August 12, 2007 in Business

It’s tough finding silver lining in this dispute over mining

Bert Caldwell The Spokesman-Review
 

Mining has always been a rough and tumble business. And, as last week’s events in Utah remind us, a very dangerous one.

Glenn Dobbs knows the rough and tumble part.

The president of Spokane-based Mines Management Inc. is tussling with federal and state authorities over the company’s right to renew tunneling towards a huge silver-copper deposit below the Cabinet Mountains Wilderness in northwest Montana. The Montanore ore body contains 230 million ounces of silver and 1.7 billion pounds of copper, according to Mines Management estimates.

Canadian mining giant Noranda transferred its Montanore claims to Mines Management in 2002. The Canadian company, discouraged by then-low metals prices, walked away from the project after an investment of $100 million that included driving a 14,000-foot adit toward the deposit from a portal on Libby Creek.

Metals prices have soared since, five-fold in the case of copper, and Mines Management now has its hands on a multibillion-dollar resource.

But the company does not have the claims to itself, at least not as far as Libby Creek Ventures is concerned.

LCV, which has its own claims near Libby Creek, has launched a competing effort to tap Montanore. In some documents, LCV claims ownership of the deposit.

Claims owner Louise “Blazing” Voves picketed the company’s annual meeting in June, and its Libby offices in July. Demands for more than $9 million in rents and other charges have been posted by LCV near the mine opening.

Dobbs acknowledges the existence of LCV claims in the area, but questions their validity. If valid, they do not cover the area to be mined, he says.

Dobbs chuckles about the picketing. At Libby, he held Voves’ sign while she drank some water in the shade of a Mines Management sign.

But he is not at all amused by LCV’s financial demands, nor the publicity the picketing has attracted, even if he was a cordial host.

Should LCV’s actions begin to harm the reputation of Mines Management, Dobbs says the company will seek damages in court.

“There are consequences to misleading people,” he says.

Mines Management completed a $34.2 million offering of stock and warrants in May.

Dobbs says he has offered to give LCV access to the adit, but only to qualified, indemnified contractors. LCV says the requirements are “cumbersome,” and wants Mines Management to pay for the work. In the meantime, LCV has sought permission to do its own drilling — right through the roof of the adit.

“That’s nonsense,” says Dobbs.

LCV spokesman Frank Wall says Mines Management tried to buy the company off for $80,000, a claim Dobbs denies.

Wall says LCV has vehemently objected to the permits issued Mines Management, and plans to do its own drilling in the area.

“We’re not in competition with Mines Management, we’d like to be in cooperation with them,” Wall says.

Montana and U.S. Forest Service officials handling the multitude of applications and environmental studies required to permit a mine are staying out of the fight over claims.

John McKay, geologist for the Kootenai National Forest, says the dispute is a civil matter that would have to be resolved in federal court. The law gives miners the right to cross claims owned by others, but not to interfere with their operations. Drilling through the roof of the adit would interfere with Mines Management’s access, he says.

LCV is not Dobbs’ only problem.

Revett Silver Co., operator of the Troy Mine to the north, also owns the Rock Creek Project, which would access another mineral deposit beneath the Cabinet Wilderness. Rock Creek permits have been repeatedly challenged by environmentalists, and biological opinions approving the project repeatedly thrown out.

Revett attorneys say Mines Management access to Montanore is blocked by the legislation creating the wilderness area, which occurred after Noranda started development. They assert the bill grandfathered Noranda’s claims, but that the right of access expired when Noranda quit-claimed to Mines Management.

Dobbs says the permitting of Rock Creek was flawed because it assumed the Montanore project was dead.

Mines Management has a Montana permit to pump out the adit, and a water treatment plant will be installed shortly, Dobbs says. Exploratory drilling will follow. And the Forest Service is preparing a preliminary draft environmental impact statement.

Dobbs says the permitting and environmental reviews could be completed by the end of 2008.

But the fights between contending claim holders, and contending mines, could get rougher, and tumbler.

It is, after all, mining.

“This story isn’t going to quit,” Wall says.


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