Free Response to Motion [Dispositive] - District Court of Federal Claims - federal

Case 1:95-cv-00650-LSM

Document 129-3

Filed 03/05/2008

Page 1 of 10

EXHIBIT 2

Case 1:95-cv-00650-LSM

Document 129-3

Filed 03/05/2008

Page 2 of 10

In The Matter Of:
Alfred Aloisi, et al. v. The United States

Thomas Paul Ferrero
I

.-.!

Vol. 1,january 13, 1998

..1
I i I

Bean & Associates, Inc.
Professional Court Reporting Service
, ! i

500 Marquette, NW, Suite 280, Albuquerque, NM 87102 119 East Marcy, Suite 110, Santa Fe, New Mexico 87501
(800) 669-9492 or (505) 843-9494

, 'i
Orginal File feO 11398. v 1, 71 Pages Min-U-Script(j File ID: 2141535658

Word Index included with this Min-U-Scrp~

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AledCase 1:95-cv-00650-LSM Aloisi, et at v.
The United States

Document 129-3
Page 1

Filed 03/05/2008

PageThomas Paul Ferrero 3 of 10 VoL 1, Januar 13, 1998
Page 2

(1)

-L

(2) (3)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

(1) APPEARANCES
(2) For the Plaintifs:
(3) FREEDMAN, LEVY, KROLL & SIMONDS Attorneys at Law
(4) 1050 Connecicut Avenue, Northwest, Su~e 825

(4) ALFRED ALOISI, CANDIS ALOISI, DONALD W. GOODMAN, ENERGEL, INC.,
(S) DYNATECH CORPORATION, JAMES KENDLE, and

Washington, D.C. 20036
(S) BY: MR. LAWRENCE G. MCBRIDE
(6) For the Defendant:

(6) LIBERTY MINING, INC.,

(7 Plaintifs,
i

(8) vs. No. 95-650L
. (9) THE UNITED STATES,

(7 MS. SUSAN V. COOK Attorney at Law
(8) Un~ed States Department of Justice

"t

(10) Defendant. (11) DEPOSITION OF THOMAS PAUL FERRERO
January 13, 1998
(12)
;',~,

Environment & Natural Resources Divsion
(9) 601 Pennsylvania Avenue, Northwest, Room 837

8:30 a.m.
625 Silver Avenue, Southwest Albuquerque, New Mexico 87102

Washington, D.C. 20004
(10)

~,: 'I'-

(13) (14)

":j'\

Also Present: Mr. AKred Louis Aloisi
(11) (12)

~i \

.\

(15) PURSUANT TO THE FEDERAL RULES OF CIVIL PROCEDURE, this depos~ion was:
(16)

::i

H

(17) TAKEN BY: MS. SUSAN V. COOK ATTORNEY FOR THE DEFENDANT
(18)

(13) INDEX PAGE
(14) THOMAS PAUL FERRERO

¥
, ì

(19) REPORTED BY: Melissa Correa, RPR, NM CCR #279 Bean & Associates, Inc. Professional Court Reporting Service (20)

(15) Examination by Ms. Cook 3 (16) Examination by Mr. McBride 61 (17) REPORTER'S CERTIFICATE 67
(18) WITNESS SIGNATURE/CORRECTION PAGE 69
(19) (20) (21) (22)

500 Marquette, Northwest, Su~e 280
(21)
(22)

Albuquerque, New Mexico 87102

J
(23) (24)

5414-9.MEL

(23)
(24) (25)

l

(25)

Page 3

(1) THOMAS PAUL FERRERO,
(2) afer having been fist duly sworn under oath, was

(3) questioned and testied as follows:

(4) EXAMINATION
(7 please?

(5) BY MS. COOK:
(6) Q: Can you give us your full nae for the record,
(8) A: Thomas Paul Ferrero.
(9) Q: How

are you employed?

(10) A: I'm a consultig geologist, self-employed.

(111 Q: How long have you been doing tht?
(12) A: Since 1983.

(13) Q: Wht did you do before that? (14) A: I was a geologist workig for mig compares and
(15) engieering compares.
(16) Q: I believe we have a copy of

your resume,A-4l. Have

(17) you looked at ths resume recently, or would you lie to take a

(lai look at it?

