In an surprise move, the U.S. Department of the Interior and the Department of Agriculture have rejected a plan of operations for the Crown Jewel gold project in northeastern Washington state.
In rejecting the 1997 record of decision, the government agencies have followed a literal interpretation of the 1872 Mining Law, which stipulates that an operation cannot have more claims for the mill site than claims for the lode being developed.
Crown Jewel is a joint venture between
The ruling has industry-wide implications as it could affect numerous projects being developed as bulk-tonnage, low-grade mineralization (as opposed to smaller projects focused on higher-grade narrow veins).
Battle Mountain President Ian Bayer says the decision is an unprecedented retroactive application of one sentence in a November 1997 opinion by the Department of Interior regarding patenting mill site claims. The opinion interpreted a section of the 1872 Mining Law to limit one 5-acre mill site claim for every lode claim. Mill site claims come with surface rights, but no mineral rights.
Crown’s president, Christopher Herald, says both the timing and the basis for the ruling are “capricious and contrary to 125 years of mining history” and stresses that no other mines in the U.S. have been held to this standard. “This interpretation was made without public comment or congressional review and appears to be an illegal attempt to retard all mining development in the U.S.”
The agencies believe that Battle Mountain and Crown still can proceed with development of the property; however, the joint-venture partners will have to change the ratio of mill site claims to lode claims.
Battle Mountain and Crown plan to appeal the ruling through negotiations with the Department of Interior and, if necessary, through the courts.
Battle Mountain and Crown have been permitting the property for the past seven years. To date, they have received 50 state and local permits, invested US$80 million in the project and posted US$50 million in security bonds.
The Crown Jewel deposit contains 1.6 million oz. gold within in 8.6 million tons grading 0.185 oz. per ton. Battle Mountain is earning a 54% interest in the property by providing all necessary funding. Crown retains a 46% interest. The mine is expected to crank out 185,000 oz. annually at a daily throughput of 3,000 tons. Cash costs are projected at US$160 per oz.
Battle Mountain and Crown recently won several court battles related to development of the property. In early January, a U.S. federal court upheld the adequacy of the final environmental impact statement, and a late-January ruling dismissed an action filed by a local environmental group.
The latest ruling sent shares of Crown tumbling 45%, down $1.25 to US$1.50; Battle Mountain lost 45 cents to hit a new low of US$2.62 the Monday after the announcement.
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