Renewable Energy For Our Future

Prepared by Jeff Wolrige, President of Anyox Hydro Electric Corp and Kitsault Hydro Electric Corp on November 25th, 2005.

Quote of the 2005 season for all aspiring remote road builders: Ed Gavelin – “You don’t have a road if you don’t have a ditch line”

The 2005 work year got off to a great start thanks to our associates at Quantum Leap Co. in Toronto. Funding for our projects’ further development was secured in late December, 2004 with a further tranche of funding to follow in the latter part of 2005.

The Founding Partners added significantly to the development budget total for the 2005 and 2006 work years and the net effect of the funds expended in 2005 was significant.

The team landed a 30 year Power Purchase Agreement (PPA) with Powerex, the power export arm of BC Hydro (see press release). It was hoped that this key milestone would pave the way for the finalization of major construction financing and allow construction of the works to take place commencing in 2006. Unfortunately, the volatile nature of the spot power market has made it very difficult to achieve adequate levels of “Senior Debt Financing” to support the construction phase.

The Powerex team has tremendous knowledge and experience in the electricity trading industry and their facilities are second to none in North America. With real time computer technology energy trades are orchestrated in the blink of an eye under the careful guidance of the Head Trader. All of the province’s generators and storage facilities are connected to this computer network and their output is carefully monitored on high resolution screens. We are looking forward to the day when our generating stations are active on these screens.

Other recent highlights of our activities include the installation of Construction Camp facilities at Anyox to accommodate up to 75 people in anticipation of an active construction program over the next few years. Just after completion of the second phase of this camp installation in June, 2006 we were pleasantly surprised as three Minstry Of Environment representatives cruised into Granby Bay in a state of the art high speed Hurricane inflatable craft for a visit. We were able to provide the group with a complete tour of the Anyox Dam, Powerhouse, Tunnel Portals and Construction Lay Down areas while our chef Rick layed on a fine Steak dinner for us at the Lodge upon our return.

The Ministry of Environment group was very complimentary of our camp set up and with the attention to detail in regards to ancillary services like water supply, sanitation, fuel storage and cooking facilities. We were all treated to a Bear visitation near the Powerhouse and it was very gratifying to be able to drive to every key area of the Anyox project. It especially felt good to be able to drive right over the Anyox Dam crest along the newly constructed access road on the left bank and right out into the reservoir.

Thanks are due to Chant Construction and their on-site subcontractor ICON for building this latest road spur into the reservoir. The Anyox reservoir is now about 65% cleared out of wood waste and debris. Over 195 Rock Truck loads of debris and timber were removed from the reservoir in June 2006 and several very old and large logs were salvaged for future use.

Earlier in the year 2006, during the winter months of January, February and March Ed Gavelin and Tony Brinson of Gavelin Construction Ltd. were able to clear a five acre area near the old Steam Plant at Anyox to construct a lay down area for construction. Excellent gravel and sand materials were found right on site and the transformation was remarkable. In addition to this project Ed and Tony successfully re-established the road leading out to graves Point from our camp facilities. This road was constructed to access the termination point of the Anyox Overland Transmission Line and the area near the transition point into the Underwater Transmission Line section. The old fire hydrants of Anyox are standing along the edge of this new road and it goes right by the old General Store and the back of the former Tennis Club. Some of the fire hydrants look like the day they were installed. We are careful to leave the relics in place for posterity.

John and I would like to thank Morris Campbell who sold us the former Chambers Creek Logging Camp complete with the water system, generators and a full commercial kitchen. This camp was formerly located at the head of the Nisoga Gulf just a few miles south of Kincolith. Morris treated us extremely fairly and was a pleasure to work with. His crews were expert at moving large structures around and with the assistance of the seasoned veterans at Wainwright Marine Services the barging went off without a hitch.

This two story camp now resembles a respectable fishing lodge thanks to Gerry DeBou and his company who built the footings for the camp installation along with the sidewalks, balconies, breezeway, Water Building, Dry Rooms, etc. all to Anyox Hydro’s specifications.

2005 was a very active year on the engineering front with EES Consulting’s Jack Snyder and his team of engineers working diligently to prepare comprehensive drawing packages for the various contractors to bid on.

