz Nitsiza 15 Member Joyce Rabesca 16 Member Joseph Judas 17 18 19 20 21 HELD AT: 22 23 Behchoko, NT 24 November 7th, 2006 25 Day 1 of 4

1 APPEARANCES 2 John Donihee ) Board Counsel 3 4 Mark Anderson ) Diavik Diamond Mines 5 Gord Macdonald ) Inc. 6 Jeff Reinson ) 7 Scott Wytrychowski ) 8 Brad Armstrong ) Counsel 9 Melanie Smith ) Counsel 10 11 David Livingstone ) INAC 12 Kathy Racher ) 13 Barry Zajdlik ) 14 Nathan Richea ) 15 Scott Duke ) Counsel 16 Carla Conkin ) Counsel 17 18 Doug Crossley ) Environmental 19 John McCullum ) Monitoring Advisory 20 ) Board 21 Bill McElhanney ) Counsel 22 23 Dave Balint ) Fisheries and Oceans 24 25

1 APPEARANCES (con't) 2 3 Valerie Meeres ) North Slave Metis 4 Sheryl Grieve ) Association 5 6 Don MacDonald ) Tlicho Lands 7 Tony Pearse ) Protection 8 Peri Mehling ) Department 9 Arthur Pape ) Counsel 10 Bertha Rabesca Zoe ) Counsel 11 12 Chief Addie Jonasson ) Lutsel K'e Dene 13 Monica Krieger ) First Nation 14 Charlie Catholique ) 15 Albert Boucher ) 16 17 Rachel Crapeau ) Yellowknives Dene 18 Lou Azzolini ) First Nation 19 Greg Empson ) 20 21 Anne Wilson ) Environment Canada 22 Steve Harbicht ) 23 Dave Fox (np) ) 24 25

1 TABLE OF CONTENTS 2 Page No. 3 Opening Comments 5 4 5 Presentation by Diavik Diamond Mines Inc. 16 6 7 Questions by EMAB 104 8 Questions by INAC 137 9 Questions by Department of Fisheries 168 10 Questions by Environment Canada 174 11 Questions by Tlicho Government 178 12 13 Reporter's Certificate 227 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:17 a.m. 2 3 THE CHAIRPERSON: Good morning. We will 4 begin our Hearing with an opening prayer. It is, as I 5 explained, custom and tradition to open a meeting with a 6 prayer from an Elder. So we have Harry Simpson that will 7 open the Hearing with a prayer. 8 (SPOKEN IN NATIVE LANGUAGE) 9 MR. HARRY SIMPSON: (SPOKEN IN NATIVE 10 LANGUAGE AND TRANSLATED INTO ENGLISH) 11 Good morning. Thank you. We have many 12 visitors here today. Many people will speak to us and 13 tell us new news too. This will give us an idea of what 14 we're talking about. We'd like to say thank you to each 15 one of them because we have respect for each of them. I 16 will do the true prayer for you today. 17 May we have a fine day that our Lord 18 will look after us and we will listen to each other. We 19 will teach -- we will always remember for our children, 20 our grandchildren; for them. We will be teaching each 21 other by explaining things to each other. We will teach 22 the other. Today we will hope that we have a fine day. 23 Many of these visitors come from distance. 24 Some of them travel by planes. But may the Lord look 25 after them until they get home safely.

1 With this in mind, I will do the prayer 2 for you. We are meeting here in the midst of the Tlicho 3 Territory. We have many chiefs and leaders here that are 4 serving their people and -- for us. They are serving us. 5 We will always support them with ideas. We're hoping to 6 do that and let's have a fine day. I will do the true 7 prayer for you. 8 9 (OPENING PRAYER) 10 11 THE CHAIRPERSON: I just want to 12 acknowledge one (1) of our co-workers from the Gwich'in 13 Lands and Water Board. We just lost a Board member from 14 the Gwich'in Nation as well, George John. He was a 15 member of our Finance Committee and he was a member of 16 the big Board of the Mackenzie Valley Lands and Water 17 Board. And I just want to say that we are sorry to lose 18 him as well as the Elder that we lost yesterday, Eddie 19 Erasmus. 20 Okay. Good morning everyone. For those 21 requiring translation, there are receivers available with 22 English on channel 1, Dogrib is on channel 2, and I'm not 23 sure whether we have the Chipewyan on channel 4. Yes, we 24 do. And the floor channel is channel 5. 25 I'd like to begin by welcoming all

1 participants in this proceedings. My name is Violet 2 Camsell-Blondin and I am the Chair of the Wek'eezhii 3 Lands and Water Board. 4 Chapter 22 of the Tlicho Agreement 5 required the establishment of land and water board for 6 Wek'eezhii. And we exercise authority over land use 7 permitting and water licensing within Wek'eezhii 8 management area under the MVRMA, Section 57.1(1) and the 9 Northwest Territories Water Act, respectively. 10 The Wek'eezhii Lands and Water Board was 11 established on August the 4th, 2005 as a result of 12 amendment to Part 3 of the Mackenzie Valley Resource 13 Management Act, which implemented the Tlicho Agreement. 14 While the Board was established on August 15 the 4th, 2005, it did not assume its responsibilities for 16 land use permitting and water licensing until February 17 the 4th, 2006 because of the terms of the implementation 18 legislation. 19 These powers, once exercised in Wek'eezhii 20 by the Department of Indian Affairs and Northern 21 Development, and more recently by the Mackenzie Valley 22 Lands and Water Board, are now the responsibility of this 23 Board. 24 The Wek'eezhii Lands and Water Board is an 25 institution of public government, a co-management body

1 which exercise quasi-judicial authorities in proceeding 2 like this one. We make our decision on a consensus 3 basis, on the basis of the evidence presented to the 4 Board. 5 The Wek'eezhii Lands and Water Board's 6 objectives are specified in Section 58.1 of the MVRMA and 7 they are to regulate the use of lands and waters and 8 deposit of waste so as to provide for the conservation, 9 development and utilization of land and water resources 10 in a manner that will provide the optimum benefit 11 generally for all Canadians, and in particular for 12 residents of its management area. 13 The Diavik Mine is on Lac de Gras and is 14 in Wek'eezhii. Over the next four (4) days the 15 Wek'eezhii Lands and Water Board will conduct a public 16 hearing into the Diavik Diamond Mines application for a 17 renewal of Type A Water Licence N7L21645. 18 The water licence currently held by Diavik 19 expires on August the 31st, 2007. DDMI submitted a water 20 licence renewal application for N7L21645 on August the 21 8th, 2005, to the Mackenzie Valley Lands and Water Board. 22 DDMI has not requested any changes to the condition of 23 N7L21645 and has requested a renewal term of fifteen (15) 24 years. 25 The MVLWB published notice of the Diavik

1 water licence renewal application in News/North on 2 September the 19th, 2005, with a request that interested 3 parties respond by August the 4th, 2005. 4 At the time of the Diavik application in 5 August 2005, the Mackenzie Valley Lands and Water Board 6 assigned a new file to the water licence MV-2005-L20009. 7 The Mackenzie Valley Lands and Water Board distributed 8 the Diavik renewal application to interested parties for 9 review and held technical sessions to examine the 10 application in December 2005. On February the 4th, 2006, 11 the Wek'eezhii Land and Water Board assumed full 12 responsibility for land use permitting and water 13 licencing in Wek'eezhii. 14 On February the 8th, 2006, the MVLWB 15 determined Diavik's mining operation at Lac de Gras are 16 not subject to Section 103(1) of the Mackenzie Valley 17 Resource Management Act. 18 Consequently, Water Licence MV-2005-L20009 19 falls under the jurisdiction of the WLWB and 20 responsibility for the file was transferred to our Board. 21 On March of 14 and 15, 2006, the MVLWB met 22 to renew the Water Licence renewal work plan. At that 23 time, the Board determined that progress needed to be 24 made on matters related to the ammonia record of 25 agreement and the development of a revised Aquatic

1 Effects Monitoring Plan before the Board could hold a 2 hearing. 3 To provide the time necessary for this 4 work, a hearing was scheduled for September 2006. The 5 Board advertised this Hearing on August the 21st and 6 28th, 2006 and used News/North as required by the NWT 7 Waters Act. 8 In July 2006, the Board reviewed the 9 progress in these areas and determined that more time was 10 needed to ensure a draft ammonia management plan would be 11 available for review prior to the Hearing. 12 The Hearing was thus rescheduled to 13 November the 7th, to 10th, 2006 in Behchoko. 14 On September 29th 2006, the Board staff 15 held a pre-hearing conference. Diavik submitted its 16 draft ammonia management plan on October the 4th, 2006. 17 The intervention deadline was set for October the 23rd, 18 2006, with the applicant's reply to these interventions 19 set for October the 30th, 2006. 20 This Hearing is constituted under Section 21 21 of the NWT's Water Act. 22 I am pleased to know that this is the 23 first public hearing held by the Wek'eezhii Lands and 24 Water Board and I am particularly pleased that this 25 Hearing should take place in Behchoko in Wek'eezhii.

1 This Board is aware from its review of 2 your interventions that the parties are not bringing a 3 consensus position for it in response to the Diavik water 4 licence renewal application. 5 While there may be differences in opinion 6 about the application, we will expect all participants to 7 proceed in a respectful manner. 8 We have reviewed all of the interventions 9 and documents filed in these proceedings. The Board 10 wants to hear from all parties this week and we hope that 11 you will help us to understand your positions on the 12 Diavik application and to make a good decision. 13 The Board has corresponded with the 14 applicant and parties to this Hearing, indicating its 15 determination of the scope of the proceedings. Within 16 the timeframe available, we hope to hear all evidence 17 relevant to the matters raised by the Diavik application. 18 Please note that these proceedings are 19 being recorded and will be transcribed later. If you 20 want to arrange for access to the transcript, please 21 speak to the Court Reporter at the end of the breaks and 22 make your own arrangements. Once the transcript is 23 available, the Board will make it available through our 24 website. 25 For purposes of the record in this

12
  1  Hearing, I ask that when you speak, you indicate your
  2  name and who you represent.  If you forget, I may have to
  3  remind you.  Also, I ask that you please be mindful that
  4  we also have interpreters and that these proceedings are
  5  being translated, so please pace yourself accordingly.
  6                 The order of the proceeding will be as
  7  follows.  The Board will first hear from the applicant,
  8  Diavik Diamond Mines Incorporated, regarding their
  9  application now before the Board.
 10                 Once Diavik has completed its presentation
 11  the order of questioning will be as follows.  Intervenors
 12  beginning with EMAB and in the same order as the order of
 13  interventions; then members of the public may ask
 14  questions.  Next are questions from Board staff,
 15  consultants, or counsel.  Board Members will have the
 16  last opportunity to ask questions.
 17                 When the questions of the applicants are
 18  completed we will proceed to presentation from the
 19  Intervenors who have been registered starting with EMAB. 
 20  There will be an opportunity for questions after each
 21  presentation, first by Diavik and then in the same order
 22  as previously set out.
 23                 Time will be set aside for the public and
 24  persons who are not registered Intervenors to speak to
 25  the Board or ask questions on Wednesday and Thursday from

