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New Northern Sands investors speak to Howard Town Board

By LeAnn R. Ralph

TOWN OF HOWARD  —  New investors for Northern Sands Wisconsin, LLC, the company proposing to develop the 1,300-acre Albertville Valley sand mine southeast of Colfax, have introduced themselves to the Howard Town Board.

Tom Gapinske, identified as the president of Northern Sands on his business cards, was the chief spokesperson for the investors at the town board’s November 7 meeting.

The proposed 1,300-acre mine site stretches north and south along the Chippewa County and Dunn County line directly east of the intersection of county Highway N and county Highway A.

The company is working now to complete the reports required by the Chippewa County land conservation office that are conditions of the mine reclamation permit, Gapinske said.

The deadline for the reports to Chippewa County is December 31.

The nonmetallic mine reclamation permit from Chippewa County required Northern Sands to complete an assessment of the biological resources at the mine site along with an inventory of the seeps, springs, wetlands and surface waters located within the mine boundaries and adjacent properties.

The original deadline for submitting the reports was July 31, 2016, although the deadline was subsequently extended to December 31, 2017.

Paul Van Eijl, the former property acquisitions manager for Northern Sands who signed the mine reclamation permit as president of the company, has been a cause of concern for the Howard Town Board and some township residents.

The company has “new leadership” and Van Eijl is not associated with the company, Gapinske told the town board at the November 7 meeting.

At a December of 2015 meeting, out of concern for future litigation, members of the Howard Town Board refused to say exactly why they were leery of Van Eijl’s involvement with the proposed sand mine. Two town board members did, however, express dismay over Van Eijl signing the Chippewa County mine reclamation permit for the Albertville Valley sand mine as the president of Northern Sands.

When Van Eijl began obtaining leases for the Albertville Valley sand mine, more than 20 boreholes were drilled to prospect for frac sand, but the boreholes were not properly filled until Red Flint Group became associated with the project.

The founding member of Northern Sands ran out of “financial steam” during the summer of 2017 and other minority members are taking the lead, Gapinske said.

Lawsuit

Northern Oak Proppants LLC filed a lawsuit against Northern Sands LLC in Chippewa County August 15 of this year for breach of contract and is seeking $1.875 million plus interest.

The summons and complaint for the lawsuit lists Northern Oak Proppants as having an address in Minneapolis, while Northern Sands is listed as having an address in Winona, Minnesota.

Under the terms of the development agreement, Northern Oak Proppants paid Northern Sands $1.5 million as an “initial contribution,” and in turn, Northern Sands was to secure a mine licensing permit from the Town of Howard on or before August 31, 2015.

Gapinske did not speak about the civil lawsuit and whether he and the other current, active investors would — or could — be named as defendants.

Reports

Regarding the baseline study work required by Chippewa County in the mine reclamation permit, three or four reports will be submitted to the county by the end of the year, Gapinske said.

After the reports are submitted, the next step will be to bring an application to the Town of Howard for the mine license, he said.

The old Northern Sands ran afoul of the neighbors. The new Northern Sands wants to be good business partners with the county and the neighbors and the towns, Gapinske said.

Northern Sands will have to get the needed licenses and purchases straightened out, he said.

Questions

Dennis Dvoracek, town board supervisor, wanted to know if Paul Van Eijl had run out of money.

Van Eijl is no longer part of Northern Sands, Gapinske reiterated.

“We are picking up the pieces,” he said.

Tom Zwiefelhofer, town board supervisor, asked about Red Flint Group.

Red Flint was part of the old business plan, and Northern Sands will contract with another operator. Red Flint will be part of five or six on the list who could operate the mine, Gapinske said.

At previous meetings, town board members indicated they felt more comfortable with Red Flint Group’s involvement instead of Van Eijl’s involvement.

Zwiefelhofer also wondered if the leases were up to date.

The leases are up to date and are paid quarterly, Gapinske said.

The town board had concerns about boreholes and the fact that Northern Sands failed to properly fill in the boreholes, Dvoracek said.

Northern Sands LLC and Ahlgrimm Explosives Company, Inc. were fined a total of $26,000 in June of 2016 for failing to properly abandon 25 frac sand boreholes in the Town of Howard.

The town board has a duty to protect the health, safety and welfare of the citizens in the township, noted Ron Koshoshek, town resident and the town board’s mining consultant.

After the situation with the boreholes, the town board has concerns about Northern Sands doing what they say they will do, Dvoracek said.

The town has a duty to protect the health, safety and welfare of town residents, but the company has an equal duty, Gapinske said.

Vernon Schindler, chair of the Town of Howard, asked about the timeframe for Northern Sands developing the Albertville Valley sand mine.

“We would like to hurry,” Gapinske said, noting the company also wants to make sure “all the boxes are checked.”

And the company will need additional funding, he said.

“We hear a lot, but we don’t know what to believe,” Dvoracek said.

Railroad

The Albertville Valley sand mine includes plans for a processing plant and a rail loading facility that has been estimated at a cost of $50 million.

Zwiefelhofer asked if Gapinske had spoken with the railroad.

Preliminary design work has been completed, Gapinske said, noting Northern Sands still needs to enter into a service contract with Canadian National.

“We want to work with the town, meet expectations and run a successful business,” he said.

Canadian National is the rail line running through Colfax, and some area residents have expressed concerns if sand trains are stalled over the crossings for hours, response times for the fire department and the ambulance could be delayed.

Koshoshek asked about the haul route for the sand.

Gapinske said he had met with officials from Chippewa County but had not yet agreed on a route to take the sand from the Albertville Valley mine to north of New Auburn.

Route is yet to be determined, but trucking the sand is not permanent and would be “transitional,” he said.

Dvoracek asked how the sand would get to the rail site.

“The plans are not fully developed,” Gapinske said, adding the sand would either be trucked internally or could be moved by conveyor.

Schindler asked why Northern Sands could not eliminate trucking the sand to New Auburn and just go straight to the railroad in the Town of Howard.

Gapinske said it was a matter of cash flow.

Northern Sands does not have any contracts to sell the sand right now, he said.

Northern Sands is going to build infrastructure but does not have a market? asked an audience member.

“It’s a matter of the chicken and the egg or the egg and the chicken,” Gapinske said.

Gapinske said he has been in the sand mine business since the first mine opened in Minnesota in 2007.

Another investor at the meeting was Rick Kekula, who has a background in real estate and construction insurance.

The third investor at the meeting was Robin Koth, who has dealt with commercial real estate for 40 years.

A visit to the website listed on Gapinske’s business card, www.northernsandsllc.com, comes up with a blank page and an error message saying the browser cannot find the server for the Northern Sands website.