Contractor United Mining looks to build own mine

Vancouver – Nestled between two major past producers in one of the world’s great silver districts, United Mining Group (UMG-T) sees big potential for the historic Crescent mine in Idaho’s Silver Valley.

The company has committed to spending US$9 million by 2013 to earn 80% of the historic Crescent mine, flanked to the west by the Bunker Hill mine that produced 161 million oz., and to the east by the Sunshine mine that produced 328 million oz.

United Mining is earning into the mine from Gold Finder Explorations (GFN-V), which bought the mine under the name of Strategic Nevada Resources from Shoshone County for US$650,000 in early 2007. Strategic Nevada then changed its name to SNS Silver and later to SNS Precious Metals before instituting a 10 for 1 share rollback and settling on its current name in mid-2010.

In between, Gold Finder spent roughly US$14.5 million exploring the Crescent mine and established a resource of 294,000 indicated tonnes grading 641.15 grams silver per tonne for 6.1 million oz. silver, plus an inferred resource of 191,400 tonnes grading 668.57 grams silver, both using a 377.14 grams silver cut-off.

Since signing onto the option agreement in late 2009, United Mining has added 243 hectares to the original 143-hectare property that contains the mine, and is looking to explore both this year. The new property, known as the Bunker Claims, add 1.2 km of potential strike to main Alhambra and South veins of the Crescent Mine and has never been drilled.

The company is launching a US$4.3 million exploration program in April that will consist of roughly 3,700 metres of underground drilling plus 7,600 metres of surface drilling. With the underground drilling the company hopes to establish the continuity of the South and Alhambra veins by drilling from platforms at 700 metres depth and extend the resource past its current 747-metre depth limit. The surface drilling will largely target the newly acquired land to extend the veins on strike to the west.

The Crescent mine historically produced 25 million oz. silver at an average grade of 936 grams silver before ramping down in the early 1980s. In 1982 Bunker Hill limited partnership bought the claims and leased out the mine, but later defaulted on debts and lost the mine, which it had used as collateral, to Fausett International. Fausett also leased out the mine, but lost it after the county seized the property in lieu of back taxes and then sold it to what would become Gold Finder.

According to the technical report, the local geology is dominated by Precambrian sedimentary rocks with large-scale folds cut by numerous west to northwest striking faults and veins. Mineralization is characterized by steep, narrow veins that contain economic concentrations of tetrahedrite and subordinate galena.

United Mining is targeting initial production at Crescent within two years. The company has already conducted significant mine rehabilitation, including reparation of the Hooper tunnel and underground access, and has also secured at least 250 short-tons per day of capacity at a mill only 5 km away by agreeing to spend US$2.3 million to increase the mill’s capacity from 100 tpd to 350 tpd.

United Mining has an advantage in mine development in that it is also a full-service mining contractor. The company recently extended a US$6 million contract with nearby U.S. Silver (USA-T) for its Galena mine, it bought a fabrication and welding shop for US$2.5 million in 2009, it will have a one-third interest in a joint venture with the nearby mill, and is also working on environmental remediation work in the Silver Valley.

The remediation work, however, points to a potential liability for the company, as the mine is within a designated Superfund area. United Mining may be on the hook for treatment of the water from underground workings and control of erosion and runoff from historic mine dumps.  

United Mining recently completed $8.3 million in a two-tranche private placement, selling units at 90¢ each. The units held one share and a half warrant, with a full warrant exercisable at $1.25 for two years. Following the financing, the company had 66.9 million shares outstanding with management, and directors holding 24%, and 82.7 million fully diluted.

The company’s share price recently closed at $1.03, while it has a 52-week trading high of $1.34 and a 52-week low of 49¢.