07/10 09:58
00:00:01 Thanks, everybody.
00:00:01 Please be seated.
00:00:03 All right, folks, we are back on record in the cranky end.
00:00:10 Elliott Treasure chest matter 3AN20-08622Civil Parties and Council are present.
00:00:15 Jury is out.
00:00:16 Ready to proceed?
00:00:17 Mr. Brzezinski?
00:00:18 All right.
00:00:18 Madam Clerk, do you want to give the jury?
00:00:28 While she's doing that, apparently one of the jurors poked a head in here.
00:00:32 I'm going to give them a brief discussion about that point.
00:00:36 Mr. Robertson handled it perfectly.
00:00:38 There's no issues.
00:01:03 You're a Christian, you swear.
00:01:04 You can say I swear or I affirm.
00:01:08 That's the secular and religious.
00:01:16 Seth kroenke v Treasure chest LLC
00:01:44 Welcome back everybody.
00:02:08 Thanks.
00:02:08 Please have a seat
00:02:15 So, ladies and gentlemen, two quick housekeeping details.
00:02:18 First, we've given you notepads and a pen, once again, at each break and then also at the end of the day.
00:02:24 Make sure you leave those on your chair.
00:02:26 We're going to identify them for each of you so that they're your notes and your notes alone.
00:02:32 You're free to take notes as you choose, but you don't have to.
00:02:35 Second, I should have explained that when we're on break,
00:02:39 There are times when I have to take things up with the lawyers in the courtroom outside your presence.
00:02:43 So when we're ready for you to come back in, we'll come get you.
00:02:48 And so if you don't mind, please stay around the jury room to make sure that you're not coming into contact with people who may be wandering the halls in the back.
00:02:58 And then as soon as we're ready for you, we'll come and get you.
00:03:00 So there are also times when
00:03:03 I say it'll be a 10-minute break, and then 10 minutes turns into 15 or turns into 20.
00:03:07 My apologies in advance.
00:03:09 That happens on occasion.
00:03:10 We'll try to keep them moving as quickly as possible, but please don't hold it against anybody if the breaks run a little bit longer than I initially anticipate.
00:03:20 So with that, I think we are ready for evidence.
00:03:23 Mr. Brzezinski.
00:03:24 Thank you, sir.
00:03:25 Your Honor, the plaintiff calls Mr. Seth Kroenke to the stand.
00:03:28 Mr. Kroenke, if you would come forward, please.
00:03:38 Seth Kroenke v Treasure Chest LLC Seth Kroenke v Treasure chest LLC Seth Kroenke v Treasure chest LLC Seth Kroenke v Treasure chest LLC Seth Kroenke v Treasure chest LLC Seth Kroenke v Treasure chest LLC
00:04:11 For the most part, we are a construction company.
00:04:16 We specialize in concrete construction and civil construction.
00:04:23 We also have a division that pumps concrete and now a division up on the North Slope in Peru Bay.
00:04:30 For those of us who aren't in the industry, what is civil construction?
00:04:34 Civil construction is usually used to refer to any type of construction that's horizontal.
00:04:40 So, earth moving, property development, mining could be civil construction, so anything that relates to the dirt.
00:04:51 Well, can you tell us how you became to own a construction company?
00:04:57 So, I grew up in the Midwest on a farm in Wisconsin.
00:05:05 got an undergrad degree in Eau Claire Wisconsin I have a degree in finance with an emphasis in accounting and I always loved the outdoors so moved to Alaska in 2002 kind of chasing Alaska the mountains and the streams and the hunting and the fishing immediately moved to Bush Alaska Lake Clark specifically and
00:05:34 The gal that I was dating at the time decided to come and try it for a summer as well.
00:05:37 And so we quickly realized that Alaska is someplace that we love.
00:05:41 So we got married and spent our first 14 years in Alaska out there.
00:05:52 How did you get from the bush of Alaska to construction?
00:05:57 So during that 14 years, we learned a lot.
00:06:00 We built our own fishing lodge.
00:06:03 I learned to fly.
00:06:04 Flying was a big part of my career as a pilot guide and as a lodge owner.
00:06:10 My wife and I built everything ourselves out there and we had a lot of help.
00:06:13 A lot of good people came up from Wisconsin and helped us to do that.
00:06:17 Even my great uncle helped with the cabinets for the lodge.
00:06:22 During that tenure, one of my fishing clients got to be a really good friend.
00:06:25 He was involved in concrete construction down in the lower 48.
00:06:31 built dairies kind of all over the lower 48 and was passionate about concrete.
00:06:36 I would say that passion really spilled onto me.
00:06:38 He gave me the love for concrete and the love for construction.
00:06:42 He saw how we operated in Bush, Alaska and the logistics out there and how well we did with it.
00:06:48 He was very impressed.
00:06:50 So him and I started Remote Alaska Solutions February 2012.
00:06:52 He was also really concerned about all the flying that I was doing as a pilot guide with a lodge.
00:07:01 You're doing a lot of flying and weather that's not very favorable, so it's risky.
00:07:08 I think his goal was to try to get me out of that space and into a space that's a little safer.
00:07:15 That's how we started Remote Alaska.
00:07:17 You said you started Remote Alaska Solutions in 2012.
00:07:21 What kind of projects has Remote Alaska Solutions built in, I guess, 12 years now?
00:07:27 It's been a really fun, I would say, adventure.
00:07:31 We've built a lot of hangers, we've built a lot of custom homes, we've built banks, we've built terminals for air taxis in Anchorage, Lake Clark Air specifically.
00:07:44 I think we built that in 2020 and 21.
