Impacts from an underground gold mine proposed near the historic mining town of Elkhorn are relatively minimal and probably can be mitigated, according to a draft Environmental Assessment issued this week.

Traffic and water top the list of concerns about the Golden Dream Mining Project put forth by Elkhorn Goldfields Inc. But Herb Rolfes with the Montana Department of Environmental Quality said that between monitoring and mitigating efforts, most of the worries can be alleviated.

"Public perception is one of the biggest issues there," Rolfes said on Tuesday, adding that since this is in an area already mined, the company could end up leaving the property in better shape than it is now.

He characterizes the proposal as a "big little mine."

This is the first underground gold mine proposed in recent history and would be created just northwest of the town of Elkhorn, about 19 miles northeast of Boulder. Mining began there with the discovery of silver in the 1870s, and at one time more than 1,000 people called Elkhorn home. It currently has only a few residences, with the majority being seasonal.

The project involves drilling two underground tunnels -- a main entrance and a secondary, safety access -- plus a ventilation shaft, and removing 500 to 1,000 tons of ore per day. The rock will be trucked to the Montana Tunnels mill near Jefferson City.

As proposed, the mine permit would cover 382 acres on private land, but the total disturbed area would be limited to 27 acres. The expected life of the mine is five years, and it would employ about 70 people.

For air quality calculations, the EA estimates that nine 30-ton trucks would each make five round trips per day between the mine and mill, for a total of 45 round trips daily. Rolfes said in reality, based on the amount of ore expected to be mined, that figure is closer to 33 round trips per day.

That concerns people who live on the gravel road between Elkhorn and Boulder, because of the narrow width of the road and the dust the trucks would raise. The EA states that an agreement reached between Elkhorn Goldfields and Jefferson County, which includes widening the road to 24 feet, laying down chemicals to control dust, regrading the road and posting a speed limit of 25 mph, all should help lessen negative impacts.

People who live in Elkhorn also are worried that the need to pump water from the ground before the mining begins might adversely impact them. Tests indicate the company would need to continuously pump from 50 to 100 gallons per minute to achieve the drawdown required to access the ore body.

Neighbors have told the DEQ they're afraid that type of pumping will harm their own residential wells, so Elkhorn Goldfields will take tests of their water levels and monitor those regularly to try to ensure they're not impacted.

The company also needs to build a water-treatment system, since tests show naturally occurring arsenic above federal drinking-water standards. Since the plan calls for sending the water back into the ground through a series of percolation ponds, it first must have the bulk of the arsenic removed.

Rolfes said that probably would be done with a technique that involves pumping the water through iron filings, where the arsenic bonds with the iron, before going into the percolation ponds. The flow-rate for the system would be a maximum of 300 gpm, with an expected average rate of about 150 gpm.

Once mining ends, the dewatering no longer would be necessary, so the underground workings would be flooded with the groundwater, rising to pre-mine water level and quality conditions.

The company would set up offices, shop and equipment areas; develop a rock stockpile in an existing unreclaimed mine pit; and build a loading facility to stockpile and load ore.

Elkhorn Goldfields Inc. is owned by Elkhorn Goldfields LLC, which also owns Elkhorn Tunnels. Its parent company is Calim Private Equity, an investment firm with offices in Colorado and New York. Elkhorn Tunnels announced a joint venture last year with Montana Tunnels' parent company, Apollo Gold, which allowed the Montana Tunnels mine to reopen.

Few impacts, if any, are expected to the town of Boulder, to recreational activities in the proposed mine area, or to wildlife, according to the EA.

Rolfes said the DEQ will accept public comments on the draft EA until May 30. They'll look at the comments and address any concerns, then either issue a final EA or move forward with the more-detailed Environmental Impact Statement. If an EIS isn't needed, the DEQ will calculate a reclamation bond. Once that's posted, the company will be issued an operating permit.

Click here to download the Golden Dream Draft EA.

Reporter Eve Byron: 447-4076

or eve.byron@helenair.com