1 1:00 p.m. to 2:15 p.m. and on Friday from 11:00 a.m. to 2 12:15 p.m. 3 The Board wants this Hearing to be as 4 informal as possible. However, as a quasi-judicial body 5 we are bound by the rules of procedural fairness and as 6 the Chair I am responsible for the conduct of this 7 Hearing. I ask that all comments and any requests be 8 addressed through the Chair. 9 Once all the intervention have been 10 presented the Intervenors and then the applicant will 11 then have an opportunity to present closing remarks; 12 following that, the Hearing will come to a close. 13 I now would like to take a moment to 14 introduce the members of the Wek'eezhii Lands and Water 15 Board and our staff. Board members include Ms. Joyce 16 Rabesca on my left. She's the Federal appointee to the 17 Board nominated by GNWT. 18 Mr. Alphonz Nitsiza and Mr. Joseph Judas 19 are both provincial government appointees. 20 I am a Federal appointee and have been 21 nominated by the Board to be the permanent Chair. 22 I now would like to introduce the members 23 of our staff. We have Zabey Nevitt, the Executive 24 Director for the Board; Peter Lennie-Misgeld, Senior 25 Regulatory Officer for the Mackenzie Valley Lands and

1 Water Board; Patty Ewaschuk, Technical Coordinator; Patty 2 Magrum, Administrative Coordinator. 3 The legal counsel for the Board is John 4 Donihee and we have technical support from Gartner Lee, 5 Eric Denholm and Neil Hutchinson. 6 As translators we have Francis Fish, 7 Violet Mackenzie, Jonas Lafferty and Phillip Rabesca. In 8 Chippewan we have both Verna and Archie Catholique. 9 These Hearings are scheduled to run from 10 nine o'clock til six o'clock p.m. each day until Friday. 11 We will be breaking for lunch, a lunch will be provided, 12 and taking appropriate rest breaks. We have coffee and 13 refreshments at the back of the room, so, please help 14 yourselves. 15 Finally, the Board has had no notice of 16 any preliminary issues and so we are going to proceed 17 with the Diavik presentation. Before we do that, 18 however, I would like to have the spokesman for Diavik 19 and then each registered intervenor identify themselves 20 for the Board. 21 MR. GORD MACDONALD: Madam Chair, it's 22 Gord Macdonald with Diavik. I'm the lead representative 23 for Diavik. 24 MR. DOUG CROSSLEY: Yes, I'm Doug 25 Crossley, the Chair of the Environmental Monitoring

1 Advisory Board. 2 MR. DAVID LIVINGSTONE: David 3 Livingstone, for DIAND. 4 MR. DAVE BALINT: Dave Balint, Fisheries 5 and Oceans. 6 ANNE WILSON: Anne Wilson, for 7 Environment Canada. 8 MS. SHERYL GRIEVE: Sheryl Grieve, for 9 the North Slave Metis Alliance. 10 MR. GREG EMPSON: Greg Empson, 11 Yellowknives Dene First Nation. 12 MR. ARTHUR PAPE: Arthur Pape, counsel 13 for the Tlicho Government. The coordination -- I'm the 14 coordinator of the presentations for the Tlicho 15 Government. And the work on developing the Tlicho 16 Government's position has been done under the leadership 17 of Eddie Erasmus, the head of the Tlicho Government's 18 Lands and Resources Department. 19 MS. MONICA KRIEGER: Monica Krieger, 20 Lutsel K'e Dene First Nation. And I also have with me 21 Chief Addie Jonasson and Sub-Chief Charlie Catholique and 22 Wildlife Committee Member Albert Boucher. 23 THE CHAIRPERSON: Okay. We have one 24 housekeeping note that we want to bring forward by our 25 legal counsel.

1 MR. JOHN DONIHEE: Thank you, Madam 2 Chair. John Donihee for the Board. 3 I just wanted to confirm for the parties 4 that all of the documents filed along with the 5 application, and all the supporting documents, and as 6 well the interventions and any appendices or supporting 7 documents along with interventions have already been 8 filed on the public record for the Board. 9 Consequently, for purposes of questioning 10 or for purposes of presentation, the parties can assume 11 that these documents are already in evidence and they 12 will not be -- it will not be necessary to file them as 13 separate exhibits for purposes of this proceedings. 14 Thank you, Madam Chair. 15 THE CHAIRPERSON: Okay. We will now 16 proceed with the Diavik presentation. 17 18 PRESENTATION BY DIAVIK DIAMOND MINES INC.: 19 MR. GORD MACDONALD: Gord Macdonald with 20 Diavik. Madam Chair, we'd just like to start our 21 presentation with some opening remarks from our 22 president, Mark Anderson. 23 MR. MARK ANDERSON: Good morning, Madam 24 Chair, Board Members, Intervenors and gathered guests. 25 I am joined today by a very able team of

1 Diavik employees and outside experts who Gord Macdonald 2 will introduce after I've finished. They will lead our 3 presentations and will provide any information that you 4 may require in your deliberations over the next four (4) 5 days. 6 Before they do I would like to make some 7 introductory comments to set out broadly our position 8 going into this renewal process. 9 As was stated at the outset, I am Mark 10 Anderson, President of Diavik Diamond Mines. Our company 11 manages the Diavik Diamond Mine on behalf of our two (2) 12 owners, Rio Tinto PLC and Aber Diamond Corporation. 13 Diavik's head office is located on Main 14 Street in Yellowknife, a location we deliberately chose 15 some years ago for its accessibility to the public. We 16 are a very transparent company and we are very pleased to 17 work closely with local communities and regulators to 18 help meet their needs and for them to fully understand 19 the nature of ours. 20 Diavik is a relatively small company of 21 just over four hundred (400) employees. However, we also 22 provide jobs to another three hundred and fifty (350) 23 people through a number of northern, predominantly 24 Aboriginal companies who help us operate the mine. These 25 northern companies supply a range of mine services from

1 catering and camp management to security, to heavy 2 equipment operations. 3 One of the largest contracts on site is 4 for site services, which includes airport operations, 5 road maintenance and operation of our water and waste 6 treatment plants. That work is done by the Tlicho 7 company, Tlicho Logistics. Another is IMD Management 8 Services, perhaps the only Aboriginal company owned by 9 four (4) different groups, who operate our heavy mining 10 equipment. We helped create both of these companies. 11 You should know that using all of the 12 northern contractors is an innovative approach and one we 13 deliberately took to help build northern business 14 capacity. It is just one of the many innovative 15 approaches that we take and that I will speak to shortly. 16 Diavik Diamond Mines is 60 percent owned 17 and managed by one of the largest global mining companies 18 in the world, Rio Tinto PLC. 19 Rio Tinto has a comprehensive set of 20 standards under which all of its operations around the 21 world operate. These standards are focussed on social 22 economic and community work, environmental protection and 23 health and safety. 24 So while our company may be a relatively 25 small one, it's one that operates under very

1 comprehensive standards, in addition to the comprehensive 2 standards specified in various local licences and 3 agreements. 4 Let me speak briefly to our work on the 5 social economic front. Our company, Diavik Diamond Mines 6 Incorporated, was incorporated in 1996. Our company was 7 created under Rio Tinto's new community standard called, 8 "The Way we Work". Rio Tinto blessed Diavik's approach 9 to work very closely with local communities as it aligned 10 with their new community values. 11 We very quickly established our 12 headquarters in downtown Yellowknife and almost 13 immediately began hiring local people. 14 As our project strengthened and looked 15 like it might become a mine, we also strengthened our 16 community involvement. We hired local firms like Ekati 17 Services to supply our camps and we helped create new 18 companies like Tlicho Logistics to look after site 19 services at our growing project. 20 Through comprehensive consultation, we 21 created new and positive ways to allow communities to 22 participate in what we are doing. We proposed to 23 communities advisory board so that local communities, the 24 Territorial Government and Diavik could sit around the 25 same table and work cooperatively to enable community

1 success. 2 With individual Aboriginal groups, we 3 signed participation agreements and we developed 4 implementation committees to work with them on social 5 economic benefits. And we supported the creation of a 6 new community-based environmental monitoring advisory 7 Board. 8 I don't think it's too bold to say that 9 Diavik provides communities with the most transparency of 10 any mining company in the world. 11 As we grew into an operating mine, we 12 continued to take our commitment to local communities 13 very seriously. I am pleased that we have been 14 recognized as a mining leader in our work with Aboriginal 15 communities. 16 Two (2) years ago we were certified to the 17 gold level of the progressive Aboriginal relations by the 18 Canadian Council of Aboriginal Businesses. Only two (2) 19 other Canadian mining companies have ever reached this 20 level and Diavik is the first in Northern Canada. 21 I'd like to flag one (1) recent highlight. 22 This year we have invested nearly $1 billion in 23 Aboriginal businesses since 1999. I believe this is a 24 truly remarkable achievement that shows our level of 25 commitment to working with local communities, and that,

1 we believe, is paying off with the growing local 2 Aboriginal business capacity. 3 We do not intend to rest as there are many 4 challenges still facing us all, but I wanted to share 5 with you my pride in the social economic work that we are 6 doing at Diavik. 7 Of course, we don't just work hard to 8 create community benefits, we also work hard to ensure 9 the environment around the mine is well protected. 10 During these hearings you may hear opinions about the 11 work we do to protect the environment. I wish to tell 12 you that we are doing our best to protect the 13 environment. 14 Let me provide a few examples. As most of 15 you will know, we have developed a number of 16 environmental monitoring and management plans to help 17 guide our environmental protection work. We have 18 programs directed at monitoring air quality; wildlife, 19 fish and fish habitat; blasting effects; effluent 20 effects, and waste and water management, among others. 21 As we're located on an island in a large 22 lake we also have a larger-than-life responsibility to 23 protect the water in the lakes surrounding us. To help 24 us we have built a government-approved water laboratory 25 at the mine and there we test several thousands of water

22
  1  samples we take each year around and on the island.
  2                 We have built a water collection system
  3  around all of our work on the island and we collect run-
  4  off waters before they can enter the lake.  We recycle
  5  some of these waters to our process plant to reduce our
  6  need for water from Lac de Gras.  The rest of this water
  7  run-off we pump to a water treatment plant to ensure it
  8  meets approved water quality standards before we -- we
  9  allow it to return to Lac de Gras.
 10                 We also take care to protect the fish in
 11  the lake.  Two (2) examples stand out in my mind:
 12  monitoring the effects of blasting on fish eggs, and our
 13  plan to replace fish habitat we have borrowed from mining
 14  after the mining closes.  And this work has already
 15  begun.
 16                 To help manage our environmental work we
 17  have certified our environmental management system to the
 18  ISO 14,001 world standard.  This is a quick way for the
 19  public to understand that our environmental protection
 20  systems follow rules set by the International Council.
 21                 That, by the way, is another of the global
 22  standards required by our parent company Rio Tinto.
 23                 Now, people in the communities play a very
 24  important role in helping us protect the environment.  Of
 25  course they do that as workers at Diavik, but they also

1 do that through a unique board in Canada which of course 2 you all know as the Environmental Monitoring Advisory 3 Board, or EMAB. 4 This Board is somewhat unique in the north 5 and in Canada for it is a community-based Board with 6 representatives from the affected Aboriginal groups. 7 This is what the communities asked us for, a seat for 8 communities at the environmental table. They are joined 9 by representatives from the governments of Canada, NWT, 10 and Nunavut, and from Diavik who pays the bill. 11 To help support EMAB we built a community- 12 based monitoring camp at Lac de Gras, across the lake but 13 within the site of the mine. The EMAB -- the EMAB 14 members invite Elders and other community members to the 15 camp to help monitor our mine. They begin with testing 16 fish and monitoring the caribou. They have grown that to 17 include sampling lake bottom sediments and sampling for 18 water quality. 19 We believe the kind of transparency that 20 we provide to local communities through EMAB is 21 unrivalled in Canada. 22 And there is much more to tell about our 23 commitment to the environment at Diavik. Let me just 24 highlight one (1) more, and that is our waste rock 25 reclamation research.

