Two years ago, John Dougherty knew absolutely zero about the proposed Rosemont Mine.
Today, he could qualify as a leading expert.
He’s also the mind behind “Cyanide Beach,” a new documentary that calls into question the business practices — perhaps even the character — of five men on the board of Augusta Resource, Rosemont’s parent company.
When I heard Dougherty was making “Cyanide Beach” about a year ago, I braced myself for a hit piece. He has a two-decade reputation in Arizona as a top-notch investigative journalist but he’s also somewhat of a loose cannon — outspoken, opinionated and loud.
Then consider that FICO, a major opponent of the mine, paid about 80 percent of the cost of making the film, and I had to wonder if there would be any attempt at objectivity.
Surprise, surprise. Dougherty’s first attempt at making a documentary — all 24 minutes of it — is an interesting addition to the Rosemont conversation. I saw it Friday; you should see it, too.
Dougherty said he was approached by Nan and Dick Walden about making the film and they agreed on some ground rules, not the least of which was that he’d have full control. Dougherty told me the Waldens didn’t see any of it until it was finished.
Mining in Sardinia
The documentary isn’t actually about Augusta or Rosemont. It’s about a company called Sargold that bought a mine in the small town of Furtei on the island of Sardinia in 2003. The link is that five Augusta executives were on the board of Sargold when all of this went down.
To be sure, Sargold bought a troubled gold mine in Sardinia. It was run by a company that left a hellacious mess of four unreclaimed open-pit mines, a leaking cyanide tailings pond and plenty of toxic sludge, but Sargold agreed to take responsibility for cleaning it up. It also promised jobs for the economically depressed region.
But, according to Dougherty’s reporting, Sargold wanted something in return — mining rights in other parts of Sardinia. According to interviews and documents he dug up, any cooperation with cleanup was going to be tied to getting those rights. But in the end, Sargold — which had been overstating the value of its Furtei claims to potential investors — never landed the rights, and it cleaned up just one of the pits before bailing.
Meanwhile, Sargold misspent a government loan, owed investors thousands of dollars, and found itself in a major cash crisis. It also eventually was revealed that they skipped legal filings, kept investors in the dark, and failed to disclose that a Cayman Islands hedge fund owned more than 10 percent of its mine stock.
Sargold owned the mine four years and lost $7 million. It sold the Furtei mine in 2007 to Buffalo Gold, but kept a 25 percent interest. The Sargold board dissolved, which is key — that’s the reason Augusta Resource today declines to answer any questions about the mine. Because when Buffalo Gold walked out literally overnight 14 months later — leaving Furtei with a horrifying mess — Augusta executives technically weren’t involved.
According to an Augusta Resource press release, “Augusta has never had any involvement with Sargold Resource Corp.”
Dougherty made several attempts to speak to them, including traveling to Augusta headquarters in Vancouver, B.C., twice. No dice.
Among the other interesting points brought up in the documentary:
• Franco Cherchi, Sargold’s man in Furtei, delivers a frightening on-camera slap at Augusta chairman Richard Warke, who was involved with Sargold: “When it’s not convenient for him anymore, he withdraws his promise,” Cherchi said.
• Dougherty says Augusta/Rosemont is in a “cash-flow squeeze” right now. He says Rosemont is the parent company’s only operation and that it is a “highly diluted, heavily leveraged company with no revenue and an uncertain regulatory outlook.”
• He goes on to say that Augusta increased the salary and stock benefits of its top five executives by $5.9 million in 2011. That’s a 127 percent increase over 2010. According to Dougherty, they’re “cashing in while they can.”
• Italy is in the midst of a $5.7 million assessment of what it’ll take to clean up the toxic dump left behind by Buffalo Gold (and Sargold). The taxpayers are footing the bill.
• Perhaps the most chilling part of the documentary is a brief interview with the mayor of Furtei, who says the town regrets ever getting involved in mining.
Dougherty isn’t the only one who has been looking into Sargold. Dick Kamp, the environmental liaison for Wick Communications, which owns our newspaper, recently finished an eight-month investigation. You can find it here.
The last part of Kamp’s analysis asks whether it could happen here. The answer is that mining, by nature, is a dirty industry. While some of what happened in Sardinia couldn’t be replicated here, there remain grave concerns over the playing out of projects involving current Augusta board members overseas. We hope you’ll take the time to read it.
An offer for Rosemont
Big corporations have long histories of ignoring documentaries critical of their business practices. But simply trying to weather the storm of “Cyanide Beach” isn’t going to cut it. Augusta Resource has some important questions to answer if it wants to continue building goodwill and trust in our community. This documentary likely won’t play a role in the mine approval process we’re currently wading through, but it does raise questions that Rosemont must address if it intends to move forward with integrity.
I hope they accept my invitation to use our newspaper to address the concerns.
— Dan Shearer
SEE IT FOR YOURSELF
•“Cyanide Beach” will be shown at 11 a.m. Wednesday, Sept. 5, and 11 a.m. Sept. 6, at Desert Sky Cinema, 70 W. Duval Mine Road, Sahuarita. There is no cost, but an RSVP is required on John Dougherty’s web site, www.investigativemedia.com.
•It will be shown at 10 a.m., Sept. 17, at the Santa Cruz Valley Citizens Council meeting, Tubac Community Center, 50 Bridge Road, Tubac. (No reservations required.)
•Also, 7 p.m., Sept. 29, at the Tin Shed Theater in Patagonia. Information: www.parawatchdogs.info; (no reservations required). More screenings will be scheduled across Southern Arizona.
•Dougherty’s web site also includes links to dozens of documents involving Rosemont, Augusta Resource and Sargold.