Montana Tunnels is a fully integrated open-pit mine and concentrating facility first active in 1986. Over $4.85B worth of minerals at current prices has been extracted from Montana Tunnels.
We acquired Montana Tunnels from Apollo Gold Corporation in two phases. In July 2006, we acquired a 50% joint venture interest in Montana Tunnels from Apollo Gold Corporation (“Apollo”) as part of a deal where we advanced Apollo $14.25M to remediate Montana Tunnel’s L-Pit following a pit wall stability issue. The L-Pit completed mining as a joint venture in November 2008. In June 2009, we entered into an option to purchase the remaining 50% interest in Montana Tunnels for assets worth $9M; the purchase was completed in February 2010.
The newly permitted M-Pit will be an expansion of the existing L-Pit. The expansion plan will “layback” or expand the perimeter of the current pit making it wider and exposing the known reserve at the pit bottom. We anticipate access to an additional 40.2M tons of ore; extracting the remaining deposit will allow for profitable mining and milling operations for approximately eight to nine years.
We have completed ore-delineation drilling at M-Pit, demonstrating substantial proven and probable reserves worth in excess of $1.4B, including:
- Gold: 505,920 oz.
- Silver: 8.7M oz.
- Lead: 127M lbs.
- Zinc: 362M lbs.
The M-Pit plan calls for an 18 to 24 month period of pit expansion during which 53M tons of waste rock will be removed to access the underlying ore body. Upon financing, we will increase the number of full-time hourly employees to approximately 160 to 190 individuals. We plan to use the existing mining fleet at Montana Tunnels augmented with new equipment as it becomes available. Recommencement of the Mill Complex at Montana Tunnels is expected to be seamless; substantially all components of the concentrating facility are intact.
All permits and licenses required to begin M-Pit expansion are current. We received favorable Records of Decision from the MDEQ and the U.S. Bureau of Land Management in November 2008. A reclamation bond of $35M must be posted prior to M-Pit expansion; currently $18.4M is in place ($15.9M in cash and $2.5M in appraised real estate) and $16.6M is outstanding.
An additional 60M tons of potential ore has been identified below the M-Pit. We have developed an underground mining approach that may allow for additional extraction with favorable economics. Additional pit expansion may be considered if future mineral prices justify the costs. An underground approach may also prove viable for development of the additional ore.