00:07:48 We've built warehouses and point of sale places.
00:07:54 So we have a pretty wide variety of construction projects that we've done.
00:07:58 We've done a lot of subdivisions, so being
00:08:01 That I love aviation.
00:08:03 We built two air parks at this point, and we're on our third subdivision now.
00:08:09 It's a lakefront property.
00:08:12 Where are these projects that you build?
00:08:14 Are they in Anchorage, in the Valley?
00:08:16 Where are they, sir?
00:08:18 Now, a lot of our construction projects are more on the road system than off, although right now we're helping
00:08:31 The church that we went to out in Port Allsworth, they're doing a big addition, so they engaged us almost two years ago to help design and we kind of partnered with them, came alongside them and it was a way to give back.
00:08:43 So I have a crew out there right now pouring concrete in Lake Clark.
00:08:49 Maybe some of us aren't familiar with where Lake Clark is and how does one get there?
00:08:54 Lake Clark is in Bush, Alaska, so it's accessible only by airplane.
00:08:59 You can get there by boat, but it's, I think, three or four portages.
00:09:04 So that's how we get a lot of our material there for the construction.
00:09:08 It's the cheaper way, but it's also longer.
00:09:10 It takes quite a while to leave Anchorage and get all the way to the job site.
00:09:16 DC-6s are able to land there as well, so they can haul about 27,000 pounds per load.
00:09:21 So that's another good way to get material there, but it's pretty expensive.
00:09:27 Other than the church that you're expanding, how many other projects, as you say, in the bush have you done?
00:09:33 It'd be hard to count them.
00:09:34 Choose the largest ones.
00:09:39 Probably 20 or 25.
00:09:41 We started the company in Bush, Alaska, so logistics are everything.
00:09:47 What do you mean by that?
00:09:51 If you don't plan properly, success is going to be elusive and very hard to achieve.
00:09:59 With any project, a lot of planning has to go into it, but specifically with Bush projects.
00:10:04 If you forget a 2x4 out there, that 2x4 turns from a $4 2x4, a $5 2x4 into a $500 2x4 if you have to charter an airplane to get it.
00:10:09 Incredible planning has to go into
00:10:18 Bush Projects to achieve that logistical level to earn that respect or that success.
00:10:25 You mentioned this church project in Lake Clark.
00:10:30 Where is your business located?
00:10:33 Our base of operations is Palmer.
00:10:35 You have to get equipment from Palmer to Lake Clark?
00:10:39 Yep.
00:10:42 What kind of equipment for those of us who aren't in the industry?
00:10:44 Tell us, how big is this equipment?
00:10:46 What are you needed for and how does it work?
00:10:48 So over the years we've shipped a lot of equipment out to Lake Clark.
00:10:51 Concrete trucks, excavators, bulldozers, telehandlers, forklifts, and then all the building products.
00:11:00 So, you know, hundreds of thousands of pounds.
00:11:03 So you don't mean miniature concrete trucks, it's just trucks that we see on the road?
00:11:07 Yep, big tandem axle dump trucks with concrete plants, mobile concrete plants in the back of them.
00:11:15 How did you go from
00:11:18 remote Alaska solutions running your business to be interested in gold I think I've always had an interest in gold on I've always loved civil construction it's probably the the thing I'm most passionate about on I love meeting a piece of property in its raw form in in in on I I really appreciate that the beauty of it then in and it's really fun to be able to on at input into that property and develop it in a way that
00:11:46 multiple people can enjoy it I've really enjoyed that and I think you know anybody who loves civil construction or dirt work I think having an opportunity to mine gold these little you know pieces of value nuggets in the ground it's just it's just it's really a fun process I think to me it it it would provide an opportunity to be in the wilderness with my family to get my kids involved growing up on a farm
00:12:16 was a really big deal to me, so I wanted to try to provide an environment similar to that for my kids and teach them how to work.
00:12:25 Do you follow the price of gold?
00:12:29 I do, yep.
00:12:31 What's it today?
00:12:33 This morning it was, I think, just over $2390, $2390.
00:12:34 Okay.
00:12:35 Let's turn to, how did you meet Mr. Elliott?
00:12:46 So I met Randy in April of 2020 through a common acquaintance, Wayne DeVore.
00:12:55 Where did that meeting take place?
00:12:57 At my hangar.
00:13:01 And what did you two talk about?
00:13:02 Well, talked about a lot of things.
00:13:09 Randy is a dreamer and he's got a lot of a lot of really cool stories and so there was lots of stories he brought gold with them I was interested in investing in some gold and so the gold he brought were large flat like nuggets it was it was pretty impressive actually and so he had a whole box he called it his heirloom gold so
00:13:38 Tell me more about what drew you two together.
00:13:43 Well, I'm a dreamer too and an entrepreneur, so of course I like good stories and I like opportunity and that's kind of what makes me tick.
00:13:52 So, you know, I saw a gentleman who appeared like he had been successful with his heirloom gold.
00:13:58 He talked lots of stories about Dan Creek and the amount of time he'd spent out there and
00:14:03 You know, kind of right at the base of the Wrangles, which I hadn't spent a lot of time in the Wrangles.
00:14:07 That was one area of the state that I hadn't had a chance to spend a lot of time in, so that was appealing to me.
00:14:13 I love seeing new things.
00:14:16 And then, you know, it was apparent that Randy needed an exit plan, and he didn't have a good one in place, and so it seemed like there was an opportunity there to build a new relationship and
00:14:32 That we could both find success in that.
00:14:34 So how did the potential purchase of this mine, the sale and purchase of this mine come about?
00:14:39 I mean, it was a moving target.