(19) A: i might as well look at it. It changes every once
(20) in a whie.
(21) MS. COOK: Are you pulg hi a copy?
(22) MR. MCBRIDE: Yes, I am.

(23) Q: Wht I'd lie you to do is take a look at it and
(24) make sure al the inormation is sti current.

(25) A: Ths is an old one. I'm certied as an engieering

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Aled Aloisi, et aL v.

Thomas Paul Ferrero
Document 129-3
Page 40

Case 1:95-cv-00650-LSM The United States

Filed 03/05/2008

VoL 1, Januar Page 4 of 10 13, 1998
Page 42

(1) (2) (3)

Q: Why would you use a grd as opposed to just pickig

(1) what al those costs are. i have to point out that they have

upA: One of the reasons you use a grd is because you

(2) to consider the fact that they're not going to get al that
(3) money. It's going to cost them to get it, and tht that's part

(4) don't know which way the vei ar going. You don't know how
(5) the vaues ar ditrbuted, so you layout a grd and it gives
(6) you surey contrl, and tht gives you - the idea is to make

(4) of the determition.
(5) Q: NoW; i noticed you used $400 per ounce for the price

(S) of gold. Was tht selected to represent the spot price at tht
(7 particul point in tie, or what?

(7 the grd tight enough tht if there's somethg in ther (S) space in close enough. If there's somethg in ther, you're
(9) going to pick it up. But generay, grd samplig on a
(10) two-ensional grd because you're not seeing very much and
(11) you tr to fid it.
!

(S) A: If i used it, then that's what it would be. That's (9) the way i normaly - i wil present either the spot price at
(10) the tie, or i wi reduce it.

(12) The other thg, you do a series of chanels on set

(13) spacing, lie undergrund. You know you have a vein along a
¡ 1
"!

(11) Q: Why would you reduce it? (12) A: You know, it's like a fudge factor. It's (13) contigency. If the gold price drops a little bit, it just
(14) gives you some room for error. If i said $400, i would (15) guess - i don't know ths for a fact, but knowing my habits,I
(16) would guess it was around $ 4 20 back then, bu t i don't know that

(14) tuel and you'll cut a sample every 5 feet and you'll take the

(15) average of those samples in order to get an average grde for

(16) that particul section.
(17) Q: Now, th .08 tht we were speakig about a moment
I

(17) for a fact. It may have been right at $400. I don't know.

(1S) ago was estiated, then, lookig at both New Cinch and your own
(19) results?
(20) A: Yes.
(21) Q: But it's not a mathematical calculation?
¡

(1S) Q: Does the mier necessarily get 100 percent ofthe
(19) current spot price when he sells the gold?

(20) A: I don't believe so, but I don't know that part of
(21) the game. I don't sell gold. I th it depends upon the (22) fieness of the gold and what it's going to take for the buyer (23) to extact - you know, separate out the silver and the copper
(24) and whatever else you have in the gold.
(25) I worked at a gold mie in the Mojave Desert, and we
Page 41

r
j\

(22) A: No. It's an estiate. I mean, an estiate is alo
(23) a mathematical calcultion, but it's not a calcultion tht was
(24) based on weighted average of a set grd samplig progr, if
(25) tht's what you're gettig at.

¡ ¡

!
~

Page 43

(1) Q: I understad.

(2) A: One thg about geology - and it applies to mig
(3) geology as well as any other geology - it's an interpretive
(4) science. There's a lot

of interpretation of data.

IS) Q: Now, you also mention later on, "a substatial"(6) near the bottom of the page - "A substati portion of the

(1) transported our fished product, our gold, to a refier. You (2) asked me about tht term.That was the rermer, and the light (3) goes on.And they paid based on how dificult it was, what it (4) was going to cost them to turn it into gold, pure gold, or as (5) close as they could get it. So I'm sure there's a reduction (S) there, dependig upon our product.
(7 Q: Do you recal what the percentage was that they paid

(7 $32 per ton of ore would go to exploration, feasibilty

(S) anysis, stripping, mig,haulg, mig, and other
(9) operational costs."Wht did you mean by substati?
(10) A: I said substatial because I knew tht it would be a

(S) you?
(9) A: No. I wasn't involved in that. I just went along

(10) and delivered it.
(11) Q: Okay. Could we look atA-17, which is the
(12) Pre1iary Feasibilty Study by

(11) fai portion, but I didn't know what it was because I hadn't(12) I'm not a mig engieer. I don't have the costs of al of (13) those items at my figertips. I can make a rough estite(14) you know, in the industr, you can make a rough estiate. You (15) can say, well, it costs about 250 bucks a foot to drive a (1S) tunnel. That's one of the thgs that was kid of an industr (17) stadad in those days.