1 While it has been put in place without 2 much fanfare, you should know that it is a partnership 3 with several universities and research institutes that 4 will contribute a new understanding to the global mining 5 industry of how waste rock piles work. And of course all 6 of us will benefit as we learn how to safely manage and 7 eventually secure these piles for mine closure. 8 I want to emphasize two (2) final points 9 on the topic of the environment. First, the Diavik 10 project was constructed and is operated today in 11 compliance with all environmental regulations, permits, 12 and licences, including the existing water licence. 13 Furthermore, the mine is not causing any significant 14 adverse affects on Lac de Gras, nor do we expect that it 15 will in the future. 16 I want to take just a moment to share with 17 you some of the changes we face as diamond miners in our 18 operating environment. In the last couple of years the 19 value of the Canadian dollar has increased against the US 20 dollar. Now, this is good if you're planning a vacation 21 to Disney Land but not so good if you're a diamond miner. 22 The reason is that we sell our diamonds in US dollars, so 23 we now get less money for our diamonds due to the higher 24 Canadian exchange rate. 25 In addition, labour costs are rising

1 across the -- labour costs are rising across the country 2 and we now have to pay more to attract and keep good 3 workers. This year we gave our northern workers an even 4 larger allowance to help them pay for the increased cost 5 of living her in the North. 6 We all know the price of gas at the pumps 7 is incredibly high, but let me tell you that the diesel 8 fuel costs have risen just as much. This has really 9 increased our costs due to the amount of fuel we need to 10 produce our power, heat, and to operate our mining 11 equipment. 12 Our costs of mining are also rising as we 13 move deeper into the pits. As I mentioned earlier, we 14 are also planning to go underground, which will also 15 increase our costs. 16 THE CHAIRPERSON: Excuse me, Mark. Can 17 you slow down a bit for the translators? 18 MR. MARK ANDERSON: Yes. 19 20 (BRIEF PAUSE) 21 22 MR. MARK ANDERSON: Thank you. 23 On top of all this, we have climate change 24 hurdles facing us. Last year we managed to transport 25 only about two thirds (2/3's) of our freight up the

1 winter road. To keep the mine running without layoffs or 2 cutbacks we took the extraordinary action to fly fuel and 3 materials to the site. As those of you from small 4 communities know, flying is very expensive, and flying is 5 not a viable option for us in the long run. 6 There are other business pressures on us 7 as well, one of which is an overly expensive tax regime, 8 an issue that Rio Tinto has already flagged with the 9 Federal Government. 10 Now, all this discussion is just to make 11 the point that this is not -- not an easy environment 12 with which to operate. 13 I mention these hurdles that we face not 14 because we want you to compromise the environment in your 15 deliberations on the licence renewal. Rather, we just 16 want to remind people of the operational realities of 17 mining in the North. 18 So why are we here today? We are here of 19 course to renew a water licence. This licence will take 20 the project into its next phases; the addition of the 21 next open pit mining areas and our attrition -- our 22 transition to underground mining. 23 The move to underground mining represents 24 a very significant investment which will likely be in 25 several -- amount to several hundreds of millions of

1 dollars. Asking our shareholders for this money requires 2 we do solid technical work to not only protect the 3 environment but also to mine -- also to plan our mining 4 strategy. And that feasibility study is currently 5 underway. 6 But our shareholders also want us to 7 obtain security for this significant investment on a 8 regulatory front. They want to see that their money is 9 protected by rules that are stable, predictable and 10 reasonable. It is for this reason that we have requested 11 that our licence be renewed for another fifteen (15) 12 years. 13 We have also requested a licence renewal 14 in time to support Diavik's investment recommendation to 15 our owners for the next phase of mining; that being the 16 underground and open pits. 17 I understand some Intervenors have 18 suggested that the renewal not be granted until specific 19 management and monitoring plans had been finalized. We 20 have done significant work to advance these plans prior 21 to this Hearing and have proposed ways to forward -- and 22 proposed ways forward, excuse me, to finalize them. Over 23 the next few days our Diavik representatives will provide 24 detailed information on our work and they will respond to 25 the various submissions provided by Intervenors.

1 It is my hope that as a result of this 2 Public Hearing, that the Board will be able to consider 3 ways to accomplish both defining the process to finalize 4 these plans and renewing the water licence. 5 Let me conclude my opening address by 6 wishing all involved good work and good meetings over the 7 next four (4) days. I'd also like to thank all 8 Intervenors for their good efforts. I know this process 9 is stronger for all the work that you do. 10 Our team has my support and that of our 11 parent companies. I know they will act in the best 12 interests of the environment and our investment as you 13 deliberate on the renewal of our water licence. 14 Thank you very much, Madam Chair. I would 15 now like to hand things over to Gord MacDonald so he can 16 make our presentation. 17 18 (BRIEF PAUSE) 19 20 MR. GORD MACDONALD: Thanks, Mark. Madam 21 Chair, ladies and gentlemen of the Board, Board staff, 22 Intervenors, members of the public, my name is Gord 23 Macdonald and I am the lead Diavik representative for 24 this water licence renewal application. 25 I currently have the position of manager

1 of sustainable development at Diavik. I have been with 2 Diavik since 1997 and was responsible for Diavik's 3 original water licence application in 1999. I am 4 professional biologist with a Bachelor's Degree in 5 Biology and a Master's Degree in Environmental Science. 6 Prior to joining Diavik, I worked for fifteen (15) years 7 in consulting, all focussed on water. 8 I'd like to introduce Diavik's panel. On 9 my left is Mr. Scott Wytrychowski. Scott is Diavik's 10 environment manager. Scott is site-based and is 11 responsible for the implementation of all environmental 12 programs. He is responsible for Diavik's environmental 13 management systems, day-to-day site environment 14 management, and managing a very large amount of 15 environmental monitoring data. Scott has been at site 16 since 2000. 17 Next to Scott is Mr. Jeff Reinson. Jeff 18 is currently DDMI's manager of infrastructure 19 construction. Jeff is a geotechnical engineer and has 20 responsibilities at site covering dike and pit 21 geotechnical monitoring, water management, hydro- 22 geological investigations and PKC deposition. Jeff 23 joined Diavik in 2002. 24 On my right is Mr. Brad Armstrong and Ms. 25 Melanie Smith, our legal counsel.

1 Additionally, we have brought with us a 2 number of technical experts who are available to assist 3 as necessary. 4 I'd like to introduce them, and ask them 5 to identify themselves. Madam Chair, their resumes have 6 been submitted with our responses so I'll not repeat 7 their qualifications, but simply state their area of 8 expertise and contributions. 9 Mr. Geoff Beale, water management 10 specialist, who contributed to the ammonium discussion 11 paper. 12 Mr. J.P. Bechtold, specialities in 13 effluent quality criteria. He provided the calculations 14 appended to the draft ammonia management plan. 15 Dr. Alan Cameron, explosives management, 16 is conducting the explosives management investigations 17 currently at site and contributed to the ammonia 18 discussion paper and draft ammonia management plan. 19 Mr. Don Chorley, in hydro-geology. Don 20 continues to be the primary person responsible for 21 modelling mine water inflows. He's responsible for many 22 of the hydro-geological support documents in the ammonia 23 discussion paper. 24 Mr. Terry Eldridge's, speciality is in 25 process Kimberlite storage and closure; contributed to

1 many of the technical aspects of the closure and 2 reclamation plan. 3 Ms. Amy Langhorne, aquatic effects 4 monitoring. She's one (1) of the contributors to the 5 2006 Aquatic Effects Monitoring Plan. 6 Dr. Karsten Liber, aquatic toxicology. He 7 was recently retained to advise on aquatic toxicology but 8 hasn't specifically contributed to any of the plans. 9 And Dr. Marcel Pineau, in Water Treatment. 10 Marcel led the SNC Lavalin team in the review of the 11 ammonia treatment options included in the ammonia 12 discussion paper. 13 Finally -- finally I'd also like to 14 introduce Eric Madsen. Many people from the communities 15 know Eric. He's one (1) of our -- one (1) of Diavik's 16 longest serving employees. Eric was Diavik's first site 17 environment manager and since he's been back to 18 Yellowknife from site he's still been very involved in 19 environmental matters. He has been providing updates to 20 the communities and is Diavik's representative on EMAB. 21 This slide is our outline for -- the 22 outline for Diavik's presentation. It follows the 23 requested format provided for the Intervenors with the 24 addition of some upfront items specific to the applicant 25 and a summary at the end.

1 We'll -- we'll start with an overview of 2 the status of the mine, then talk to the renewal 3 application and then go through each of the ammonia -- 4 the status of each of the ammonia management, aquatic 5 effects monitoring, closure, then the term of the 6 licence, some other issues, and a final summary. 7 I'll begin with a current overview of the 8 mine that describes the current development with a focus 9 on water and waste management areas, talk about 10 environmental performance, socioeconomic performance, 11 planned future development, and a summary. 12 The top picture in this slide, top left, 13 is a -- is a picture of Lac de Gras. It's about 60 14 kilometres long. Water flows into Lac de Gras from Lac 15 de Sauvage in the northeast, and water leaves Lac de Gras 16 through the Coppermine River at the west end of Lac de 17 Gras. The mine is on the east island of Lac de Gras. 18 The larger slide shows how we envisage the 19 -- how we envisaged the project in 1998 and that review 20 remains current today. The main areas are the A154 north 21 and south Kimberlite pipe, the A154 dike, the A418 22 Kimberlite pipe, the A418 dike, the A21 Kimberlite pipe, 23 the A21 dike, the airstrip, the north inlet, the North 24 Inlet Water Treatment Plant, the North Country Rock And 25 Till Area, the Process Kimberlite Containment area, the

1 accommodation complex and process plant, the South 2 Country rock and till area, and the winter road is also 3 shown. 4 This slide compares the actual development 5 with the original plan. As you can see we are following 6 the original plan. 7 There are some differences. For example, 8 the explosives and ammonium nitrate storage was relocated 9 from near the A418 pit to the southern part of the 10 island, due to explosives regulations. The north till 11 area hasn't been used to store till because the till has 12 been placed around the pit crest in the A154 area for 13 future fish habitat. 14 Plans for A21 are pending additional 15 information on diamonds in this pipe which we will get 16 from a large sample of the A21 Kimberlite. The sample is 17 in the process of being collected from an underground 18 access tunnel. 19 This next set of slides is intended to 20 give a bit of a tour of the current mine site with a 21 focus on water and waste facilities. These slides are 22 our most current, September 2006. 23 This photo is taken looking west with the 24 outlet to the Coppermine River, some 50 kilometres in the 25 distance. This shows the new A418 dike with the area