00:14:46 We talked about a lot of different things, about a lot of different paths that could be taken, you know, purchase now, purchase later.
00:14:57 In my opinion, I needed proof, so I needed to see the mine.
00:15:01 He had no real logs to speak of, nothing that he could show me that could show coring samples or different things that are usually involved in a transfer of a mine ownership or a purchase of a mine.
00:15:15 I didn't see any of those things.
00:15:20 I think we ultimately decided that I was going to bring
00:15:25 A crew out there with some of the equipment.
00:15:28 He was going to provide some of the equipment and we were going to do two things.
00:15:32 We were going to sample the different areas so that I could prove up for myself what was truly there or the potential that was there.
00:15:42 And then I made it very clear I wasn't really interested in proving up his mine without a scenario where at least the expenses would be recovered.
00:15:51 Did you discuss a price of the mine prior to going out there?
00:15:55 Yeah, I think at that point it was all over the board.
00:15:57 So it was like he had four or five acres down below that he really wanted to sell.
00:16:03 And then he had a stretch kind of in between.
00:16:06 And then he had another claim way up top that for all practical purposes isn't accessible but by airplane or helicopter.
00:16:16 So I don't recall.
00:16:19 I think he had talked about
00:16:22 1.2 million for the lower part and then maybe 2.5 million for the lower part and I expressed early on that I'm not really interested just the lower part one of the things that really concerned me with my first flight out there was the disarray that I saw on the lower portion so I saw a lot of contamination soil contamination a lot of equipment that was leaking oil and fuel evidence of big oil spills
00:16:50 And one of the things we do is some contamination remediation.
00:16:56 So I was very aware of the different agencies and how they would treat something like that and how serious of a concern that was.
00:17:04 And that concerned me for that lower port.
00:17:07 So when you decided to explore this opportunity, did you have a price in mind for the mine?
00:17:19 Not really.
00:17:20 I think that I needed to see proof.
00:17:22 So if the you know, if it proved that the resource was there as he claimed, which again was a big spectrum, then I think the price could be justified.
00:17:36 So I don't think any I didn't have a preconceived notion.
00:17:39 And were you going to buy this just for yourself?
00:17:41 No.
00:17:43 That's not something that I could just afford by myself millions of dollars.
00:17:47 So you'd have to bring on investors and
00:17:49 That's one of the ways I've been able to build our business is by good relationships.
00:17:53 So you bring in good people and you have good ideas and and then You can move forward You talked about these land development projects.
00:18:03 Are those your own projects?
00:18:06 I've done Maybe one by myself, but for the most part I bring on partners so most of them have had different forms of partnerships that usually they act as a silent partner and
00:18:20 We manage the project and build out the project and then they get their return So now You had these discussions with mr. Elliott and you said you flew out there.
00:18:31 Is that correct?
00:18:32 Yeah, okay Let me turn your attention to exhibit 15.
00:18:37 I believe you've got that in front of you and We will endeavor to put it up on the screen for everyone.
00:18:42 I
00:18:46 And if it's easier for you to stare at the screen, you're welcome to, but you've got copies in front.
00:18:50 Okay.
00:18:51 What are we looking at?
00:18:53 That's a picture of the lower area, the lower four or five acres, whatever it is.
00:19:00 That was likely a picture that I took upon getting my first look at the mine.
00:19:05 Okay.
00:19:06 Let me turn you to the next picture.
00:19:09 What are we seeing here?
00:19:11 That's a picture taken from my airplane of the Nizina River.
00:19:17 The Nizina has to be crossed 10-15 times to get from McCarthy to Dan Creek.
00:19:26 You can see how braided it is.
00:19:28 That picture probably doesn't even do it justice for just how wide the river corridor is and how treacherous it can be.
00:19:36 Let me turn your attention to our next picture of exhibit 15.
00:19:39 What are we looking at here?
00:19:41 It's a nice sunny day.
00:19:42 Yeah, that's again the lower part of the mine.
00:19:44 You can see up in the cut is where you get up into the upper parts, the cut right in the middle.
00:19:51 But the lower part, I think, is a runway that Randy had been building for several years that he was operating off of.
00:19:59 And that's where you landed?
00:20:01 I landed below there.
00:20:02 There's more of a public part of the runway behind this picture.
00:20:07 So usually I'd land there and then taxi up this one.
00:20:12 Who did you bring with you on this initial flight?
00:20:16 I believe the first flight we went I brought Frank Martin and Kevin Clark, okay So what happened after this flight out to the mine I Don't recall exactly but I think I think we
00:20:39 We went out.
00:20:40 I had Frank with me.
00:20:41 Frank is my lead civil superintendent.
00:20:45 So he's in charge of our Dirt Division.
00:20:47 Frank is, I think, approaching 70 now.
00:20:51 And he's kind of on the tail end of his career.
00:20:53 And he has a passion for gold mining.
00:20:55 Gold mining has been a big part of his life, of his entire career.
00:20:59 He has his own patents and claims in the Petersville area.
00:21:03 So I really wanted to get Frank's opinion of the opportunity
00:21:09 and Kevin is kind of my he's my at that time he was my general manager now he's my vice president so he's kind of my right hand man and very much value their opinion so when we got back there was a lot of discussion around it and I think we probably called a meeting with Randy and there was probably quite a bit of text messaging back and forth or phone calls so as you said earlier you're going to have
00:21:39 If you're going to explore out there, you're going to have your people do it.
00:21:42 Who did you choose to work this project?
00:21:49 The project was more than just exploring, more than just testing.