Watts, Griffiths & McQuat?

(13) A: Gotit.
(14) Q: Do you know

anytg about how ths report happened

(15) to be written?

(1S) A: I know some of it. The geologist was Hugh Clayton,
(17) if I'm not mistaken. Let me make sure I have the right guy Yeah. Hugh (1S) here. Did he have a certicate page in here?
(19) Clayton.
(201 MR. MCBRIDE: Page i6?

(1S) But those thgs realy don't mean anytg because
(19) those costs var greatly upon whether you're on had ground or
(20) dicey ground or easy ground, whatever, who's doing the work,

(21) whether you're going to go diesel or trck.There's al these (22j dierent factors. So when you doa real cost anysis, you go (23) though and you itemie and you know al the blue book prices

(21) THE WITNESS: Yeah.
(22 A: And the geologist Hugh Clayton came out representig

(24) for thgs. I'm trg to make a rough estiate, but i don't
(251 want to overestiate my case. i don't want to say that i know

(23) Watt, Griffith & McQuat. They had an arrangement with And he was there in the (24) Mr. Aloisi. I assume it was a lease.

(25) same way that I would go out for other people to assess the

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Case 1:95-cv-00650-LSM

Document 129-3

Filed 03/05/2008

Page 5 of 10

Thomas Ferrero Alfred Aloisi v. United States of America

1 2
3

4 5

6 IN THE UNITED STATES COURT OF FEDERAL CLAIMS
7

ALFRED
8

ALOISI,

et al. ,

Plaintiffs,
9

vs.
10
UNI TED STATES OF AMERICA,

No. 95-650L

11

Defendants.
12 13 14 15

DEPOSITION OF THOMAS FERRERO
16 17 18 19 20 21 22 23 24 25

Thursday, November 1, 2007
9:18 a.m.

Reported By:

CRAIG W. WOOD, RPR, CSR No. 9789

__~~"n~7."1.:""'" ....~i~.'~.,.,;.!-."'=."l,.hl.=-c.~,'..æL-""...:-"~..:-~~A:"'.:\:.~",.".-,~=_-:".._(t..,,.'_',:-_'~:.'_~-&~-i''~'~'_Io~~~;:J':l.,"x.'"t.,::';2"~b==;"

CRAIG WOOD REPORTING
Redding, California --- (530) 244-0789

Case 1:95-cv-00650-LSM
Thomas Ferrero

Document 129-3

Filed 03/05/2008

Page 6 of 10

Alfred Aloisi v. United States of America
Page 2
Page 4 ~
1

I

2

APPEARNCES
3

2
3

4
5

For the Plaintiffs:

FOLEY & LARNER
Washington Harbour

4
5

6

3000 K Street, N.W., Suite 500 Washington, DC 20007-5101
(202) 295-4017

7
8

6 7
8

BE IT REMEMBERED that on Thursday, November 1, 2007, ~"' commencing at the hour of 9: 18 a.m., of said day, at the ~ Klamath National Forest, 1312 Fairlane Road, offces of ,ï Yreka, California, before me, Craig W. Wood, a Certified 1j ii J Shorthand Reporter in and for the State of California, r' "~ there personally appeared

THOMAS FERRRO,
who, being first duly sworn by me to tell the truth, was examined and testified as follows:

BY: LAWRENCE G. McBRIDE
9 10

For the Defendant:

9
10
11

~ ~ ~ ~ :j ;; 1

II
12
13 14

DEPARTMENT OF mSTICE Environmental & Natural Resources Division 601 D Street, N.W. Washington, DC 20004 (202) 305-0238 BY: BRUCE K. TRAUBEN

---000--EXAMINATION BY MR. TRAUBEN: Q. Please state your full name for the record. A. Thomas Paul Ferrero. Q. Mr. Ferrero, my name is Bruce Trauben, I represent the United States, the defendant in this action of Aloisi, et aI, versus the United States. And I understand you've been deposed in this action previously?
A. Yes.