1 behind the dike almost de-watered. 2 Areas I will primarily talk about are the 3 PKC, or Process Kimberlite Containment area, the North 4 Country Rock Area, the north inlet and North Inlet Water 5 Treatment Plant, and the A154 pit area. 6 This slide shows the water management area 7 for the site. The mine has been designed to allow us to 8 collect water, snow melt, rainfall, from this entire blue 9 area and direct that water to where we want it to go; for 10 example, to treatment or for reuse in the process plant. 11 I would like to start by looking more 12 closely at the -- at the PKC area. This is both a water 13 management and a waste management area. 14 The next picture I'll show is looking east 15 from about where the green arrow is. First I would like 16 to talk about the containment structures. The PKC area 17 is contained by engineered dams. This includes both 18 primary containment dams and secondary containment dams, 19 in case of any seepage or runoff. 20 The primary containment dams are raised 21 every few years, as the PKC starts to fill. The dotted 22 line shows the path where the final containment dam will 23 be placed. 24 Inside the PKC we place two (2) types of 25 processed Kimberlite; coarse and fine. The coarse is

1 delivered by truck and dumped in this area, and the fine 2 is transported as a slurry through a pipeline that is 3 deposited into the PKC through a series of spigots that 4 go all the way around the facility. 5 This ring of spigots allows the operators 6 to develop these beach areas, minimizing ice entrapment 7 and forcing the water to the center of the PKC area. The 8 water that is part of the fine PKC slurry is continually 9 reused. In the center of the pond is a pump barge which 10 takes the water back to the process plant. 11 Some water does get permanently trapped 12 within the fine PK and the beaches and the bottom. Fresh 13 water is currently brought in from Lac de Gras to make up 14 for this trapped water. We also reuse the treated 15 domestic sewage water. This water goes to the PKC to 16 help make up the water shortage. 17 This is a bit different and better than we 18 had thought in 1999. In 1999 we thought that we would 19 end up with too much water in the PKC and the excess 20 water would need to be treated and discharged to Lac de 21 Gras. No water is discharged from the PKC. 22 The next area I would like to show is the 23 North Country Rock Area. It's called the North Country 24 Rock Area because in the future, presuming A21 is mined, 25 there will be a second smaller area in the south.

1 Like the PKC, the next slide is looking 2 east over the pile from the green arrow. For 3 orientation, the A154 pit is just off to the left and the 4 process plant, accommodation, and PKC are to the right. 5 This North Country Rock Area is the area 6 where the non-Kimberlite rock from the A154 and soon the 7 A418 pits, is placed. The blue line shows the water 8 management boundary. 9 There are three (3) collection ponds 10 around this area to collect any run-off or seepage: Pond 11 1, in the middle of the screen; Pond 2 is off the screen 12 to the bottom left; and Pond 3 is off the screen to the 13 bottom right. 14 Pond 3 also has the unfortunate title of 15 OLDSSF, for On Land Dredge Sediment Storage Facility. 16 The Pond 3 area was temporarily used to received dredged 17 material, the lake bed sediment, that was removed from 18 the A154 and A418 dike alignments before the rock for the 19 dikes was placed. This area has also received the water 20 from behind the dikes that was too dirty to send to Lac 21 de Gras without treatment. 22 The water in this area, in the picture, 23 would be from the A418 pool. 24 Water can then be pumped from here over to 25 the north inlet for treatment and discharge to Lac de

1 Gras. 2 Within this North Country Rock Area, there 3 are different basins where we put different types of 4 rock. While all the rock in this picture looks the same, 5 there are actually three (3) types. 6 Diavik separates rock based on its 7 potential to produce poor quality run-off or seepage. 8 The lowest potential for poor quality is called Type 1 9 and the highest potential is Type 3. Type 2 is an 10 intermediate. 11 The different types are identified in the 12 pit from sulphur measurements. They are taken from each 13 hole that is drilled to load explosives. To date, we 14 have made sixty-four thousand, eight hundred and ninety- 15 four (64,894) sulphur measurements to identify the rock 16 types. 17 The Type 3 rock is restricted to areas 18 where the drainage or seepage can be best controlled, in 19 and over the original quarry and within the Pond 3 20 drainage. Water from the collection ponds is pumped 21 seasonally to the PKC. 22 The final area I'd like to talk about is 23 the A154 pit, north inlet, and North Inlet Water 24 Treatment Plant. This area is our most intensive water 25 management area. This is the only area where there is a

1 discharge to Lac de Gras. 2 The A154 pit is currently the primary 3 source of the water that is managed in this area. 4 Note that there are actually two (2) 5 Kimberlite pipes in the A154 pit area; A154 north and 6 A154 south. In the future, there will also be water from 7 the A418 pit and underground mine water that will also go 8 to the north inlet. 9 On the top left is a picture of where the 10 mine water is released to the north inlet. Water is 11 moved by pipeline to the far end of the north inlet. 12 This allows some natural settling of the sediment from 13 the water before it is brought into the treatment plant. 14 This next slide shows the inside of the 15 treatment plant. This plant is a first class treatment 16 facility that removes all of the particles from the water 17 and removes the naturally-occurring phosphorous before 18 discharging the treated water to Lac de Gras. 19 The next slide I'll show you has some 20 numbers indicating amounts of water. To give you an 21 example of what these amounts of water look like, the top 22 picture on the left shows a rate of about 20,000 cubic 23 metres per day. This is water being discharged to the 24 north inlet. The bottom left picture is 250,000 cubic 25 metres a day and this was from the de-watering of the

1 A154 pool. 2 On the right is the Coppermine river where 3 it leaves Lac de Gras. It has a flow rate that is on 4 average around 1,750,000 cubic metres a day. 5 The typical current water balance around 6 the north inlet is shown here. The pit is currently 7 producing about 20,000 cubic metres a day of water that 8 enters the pit through the Kimberlite Pipe and one (1) 9 particular zone along the north wall. There's an 10 additional small amount of dike seepage and local runoff 11 that is collected in drains but the amounts are 12 relatively small. 13 The 20,000 cubic metres per day of water 14 goes to the far end of the north inlet as we saw in the 15 previous slide. The water is then brought from the north 16 inlet, through the North Inlet Water Treatment Plant 17 where it is treated and then discharged to Lac de Gras. 18 The discharge to Lac de Gras is through a 19 pipe that runs along the bottom of the lake a few hundred 20 metres off shore to a set of jet nozzles that were 21 designed to rapidly mix the treated effluent with Lac de 22 Gras water. 23 That completes the tour of the water and 24 waste management facilities. The next three (3) slides 25 highlight the monitoring done under the Surveillance

1 Network Monitoring Program or SNP that is specified in 2 the water licence. 3 These slides are actually from an EMAB 4 water quality workshop that was held in Kugluktuk. 5 They're a bit older as you can see. The A154 pit area 6 has just been de-watered. This is again looking west. 7 The same water management area as shown before is also 8 shown here but now as a yellow line. 9 The green triangles and numbers are the 10 surface runoff and groundwater SNP stations. So number 11 24, for example, by Pond 1 is actually SNP 1645-24. This 12 station checks for any runoff or seepage from the Pond 1 13 and the Country Rock areas. 32 or 1645-32 by the 14 ammonium nitrate storage facility is a groundwater 15 monitoring well to check for any groundwater seepage or 16 contamination from the ammonium nitrate storage facility. 17 In general, these green SNP stations are 18 checking for runoff or seepage from the water management 19 area. 20 The red SNP stations also included in the 21 water licence are used to measure the quality of water at 22 different locations inside the water management area. 23 This includes the collection ponds; for example, SNP 47 24 is collection pond 12. It includes the water in the PKC, 25 SNP 16, and the A154 mine water, SNP 49.

1 Knowing the water quality in these areas 2 and tracking how the water quality changes over time 3 provides first indications of any unexpected conditions. 4 It was during DDMI's review of the results 5 from SNP 49, the A154 mine water, back in the spring of 6 2003 that we identified the arising ammonia levels. 7 The final two (2) types of SNP stations 8 are the ones that are monitored the most intensively and 9 the results are looked at most closely. SNP 18 is the 10 location where the quality of the treated water from the 11 North Inlet Water Treatment Plant is measured before it 12 is discharged to Lac de Gras. This is the one location 13 where we have an operational discharge within the entire 14 water management area. This is also DDMI's discharge 15 compliance point. 16 The results from this location are checked 17 against the discharge limits specified in the water 18 licence. The water quality is measured every six (6) 19 days. Acute toxicity is tested monthly and chronic 20 toxicity every four (4) months. The expectation is that 21 if the water quality in the treated discharge water is 22 below the discharge limits, that the quality of Lac de 23 Gras is being protected. 24 The treated discharge water goes through a 25 pipe that runs along the lake bottom to a set of jet

1 nozzles that rapidly mix the treated water with Lac de 2 Gras water. As an important second check to ensure the 3 quality of Lac de Gras is being protected, there are also 4 three (3) SNP monitoring stations in Lac de Gras, right 5 at the edge of the zone where the treated discharge water 6 mixes with Lac de Gras water. These are SNP 19A, B and 7 C, and are also known as the mixing zone or 60-metre from 8 the discharge station. 9 Diavik environment staff sample from the 10 site each month. At each of these three (3) locations 11 they collect the water sample from four (4) or five (5) 12 depths within the lake. Results from this sampling 13 location would show the maximum expected change in water 14 quality in Lac de Gras. As you go further out into the 15 lake and away from the point where the treated water 16 enters the changes would get smaller and smaller. 17 In the environmental assessment it was 18 predicted that the water quality in Lac de Gras would 19 remain below effect thresholds at this SNP 19 from mixing 20 zone boundary. This is the point where EA predictions 21 are compared with monitoring results. 22 There are books and books of results from 23 the SNP monitoring. I would like to only briefly talk 24 about the results at these two (2) important locations I 25 just described. The two (2) locations are the treated

1 effluent water quality at SNP 18, that I will compare 2 with the water licence discharge limits, and the other 3 location is the water quality in Lac de Gras at the 4 mixing zone boundary, SNP 19, that I will compare with 5 effects thresholds from the environmental assessment. 6 I should note that these two (2) figures 7 were also included in DDMI's response to interventions on 8 October 30th. In that document we explained which 9 specific data were used to make these diagrams. 10 The top diagram shows the treated effluent 11 water quality at Station 18 compared with the water 12 licence discharge limits. There is a bar for each of the 13 parameters with specific discharge limits in the water 14 licence. They are aluminum, ammonia, arsenic, cadmium, 15 chromium, copper, lead, nickle, phosphorous, TSS or total 16 suspended solids, turbidity and zinc. 17 The purple bar shows the typical level of 18 the effluent for each parameter as a percentage of the 19 discharge limit. 20 If the effluent was at the discharge 21 limit, the purple bar would go all the way to the top of 22 the chart. So, example, for aluminum, the treated 23 effluent is at about 30 percent of the discharge limit. 24 Ammonia is less than 10 percent and this 25 is based on the current temporary limit of 20 milligrams