Of major importance to the Anyox project is the construction of a 3.2 Kilometer tunnel to carry water for the majority of the way between the Anyox Storage Dam and the Powerhouse. Len and Clark at Roktek Services out of Prince George and their hard working and very professional team of miners were able to establish both the upper and lower tunnel portals and approximately 200meters of tunnel during the 2005 work season as part of an advanced Geotechnical investigation.

Each of our projects share significant challenges and uncertainties. This is particularly true with respect to access and terrain but extends to all aspects of small hydro development from the Power Purchase Agreement securement to the basic permitting. We are doing our best to manage the risks associated with this remote area work and have found that creating safe and easy access to the primary project components is one of the best ways for us to manage costs. At Anyox we concentrated on the tunnel and successfully proved to our tunnel contract bidders that the rock properties are excellent with little ground support and few rock bolts required. This has provided us with very sharp and accurate project estimates and has saved us several millions in “Uncertainty” dollars.

The Upper Kitsault River projects have their own set of significant challenges. Our ultimate destination in our ongoing road building exercise is the Kitsault Lake Dam at the very top end of the watershed. We need to replace this timber crib, rock filled structure with a more conventional concrete dam. This dam is some 39 kilometers from tidewater and the town of Alice Arm. An abandoned Provincial Highway (yes, believe it or not there is a gazetted Provincial Highway here #82 and #83) initially skirts the Kitsault River flood plain for about 20 kilometres and then enters a steep canyon section where we are currently working. For these Upper Kitsault River projects getting there with some form of a temporary access road has the team’s full attention. In late October of 2005 we have made it to the Dolly Varden Silver mine at kilometer 29. One mid October day Ed Gavelin, John Turpin and I hiked through the network of mine tunnels at the Dolly Varden. The mine produced millions of ounces of Silver in the 1920’s and still Bears what may be North America’s largest remaining horde of Silver. I don’t really consider myself as an underground guy but the air was good and the water was not too deep. Abandoned mining memorabilia was present everywhere along the narrow guage railway line. Each of the main tunnels that comprise the old Dolly Varden mine’s railway loop terminate at the edge of the Kitsault River with the original dilapidated portals perched precariously over a chasm of white water churning down through the Kitsault Canyon. All that’s left of the former suspension bridge structures that used to carry the narrow guage railway cars are the primary cables which are still in remarkably good shape. We didn’t hang around long as the portals are somewhat unstable and loose rock becomes dislodged as we tromp around. Discretion is the better part of valour.

The 2005 and 2006 work programs can be compartmentalized into several key undertakings all strung along a critical path heading towards a Fall, 2008 “Commercial Operation Date” for both the Anyox and Upper Kitsault River plants.The main components of the work program follow:

1. Continued development of the road leading to the Kitsault Lake Storage Dam; the Trout Creek Intake structure; and the Homestake Creek Intake structure.
2. Advanced Geotechnical work at Anyox to include the establishment of both the upper and lower tunnel portals and approximately 100 metres of tunnel at each end. The tunnel at Anyox will act as a water conduit between the storage dam and the powerhouse at tidewater. The tunnel will be horseshoe shaped and is big enough to comfortably drive a big pick-up truck into.
3. A comprehensive “Dam Stability Analysis” for the Anyox Dam is undertaken and completed in 2005.
4. EES Consulting continues its Process Engineering and the preparation of drawings to support the bidding of the 5 main construction contracts.
5. Terra Remote Sensing completed a “Bathymetric Survey” and side-scan sonar profiling of the sub-sea transmission route.
6. Securing the remaining land tenures for the projects as required after final modifications of routing is an ongoing process.
7. Obtaining a suitable long term Power Purchase Agreement is fundamental to the projects’ success.
8. Lex Engineering was retained to assist with sub-station and transmission system design.
9. Temporary crew camps are being supplied and installed at Anyox and Alice Arm in preparation for construction
10. Securing project financing and necessary equity contributions to enable continued development of the projects is ongoing.
11. Proceeding with the “Final Interconnection Study” after obtaining requisite advance funding occurred in 2005 and the final report was completed by BCTC in the Fall of 2005.
12. A Grapple Yarder for ongoing Anyox reservoir clearing & maintenance operations was purchased from Rob Long and deliverd to Anyox in 2005. The Grapple yarder has been installed on a blasted bench perched some 150 feet above the reservoir on the left bank in June, 2006 and awaits final rigging checks.
13. A construction Lay Down area at Anyox is required for construction.
14. A new road spur at Anyox leading to graves Point was started in early 2006.
15. A full market value appraisal of properties acquired and infrastructure built and secured to date is slated for late 2006.