12
13

14
15 16

~ ~ 'I ~ ~ ~ ..j ii 1 " :1 ~ 1'1 I '1 ~ il !I ~ ,I " " ,.1 H (~ :1 :1 "'

;

Also Present: "

15

Fred Aloisi
16 17

---000--18

17 18 19

20
21

19

20
21

22
23

Q. SO I'm going to forego the normal preliminaries
you, though, that if

22 23 24 25

24
25

of explaining the rules of a deposition. I wil remind you need to take a break for any
reason, just say so and we'll tae a break.

Page 3
1

Page 5 J.
1

A. Okay.

'J " '-1 ,

2

INEX
3

2
3

by having you take a look at Plaintiffs Exhibit A-171.
Q. Can we star off

J
11 ~ ",' ~

EXAMIATION BY:
4
Mr. Trauben

Page
4

4
5

A. (Reviewing document.) Okay.

Q. What is Exhibit A-I 71?
A. It's the cert field notes ofa survey of the

5

6 7
8

6
7
8

9
10
11

9 10
11

12
13

12
13

14

Klamath Blacksmith Tunnel by H. Behrens, done in 1936. Q. And what is this -- what do these notes show? A. They show the bearings and distances from point to point, mapping the course of the Blacksmith Tunnel and some ofthe side workings off of it. Q. And based on these notes, is it possible to locate the tunnel in the field? On the ground? A. Based on these notes?
Q. Yes.

~ ~

~ l¡ ~~ ~ " .,

14 15 16 17

EXHIBITS

15

NO DOCUMNTS WEREMARKD AS EXHBITS
18 19

16 17 18 19

A. No.
Q. And the last page, is that a sumar of the

notes that you created?
the data in the notes. Q. And the different -- I'll describe it for the record, there appear to be five depictions surrounding a line that was like three parallel lines which are running northeast to southwest.
A. This is my plotting of

20
---000--21

20
21

22
23

22 23

24
25

24 25

A. Uh-huh.

Q. Does this -- your graphical representation show
2 (Pages 2 to 5)

CRAIG WOOD REPORTING
Redding, California (530) 244-0789

Case 1:95-cv-00650-LSM
Thomas Ferrero

Document 129-3

Filed 03/05/2008

Page 7 of 10

Alfred Aloisi v. United States of America
Page 30 Page 32
1
A smaller percentage if that's going 1200ths or 1300ths of

1

2
3

A. Boy, at that time I believe they were down in the ET, but I'm not i 00 percent sure at this point. Q. Do you know whose centrifuges they were?

you're running material

2
3

an ounce, you'll have

a higher percentage of coarse gold.

4
5

A. Libert's.

4
5

Q. Libert was leasing them. Do you know?

6 7
8

A. I think Libert bought them. But I really
don't know for sure. They were originally part of the

6

7
8

ET Placer operation.
Q. What's the capacity of

9 10
11

the centrifuge?

A. I think they're 1,000 tons a day, but I don't really recall for sure at this point. It depends 12 upon -- the capacity of the system depends upon the type 13 of material you're running and how close of a cut you're
14 15 16 17 18 19
tring to make out the product end.

9 10
11

12
13

Q. Is the material being tested in 1989 in these centrifuges from dumps or from apex? A. I don't recall now. I think it was both, but I don't know for sure. tests done on dump Q. Do you recall the results of material with respect to whether the dump material, for example, from the Klamath dump, whether that had a majority of the gold in fines rather than coarse gold? Do you understand my question?
A. No.

14
15

Q. Do you know whether the centrifuges that were being tested proved to be adequate?
A. Yes.

Q. And when was that shown?
A. The exact date, I don't recalL.

16 17 18 19

Q. Okay. Was the Klamath dump material tested for percentage gold? A. Yeah. Numerous times by many different people. Q. And was the gold at the Klamath dump considered to be coarse or fine?
A. It was a mixture. What I determined from the

20
21

Q. Was it in 1989?
A. I believe it was in 1989, but I'm not even sure

20
21

many samples that had been done by others and also by us was that there was generally a background fine gold of
somewhere around 8 to 900ths. It varies, but that's

22 23 24 25

of that.

