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Montanore tests MT's shifting winds
By: Dorothy Kosich
Posted: '05-JAN-05 04:00' GMT © Mineweb 1997-2004
RENO--(Mineweb.com) Glenn M. Dobbs, the President and CEO of Spokane, Washington-based Mines Management is the epitome of a savvy, honorable, distinguished, and extremely capable executive.
A former Washington state legislator, Dobbs founded a successful bank, a commodities fund, and a gold fund. A considerable portion of his career was spent doing business both domestically and internationally. A consummate gentleman, the articulate, yet soft-spoken Dobbs surrounds himself with good people and has attracted outstanding mining professionals to his team, such as the highly respected Russell Babcock, former Chief Geologist for Kennecott, and Robert Russell, former Freeport McMoRan Vice President of Mining.
In other words, Glenn Dobbs is no dummy and is highly respected by his peers. And, it may take all the political skills and business expertise Dobbs possesses to get a major silver-copper mine re-permitted in the notoriously anti-mining environment of Montana.
On Tuesday, Mines Management (AMEX: MGN) announced it formally submitted a 13-volume application for re-permitting and development of the Montanore Silver-Copper project. The mineral resources of the project are not typical mining hype. In 1988 Mines Management acquired a portion of Montanore from a claimholder who had previously optioned its claims to U.S. Borax, which spent $35 million exploring the Montanore deposit, south of Libby, Montana. U.S. Borax then turned around and sold its claims to a Noranda Minerals partnership. Noranda expended more than $100 million on acquisition and development of the Montanore deposit. Noranda found a resource of 135 million tons, which contain 260 million ounces of silver and 2 billion pounds of copper. The EIS anticipated a mine life of 16 years at a production rate of 17,500 tons per day. At that rate the anticipated mine would have an average annual production of about 11 million ounces of silver and 85 million pounds of copper. The EIS and 28 permits were approved by state and federal agencies.
Astoundingly, Montanore was literally dropped into the junior company's lap in 2002 when Noranda Minerals decided it preferred to develop projects outside of the United States. Everything, including patents and intellectual property, were quitclaimed to Mines Management.
Since that time, Dobbs has reduced the project footprint, including processing capacity which will decline from the original 17,500 tpd to 12,000 tpd. Project capex has been reduced 40% as a result.
Montanore may not suffer the recent fate of Canyon Resources' McDonald gold project, which went down in flames as the result of a November ballot initiative (I-147) in which 60% of Montana's urban population voted their opposition to allowing a new open-pit gold mine to use cyanide in its processes. Mining optimists say the vote to defeat the initiative was more anti-Canyon Resources than anti-mining.
Substantial differences do exist between the two proposals. First, Montanore would be an underground mine, which may be more acceptable to Montanans. Second, a crushing, grinding flotation circuit, which doesn't use cyanide, would produce a silver-copper concentrate. Third, the revised mine plan would actually reduce the amount of waste rock deposited on the surface, and may disturb less environmentally speaking than the original plan approved in 1992. Fourth, the grizzly bear habitat of concern to environmentalists would be managed with an eye to benefiting the bear.
The mine would employ more than 200 people and is expected to benefit a historic mining community, which now suffers from high unemployment.
The bad news? Montanore is located beneath the Cabinet Mountains Wilderness area, sort of a backpacker's haven. ASARCO used to get regularly beat up by environmental NGOs over its proposed Rock Creek mine. The issue has been recently resurrected by Earthworks, the Rock Creek Alliance (an umbrella organization of local environmental and sportsmen's groups) and Tiffany & Co. However, Tiffany's objections were specifically aimed at Rock Creek with no mention of the Montanore project.
In a news release issued Tuesday, Dobbs stated, "we have worked diligently to prepare an application that addresses all issues related to the development and operation of Montanore. We believe our plan will result in building and operation of a mine that will become the standard by which underground mining will be conducted well into the 21st Century. The company has been gratified with the reception we have received from the local community and its encouragement to re-permit Montanore."
It is anticipated that the re-permitting process will take from 15 to 20 months to complete, even in the litigious and initiative-happy state of Montana.
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