May 29, 2014 in Business

Ex-Montana governor, others seek $10 million for ore access

Firm holds claims needed by Spokane-based group
Matthew Brown Associated Press
 

BILLINGS – Former Montana Gov. Brian Schweitzer is part of a small group of investors seeking roughly $10 million in compensation from a mining company in exchange for access to a huge silver and copper reserve near the Canada border, according to court documents and interviews with Schweitzer.

The Democrat, who has hinted at a 2016 presidential run, is a director and investor in Optima Inc. That business controls mining rights – known as claims – on underground parcels needed by Mines Management Inc. to access the proposed Montanore mine beneath the Cabinet Mountains Wilderness near Libby.

The mine would tap into reserves valued at $8 billion by Mines Management and employ 350 people.

A federal judge in April gave Montanore a preliminary condemnation order that would give it the right to access the reserves through Optima’s claims.

The order entitled Optima to just compensation. Schweitzer says $10 million represents a “ballpark figure” of what the claims are worth, and is based on an earlier offer from Optima that was rejected by Mines Management.

A formal claim from Optima is due today. If the two sides cannot agree on compensation, the court will appoint a commission to resolve the matter.

Schweitzer left office last year and now serves as chairman of Stillwater Mining Inc. He says Stillwater – Montana’s largest mining company – is not involved in his dealings with Optima and the Montanore mine.

The mining claims at issue in the case were originally owned by another member of Optima, Arnold Bakie, according to court documents. Bakie and others with claims at the Montanore site were sued by Mines Management in an attempt to cancel out their claims.

A state court rejected the Mines Management lawsuit last year, a ruling subject to an appeal before the state Supreme Court.

Spokane-based Mines Management needs the Bakie claims to complete a 14,000 foot tunnel that would give it access to the silver and copper reserves, the company said in court documents. A previous $100,000 offer to Bakie was rejected, it said.

The company filed a separate lawsuit in U.S. District Court to condemn the claims held by Bakie and others under Montana’s eminent domain law.

Schweitzer said he had followed the case and got involved once he left office. Optima was incorporated after conversations between Schweitzer and Bakie that the governor said were “mutually” initiated.

“I was familiar with the doings here as governor,” Schweitzer said. “I saw what was happening: These guys from MMI (Mines Management) thought they would come in here and strong-arm Arnold Bakie and their big lawyers are going to scare him … Now he has partners that stand with him.”

Schweitzer said Mines Management rejected an offer in March to resolve the claims dispute in exchange for cash and stock worth about $10 million.

Mines Management CEO Glenn Dobbs told the Western News that Schweitzer was “threatening to damage my company” by stirring controversy around the mine proposal if Dobbs did not accede to Optima’s demands.

He accused Schweitzer’s administration of delaying the project during his two terms in office, and said fair compensation to Optima would be as little as a few thousand dollars.

Schweitzer called the accusations “silly” and untrue.

“Quite the opposite. This is an opportunity to settle this thing and have it over with” so work on the mine can proceed, he said.

Mines Management has been seeking state and federal permits since 2005 for Montanore, which could produce more than 6 million ounces of silver and 50 million pounds of copper annually. A permit decision by the U.S. Forest Service and other agencies is targeted for 2015.

That timeline is largely dictated by the federal agencies, not the state, said Kristi Ponozzo, project coordinator at the Montana Department of Environmental Protection. She said she unaware of any involvement by Schweitzer when he was in office.

The other members of Optima are Bruce Ramsey, former U.S. Forest Service supervisor for the Beaverhead-Deerlodge National Forest; David Elliot, a partner with the Canadian brokerage firm Haywood Securities; mining entrepreneur Frank Duval and financial consultant Heather Ennis, according to records filed with the Montana Secretary of State and information provided by Optima.

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