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Troy Mine shutting down operations, hopes to
re-open in future when metal prices improve |
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January 22, 2015 |
The company that owns the copper and silver mine
in Troy, Montana has announced a shutdown of
operations at the mine, which will lead to
layoffs of approximately 70 current employees.
Falling prices for copper and silver are forcing
the closure, according to the company that owns
the mine.
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.
(Story continues below these
graphs).
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. |
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