1 per litre. Zinc is the highest at 60 percent. 2 I think this clearly shows that the 3 treated effluent water quality is well below the 4 discharged limits, limits that were established to be 5 protective of Lac de Gras. 6 The bottom diagram compares the water 7 quality in Lac de Gras at the mixing zone boundary with 8 the effects thresholds from the environmental assessment. 9 The same type of diagram as the one for 10 the treated effluent with a bar for each of the regulated 11 parameters. 12 At the top diagram -- sorry, in the bottom 13 diagram, the top or 100 percent is the effects threshold 14 instead of the discharge limit. 15 The effects threshold is the same as what 16 you might have heard called the CCME guidelines or water 17 quality objectives. 18 The threshold is a level that, if the 19 results are below, we would expect that fish and 20 organisms in Lac de Gras would be protected. 21 The top of either the purple or green bars 22 shows the level in Lac de Gras at the edge of the mixing 23 zone. Remember, this is right beside the treated 24 effluent discharge. 25 All of the bars are well below the top, so

1 well below the effects threshold. Using aluminium again, 2 as an example, the levels are just below 30 percent, a 3 bit more than half of the aluminium level at the edge of 4 the mixing zone are due to the treated effluent. The 5 other half is due to natural levels in the lake. 6 The green part of the bars show the 7 contribution from natural lake levels for each parameter. 8 The purple part shows the amount contributed from the 9 treated effluent. 10 In some cases, for example, TSS or total 11 suspended solids, the purple bar, the contribution from 12 the effluent is so small it doesn't show on the diagram. 13 The levels indicated here for the edge of 14 the mixing zone are from winter, with ice cover 15 conditions. This is when water quality levels are 16 highest, because the wind cannot make currents in the 17 lake and mix the effluent. 18 If I had a similar diagram for summer, the 19 contribution from the treated effluent, the purple bar, 20 would be even smaller. 21 These results show that even under the 22 worst conditions, the ice cover, and as close to the 23 effluent discharge as we can reasonably monitor, water 24 quality levels in Lac de Gras are below effects 25 thresholds.

1 Water quality isn't the only thing that's 2 being monitored as part of the Water Licence, but it is a 3 big part. 4 This figure shows the amount of water DDMI 5 uses each year. The first column shows the total amount 6 of water we have taken from Lac de Gras in millions of 7 cubic metres. 8 Most of the water we use is for makeup to 9 the process plant. If you remember back a few slides, 10 when we talked about the PKC, and I noted that we have to 11 keep adding water, these are the volumes of water we are 12 adding as makeup. 13 The highest levels were reached in 2004. 14 With experience, we're getting better at managing the 15 recycle around the PKC and we expect that -- that these 16 water use numbers will continue to go down in the future, 17 particularly when we start using mine water as makeup to 18 the PKC instead of lake water. 19 The second column shows the volumes pumped 20 from the mine. These are higher than what we originally 21 predicted and will continue to increase over time as the 22 A154 pit gets deeper and the A418 and underground 23 develops. 24 The final column is the amount of treated 25 water discharged to Lac de Gras from the North Inlet

1 Water Treatment Plant. This is primarily mine water. In 2 years like 2002 and 2003 the amount discharged is higher 3 than the amount pumped from the mine water. The 4 difference is the pool water pumped from behind the A154 5 pit as part of the initial de-watering which was treated 6 and then discharged and so is included in the North Inlet 7 Water Treatment Plant numbers. 8 I should note that all these tables are 9 included in the water licence renewal application from 10 August of 2005. The only difference is that we've added 11 the 2005 numbers which were obviously not available then. 12 In addition to water, the water licence 13 regulates waste. This table shows the primary waste 14 volumes by year for process Kimberlite as coarse and fine 15 fractions that go to the PKC and the three (3) types of 16 waste rock. We have about equal amounts of Type 1 and 17 Type 3 and a smaller amount of Type 2. 18 As I mentioned earlier the type of waste 19 rock determines where in the waste rock area that the 20 rock is placed. To summarize on waste and water, I 21 described the water and waste management areas and I 22 showed the various SNP monitoring locations. I'd like to 23 note that since receiving the water licence in August 24 2000 Diavik has remained in full compliance. 25 As I indicated with the water quality

1 monitoring results, affects are less than predicted. 2 There are no significant adverse affects on Lac de Gras. 3 In Mark Anderson's opening remarks he 4 noted some of Diavik's socioeconomic contributions. This 5 slide shows some indicators of Diavik's northern 6 commitment. During the initial construction phase 44 7 percent of the eight hundred (800) workers were from the 8 north with 22 percent Aboriginal. 9 Of the $1.2 billion in construction 10 contracts 74 percent went to northern contractors and 50 11 percent or $600 million went to Aboriginal companies. We 12 currently have an operating workforce of seven hundred 13 and twenty-seven (727) people. Seventy-three percent of 14 these people are from the north and of these 35 percent 15 or two hundred and fifty-six (256) are Aboriginal. 16 In 2005 as an example the business 17 spending totalled $223 million. 80 percent of those 18 dollars were spent in the north and 39 percent to 19 Aboriginal firms. 20 Mark also noted Aboriginal businesses. 21 The amount of work we have done with Aboriginal firms 22 since 1999 is quite significant at nearly $1 billion. 23 With preliminary 2006 half-year figures it's safe to say 24 that we're now past the $1 billion mark. 25 The future of the Diavik mine will be in

1 an -- will be in the underground. This mine plan was 2 included in the water licence renewal application. It 3 shows that the A154 pit will be complete in 2009, that 4 the A418 pit will be complete by 2011. That underground 5 production is planned to start in 2008. So depending 6 what happens with A21, Diavik could be an all-underground 7 mine by -- by 2012. 8 The three (3) open pits and underground 9 mining were all part of the original environmental 10 assessment scope. This is also the defined scope of the 11 existing water licence. 12 I would like to point out the mining 13 machine in the bottom left corner. This is a machine 14 that is being tested right now for the underground 15 removal of Kimberlite. The cutters in the front rotate 16 and the teeth cut the Kimberlite. If it proves 17 successful it could be used in some areas to replace 18 blasting. As well as being a potentially effective 19 mining method for underground, this could also reduce the 20 use of ammonium nitrate. 21 There are a few different paths to the 22 future and a lot of work to do in all areas, but the 23 long-term goal remains the same, a safe and full closure. 24 We'll discuss this a bit later. 25 To summarize the first part of our

1 presentation, the mine is being developed as planned. 2 Diavik is proud of its accomplishments. We're proud of 3 our performance in sustainable development. We recognize 4 that many challenges remain, with one of the challenges 5 being to continue to improve into the future. 6 The next part of the presentation will 7 focus on the renewal application itself. I'll give an 8 overview of the application, comment on security deposit, 9 and comment on the renewal work plan. 10 The renewal application for water licence 11 N7L21645 was filed on August 8th, 2005. The application 12 contains five (5) parts. 13 Part 1 is the application form provided by 14 the Mackenzie Valley Land and Water Board. It provides 15 some general information about the applicant, the mine, 16 and confirms that a comprehensive study report, or 17 environmental assessment, was issued under the Canadian 18 Environmental Assessment Act. 19 Part 2 is a completed mining industry 20 questionnaire. It provides information about the mining 21 operation, waste water and environmental monitoring. Its 22 stated purpose is to provide -- is to obtain supplemental 23 information to support the renewal application. 24 On 21 of -- on page 21 of that section is 25 a list of attachments that are provided on three (3)

1 CD's. This material is referenced to the question number 2 in the questionnaire. 3 Part 3 is a consultation summary. It 4 provides a list of water licence renewal update meetings 5 and materials presented. 6 Part 4 is an overview -- provides an 7 overview and a status of the N7L21645 licence. It goes 8 through each part of the existing licence and describes 9 the general status of each clause. 10 Part 5 is a copy of the existing water 11 licence. Diavik proposed that the existing licence be 12 the basis for the renewed licence. 13 The renewal application was deemed 14 complete by the Mackenzie Valley Land and Water Board, on 15 September 8th, 2005. Diavik has not applied for any 16 changes to terms and conditions other than to seek a 17 fifteen (15) year term. This term would coincide with 18 the expected duration of operations and align with 19 closure planning. 20 With the application in August of 2005, 21 DDMI requested an exemption from preliminary screening 22 under the Mackenzie Valley Resource Management Act, 23 Section 124. 24 This was requested because the Diavik 25 project at Lac de Gras has not been modified. It remains

1 the same project that was the subject of the 2 environmental assessment under the Canadian Environmental 3 Assessment Act. In particular, it continues to have the 4 same footprint and mining facilities. 5 Diavik fulfilled the requirements of the 6 Environmental Assessment Act process under the Canadian 7 Environmental Assessment Act for its mining operations at 8 Lac de Gras. In particular, the project was the subject 9 of the comprehensive study report issued in June of 1999. 10 DDMI received exemption from preliminary screening on 11 September 8th, 2006 -- sorry, 2005. 12 As the Board is aware, Part B of the Water 13 Licence includes requirements for security deposits. We 14 understand that INAC is completing its review and when 15 that is complete, DDMI would appreciate an opportunity to 16 review and comment. 17 At this time, we would just like to note 18 for the Board that the Minister currently holds $153 19 million in security deposits from Diavik and this amount 20 increases to $178 million in 2007. 21 As referenced in the environmental 22 agreement, the expected total life of the project closure 23 cost is $123 million. Also, as referenced in the 24 environmental agreement, the Minister can require 25 additional security deposit amounts that have also been

1 scheduled for the life of the project. 2 The Board's renewal work plan for this 3 Public Hearing included the renewal application with a 4 focus on changes to terms and conditions and rationale, 5 progress with respect to ammonia management and the AEMP, 6 and productive discussions at this Hearing. 7 DDMI provided its written response to 8 interventions on October 30th, 2006. DDMI responded to 9 specific intervenor suggestions and recommendations, but 10 particularly those that related to changes to terms and 11 conditions of the licence, including the ammonia 12 discharge limit; the ammonia management plan, and a 13 proposed way forward; and the aquatic effects monitoring 14 plan, and a proposed way forward. 15 It is hoped our response will contribute 16 to these productive discussions. 17 Madam Chair, the next section starts to go 18 into the ammonia management plan and it would take us 19 into the lunch hour. I'm wondering if we should break -- 20 if you'd want to break now or proceed? 21 THE CHAIRPERSON: I'd like to call a 22 break, a recess, for five/ten (5/10) minutes and give our 23 translator a break as well, too. 24 25 --- Upon recessing at 11:46 a.m.