The latter part of 2004 and early 2005 represented the first time that our company actually worked all winter and to this end we kept the road from New Aiyansh to the town of Kitsault open for crews to get in and out of Alice Arm. This road in the Summer of 2004 was in really bad condition but when covered with ice and snow all of the very significant pot holes were flushed over and seven to eight foot snow banks on either side through the high pass gave the driver some added confidence. With Ed Gavelin leading the work program our heavy aluminum jet boat successfully packed men and gear, parts, etc. across the 2 mile bay to our crew quarters in Alice Arm. While there was some ice on the bay during the winter months we were able to keep it clear from any heavy ice with routine “Break-up” runs across the bay in the jet boat. This process was challenging during -20 temperatures but fortunately those were isolated cold snaps that didn’t last very long. The purpose of our winter work program was to carry out a plan devised with the Department of Fisheries to re-build a 300 metre section of Kitsault Highway #83 at approximately the 15 kliometre mark from Alice Arm. At this point a steeply pitched and now forested rock slope exists along the base of which the former rail grade and subsequent road were constructed. We figure that approximately 20 years ago or more a flood event caused the complete washout of this section of road. This was probably due to a lack of maintenance of the shielded leading edge of rip rap along this curving section of road which follows the contour of the river. We designed in conjunction with DFO an in-fill program to be carried out at very low water so as not to impact any lingering Coho adults or redds in the area. We initially cordoned off the area with a net and stake structure to keep the adult Coho from spawning in this area. There is a fairly sizable run of big Coho that spawn in the Kitsault River and its tributaries. Some 20 to 60 fish like this particular section of the river given that there is a nice side channel below. A very large Grizzly Bear was routinely tearing down our protective fence for a while in late January apparently unhappy about us trying to keep the Coho out of his favorite fishing hole. Jim Gurney (our excavator operator hailing from Greenville) was surprised one morning after arriving at the site and seeing Bear prints in the fresh snow which his size 10 work boots easily fit inside of. The boys took a video of all this as pad prints of this size are rare. A very big bear indeed. Fortunately the Bear went away and the work progressed smoothly as clean and sorted rock was hauled from our nearby quarry site and placed in three separate lifts to form the new road grade. The careful application of silt fencing ensured that finer sediments did not enter the river. Ed Gavelin carefully constructed three toes (peninsula structures) along this stretch of the road and these were subsequently vegetated by Environmental Monitor Charlie Fleenor. All in all the project went smoothly and was carried out before the March 31st, 2005 deadline. By the Fall of the 2005 year the planted trees and shrubs had rooted successfully. The “Toes” were also a big success providing some cover and back eddies for traveling Coho. Part of our agreement with DFO was to count the fish in the area during the November to January period.

As the road materialized at the 9 mile washout Ed sent equipment including the D-8 Cat and John Deere Excavator ahead re-constructing road, and forming ditch lines along the way. Ed has a famous saying with respect to road building. It goes something along the lines of “If your road has no ditch you have no road” Our stock of ex-CN rail cars steadily depleted itself along the way as each and every timber bridge had long since collapsed. The crew has become very proficient with the installation of these bridges.

Thanks are due to Brian Bosman out of Prince Rupert who has sent freshly milled timbers for the bridge decks on every barge sent up this year. Darryl McCarron and Jim Gurney got very proficient at decking the rail cars by year end. We also started to use concrete lock blocks for abutments as depicted in the Lyall Creek bridge crossing shown in the 2005 “Photo Album”.