22
23

Q. What factor makes them adequate? How is it that some centrifuges may be inadequate versus an adequate centrifuge?
Page 31

24 25

the gold that was-the gold that was between that grade and higher, like if
kind ofan average. And most of

you had a 1200ths, you'd have about 400ths that would be
Page 33

1

A. If

you get gold out of

the bottom end, then
the recovery?
you

1

coarse gold as a rule of

thumb. That's what the data

2
3

it's adequate, basically.
Q. Is it based on the percentage of A. If the -- if the test is done that way, if

2
3

suggested. And is carried through every test we've ever

1 J '! -¡

4
5

4

made. Q. Just for the record, so it's clear because

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6 7
8

9
10
11

12
13

14 15 16 17 18 19

20
21

weigh it going in and weigh your midlings and you weigh 5 we're not identifYing any unit, it's my understanding 6 that the unts are ounces per ton. Is that correct? you do it in that kind of detail, then 7 A. Yes. you can generate those kind of numbers. 8 Q. Sometimes abbreviated OPT? Q. Was that done in this case? A. Yes. A. I don't think so. The question of adequacy in 9 this case was would the centrifuges catch the coarse 10 Q. SO the centrifuges that were being tested in 11 1989 were not intended to recover fine gold? gold that was in the low grade deposits, which it did 12 A. No, they were not. There's a -- you know, sort do. 13 of a definition question in terms of what you call fine Q. Not the fine gold? A. Not the fine gold. 14 and what you call coarse. Coarse -- the fine gold that 15 I'm talking about that we weren't trying to get was Q. Between the fine gold and the coarse gold, was the greater percentage of the gold in fines? 16 very, very fine gold. 17 Those centrifuges can catch some fairly fine MR. McBRIDE: This is in the area we're -18 materials. But we're talking about microscopic gold we we're presumably getting into opinion. But that's quite all right and he'll proceed as it's this kind of 19 weren't trying to get, which is in the background I was 20 talking about. deposition.
your tails, if

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THE WIlNSS: The answer to that is it varies
because the higher the grade of the material, the higher
the percentage of coarse gold. So if

21

22 23 24 25

22

a note in the middle of

Q. Can you take a look at page 4 in A-22. There's the page. Is that your

1':

you're running 23 handwriting towards the bottom? 24 A. Yes. material that's going 800ths of an ounce, there's a little bit of coarse, but not very much. 25 Q. It says, "called MG." Is "MG" Mark Gavard? -" -" ~..,,"'-_'_~,.~_,-,,~,.;,,-,,_; ",,",-:,;.::"".'~,;'-~:',~:!'-_~i,~_"'J.l,"~"',,_""_ ....-",r'_.,._,);"""\'"''"l~.'_-._.__~., ", __'-,.'_,i_:i_'.::~_=-",.,"-''_~'='''~'.L_~~t&~~=.,=",-",.''~~,l=""""'-~~1cC''~''~~~,~~~~~'l~

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9 (Pages 30 to 33)
CRAIG WOOD REPORTING
Redding, California (530) 244-0789

Case 1:95-cv-00650-LSM
Thomas Ferrero

Document 129-3

Filed 03/05/2008

Page 8 of 10

Alfred Aloisi v. United States of ~erica
Page 66
Page 68 l
1 show the possibilties of where it might go. We hadn't 2 decided at that point exactly what we were going -3 whether we were going to include a cyanide circuit.

1 Q. Or at any point?

2 A. No.
3 Q. SO, to your knowledge, then, did you discuss
4 with Mr. Lee and Mr. Buchter the potential use of

the

4 We had been advised that it was going to be
5 diffcult to get a cyanide circuit. But I also knew

5 cyanide leaching operation in the Eddy Gulch mines?

6 A. I must have. It's listed here in my list of 7 topics.
8 Q. Was this -- to your knowledge, is this the
9" first time use of cyanide came up in discussions

6 from my own experience that I had worked at operating 7 cyanide mines and that it certainly wasn't impossible.

8 But I was sort of waiting for the process that was going
9 on within the company to fall out.
10 Each time we made these plans, they were

1 0 regarding --

II A. No. I think it was in plans that led up to
12 this, in the plans of operations.
13 Q. To use cyanide?