1 --- Upon resuming at 12:00 p.m. 2 3 THE CHAIRPERSON: Okay. Gordon...? 4 The next presentation is on the ammonia 5 management. Yeah, go ahead. 6 MR. GORD MACDONALD: Thank you, Madam 7 Chair. In this section of the presentation I'll provide 8 an overview of ammonia. I'll go over the draft ammonia 9 management plan, discuss total ammonia discharge limits, 10 and propose a way forward with ammonia. 11 I'd just like to start the presentation on 12 ammonia with a few facts about ammonia to keep in mind. 13 Diavik brings ammonia to site in the form 14 of ammonium nitrate for use as an explosive to break rock 15 for mining. Ammonium nitrate is also used around the 16 world as a fertilizer. Ammonium nitrate is made into a 17 waterproof mixture that includes an emulsion and fuel 18 oil. This mixture is loaded into holes drilled in the 19 mine rock along with detonators. 20 After the blast a small amount of the 21 ammonium nitrate gets into the mine water. This happens 22 at all mines throughout the world; it's not unique to 23 Diavik. We mostly talk about ammonia, not ammonium 24 nitrate, because that is the part that at high levels can 25 hurt fish and organisms in Lac de Gras.

1 Ammonia is simply a form of nitrogen. 2 It's found naturally in the land, water, and air. 3 Ammonia is not a persistent pollutant and does not 4 accumulate in water. From water ammonia is transferred 5 to the air or changed to other forms of nitrogen through 6 natural processes. 7 At high concentrations and particularly in 8 warm water or higher pH water, some of the ammonia known 9 as un-ionized ammonia can hurt fish and other aquatic 10 organisms. 11 Lac de Gras is a low pH cold water lake, 12 so only levels -- so only lower levels of the harmful un- 13 ionized ammonia would occur in Lac de Gras. 14 I would like to emphasize that the past 15 and current levels of ammonia in the treated mine water 16 at Diavik and in Lac de Gras are well below any levels 17 expected to hurt fish or other organisms. 18 We actually test the treated effluent by 19 taking some of the effluent and putting fish and other 20 organisms in it. We do this every month and every time 21 all 100 percent of the fish and other organisms pass the 22 test. 23 Similarly, the future levels of ammonia in 24 the treated mine water and in Lac de Gras will also 25 remain below levels -- below any levels expected to hurt

1 fish or other organisms in Lac de Gras. 2 The discussions around ammonia management 3 are around two (2) things. First, things that can be 4 done to keep ammonia levels as low as practical; this is 5 the ammonia management plan. And second, to provide 6 information for the Wek'eezhii Land and Water Board so 7 that they can set a discharge limit in the water licence 8 that is protective of Lac de Gras. 9 This slide shows graphically how all of 10 the pieces of information, from discussion papers and 11 studies associated with ammonia, the ammonia record of 12 agreement came together to form the basis of the ammonia 13 management plan. 14 The main process was a series of 15 investigations and reports to provide information. The 16 information was to start broadly and then funnel down to 17 a narrow scope over time and following a series of 18 reviews. 19 In this figure time is shown from top to 20 bottom, and a scope of the work is shown from left to 21 right; a wider box indicating a broader scope and a 22 longer box indicating a longer period of time. The green 23 stars are points where the Wek'eezhii Land and Water 24 Board -- where input from the Wek'eezhii Land and Water 25 Board was required or provided.

1 The ammonia discussion paper ended up 2 being a much larger task than we had originally 3 envisaged, with a broader scope that resulted in both a 4 revised discussion paper and an addendum to the paper. 5 The purpose of the discussion paper was to present 6 ammonia management options; options to achieve the 7 original 2 and 4 milligram per litre discharge limit and 8 options for the lowest practical levels. For each option 9 we provided information on environmental, financial and 10 operational implications. 11 DDMI hosted a two (2) day technical 12 workshop to discuss options and make recommendations. 13 DDMI conducted a net environmental benefit analysis for 14 water treatment and also conducted a screening review to 15 select management options for further consideration in 16 the ammonia management plan. 17 With direction from the Wek'eezhii Land 18 and Water Board, DDMI prepared a draft ammonia management 19 plan that was built on all of the information described 20 above. The status of the recreative agreement items have 21 been described elsewhere, so I won't go into detail here. 22 DDMI has no outstanding Wek'eezhii Land 23 and Water Board requests on the record of agreement, but 24 note some items are pending a Wek'eezhii Land and Water 25 Board decision.

1 DDMI's objectives as stated in the ammonia 2 management plan are: first, to ensure that explosives are 3 used and water is managed in such a way that ammonia 4 losses do not result in a change in the trophic status of 5 Lac de Gras or adverse environmental effects; and 6 secondly, to continually work towards achieving the 7 lowest practical ammonia levels in the mine water and the 8 final effluent discharge. 9 The outcome from the investigations, 10 papers, workshops, addendums and discussions are four (4) 11 additional ammonia management options that have been 12 included in the draft ammonia management plan. 13 These are: explosives management and use. 14 This involves the evaluation of explosives management 15 practices, procedures and materials. Our initial efforts 16 in this area are nearly complete. Some improvements have 17 already been made and others will be identified in 18 conclusions to Dr. Cameron's investigations. 19 The A418 pit water as makeup to the 20 process plant. This is a conceptual plan to send high 21 ammonia concentration, low volume mine water, to the 22 process plant for reuse instead of discharging it to the 23 lake. 24 The third measure is rock wall seepage 25 collection. Wells are currently being trialed for

1 specific areas of the A154 pit wall to collect water from 2 behind the pit wall and avoid having the water come in 3 contact with residual ammonia. 4 Treatment within the north inlet. This is 5 a conceptual plan to investigate options to enhance 6 seasonal ammonia reductions that are already occurring 7 naturally in the north inlet. 8 This slide shows the specific tasks 9 currently planned to advance each of the management 10 options. These tasks and timelines are described in the 11 draft ammonia management plan. 12 The ammonia management plan contains a 13 description of the additional measures that will be taken 14 to manage ammonia and the implementation schedule as 15 previously shown. It includes management objectives, 16 which were also previously shown. 17 The plan specifies internal control levels 18 for ammonia. Diavik uses a management system called Six 19 Sigma, and we have now included ammonia management within 20 the system's approach. 21 Central to Six Sigma is -- is measurement 22 and monitoring to know when a system or process is 23 operating normally or abnormally. We have set internal 24 control limits for ammonia well below discharge limits. 25 For the treated effluent, for example, the internal limit

1 is 6.6 milligrams per litre. 2 We have set limits for both the mine water 3 and the treated effluent. Tracking against these control 4 levels will help to guide management improvement. 5 In Section 11 of the draft ammonia 6 management plan we describe the plans for ammonia 7 monitoring, controls, and contingencies. We will 8 continue with daily internal ammonia and SNP monitoring. 9 We will continue to calculate daily un-ionized ammonia 10 levels at the North Inlet Water Treatment Plant. We will 11 continue with monthly acute toxicity testing and 12 quarterly chronic toxicity testing. We will continue to 13 measure monthly ammonia concentrations in Lac de Gras at 14 the mixing zone boundary. We have proposed quarterly 15 ammonia and chlorophyll measurements in Lac de Gras. We 16 will continue to collect fish and benthic invertebrate 17 information in Lac de Gras. 18 A significant control mechanism that is in 19 place is the standard operating procedure for pH control. 20 pH control can be used if necessary to ensure no acute 21 toxicity in the treated effluent. 22 A specific toxicity contingency plan has 23 been approved if the toxicity is -- if toxicity is 24 detected in the effluent. The plan defines steps to be 25 taken including holding the North Inlet Water Treatment

1 Plant effluent in the north inlet for a period of time if 2 testing results deem this necessary. 3 In addition to this we will add regular 4 velocity of detonation measurements. This will help 5 ensure effective blasting. 6 We are recording the number of dry, wet, 7 and flowing holes on each blast pattern. This will help 8 with interpretation of monitoring results. And we will 9 request that an SNP monitoring location be established 10 for the A418/A154 underground mine water. 11 The monitoring results are reviewed and 12 reported in a number of ways, internally and externally, 13 to direct any necessary changes. Daily results are used 14 by the North Inlet Water Treatment Plant Operators and 15 Diavik environment staff, to inform day-to-day decisions 16 like pH control. Any abnormal results are reported to 17 the Environment Manager. 18 Every three (3) months a performance 19 summary will be distributed to the site managers. Every 20 six (6) months a management committee will review 21 performance and issues and take actions as appropriate. 22 Externally we will review information and 23 actions with the inspector. We will provide electronic 24 results every three (3) months to the Wek'eezhii Land and 25 Water Board public registry. A proposed format for the -

1 - for that reporting is appended to the draft ammonia 2 management plan. We will add a section to the annual 3 water licence report on the ammonia management plan, and 4 the ammonia management plan document will be reviewed 5 annually and revised as necessary. 6 The water licence and the record of 7 agreement specify that DDMI provide recommendations on a 8 discharge limit or effluent quality criteria for total 9 ammonia in the ammonia management plan. DDMI -- DDMI 10 provided its recommendation. 11 This slide tries to show graphically the 12 information on discharge limits that are included in the 13 ammonia management plan. Discharge limits are generally 14 defined in the water licence as maximum thirty (30) day 15 average limits and maximum grab or daily limits. This 16 figure is just looking at daily maximum values. 17 The blue line, at 4 milligrams per litre, 18 is the discharge limit that was in the August 2000 water 19 licence. It's also a discharge limit that is appropriate 20 for proven treatment technologies. 21 As presented in the discussion paper, 22 these proven treatment technologies are not practical at 23 the Diavik site for several reasons, but importantly for 24 environmental reasons. They would create negative 25 environmental effects through waste generation, like

1 brines and sledges, and would require significant amounts 2 of diesel, creating additional greenhouse gas emissions. 3 We did not recommend that the discharge limit be based on 4 a technology limit. 5 The red line, at 20 milligrams per litre, 6 is a conservative ammonia level that, with PH control, is 7 protective of the environment. By protective of the 8 environment, we specifically mean with respect to the 9 avoidance of acute toxicity in the effluent and chronic 10 toxicity in the environment. 11 Twenty milligrams per litre is the same 12 value as established recently for the -- Snap Lake and is 13 the value that was agreed during the mediation to use as 14 a temporary discharge limit. In both case 20 milligrams 15 per litre was expected to be protective of the 16 environment. 17 The green bar shows the estimated range of 18 the lowest practical levels. These are also provided in 19 the draft ammonia management plan. These values are 20 estimates and include allowances for uncertainty. It is 21 the uncertainty in these estimates that create the broad 22 range. The draft ammonia management plan describes 23 specifically how these were derived. They represent the 24 range of discharge limits that could likely be achieved. 25 In short, there are three (3) general

1 approaches to determine the discharge limit: The 2 technology-based approach, the blue line; the water- 3 quality-based approach, the red line; and what I've 4 termed the practically-achievable approach, the green 5 bar. 6 It is DDMI's recommendation that discharge 7 limits in general should be based on being protective of 8 the environment, meaning not acutely toxic in the 9 effluent and would not have chronic effects on passing 10 organisms in Lac de Gras, and that it should only be set 11 lower than this level if that lower level can be 12 guaranteed by a proven commercial treatment technology 13 applicable to the location. 14 We do not recommend that the Board use the 15 practically achievable approach for setting a discharge 16 limit. We suggest that the estimates of practical 17 achievable levels are more appropriate for evaluating 18 management options, setting internal control levels and 19 guiding ammonia management as they are used in the 20 ammonia management plan. 21 DDMI has recommended in the draft ammonia 22 management plan a discharge limit for ammonia of 20 23 milligrams per litre as a daily maximum limit. This 24 level is protective of the environment, ensures no 25 chronic toxicity with detailed information or

