Environment

Skye Resources believes that environmental stewardship and social responsibility are cornerstones to developing a world-class mining facility in El Estor. The Fenix Project is being developed within the framework established by Guatemalan laws and with reference to the Equator Principles of leading financial institutions (www.equator-principles.com).

The Guatemalan Ministry of Environment and Natural Resources (MARN) requested that CGN complete two Environmental Impact Assessments (EIAs): one for the mining area and a second for the mineral processing plant and infrastructure. Both EIAs were prepared to meet the requirements of Guatemalan Environmental Law Decree 68-86 and its Regulation 23-2003 for the evaluation of projects.

The application for the mining license required the completion and approval of a full EIA for the mining activity, which was submitted in October 2005. The Ministry of Energy and Mines (MEM) issued the mine exploitation license in April 2006, following MARN approval in January 2006 of the Mine EIA. The second EIA (the ”Plant EIA”) for the expansion and modernization of the processing plant was submitted to MARN in June 2006.

Skye and CGN were aware of several concerns expressed by the relevant authorities with regard to the mineral processing plant EIA. To address these concerns, in February and March 2007, four new EIA documents were submitted to MARN, individually addressing the following four distinct components of the Fenix Project  (the “Component EIAs”): the Process Plant,  the Power Generation Plant, the proposed employee housing and recreational complex, and the project transportation system. Environmental approvals were received for these four Component EIAs in May of 2007.

Social & Environmental Impact Assessment (SEA)

In addition to the Spanish language EIAs created for the MARN and with reference to the requirements of the Equator Principles, Skye commissioned an English-language Social Environmental Assessment (SEA). It presents the necessary information required for financial institutions to evaluate the environmental and social impacts within the context of Government of Guatemala regulations, International Finance Corporation Performance Standards and World Bank guidelines recognizing that environmental monitoring programs, project mitigation measures and operations plans will be designed to achieve best practice and, at a minimum, compliance with both Guatemalan law and the 1998 World Bank / International Finance Corporation Environmental Health & Safety guidelines applicable to mining operations.

The studies were conducted by a team of Guatemalan and international experts, and involved extensive investigation on the current state of the physical and biological environment in areas the Project may affect, including studies on water, soil and air quality, flora and fauna. The SEA assesses how the project might affect these aspects of the environment and presents strategies to avoid or minimize adverse impacts. The assessment also examines the social and cultural environment, including an emphasis on the local Q'eqchi Mayan population. These socioeconomic studies are a building block for maximizing the project's benefits for all stakeholders.

Socioeconomic and environmental components for the Fenix Project were identified during the issues scoping process, which comprised reviews of literature, standards and regulations, and historical and current data, as well as communications and consultations with local indigenous groups, regulators, and other stakeholders. The issues were then screened to identify potential interactions between the socioeconomic and environmental components and Fenix Project activities. Using methodology adapted from the Cumulative Effects Assessment Working Group (1999) and prepared for the Canadian Environmental Assessment Agency (www.ceaa-acee.gc.ca/013/0001/0004/index_e.htm), the screening process resulted in the identification of the ‘Valued’ Socioeconomic and Environmental Components, which formed the basis of the impact assessment.

The Valued Socioeconomic and Ecosystem Components, known as VSCs and VECs respectively, are elements of a project’s socioeconomic and ecological surroundings that are screened and ranked on the basis of their value and importance to a number of interested and affected parties and may include, for example, traditionally used resources, nationally protected species, ecologically sensitive habitats and water bodies used for drinking and recreation. The purpose of identifying these valued components is to focus the impact assessment on the most vital socioeconomic and environmental issues.

The screened VSCs and VECs were subjected to an assessment process that consisted of identifying and predicting the nature and extent of impacts (adverse and beneficial, direct and indirect) that the project may create. The assessment for each of the major project areas was completed by a review committee consisting of professionals with experience in the specific area taking into account the magnitude, extent, duration, frequency and reversibility of residual effects. This evaluation considered potential impacts that could occur during specific project phases: construction, operations, and decommissioning. Potential impacts were assessed based on a review of relevant baseline data, field reconnaissance and consultation with experts, stakeholders and other interested parties.

The impact assessment identified VECs and VSCs likely to be affected by the project throughout its entire life cycle. Potential impacts were then subjected to mitigation measures, and the resulting residual impacts were identified.