Revett presses on in Montana

When Revett Minerals (RVM-T, RVM-N) 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 mid-way through 2008, but with some hard work and exploration successes, that four years turned into fifteen years pretty easily,” chief executive John Shanahan said.

Today, the mine life extends through 2019, and with more exploration success identifying reserves and resources in Troy’s C bed and I bed and on the JF property, Shanahan believes Troy will likely continue to 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 United States Forest Service, and approvals are expected by the middle of next year. An exploration budget for 2013 should come in at between $2.5 million and $3.0 million, he said.

In the meantime, the Troy mine churned out 348,194 ounces of silver and 2.36 million pounds of copper in the three months ended Sept. 30. “It’s on target for where we should be,” Shanahan said. “If we could do that, quarter after quarter, for the next fifteen or twenty years, we would be very 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, the real excitement at Revett revolves around its Rock Creek property, about 56 km away, which has 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 the opponents to 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 said. “They can appeal it but I’m sure a judge would say 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 what would be the basis of a challenge given a lot of it has already been challenged and dismissed.”

The remaining hurdle now is to complete a Supplemental Environmental Impact Assessment (SEIS) by the U.S. Forest Service. Shanahan expects a draft of the Supplemental EIS will be delivered to the Forest Service by the agency’s contractor during the first quarter of 2013.

Once the Forest Service and cooperating agencies approve it, the SEIS will then be put out for public comment. Shanahan expects that process could start as early as the middle of next year, with a final Record of Decision six to nine months after that.

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

“Rock Creek is really the big story,” he said. “Everything we do at Troy is all about getting to Rock Creek. Our experience in the Revett formation — it’s a perfect situation. We can fund it, we can operate it, 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 operations.”

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

At presstime, Revett was trading at $3.38 per share within a 52-week range of $2.84-$6.00. The company has about 34.5 million shares outstanding.