1 demonstration of this included in the draft ammonia 2 management plan. It ensures no acute toxicity with pH 3 control. Again, this is supported by evidence in the 4 draft ammonia management plan. 5 We also think it's important that the 6 Board set consistent discharge limits and follow a 7 recognized and defensible approach. For the Board's 8 information, we understand that the Ekati and Snap Lake 9 discharge limits for ammonia were set using the same 10 approach. 11 We suggest the 20 milligram per litre 12 discharge limit be supported by an ammonia management 13 plan to help achieve lowest practical levels. 14 We'd like to note three (3) responses 15 related to ammonia from our October 30th submission. 16 First, on the recommendation that DDMI be 17 required to collect round whitefish gametes from Lac de 18 Gras and rear fry for toxicity testing. We'd note that 19 round whitefish would have to be seventy (70) times more 20 sensitive than mountain whitefish to be negatively 21 affected by the effluent in Lac de Gras. And this 22 calculation is provided in our -- actually on page 12 of 23 our submission. 24 We note that such a difference in the 25 sensitivity of two (2) related species to the same

1 compound is highly unlikely and note that the maximum 2 difference in sensitivity across the twenty-three (23) 3 different, for a species, reported in Environment Canada 4 and Health Canada, is a factor of six point seven (6.7); 5 much less than the -- the range between two (2) similar 6 species. 7 DDMI provided the Wek'eezhii Land and 8 Water Board with a protocol describing what is required 9 to collect gametes from fish in Lac de Gras, fertilize 10 the eggs, hatch the eggs, rear the fry and then test 11 their sensitivity to ammonia. It's not a simple task. 12 DDMI recognizes that there is interest 13 from Intervenors, from Diavik, and likely others in the 14 results. Round whitefish are not unique to Lac de Gras, 15 they're in other northern lakes. There's also a general 16 desire to advance the knowledge base on northern aquatic 17 species. 18 However, this is research work and does 19 not belong in a water licence and is not best conducted 20 by DDMI. DDMI proposes that the testing of round 21 whitefish be developed as a research project with DDMI as 22 a funding partner. 23 Second, on using estimated hyalella azteca 24 toxicity to calculate discharge limits, I'd like to ask 25 J.P. Bechtold of Golder Associates to address the

1 calculations. 2 MR. J.P. BECHTOLD: Thank you, Gord. 3 Good morning, ladies and gentlemen. 4 In their Intervention, Indian and Northern 5 Affairs Canada, or INAC for short, recommended a maximum 6 average concentration limit of 10 milligrams per litre 7 with a corresponding maximum daily limit of 20 milligrams 8 per litre. These values are based on the sensitivity of 9 hyalella to total ammonia as outlined in Table 1 included 10 in their submission. 11 A copy of Table 1 is shown here on this 12 slide. Table 1 shows the concentration of sodium and 13 potassium at various locations along with pH and the 14 associated acute and chronic thresholds for hyalella. 15 The acute and chronic thresholds were 16 developed based on some work by an individual of the name 17 of Borgmann, who found that hyalella appeared to become 18 more sensitive to total ammonia as sodium and potassium 19 concentrations decrease. 20 The three (3) locations included on the 21 table include, first, background areas in Lac de Gras 22 unaffected by Diavik's operation. The second line shows 23 concentrations at the outlet of the North Inlet Water 24 Treatment Plant in the table labelled as, "Effluent". 25 The third and final line of the table shows the

1 concentrations in the mixing zone. 2 INAC developed their recommendations of 3 the 10 and 20 milligram per litre limits based on the 4 same methodology as outlined in Appendix E of the total - 5 - or of the ammonia management plan. They simply 6 replaced the threshold with a value from Table 1. The 7 value they used is shown in red; corresponds to the 8 chronic toxicity threshold in background areas of Lac de 9 Gras. 10 Unfortunately, this is the inappropriate 11 value to use based on the methodology. The methodology 12 outlined in Appendix E is based on achieving compliance 13 with the selected threshold at the edge of the mixing 14 zone boundary. As such, the appropriate threshold to use 15 would have been the one shown in green at the bottom of 16 the table. 17 If INAC had used that value, the one shown 18 in green, they would have reached the same conclusions 19 that we did; that being that a maximum daily 20 concentration limit of 20 milligrams per litre would be 21 protective of both chronic and acute effects and that a 22 maximum average concentration limit is not required. 23 MR. GORD MACDONALD: Thank you, J.P. 24 Finally, also in relation to using the hyalella test, Dr. 25 Liber reviewed the reference to Borgmann and Borgmann

1 paper and I'd ask him to address this topic. 2 DR. KARSTEN LIBER: Thank you, Members of 3 the Board. Much reference has been made to the work by 4 Dr. Uwe Borgmann in the interventions, on the toxicity of 5 ammonia to the anthropod, hyalella azteca, a small 6 freshwater aquatic invertebrate. Most of that reference 7 has been made to a paper referred to as Borgmann and 8 Borgmann, 1997. 9 If you could first advance this line, 10 please. Thank you. 11 While I am not questioning the quality of 12 Dr. Borgmann's work, which is good, I do question the 13 applicability and the extrapolation of the results from 14 this work to the conditions in Lac de Gras. 15 Borgmann's experiments were conducted in 16 the laboratory at 25 degrees Celsius in what's referred 17 to as artificial media. This is basically synthetic 18 water, water that is made up from de-ionized or distilled 19 water, to which chemical reagent grade salts chemicals 20 are added to create a water that's suitable for the 21 survival and growth of aquatic organisms. 22 This water was then diluted 1 in 10, again 23 with the ionized water to create a softer, diluted water 24 for comparison. 25

1 (BRIEF PAUSE) 2 3 DR. KARSTEN LIBER: This created two (2) 4 types of water, the standard water and the diluted water, 5 for which they now evaluated the toxicity of ammonia to 6 hyalella azteca the anthropod. And they did find that 7 the anthropod was more sensitive to ammonia in the 8 diluted synthetic water. 9 However, they only tested these two (2) 10 types of water, the standard water and the diluted water, 11 and there was no intermediate variation of concentrations 12 of that water tested, which makes it very difficult to 13 establish what we refer to as concentration response 14 relationships, or relationships between the constituents 15 in that water and how they influence to toxicity of 16 ammonia. 17 And it also makes it inappropriate to 18 extrapolate the results from that study outside of the 19 tested parameters. So outside of the conditions of the 20 water in which it was tested. 21 Borgmann and Borgmann also ran -- 22 conducted additional experiments where they used the 23 synthetic water and added concentrations of sodium and 24 potassium to this water in order to evaluate the 25 influence of sodium and potassium on ammonia toxicity.

1 And from this they developed a simple mathematical model 2 that they felt would allow them to predict the toxicity 3 of ammonia to this organism. 4 In order to evaluate or validate whether 5 their model worked, they ran an experiment to -- to look 6 at ammonia toxicity to the same animal, high level, in 7 water collected from Lake Ontario. And again they -- 8 they did that with the straight and water diluted 1 in 9 10, with the ionized water. 10 And they found that overall the model did 11 a pretty good job of predicting ammonia toxicity, but in 12 most cases it's slightly overestimated toxicity. In 13 other words, the model predicted toxicity to be greater 14 than it actually was, based on their experiment. 15 After that they wanted to evaluate their 16 model once again, using an experiment conducted by 17 somebody else in a different type of water. And they 18 found some information from a research group in Duluth, 19 Minnesota, conducted by the United States Environmental 20 Protection Agency. 21 And they used the sodium and potassium 22 concentrations from that work, to model what their model 23 would suggest the toxicity should be, and compared it to 24 what the American researchers actually found the toxicity 25 of ammonia to be to the same species, hyalella azteca, in

1 Lake Superior water. And in this case the model 2 substantially over-predicted toxicity by six (6) to nine 3 (9) times. So the model predicted ammonia to be much 4 more toxic than it actually was in Lake Superior water. 5 So if I may quickly summarize. What 6 Borgmann and Borgmann show was that sodium and potassium 7 can indeed influence the toxicity of ammonia to the 8 anthropod, hyalella azteca, but their model was not able 9 to predict ammonia toxicity to this organism in Lake 10 Superior water. And there's no evidence that the 11 Borgmann model is directly applicable to conditions in 12 Lake de Gras. 13 Thank you. 14 MR. GORD MACDONALD: Thank you, Karsten. 15 Just to summarize what JP and Karsten 16 said, is that the 20 milligram per litre discharge limit 17 does not need to be adjusted for hyalella azteca. 18 DDMI has proposed a way forward that is 19 also described in the October 30th response. With 20 discussions from these Hearings, Diavik submits that the 21 Board will be in a position to approve the ammonia 22 management plan in accordance with Part H of the water 23 licence. Diavik also submits that with discussions from 24 these Hearings, that the Board should be able to 25 determine the long-term discharge limit for ammonia.

1 DDMI proposes that the testing of round 2 whitefish be developed as a research project with DDMI as 3 a funding partner. 4 To summarize on ammonia, this -- in this 5 presentation Diavik has provided information about 6 ammonia, provided an overview of the draft ammonia 7 management plan showing how it was developed, what the 8 management measures are and what the plan contains. 9 We proposed a way forward, involved -- 10 involving the Board approving the ammonia management 11 plan. and the Board setting an ammonia discharge limit. 12 We proposed round whitefish research. Clearly, 13 substantial progress has been made with ammonia. 14 Madam Chair, that ends our section on -- 15 on ammonia. 16 THE CHAIRPERSON: Massi, Gordon. I 17 understand that lunch is ready, so we will break for an 18 hour and convene within an hour's time. Massi. 19 20 --- Upon recessing at 12:40 p.m. 21 --- Upon resuming at 1:40 p.m. 22 23 THE CHAIRPERSON: Good afternoon. We 24 will convene the Hearing this afternoon. Diavik still 25 has about an hour to make the presentation. And so

1 Diavik will continue their hearing this afternoon and 2 then after that we'll go for a break and we'll go for 3 questions from the Intervenors. 4 Gordon...? 5 MR. GORD MACDONALD: Thank you, Madam 6 Chair. 7 I would now like to move to aquatic 8 effects monitoring. In this next section of the 9 presentation I'll describe aquatic effects monitoring in 10 general, show the project related effects pathways, talk 11 briefly about the 2001 AEMP and the 2006 AEMP, review 12 terms and conditions, and go over our proposed way 13 forward. 14 Monitoring of Lac de Gras for effects of 15 the project is a significant and important aspect of 16 Diavik's environmental monitoring. Aquatic effects 17 monitoring is a broad term. I'd like to start by trying 18 to describe what it means. 19 In its most simple form it is really 20 checking the lake to make sure that everything is within 21 acceptable levels and within levels predicted in the 22 environmental assessment. This can be done from both the 23 scientific and traditional knowledge approach. 24 From a science approach monitoring can 25 include water quality, fish, sediment from the bottom of