11 basically yearly intervals because we were on this one
12 year renewal process. And they vary. Sometimes we

14 A. Yes.
15 Q. In what?
16 A. I'd have to dig. You want me to look?
17 Q. Well,

13 think we're going to use cyanide, sometimes we don't. 14 But that was because we were in the process of testing
15 the effciency of it and weighing the regulatory

16 problems.

actually, let's take a look.

17 Q. Okay. Just so everybody is clear on the record
18 and everyhing, the cyanide circuit that you're

18 A. I have them all in sequence right here.
19 Q. Yeah. Give me just one second.

19 referring to is not the heap leach method?

20 A. We may not have included it in the plans. I
21 know we were workig on the testing for it long before 22 that. Let me look. 23 Q. Let's go back a couple months in time and look 24 atPlaintiffsA-144. 25 MR. McBRIDE: Show marked as the same as Forest
Page 67

20 A. Absolutely not. No.
21 Q. Okay. 22 A. No. It's a carbon and pulp vat leach, which
23 takes place in a big tan and you build big concrete 24 containments that hold more material than the tank 25 holds. So even ifthe tan dissolves or it all empties
~ :j ~

.;

Page 691
lout, it's all contained. And the tailings are washed
~ 'j ij ~ :1 .'1 ,ì ~ :;1 .;

1 Service 76. But, yes, he has it now.

2 BY MR. TRAUBEN: Okay. Thank you.
3 Q. Is document A-144 a memorandum that you wrote
4 to the Forest Service dated March lIth, 1991?

2 and the cyanide is recirculated into the system. So
3 it's a closed system.

4 Q. A closed system.
5 And a heap leach system is an open system where

5 A. Yes. 6 Q. And that's your signature on the second page? 7 A. Yes. 8 Q. And this was -- this memo that you sent to the
9 Forest Service was just a couple months before the

j

6 cyanide solution is leached through a pile of ore to
7 extract gold out in the environment?

8 A. Well, a properly designed heap leach system is
9 also a closed system. They haven't all worked that way.

10 meeting in May '91, obviously?

11 A. Yes.

10 But because the piles are set on a liner, a
11 heavy liner, and the pregnant solution, which is the 12 cyanide solution, after it circulates through the pile

12 Q. Okay. Can you take a look at the second page,
13 item ten.

14 A. Yes.
15 Q.Number ten. It says there in parentheses "no
16 cyanide"?

13 and collects under the pile and then is transported to
14 the pipes at the low end, it never makes contact with

15 the actual earh, it's separated by a liner. The 16 problems that have occurred in some heap leach
17 operations is where the liners have failed. Generally.

i 7 A. Correct.

18 Q. Were you informing the Forest Service that
19 there were no plans to use cyanide in Libert Mines'

18 Q. SO some containment systems that you -- I think
19 you said, the system that you were contemplating, that
20 would have required some containment system?

20 operations at that point?

21 A. At that time.
22 Q. And between March '91 and May '91, was there a

21 A. Absolutely.
22 Q. Had there been engineering designs for a
23 containment system?

23 decision made at some time during that period to use 24 cyanide in the Libert Mine operations?
25 A. No. This was something that I did on my own to

24 A. We never got to that point. 25 Q. Take a look at the next page. Looks like the

ij

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18 (Pages 66 to 69)

CRAIG WOOD REPORTING
Redding, California (530) 244-0789

Case 1:95-cv-00650-LSM
Thomas Ferrero

Document 129-3

Filed 03/05/2008

Page 9 of 10

Alfred Aloisi v. United States of America
Page 122 Page 124

1

of --

i

2
3

4
5

A. That's a sum. That's the weighted average of all ofthose different numbers above it for the east dumps, Klamath Dumps East.
Q. SO the "KD-All," the "94" in bold would be the

2
3

4
5

6

7
8

sum ofKDE-All and then the -- then what? A. Yankee Dump, YD US, KD West Libert 07 and
Yanee Dump -- well, Yankee Dump plus KDW are those two.

6

7
8

9
10
11

So what the KD-All is a sum ofKDE-All and YD plus KDW. Q. I'm stil -A. Got that?
Q. No.

