Revett presses on in Montana

When Revett Minerals (RVM-T, RVM-X) restarted the Troy mine in northwestern Montana in December 2004, the property had a mine life of about four years, based on its known reserves. 

“We thought we’d be done about midway through 2008, but with some hard work and exploration success, that four years turned into fifteen years pretty easily,” CEO John Shanahan says.

Today the mine life extends through 2019, and with more exploration identifying reserves and resources in Troy’s C bed and I bed and on the JF property, Shanahan says, Troy will likely produce silver and copper well past 2025.

On a conference call announcing the company’s third-quarter results, Shanahan noted that a five-year exploration plan for targets north and east of the Troy mine have also been submitted to the U.S. Forest Service, with approvals expected by mid-2013. An exploration budget for 2013 should come in at between $2.5 million and $3 million, he says.

In the meantime, the Troy mine churned out 348,194 oz. silver and 2.4 million lb. copper in the three months ended Sept. 30. “It’s on target for where we should be,” Shanahan says. “If we could do that quarter after quarter for the next fifteen or twenty years, we would be happy.”

Third-quarter revenues reached $19.4 million, up from $16.7 million in the same quarter of 2011, due primarily to higher silver and copper sales. Net income reached $4.4 million, or 13¢ per share, up from $2.9 million, or 8¢ per share in the year-earlier quarter.

While Troy is a sold asset, Revett’s Rock Creek property 56 km away is causing excitement with an inferred resource of 125 million tonnes grading 57 grams silver per tonne and 0.72% copper.

The property has been tied up in permitting issues and litigation for years. The project received a positive environmental impact assessment from the U.S. Forest Service, as well as a positive biological opinion and a favourable record of decision in 2003. But litigation brought by environmental groups challenged the project on the grounds that it would endanger fish and wildlife. In November 2011, the Ninth Circuit of Appeals disagreed with opponents of the project and upheld the earlier ruling — or biological opinion — that was in favour of the project.   

“The plaintiff then had a chance to take that to the Supreme Court, and they didn’t, so there’s very little room for disputing it,” Shanahan says. “They can appeal it, but I’m sure a judge would say that we’ve been down this path before, and a decision was made. Will there be challenges? There probably will be . . . but it’s difficult to imagine the basis of any challenges, given a lot of it has already been challenged and dismissed.” 

The remaining hurdle is to complete a supplemental environmental impact assessment (SEIS) by the U.S. Forest Service. Shanahan expects a draft delivered to the Forest Service by the agency’s contractor next quarter.

If the Forest Service and co-operating agencies give their approval, the SEIS will be put out for public comment. Shanahan expects this happening as early as mid-2013, with a final record of decision six to nine months after that.

If all goes well, Shanahan says, construction could start as early as 2014.

“Rock Creek is really the big story,” he says. “Everything we do at Troy is about getting to Rock Creek. Our experience in the Revett formation — it’s a perfect situation. We can fund it, we can operate it [and] we can finance it. That’s the easy part. Getting through the permitting process is tougher, but we have shown that these operations can be extremely clean.”

At the end of September, Revett had $33.1 million in working capital.

At press time, Revett traded at $3.38 per share within a 52-week range of $2.84 to $6. The company has 34.5 million shares outstanding.