re-open in future when metal prices improve
Revett Mining Company, Inc. of Spokane Valley, Washington, owner of the mine, announced Monday in a press release that due to low metal prices, the mine will be transitioned into a "care and maintenance" status by the end of this month. Work on the mine beds will cease immediately. Milling of already-produced ore will continue until the end of January, then those operations will cease.
The company states that an orderly shutdown of the mine will take place during February, with the care and maintenance program keeping the mine ready for eventually re-opening in a future, more favorable metals price environment.
The mine, located just west of Bull Lake along Montana Highway 56 near Troy, has recently employed around 80 people, according to the Flathead Beacon. Once operations are shut down, only around a half dozen employees are needed to maintain the site.
Previously the mine's future had been rosier
It was only last October that Revett Mining issued press releases announcing resumption of mining operations at the Troy Mine since a series of underground rock slides forced a closure in 2012. In news reports three months ago, Revett optimistically anticipated hiring 95 additional employees by the end of 2014 to join the 65 already then working at the mine, with a return to full production of mining operations at the mine by mid-2015.
From 2004 until the rockslides in 2012, the mine employed around 180 people, making it one of the largest employers in the area.
Revett's history with the Troy Mine
Revett acquired the Troy Mine in 1999; the mine was on a shut-down status during that time period. Metal prices rose in 2003, and in late 2004 Revett had the mine back in production. Since then the mine has produced 8.4 million ounces of silver and 69.5 million pounds of copper.
Since resuming milling operations in mid-November of last year (2014), the mine produced over 27,000 ounces of silver, and over 159,000 pounds of copper from limited operations at one set of mining beds only.
An economic blow for the area and for area families
Shutting down the Troy Mine is a significant economic blow for Lincoln County in Montana, and surrounding areas. "Although this is a difficult decision, it is important to note that redevelopment efforts at Troy [Mine] have been successful," said John Shanahan, Revett's President and CEO.
"Unfortunately, at current metal prices, commercial operations are not sustainable in the near term. We believe that in a higher metals price environment, it may be possible to recommence operations at Troy . . . Placing the Troy Mine on care and maintenance will conserve cash [for the company]," said Mr. Shanahan.
Metal prices have been falling
Worldwide prices for copper and silver, which are what the Troy Mine produces, have been trending downward. Last November, the price for copper stood at a little over $3 per pound. Following a steep drop in price in December, copper is now at $2.60 per pound.
Silver has been falling since last summer. During the summer months silver was around $21 per ounce. It fell to a low of around $16 per ounce in early January, but has since rebounded some to where it is now approximately $18 per ounce.
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Revett's other property
In spite of the shutdown at Troy Mine, Revett continues to develop its other mining site, Rock Creek. The Rock Creek mining development is located just south of the Troy Mine in Sanders County, Montana. Revett is currently moving through the final phases of the permitting process and approval stage for its Rock Creek site (including working with the U.S. Forest Service on Environmental Impact Statements, and with the Montana Department of Environmental Quality on Montana Air Quality Permits). Revett estimates that the Rock Creek site holds one of the largest undeveloped silver deposits in North America.
Revett's stock also took a hit
Revett Mining Company, Inc. stock (RVM on the NYSE), which had been trading at around 70 cents per share on the trading day prior to the announcement of the Troy Mine closure, plunged to a closing price of 45 cents, a 36% drop, on the first trading day following the announcement. Although the stock went even lower to 34 cents per share this past Wednesday, at the time of this writing it is currently at 45 cents per share.
It's not just the Troy Mine news that is affecting Revett's stock price. Metals and mining company stocks in general have been sliding recently due to worldwide economic conditions. Such stocks recently slid further when CitiBank cut its 2015 and 2016 price targets for iron ore, according to the Wall Street Journal. Lower oil prices enjoyed by motorists are thought to have had an effect on pushing down prices for copper, as have general downward trends in economic growth worldwide, which has led to decreases in demand for copper. Revett stock has been on a general downward trend since last September.
According to news reports in Montana, the Troy Mine needs prices higher than $20 an ounce for silver and $3 a pound for copper to be economically viable.