9 10

A. I'll remember that next time. Q. Okay. So, now, let's see what's going on with the Klamath Apex. What numbers then were totaled to get to the KA-All full W-US 04(05) at the bottom line? A. That's minus, KA-All full -- full width. That's what that means. That means only the samples that were cut the full width of the vein. There were a number of samples through the years cut by all the different people. I
don't know if you noticed when we were talking about

ii
12
13

Giles and Halbe, in my letter I talk about how he cut a
narow swath parallel to the vein so it wasn't
representative of the full width of

12
13

A. Getting late. Q. SO now on the "0.096" in the bold, is that the 15 average of all the unweighted -- all the samples? 16 A. No. It's a weighted average of all the 17 samples. Whether I used them or not. This is just -18 this just about grade of everything. 19 Q. I'm not -- I'm not sure how you got to the 20 0.096. Is that from dividing 9.005 at the bottom ofthe 21 SA x opt, dividing that by 94? 22 A. Yes. 23 Q. And that yields 0.096?
14

the vein. That's an

14 15 16 17 18 19

example of one that I didn't include in my calculations because it didn't relate, it wasn't representative. And so -- right. The All full Width (average
20.5 feet), that number.
Q. Yes.

A. That includes the governent samples that
were -- the governent splits, the assays of the

20
21

governent splits from our samples in 2004. That's what
that number includes. The number below it, which is a number I'm

g w ~ " -.~ ~i ¡ ~

22
23 24 25
Page 123

24 25

A. I guess. That's what it looks like.

using, I eliminated those governent splits.

,\

Q. That's how you got there?

Q. And why did you do that?

!
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Page 125 r
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1

A. (Nods head up and down.) It's a spreadsheet
program and it depends upon how far you car out the

2
3

i 2
3

A. Well, it's described in great detail in the-Q. Narative.
A. -- narative. But basically the results were

4
5

decimals as to what number you end up with. Q. Well, isn't there -- I'm confused now. The-let's see, the 9.005, that would be the sum of

4
5

so anomalously low compared to every other sample that
was taken from that area, that I didn't believe them.

the 7.631

6 7
8

and the 1.74. Is that correct?
A. Yes.

6

7
8

Q. Okay. So you don't add the entire colum to
get to the nine, you're just adding from the KDE-All and the YD and KDW?
A. Right.

9
10
11

9 10
11

There was something wrong with the process. And there's an explanation of why that's a valid assumption having to do with, you know, anomalous samples in the narrative. But basically the bottom line is when you have a series of assays along an apex or from dumps -- from a series of dumps or whatever, it's
normal to have ups and downs in the grades. Parly
because that's the nature of because the luck of

~1 iJ

12
13

Q. Okay. You see the source of confusion? Because normally when you see -- I'm not arguing or
anything like that, but I'll just explain to you so you

12
13

14 15 16 17 18 19

14
15 16

the deposit and parly the draw and where you pick your
thing.

understand as we're going forward, that I would have assumed that you would have sumed the entire column to
get to the bottom of nine. And that's not what you're

samples and all that sort of

20
21

doing. A. No. I'm doing little subtotals as I work my way down. And it's -- the bottom number is the sum of
the subtotals.

17 18 19

20
21

22
23

But I didn't do something like make them italic or bold to show that they were sub titles. And so
therein lies the confusion.

22
23

24 25

24
25

Q. Than you.

But when you have a whole block of samples that run high numbers and then another set of analyses of the same samples and they're all dead, that is beyond the bounds of credibility. There's something wrong with the process that created those low assays. Because you can -- you can miss the gold, but you can't put it in during the assay. Q. How do you know that there's a problem with the low assay and not a problem with the high assay? A. I just explained that.
32 (Pages 122 to 125)

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CRAIG WOOD REPORTING
Redding, California (530) 244-0789

Case 1:95-cv-00650-LSM
Thomas Ferrero

Document 129-3

Filed 03/05/2008

Page 10 of 10

Alfred Aloisi v. United States of America
Page 126
Page 128
1

1

. Q. Well, no, I -- let's say that a sample was
taken, a split is taken by the governent, they sample

2
3

2
3

the sample. That's what a split is essentially. And
then Libert Mining processes the remainder of the

what I believed. And the only thing that I knew was going to be debated was going to be that decision. Because I just
threw out that group of