00:21:53 The agreement that Randy and I came to is that they had
00:21:59 plants, wash plants and go plants that were fairly small in nature and kinda had a lot of breakdowns and they were pretty rough.
00:22:10 So the plan was to bring my lead fabricator out there to use all the components that Randy could supply to put together a nice large wash plant that was reliable and capable of running more material than what they had previously had.
00:22:25 Who's your lead fabricator?
00:22:27 Travis Turnbull.
00:22:28 How good is Travis?
00:22:30 He's the best fabricator I've ever met.
00:22:35 Tell us what a fabricator is.
00:22:36 What does the job entail?
00:22:38 It's mostly metalwork.
00:22:42 A finished carpenter is really good with wood.
00:22:43 A fabricator is really good with steel.
00:22:45 They know how to see raw steel and put it into a project or into an application that produces a machine or fixes a problem.
00:22:56 So it's a lot of cutting and a lot of welding and a lot of angles and a lot of thought.
00:23:02 I think one of the things that makes Travis so good is he can see the end result way before he gets there.
00:23:10 So his steps are very efficient and methodical and it's kind of fun to watch him.
00:23:16 When the sparks start flying, the best thing to do is just step back and watch.
00:23:21 And who's going to manage this project on a day-to-day basis?
00:23:24 We were going to manage it.
00:23:26 That's you and who else?
00:23:27 Me and Kevin.
00:23:30 How long has Mr. Clark worked for you?
00:23:33 I think Kevin came to work for us in 2015 or 2016.
00:23:39 And you mentioned Frank Martin.
00:23:42 How long has he worked for you?
00:23:44 He came to work for us before Kevin did.
00:23:45 I think probably 2014 Frank came to work for us.
00:23:52 and Mr. Turnbull Travis has been with us probably five or six years so before you committed to this project did you have any conversations with Mr. Elliott oh yeah we had quite a few conversations in person and over the phone and
00:24:16 I remember at one point he was super excited about buying a big plant in Wasilla that he asked me to come and look at with him.
00:24:22 Yeah, there were quite a few conversations.
00:24:25 Did those conversations culminate in a contract?
00:24:29 They did.
00:24:30 A first contract.
00:24:31 I think we went out there one more time before.
00:24:35 Again, the dates are a little bit fuzzy, but I believe we flew out there again.
00:24:39 Myself, Kevin, and a friend of ours, and we spent the whole day out there walking up
00:24:45 all the way up Randy hadn't been up there and I think he said 20 or 25 years up where sir way up the the mine in that cut how big is that mine the claim or the mine start with the claim it's pretty sizable it goes way up and it kind of follows the creek on both sides and I mean a couple miles up up the creek so we're talking how many acres 500 maybe okay
00:25:17 The history was fascinating.
00:25:19 The whole area had been mined before.
00:25:22 Randy, this was one of the things that was fun to listen to.
00:25:26 He had a knowledge of the early 1900s and the water cannons that were used.
00:25:33 It was fun to hear that history and even see evidence of that.
00:25:37 Where did the discussions regarding this contract take place?
00:25:41 Most of them were at our office.
00:25:44 That's in Palmer?
00:25:45 Yes.
00:25:47 Let me turn your attention to Exhibit 1, and it's in your folder, and once again, we'll put it up on the screen for the jury, and if you wish to, you're welcome to look at it.
00:25:55 Okay.
00:26:01 Do you have a copy?
00:26:02 Yep.
00:26:02 Okay.
00:26:03 And is that the contract that you and Randy signed?
00:26:10 It is.
00:26:10 Okay.
00:26:11 And what's the date on that?
00:26:12 4-5 of 2020.
00:26:17 is the date, but the signature date I think is 5-5.
00:26:21 Let's scroll down and see.
00:26:40 Let me turn your attention to the fourth paragraph.
00:26:49 And we'll just blow that up a little bit so everybody can read it as well.
00:26:52 All right.
00:26:53 Can you read that to us?
00:26:56 Randy will provide full and unrestricted access to the Dan Creek Placer Mine property, excluding Idaho Gulch, multiple 400-class excavators, materials to build new screen deck plant with the centrifuge, tools to build the new plant, service truck mobilizations from McCarthy to Dan Creek, as well as any other tools and equipment that is present
00:27:19 on the Dan Creek plaster mine property.
00:27:20 It is commonly agreed that supplying this agreement will in no way infringe upon the operation that is ongoing with Charlie, Kelly and crew.
00:27:28 Okay.
00:27:31 And why don't you read the next paragraph that starts with Seth will provide.
00:27:34 What are you going to do?
00:27:36 Seth will provide two Stewart and Stevenson dump trucks, a new Saney 135 excavator, Frank's trommel, Travis's time to fabricate new plant,
00:27:47 miscellaneous parts and supplies to fabricate new plant, a sleeping connex, as well as other qualified persons needed for the testing that will be expensed to the common expenses.
00:27:56 Okay.
00:27:57 And let's, this is a very short contract, so let's scroll up a little bit.
00:28:02 The other way, sorry.
00:28:03 Scroll down.
00:28:05 There we are.
00:28:06 So what was the common goal of this contract?
00:28:11 The common goal was to evaluate
00:28:16 and a mine at this point.
00:28:20 I made it very clear from the beginning that I'm not interested in just going out there and racking up a bunch of expenses that prove up his mine.
00:28:28 When you mean prove up, what does that mean?
00:28:30 Well, evaluate.
00:28:32 Test in various locations and prove that the resource that Randy is claiming is truly in the ground.
00:28:44 So what is, so go ahead, I interrupted you.
00:28:50 The common goal.
00:28:51 What is the purpose of this contract?
00:28:53 What is the goal here?
