Crown, U.S. close New World agreement — Company opts for cash rather than federal property

The saga of the New World gold-silver-copper project in Park Cty., Mont., is drawing to a close, as former owner Crown Butte Resources and the U.S. government conclude a 2-year-old exchange deal.

Crown Butte will receive US$65 million in funds from the government, which expropriated the property in 1996 in response to lobbying by environmental groups and local residents concerned that a mine would endanger the surrounding environment.

The agreement stipulates that US$22.5 million of the funds must be used to finance cleanup and reclamation costs at the site, which has been mined at various times since the 1880s. Following the settlement of legal costs and other obligations, the company will distribute the remainder of the funds among shareholders.

Crown Butte purchased the property in 1987 and proceeded to spend US$37 million on exploration and development. (The funding was supplied through loans from Battle Mountain Canada, which has a 60% interest in the company. Crown Butte has since paid off the debt.)

In the early 1990s, the company filed for a mining permit, outlining a 1,200-ton-per-day operation with a life expectancy of 12-20 years.

However, the project came under intense scrutiny over perceived threats to Yellowstone National Park, some 5 km distant. Environmentalists and local residents claimed that in the event of a tailings spill (which they considered likely in view of the area’s high level of seismic activity), the ecosystem of the park would be seriously harmed, as would the waters of the Clarks Fork river system north of the park.

The original agreement called for a land swap, with Crown Butte receiving federal land valued at US$65 million in return for relinquishing rights to New World. However, the company did not accept any properties offered by the government.