4
5

4
5

those samples by the governent.
,;~ ~ì ~~ 1 ~( d R 'j '~.1

sample. Libert Mining's results come out higher

But they just were -- they were incredible to me. They

6 7
8

consistently than the governents. The governent's
come out consistently lower. So how do you know that the governent samples

6 7
8

are anomalous compared to Libert Mining's results? 10 Could it not be that Libert Mining's results are 11 anomalous? A. In a vacuum you might be able to say that, but 12 the basic fact 13 statistically it doesn't work because of 14 that you can't -- unless you're salting your samples,
9
15 16 17 18 19

9
10
11

just didn't make any sense. Q. Let me ask -- hold on a second. A. And part of this exercise in terms of doing assays and doing metallurgical work, when you're doing
this process outside of a contest like this, when you're

12
13

doing it in industry, your calculations at the end of your hits and misses. You're developing amethodology for assaying and
the process aren't an average of

:1 "

14
15

extracting the gold. Especially in something like this.

you can't add gold to the sample, but you can miss gold

Assays aren't always the problem, but in this
case they are. So when you get to the point where you

:1 1 ~ ~~ " ~ ., =.: j

easily. Especially in refractory ore. And that's the background that adds to this.
The other par is, once again, if it was just

16
17 18 19

have a process of evaluating the material and miling
the material in a certain way, it's the end of that

individual samples, I wouldn't make that assumption.
It's when it's a whole group of samples all strung together that it's suspicious.
But, also, we go to great pains to instrct our

20
21

20
21

22 23 24 25

assayers on the proper technique for handling this type of material because it's critical because it's refractory ore. It has high carbonaceous content and it
Page 127

22 23 24 25

process, it's the results you're getting from that that is the bottom line number that you apply. You don't say, "Oh, well for three years we did this kind of metallurgical test and this kind and this kind and then we ended up with this one. And this worked really welL." You're not going to average in the failures. what you're going to be That's not representative of

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Page 129 ~
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1

has arsenopyrite, both of chemical balance of

which can mess with the
an assay.

2
3

4
5

6 7
8

9
10
11

So -- and we were told that -- in response to one of our questions, that the Forest Service let the assay lab make those determinations. That they were given no instructions. So as a geologist who interprets things and makes a call, I felt that those assays were far too anomalous and there was way too many reasons that I just described to believe them. I thought they
were not believable.

Q. When that happens, when you get disparity like that in -- from splits of a sample, wouldn't another 13 reasonable solution be to disregard all the sampling 14 that -- where those splits were so divergent?
12
15 16 17 18
A. Not for me because I trust our I mean, I'm making my call. I mean, if samples. you

doing. You're going to be doing the best possible application. And so that's the applicable number. But even with that, my economic calculations 3 4 include all ofthese steps along the way because I'm 5 trying to get as many numbers as possible. So I have a 6 built-in very conservative factor. It's just those 7 samples, they were so gross -- I mean, they were 0 where 8 we had really good numbers all the way across that 9 ridge. It just didn't make any sense. 10 Q. Now, before you disregarded certain data, like 1i that situation, did you initially include the data in 12 your calculations, see the result and then go back and
1

2

~ '.1 L 1 ~

,

i

13

look what data then could be discarded? Do you

14
15 16 17 18 19

understand my question? A. No. I mean -- well, you can see here, I have a
grade calculation that includes those samples. Right

19

20
21

22 23 24 25

have a different -- you know, as -- you know, there's a you have a different view give and take now in this. If and can make a different argument, that's fine. But I honestly wanted this thing to be an interpretive document, as well as a data driven document. I did make interpretations, and I threw away a lot of good assays of ours, too, that would have really jacked up our numbers, but they weren't the full the vein or whatever it was. And I only used width of

here. It's all full width average 20.5 feet. That
includes the governent samples. It's only the bold entry below where I've eliminated the governent samples. So I've included both calculations in here, but

20
21

22 23 24 25

when I applied it to the economic calculations, I used the bold one without the governent samples. Q. And you made that decision before runnng the economic calculations or did you run the economic
:

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33 (Pages 126 to 129)

CRAIG WOOD REPORTING
Redding, California (530) 244-0789