00:28:54 The goal is to try to establish some level of proof of the resource to mine along the way to support the expenses and then to get to a fair sale price that both of us feel good about.
00:29:13 Now, the contract says you won't interfere with others.
00:29:16 Who else is out there?
00:29:19 Randy had another crew out there.
00:29:21 He called it his contractors.
00:29:25 They had one slit.
00:29:28 I had no idea of any contracts that were entered into.
00:29:31 I never saw any contracts, but I knew that they were there and I knew that they had a trench opened up and that their focus for that season was that trench and going as deep as they possibly could.
00:29:42 And did they have a name, a business logo?
00:29:45 Who was this?
00:29:46 FUBAR was their name, FUBAR Equipment.
00:29:49 Did you learn who these individuals were within this FUBAR company?
00:29:53 Well, I knew a little bit about them.
00:29:54 They had, four or five years before, had fixed one of my dump trucks.
00:30:00 So I knew of them a little bit.
00:30:01 Okay.
00:30:03 What were their names?
00:30:04 Charlie Armstrong and then his ex-wife, Raquel Luna.
00:30:09 Okay.
00:30:10 And was there another crew there as well?
00:30:14 Not that I knew of then.
00:30:18 Since then, I've learned that there's been multiple agreements that are hard to unravel and understand.
00:30:27 Obviously, as you said, this is going to be an expensive process.
00:30:32 How did you and Randy agree to deal with the costs of this operation?
00:30:38 The costs would be split evenly.
00:30:40 The efforts would benefit both party.
00:30:44 Randy's has an asset that he's believes is is worth so much but really no proof to back it up so whether I bought it or not there would be value in any kind of exploration exercise so the the intent was for the cop those costs to be split okay and as you said you're mining so you'd be recovering gold what happens to that gold you recover that again would be split 50-50
00:31:11 And a note about that, so a 50-50 split on a situation like this is, I've done quite a bit of research, is kind of outside industry standard.
00:31:20 So industry standard for a situation like this is for the leaseholder or the landholder, if they're going to lease out their property to an operator, is usually 10-20%.
00:31:30 So 10-20% of the gold is paid to the landowner or the leaser
00:31:39 for the ability to operate in that area.
00:31:42 Now, you said you discussed your expenses.
00:31:45 Are the expenses addressed in your contract?
00:31:53 They are, I believe.
00:31:55 Would you please read the section addressing expenses?
00:31:58 The following expenses will be split evenly between Randy and Seth for the purpose of this evaluation.
00:32:04 Fuel expenses incurred by Randy in direct relation to the evaluation
00:32:08 and expenses incurred by Seth in direct relation to the evaluation.
00:32:13 Do you want me to keep going?
00:32:14 Please.
00:32:17 After the expenses are accurately reimbursed to Randy and Seth, the remaining gold will be split evenly.
00:32:22 Receipts or proof of expense will need to be provided to be considered a legitimate expense.
00:32:28 Now, who wrote this contract?
00:32:32 It was written...
00:32:34 It was discussed at length.
00:32:36 Everybody was present and I don't remember who typed it.
00:32:39 It would have either been Kevin or myself.
00:32:41 Probably Kevin.
00:32:42 How long do these discussions take?
00:32:45 Usually hours.
00:32:46 I mean a whole afternoon.
00:32:53 And either you or Kevin typed it?
00:32:56 Yeah.
00:32:57 Right on the spot as we discussed the different implications and the different things that were important to each party.
00:33:04 Did Mr. Elliott object to any portions of this contract?
00:33:08 Well, I think there probably was a bit of a negotiation that happened on scene, on the spot, and that would have been reflected in whatever was written and then signed.
00:33:21 And if we can scroll just down a little bit to the signature line, is that your signature?
00:33:28 It is.
00:33:29 Right above your name, right?
00:33:29 Yeah.
00:33:31 And that's Mr. Elliott's signature right above yours?
00:33:34 Yes.
00:33:34 And that happened on the day that is on the... And what's that date?
00:33:39 May 5th, 2020.
00:33:40 Okay.
00:33:42 Let's scroll back up to the obligation of Mr. Elliott to provide equipment.
00:33:51 Now, tell me about the importance of the paragraph that starts with Randy will provide colon.
00:33:59 Why is that important?
00:34:03 We needed access to large excavators.
00:34:05 400 class excavators are 90,000 pound machines.
00:34:12 They need an overweight permit just to even go on the road.
00:34:14 They're a huge piece of equipment.
00:34:18 It's impressive how big they are when you get next to them.
00:34:22 Randy verbalized that he had four or five
00:34:25 out there already.
00:34:26 That's not something that I had to bring to the site, that he would provide multiple 400-class excavators to satisfy his obligation.
00:34:37 Why are excavators important in mining?
00:34:41 They're the primary tool to dig the resource and the overburden out of the ground.
00:34:50 As you mentioned, they're 90-ton pieces of equipment.
00:34:53 What does it take to get one of those from your company, Palmer, out to the mine?
00:35:01 I mean, it's probably tens of thousands of dollars just from Palmer to McCarthy because it's an oversized piece of equipment.
00:35:09 So it involves oversized permits, flagging trucks.
00:35:16 It's pretty involved just to get it to McCarthy.
00:35:18 And then once you get it to McCarthy, you have to, at that point, track it.
00:35:22 One of the weak links on excavators is their tracks.
00:35:25 So they're intended to dig big amounts of soil, and the tracks are used to get kind of from short distances.
00:35:33 But to track an excavator that size 15 or 20 miles is hard on it.
00:35:40 It really puts a lot of wear on it.