1 the lake, small organisms called benthic invertebrates 2 that live on the bottom of the lake, algae, and organisms 3 that float around in the water. 4 To monitor, DDMI collects water from 5 different depths and locations in the lake. It collects 6 cores of sediment from the bottom and catches fish. The 7 collected samples are measured for a range of things from 8 chemistry to counting and identifying each species of 9 organism. 10 Monitoring is done in summer from a boat 11 and in winter from the ice. The results from different 12 areas are then compared. If the mine was having an 13 effect on the lake we would expect to see this first and 14 most clearly closer to the mine and last and least 15 further from the mine. 16 But the AEMP actually starts -- actually 17 includes more than monitoring in the lake. It also 18 includes monitoring to understand what would cause a 19 change. If you recall back to the very first slides, I 20 showed all the SNP stations. The results from these 21 stations help us to understand what is coming from the 22 mine site. We call this "source monitoring". 23 Source monitoring also includes measuring 24 the quality of the snow on Lac de Gras. Anything that 25 deposits over the winter from the air, like dust, will

1 collect with the snow. When it melts this water goes 2 into Lac de Gras and is a possible source of effects. 3 To understand the potential effects of the 4 project on Lac de Gras back in 1998 a series of effects 5 diagrams were developed with the various environmental 6 assessment participants at that time. These effects 7 diagrams were used as the basis for the environmental 8 effects assessments and for determining what would be 9 monitored. 10 I have three (3) slides, one (1) each for 11 water quality, water supply, and fish. I would like to 12 go through them briefly to try and show all the effects 13 monitoring that is being done at Lac de Gras. 14 This information was also provided to all 15 parties as a request from the August 2006 AEMP workshop. 16 In the circles or ovals are the project activities -- 17 dikes, mine water and sewage discharge, infrastructure on 18 East Island, dust and air emissions. 19 On the right are pretent -- are potential 20 changes that could occur and at what phase of mining 21 they'd be expected, example, construction, operations, or 22 closure. So for example dikes could have a cause in 23 increased suspended sediments during the construction 24 phase. 25 On the left is how each of these pathways

1 are currently being monitored. The figure lists the 2 specific clause of the water licence or the other 3 regulatory instruments. For example, monitoring effects 4 of the dikes on Lac de Gras is primarily being conducted 5 under the Fisheries authorization, although monitoring of 6 suspended solids during construction was also an SNP 7 water licence requirement. 8 The dike monitoring program has been in 9 place since 2001 and included pre-dike construction 10 monitoring and then post-dike construction monitoring 11 every three years. Monitoring includes water quality, 12 sediment, and benthic invertebrates. 13 Pre-construction monitoring has been 14 completed for both the A154 and 418 dikes. Post- 15 construction has been completed twice for the A154 and 16 just finished this year for the A418. It will include 17 821 if and when plans for that dike are finalized, 18 designs are approved by the Department of Fisheries and 19 Oceans and reports issued to the Board with the annual 20 Water Licence report. 21 I'll come back to the mine water sewage 22 pathway at the end. 23 The infrastructure pathway is to look at 24 potential changes in run-off that may result from the 25 development of infrastructure, like the PKC or the waste

1 drop piles on the east island. This is monitored through 2 the Water Licence surveillance network and reported 3 annually through a seepage report. 4 The potential for dust or air emissions to 5 increase suspended solids in Lac de Gras is monitored 6 through a snow quality monitoring program. This includes 7 all water quality parameters, not just suspended solids. 8 This is a Water Licence requirement, and the design was 9 approved with the 2001 AEMP. 10 Results are currently being reported in 11 conjunction with a broader dust monitoring report that 12 includes terrestrial and wildlife effects pathways. 13 At the bottom is a pathway of potential 14 for increased total dissolved solids in the groundwater 15 due to mine de-watering. This is being monitored through 16 the SNP. 17 The predominant pathway, with respect to 18 potential effects on Lac de Gras is the treated mine 19 water discharge. While the diagram includes sewage 20 discharge, this was only during construction as the 21 sewage discharge is now recycled for use in the process 22 plant. 23 The effluent effects pathway is the focus 24 of both the 2001 AEMP and the 2006 AEMP design, but is 25 also a significant component of the SNP.

1 This slide shows, in a similar format, 2 effects pathways for water supply or water quantity. I 3 won't go through each of these, but note that monitoring 4 of these effects pathways are also included in the Water 5 Licence. 6 Effects pathways for fish include the use 7 of explosives having potential effects on fish eggs and 8 fish; fish mortalities when salvaging fish from behind 9 the dikes; water intake structures having potential to 10 trap fish; and there are also others shown. Monitoring 11 of all these effects pathways are addressed in the 12 Fisheries Authorization. 13 Each of the effects pathways, water 14 quality, water supply, and fish, each have specific 15 monitoring programs that have been designed, approved, 16 and are being implemented and reported on. There are 17 some twenty-one (21) design reports and forty-six (46) 18 monitoring reports to date; each is covered under a 19 specific regulatory clause. 20 As the programs have been implemented, 21 issues have been identified and addressed. These 22 programs will continue to be revised to improve. 23 I'd like to go back to some of the earlier 24 slides, where I described the mixing zone in Lac de Gras. 25 It's shown here as a purple dot. I don't think you can

1 see it very well. And the zone around it in green 2 shading which is the approximate area where we can detect 3 the treated effluent in winter. 4 Also shown on this slide as triangles, are 5 the AEMP monitoring locations in Lac de Gras. Green are 6 water quality, red are sediment and benthic 7 invertebrates. Diavik Environment have been consistently 8 monitoring at these locations twice per year since 2000 9 with the most recent sampling event being this summer. 10 It's not possible to present the results from all of this 11 monitoring here. 12 The figure on the right is the one that 13 was discussed before, and I think it remains important 14 when trying to summarize the monitoring results. 15 To repeat, these results are at the edge 16 of the mixing zone, 60 metres from the discharge point. 17 And again 100 percent, or the top of the bar, would be 18 equal to the effects threshold. The green component is 19 the contribution from background and the purple is the 20 contribution from the treated effluent. 21 Results show that even under the worst 22 conditions, ice cover, and as close to the effluent 23 discharge as we can reasonably monitor, water quality 24 levels are below effects thresholds. 25 The bottom graph shows the same type of

1 comparison for the AEMP site LDG41. What you notice at 2 LDG41 and at most of the AEMP locations are first that 3 the results are all well below the effects or CCME 4 guideline levels, and second that the purple component of 5 the graph, the contribution from the treated effluent, is 6 essentially non-existent once you move away from the 7 immediate mixing zone. Water quality levels throughout 8 the lake are all below effects thresholds and remain at 9 trace levels for most elements. 10 Using CCME guidelines or water quality 11 objectives to define a threshold of effects, like I have 12 done here, is a common approach to interpreting water 13 quality monitoring results, and there are established 14 water quality objectives for Lac de Gras. 15 What is also needed, as well as effects 16 thresholds, and I'll -- I'll talk a bit about it later, 17 are agreed levels that will trigger additional action. 18 DDMI refers to these as trigger levels, or you might also 19 hear them called early warning levels. 20 While it can be agreed that the top of 21 this graph represents a level at which you might start to 22 see environmental effects, additional actions should be 23 taken well before levels get close to an effect level; 24 that is the purpose of a trigger level. 25 DDMI has proposed two (2) different

1 trigger levels, the most recent being 25 percent of the 2 distance from background to the effects threshold. So 3 for aluminum that level would be at about the thirty (30) 4 line. 5 The first trigger value DDMI proposed was 6 75 percent of the baseline data. A 2005 review of the 7 baseline data identified problems, that DDMI has 8 acknowledged, with how the baseline data were 9 statistically summarized to determine this 75 percent 10 trigger. 11 A conclusion from this review was that it 12 would be better to compare results with results from 13 reference areas collected at the same time rather than 14 using the much older baseline data. 15 I should note that in the comparison shown 16 here the background level is defined by the measured 17 concentration from reference areas at the west end of the 18 lake collected at the same time as the samples from LDG41 19 and SMP19. 20 Diavik collected a substantial amount of 21 baseline data starting in 1994. These data were used to 22 develop the environmental assessment and to characterize 23 the general conditions of Lac de Gras. They remain as a 24 valid description of the general analogy of Lac de Gras. 25 In summary, after looking at all the

1 monitoring results, DDMI and others have observed that 2 water quality effects monitoring results are consistent 3 with effects predicted in the EA and below levels 4 expected to result in adverse effects. Water use amounts 5 are within levels predicted in the EA and have not caused 6 impacts on water supply in Lac de Gras. 7 Monitoring of effects on fish have not 8 identified any significant impacts and results are within 9 EA predictions, however, fish mortalities during fish 10 salvage from the North Inlet and the A154 were much 11 higher -- were higher than expected and mortalities from 12 ongoing monitoring programs used to study the lake were 13 not actually included in the environmental assessment. 14 Dust deposition rates are currently higher 15 than predicted in the EA due to ongoing construction but 16 remain below levels that would be expected to impact on 17 Lac de Gras. 18 The water licence states that the scope of 19 the AEMP is effects in the aquatic environment resulting 20 from the project. We will consolidate the relevant 21 aquatic effects monitoring programs of the project on the 22 aquatic environment into one (1) comprehensive AEMP that 23 includes effluent monitoring, dike monitoring, snow 24 quality monitoring, runoff monitoring, traditional 25 knowledge and community monitoring.

1 The appropriate approach is to have 2 monitoring programs designed for each specific effects 3 pathway as we currently have. We acknowledge that the 4 2006 AEMP should be considered as the effluent monitoring 5 chapter of the AEMP, not as the AEMP itself as we 6 presented in May. 7 We suggest that the 2006 AEMP document be 8 reviewed and finalized within that scope objective. 9 We recommend that a new comprehensive AEMP 10 document be prepared that includes all five (5) 11 components and that the monitoring designs for all but 12 effluent remain as currently approved and that the focus 13 be on the effluent design as described in the 2006 design 14 document. 15 We propose two (2) levels of reporting as 16 described in the October 30 response, an annual report 17 containing specific program reports completed in that 18 year with a summary of all results and an integrated 19 aquatic effects report every three (3) to five (5) years 20 that reviews all the information collected over the 21 period and provides a more comprehensive and integrated 22 analysis of aquatic effects and compares measured results 23 against those predicted in the environmental assessment. 24 I'll now go briefly back to the 2001 AEMP. 25 The scope of the AEMP was the subject of review at the

1 February 27, 2001, Diavik Technical Committee meeting. 2 The Diavik Technical Committee is a committee that was 3 underneath the Mackenzie Valley Land and Water Board. 4 DDMI submitted a scoping document on 5 January 30th, 2001, with the state of object -- the 6 stated objective being to ensure that DDMI and the Diavik 7 Technical Committee have a mutual understanding of the 8 scope of the AEMP before finalizing the program design. 9 We addressed the issue of effects pathways then. 10 The mutual understanding was obtained and 11 a final program designed, prepared, and approved in July 12 2001. As a result, some Water Licence items were 13 explicitly not included in the 2001 AEMP, like dike 14 monitoring, as it was being conducted under the Fis