The next big decision to be made came later in the Spring of 2005 as we approached “Mud Canyon” aptly named for its significant clay deposits laying in steep terrain for a stretch of about one mile. The river becomes so narrow at one point that one can nearly jump across the river thanks to some interesting rock prominents in this section. How to proceed? As usual we looked at what the old timers did, and then what the Silver Grizzly logging road builders did in the early 80’s to help us make a decision. The original rail grade could not handle more than a 5% grade therefore tended to follow the natural river course. The rail grade had long since washed out. Old sections of narrow guage rail are evident all along our road and become sentinels of the past we are careful to leave alone if possible. The next modern road was built with a slightly steeper grade and partially skirted the Mud Canyon area. This route was quick and efficient but cut through the heart of the biggest clay deposit. I remember us wearing some clay of our own on a few occasions as we hike through the old road alignment. Galvanized steel culverts are evident in abundant numbers as various creek systems enter this funnel like section from the Boreal forests above. Ed is of the opinion that since both of his predecessors failed to find a satisfactory route that we should hike some more and choose a route that avoids the dreaded clay as much as possible. The eventual route we took at the end of the day went slightly above the biggest clay deposit along a wooded bench area. To date this section of road has worked out quite well and has required only moderate maintenance. We did encounter some clay and several small slide areas along this route which required some extra slope stability work. As always, these areas were revegetated by Charlie Fleenor in accordance with DFO’s guidance. Thanks to Joy and Holly at DFO for all of their help.

Once through Mud Canyon we picked up the old road again which runs along the Kitsault river. The D-8 blazed the way with the John Deere excavator operated by Tony Brinson following closely behind creating ditch lines where possible.Good progress was made through the Alders and Birches until we hit a section of the road approximately two miles up from Mud Canyon where the dyke bordering the road had completely eroded and the road terminated in a large bay formed by the combination of a spate creek and the ever changing Kitsaulr River. We eventually chose a new route through a wooded area slightly above and thereby avoiding completely a nearby swamp teeming with aquatic life. This is a beautiful stretch of the road with re-vegetated banks above each of the ditch lines bordered by the Hemlock forest. We used two large culverts to deal with the unnamed creek. One culvert was installed slightly higher than the other to provide an overflow capability for this system. The original galvanized culvert (we now use plastic culverts for longevity and ease of handling and splicing) just didn’t cut the Mustard and had long since clogged with debris causing the flow to overtop and form a large new channel with all kinds of debris scattered throughout its length. This could be a nasty little system in the rainy season and extra care was taken to build the road at a proper elevation and to fortify it with a good system of ditches and culverts. At this point in time it was late Spring and the clock was ticking loudly in our collective ears. It is a short working season on the North Coast allowing us to work efficiently and cost effectively not much longer than mid November each year in the upper watershed. Our next target was Lyall Creek, the last major Salmon bearing tributary of the Kitsault River and we are on schedule to get there by the middle of May, 2005. Our advance scout Ed Campbell advises us that the old road has no further surprises in store for us and on May 20th, 2005 we were able to launch an 88 foot rail car bridge across Lyall Creek (see photo set) without touching the creek and with minimal disturbances while constructing the abutments. All along the route from Alice Arm to where we are currently working blue spray painted bands adorn the trees in the vicinity of fish habitat areas. It makes it that much easier for us to avoid doing work or other activities that might cause siltation or habitat degradation in these sensitive areas. We have also installed kilometer markers along the road for safety reasons so our crews can communicate positions while traveling with heavy equipment.

Once we are across Lyall creek everyone is anxious to see what the canyon looks like. So far, we have seen it only from the air and it is very intimidating even from the comfort of the helicopter. The road in sections and particularly at “Deadman’s Curve” seems capable of allowing only the local Goats to pass. As usual we have advance clearing crews and the D-8 storming ahead while the excavators and other equipment are busy constructing the road behind. We are starting to encounter bigger trees and more rock now. Darrel McCarron, our veteran faller, tells us he wants a bigger saw now. Our trusty track drill is working overtime in the rock trying to establish a ditch line and we find ourselves really having to baby it along. The main air filter assembly is replaced and several other parts break and require replacement. Fortunately, Ed Gavelin can fix any piece of equipment that moves it seems and he is definitely putting his skills to work. The poor old jet boat continues to routinely transport hundreds of pounds of parts and gear across the arm.

Sometime in late October the snow starts to fall in the upper Kitsault Valley. This is a sign that this 2005 season’s work program is nearing its end. Thanks for taking the time to read this material and following the progress of our projects. Feel free to e-mail us at anyox@anyox.com

We will keep you posted with further updates.

Jeff Wolrige Anyox Hydro Electric Corp.

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