00:35:43 So in terms of expense and logistics, how important was the fact that Rainier would provide you with equipment?
00:35:50 It's a game stopper.
00:35:51 If you don't have a 400 class excavator on site, you don't have the proper tool to do your job.
00:35:59 And did Mr. Elliott tell you what condition these things were in?
00:36:04 I would say not fully.
00:36:07 I mean, he definitely hinted that his equipment is rundown and older equipment.
00:36:18 But frankly I had no idea to what degree until we got out there and started trying to get these things started and just saw how bad they were.
00:36:31 Do you recall when you first started to move your personal equipment out to the mine?
00:36:38 It was right around the date that the contract was signed.
00:36:42 Why so quickly?
00:36:44 Because there's a limited time.
00:36:45 What do you mean?
00:36:47 There's a limited mining season.
00:36:49 And more specifically, traveling from McCarthy to Dan Creek is dangerous.
00:36:58 Crossing the Nizina river 15 times, it's a treacherous river with deep channels and the only time it can really be safely crossed is
00:37:09 in the low water conditions, which are going to be early spring or super late fall.
00:37:14 As soon as the snow starts melting, the river comes up and it's really not crossable.
00:37:22 Tell us about the equipment that you are bringing to the mine.
00:37:28 Two off-road dump trucks, Stewart and Stevenson dump trucks that we... Can you describe those?
00:37:33 What do those look like?
00:37:34 What those are?
00:37:35 So they're highly customized dump trucks.
00:37:38 They're built off a military chassis, so 1083 chassis, which are 6x6 off-road chassis, to be specific.
00:37:47 We have them outfitted because we do a lot of developing, and most of our excavation is not on
00:37:56 hard paved or solid roads we had these specifically built for situations like this when Randy saw them he was pretty excited by them so we sent up to those and then knowing that Randy's equipment may have maybe in some disrepair we committed to bringing a brand new excavator out there that would be set up on the plant and be able to feed the point
00:38:22 which is the Sani 135.
00:38:23 Did you already own that piece of equipment?
00:38:25 No, we bought it for this project.
00:38:28 And in the range of equipment that's out there, where does the Sani 135 fit in terms of quality?
00:38:36 I mean it was a newer company that's trying to make headway in Alaska.
00:38:40 I think it's worth noting that
00:38:44 Generally speaking it's pretty hard to get a brand new excavator last minute so usually you have to plan six months in advance if you want to buy a brand new piece of equipment so you know we're already into the season in town and and so we felt fortunate just to even be able to find one okay so if I understand you correctly the first part of this mobilization is from Palmer to McCarthy correct okay what happens from McCarthy to Dan Creek
00:39:14 well you have to go there's a cat trail from McCarthy down to the to the nizina that might be maybe a 10 mile cat trail okay and then you said you have to cross the river I think you said 15 times at least it kind of changes you know based on the channels what are we looking at so that's Travis that's um my lead fabricator and he's uh
00:39:43 He's doing something that he wasn't even supposed to do.
00:39:45 So we weren't tasked with, you know, part of our agreement was that Randy would provide the mobilizations.
00:39:51 But we're a pretty adaptable crew and we're pretty easy to work with.
00:39:57 So when we see a hole, we try to fill it.
00:40:00 So in this case, Travis is on one of Randy's pieces of equipment, a maruka, in the middle of the nizina.
00:40:08 And that's an incredibly dangerous situation.
00:40:10 In this picture, the maruka stalled out and broke.
00:40:15 And you can see how fast the water is.
00:40:19 In a matter of an hour, probably, the water will peel away the gravel on the uphill side and everything will tip over upstream.
00:40:28 So in this situation, Travis is probably trying to consider if he's going to make a jump for it, how deep the water is.
00:40:36 How to even get him out of there safely without him dying, potentially.
00:40:41 Can you walk across that river?
00:40:42 No.
00:40:48 Let's go to our next picture.
00:40:50 Alright, what are we looking at here?
00:40:53 So that's the Stewart and Stevenson dump truck.
00:40:57 I don't know if that's coming in or going out.
00:41:01 The MOB in or the MOB out, but that's, again, that's a big 6x6.
00:41:06 And behind that M1083 is what?
00:41:08 That's the SANE E135.
00:41:08 Okay.
00:41:09 And that's a small excavator?
00:41:10 Yep.
00:41:10 Mid-size.
00:41:10 Small to mid.
00:41:35 And let's look at this photo.
00:41:37 What's happening here?
00:41:39 So it's the Sany crossing another channel.
00:41:43 Okay, so let's flash back to your contract for a second.
00:41:53 And if you need to take a drink of water or please help yourself, I've got a cup right here.
00:41:58 I'm good, thanks.
00:42:00 Okay, so Seth will provide.
00:42:02 Let's look at that paragraph.
00:42:07 Are you doing what you said you would do?
00:42:09 Yes.
00:42:10 Did you provide all of that equipment?
00:42:12 We did.
00:42:12 Did you provide two Stewart and Stevenson dump trucks?
00:42:18 We did.
00:42:19 And the Sani?
00:42:20 Yes.
00:42:21 And Frank's Trommel.
00:42:23 What is a Trommel?
00:42:25 A Trommel is a gold processing plant that has a tube that spins with perforations in the tube that allow the
00:42:37 The small finds to fall through and then it kind of spits out the larger rock.
00:42:41 Okay.
00:42:43 And then it says that as well as qualified personnel needed for testing.
00:42:49 Is Frank qualified?
00:42:52 More than qualified.
00:42:55 Now, you said Frank has been with you since 2014, 2012?
00:43:00 Yep, 2014.
00:43:02 And you said he's just about 70.
00:43:04 How long has he been in this business?
00:43:06 his entire life.
00:43:08 Frank has been in the civil world.
00:43:10 He's done a ton of large format environmental remediation all across Australia, and I think even some other countries.
00:43:23 Frank came to us in 2014.
00:43:28 He had been in a situation where his employer didn't take care of him, and so he was
00:43:35 somewhat untrusting when we first met, and it's been a lot of fun to provide a place for Frank to be able to retire.
00:43:43 This year I think he's going to be retiring, and I hate to see him go, but it's been a fun 10 years with him.
00:43:50 Okay.
00:43:53 Now, I believe you mentioned earlier that the first task Travis is going to have is to build a processing plant.
00:44:01 Can you tell us about what a processing plant is and what does it take to build one?
00:44:07 So a processing plant is basically a gravel screen, multiple deck gravel screen that shakes and you add water to the process.
00:44:17 Is this horizontal, vertical?
00:44:19 For those of us who have no idea, just show us.
00:44:23 So it's a big box, a big tubular steel platform that goes up and then you have different levels of screens at angles.
00:44:35 and the angle is somewhat critical so that you don't plug up the screen but you also don't want to bounce because it's shaking pretty violently you don't want to bounce the material that you're trying to capture off the screen so you have multiple layers starting with on the very top which is you know probably 12 to 14 feet high a grizzly and that's usually bars that will peel off anything that's three or four inch minus or greater and then you have another level of screen that's maybe a
00:45:05 a one inch screen and that'll peel off anything from one inch size or larger and then your final screen is a quarter inch mesh or a punch plate and what you're trying to do is get all of that material that's a quarter inch or less down into the bottom of the plant and that's where you'll have channels where the water, the slurry of quarter inch minus material and water will go across your sluice boxes and riffles and capture the gold.
00:45:34 And how long was Travis going to take to build that?
00:45:41 We didn't know for sure.
00:45:42 We figured that we could have, with the stuff that was out there, kind of the bones of the plant, we could have a plant built in four to five weeks.
00:45:54 How long did it really take?
00:46:00 Two months, seven weeks, eight weeks.
00:46:05 Part of the problem was we would have had the plant done sooner, but there was a series of disagreements.
00:46:18 Travis has tons of experience in the gravel industry.
00:46:20 He's operated hot plants and gravel plants.
00:46:23 He knows what a processing plant needs to be and how it needs to operate and the mechanical advantages and the bearing placements.
00:46:31 He's very affluent.
00:46:33 in that type of fabrication.
00:46:35 We were relying on Randy for the sluice box.
00:46:38 Randy would have had the knowledge on the sluice box for that area.
00:46:41 There's a lot of copper out there so there's some peculiarities that need to be considered.
00:46:48 It became apparent as we were building this plant that Randy wasn't really after building a successful
00:46:59 He was after an experiment using a centrifuge, and he wanted to mine fines and see how much fine gold was out there.
00:47:05 So that's one of the reasons it took so long.
00:47:09 Now, you also mentioned earlier that when you got out there, the equipment, the two 400-class excavators, weren't what you expected.
00:47:19 Tell us what you found out there.
00:47:24 They leaked oil and fuel like nothing I've ever seen.
00:47:31 Hard to start, none of the batteries worked.
00:47:34 Tracks off or falling off, you almost couldn't go 100 yards without a track falling off.
00:47:41 I mean, it was incredibly frustrating.
00:47:46 We spent 90% of our time just trying to deal with the disrepair of the equipment and getting it to a point that it could even function.
00:47:57 90% of whose time?
00:47:59 Well Travis is for sure and Frank's too I mean Frank is less mechanical than Travis but he's been around this equipment his entire life so you know Frank understands the need for grease and just different things that a piece of machinery has to have to operate successfully.
00:48:18 What were they supposed to be doing?
00:48:20 Well they were supposed to be building the plant Travis
00:48:23 and Frank was supposed to start testing immediately that's why we brought his small plant out there so he could start testing one of the things that Frank did in that first three or four weeks was in at Randy's direction was to strip a big area that was adjacent to Charlie Kelly and crew the other the other crew that was out there that we had agreed not to infringe upon Randy directed us to
00:48:50 strip an area that was adjacent to where they were at so if they had a trench going perpendicular to the creek we stripped an area parallel to the creek that wouldn't have interfered with them in any way they were committed to this trench for the year and so we spent I would say the better part of three weeks stripping off of 10 to 12 feet of overburden I mean it was thousands of yards of material
00:49:20 Who's directing your crew out there?
00:49:23 That was tough.
00:49:24 So we were trying to direct our crew, but we were getting constantly redirected and manipulated by Randy.
00:49:31 What do you mean?
00:49:37 Randy would come to my crew and say, hey, the water's rising.
00:49:43 the creek is if the creek punches through this spot it's going to flat out everybody and we're all going to have to go home for the year and people are going to die it was kind of dramatic and so he's like I need your crew because you guys are good excavators to go up and build this berm this dyke to ensure that that this didn't happen and he was working on it some himself he's a qualified excavator himself but we spent a lot of time doing stuff like that
00:50:11 a ton of time rebuilding buckets, putting tracks back on.
00:50:15 Buckets are?
00:50:16 Buckets on the excavators.
00:50:17 Mr. Elliott's excavators.
00:50:19 Yes.
00:50:21 Our equipment didn't require, we did have some issues with the Sany because of fuel issues, we can talk about that more later I'm sure, but for the most part our equipment we spend all winter preparing our equipment so that when it comes time to go, it's a short season, we're not dealing with maintenance issues.
00:50:38 Did you have to buy any additional equipment?
00:50:41 Well, yeah, we bought the Sani, like I said, and then we also had to buy another 400-class excavator eventually.
00:50:49 Where did you get that?
00:50:51 So Keith Rowland is an operator in McCarthy.
00:50:56 As with most bush villages, there's always a couple players in town that are the movers and shakers of the community.
00:51:02 They have resources and little enterprises that help support the community, and so Keith Rowland was that to McCarthy.
00:51:09 And he had a CAT 336 that I think he was willing to sell.
00:51:15 I don't even think it was for sale.
00:51:17 And I felt like it was a very gracious offer from Keith.
00:51:22 He kind of saw what we were up against.
00:51:23 And so he offered the excavator to us.
00:51:25 And did you buy it?
00:51:27 We did.
00:51:27 What did it cost you?
00:51:30 $165,000.
00:51:31 Were you planning on buying that excavator?
00:51:33 No.
00:51:34 Why'd you buy it?
00:51:35 Because we weren't able to do our job.
00:51:38 Randy was not able to provide the the former classic leaders that he promised and as soon as you get one running he give it to the other crew and so that this just went round and around we'd we get one running and he let us use it for a day or half a day and then he'd say no this gotta go to the other crew and so then we have to get another one running it try to keep it running in and and then that other one that would probably break down he said I we need this the other crew is the first my first priority with my equipment I've already guaranteed them to have equipment and that's my first priority
00:52:08 So, I mean, that went around and around multiple times.
00:52:11 At this point, how long are you guys out there for?
00:52:13 You mean when we bought the second excavator?
00:52:17 No, from the time that your crew arrived to the point that you're now talking about.
00:52:21 How much time has passed?
00:52:23 Four or five weeks, probably.
00:52:24 Okay.
00:52:26 And during that period, how much testing is going on?
00:52:32 I mean, not a lot.
00:52:34 We did a lot of stripping, a lot of maintenance, a lot of road building, dike building.
00:52:37 I mean, very little testing.
00:52:40 Road building?
00:52:41 Tell me about that.
00:52:45 You saw the picture when we got there, these mountains of gravel and no real rhyme or reason to the
00:52:54 to the lay of the land.
00:52:55 So there was multiple paths that had to get built, even to put our sleeping conics and find a suitable place to set up required a bunch of dirt work.
00:53:05 Roads going up the mine had been washed away.
00:53:07 Even roads going in the lower area had to be repaired.
00:53:16 So it was significant.
00:53:18 Is that what you're referring to?
00:53:20 Yeah.
00:53:21 I mean, just to navigate
00:53:23 you know a couple hundred yards in a situation like that required a lot of effort so roads for lack of a better term make movement easier along a mile yeah I mean one of the critical things to to civil construction is a well thought out plan a site plan so to speak where you have multiple phases and you have a plan
00:53:50 right and I think one of the things that struck me my first time out there was just how unorganized there was no rhyme or no reason or no plan that was evident to me it was just it was really hard to describe but you know try it here or try it here or set up here it was very disorganized is that what you're talking about
00:54:21 well in the background would be some of those tailing piles in the background and yeah I mean so this is that's Frank's trommel so the where the waters coming in that would have been the cut that the contractors were using and committed to for the season this area the rivers over here this area was the area that we stripped to be able to set up and test and then we wanted to mine
00:54:52 I think one thing that's... Mr. Kroenke, could you just be a little more descriptive as to where you're pointing?
00:54:57 You're just sort of pointing at the picture.
00:54:59 Can I stand up?
00:55:00 Of course you can.
00:55:02 And we'll move the picture accordingly to what you need, sir.
00:55:05 So if you could bring it back down.
00:55:06 So this is the river's over here.
00:55:08 You can see the bank.
00:55:10 So the river's coming this way.
00:55:11 Up here is where the dike needed to be made so that the river was diverted to the north, I think.
00:55:19 So that it did come through this area.
00:55:20 So that's where we spent a considerable amount of time with the boulders.
00:55:24 This here, where this river water's coming in, was the cut that the other contractors were using.
00:55:28 And this area was up here.
00:55:31 And that's all of the overburden that we removed to get down to pay dirt, the dirt that would pay.
00:55:38 I think one other thing that's worth noting is if you could scroll down, you can see the rainbow in the water.
00:55:45 That's the contamination and environmental issues that I'm talking about.
00:55:49 This is all coming from them and their equipment.
00:55:51 Them is whom, sir?
00:55:53 The contractors and Randy's equipment.
00:55:55 And I mean, this doesn't even, Fisher doesn't do it justice.
00:55:58 I mean, it was, I've never seen anything like it.
00:56:01 I mean, it's, if the EPA saw this.
00:56:06 Maybe approach, please.
00:56:06 Give me a minute.
00:56:13 Seth kroenke v Treasure chest LLC
00:56:40 All right, so folks, we've been going about an hour.
00:56:44 I don't want to give everybody a full break for the restroom unless anybody needs it.
00:56:47 But one of the things that I like to do is to make sure that everybody keeps the blood flowing a little bit.
00:56:52 So we're going to do a stand up and stretch.
00:56:55 Give everybody a chance to get off the
00:56:58 Seth Kroenke v Treasure Chest LLC
00:57:15 No, don't be sorry at all.
00:57:17 That's why I asked for it.
00:57:18 So we're going to go ahead and take five here, folks, and let people use the restroom, and then we'll come back.
00:57:54 Jury is out, folks, so if you need a restroom also.
00:58:05 Thank you.
00:58:07 Thank you.