Company seeks to expand Helena gold and silver mine

HELENA (AP) — Canada-based RX Exploration has applied for an operating permit to expand a gold and silver mine northwest of Helena after regulatory officials became concerned the company was pushing the limits of its existing permit.

The company made the application Thursday to the Montana Department of Environmental Quality to expand operations at the historic Drumlummon Mine.

"This is a big step toward moving forward," Bob Taylor, the company's chief operating officer, told the Independent Record.

The mining company has been operating under a Small Miners Exclusion Statement, SMES, that allows it to disturb five acres and remove up to 10,000 tons of ore.

But the Lewis and Clark City-County Board of Health in a letter to the state Department of Environment expressed concerns about the permit.

"We question the appropriateness of allowing RX to operate under a SMES instead of requiring the company to apply for a full-scale ... operating permit," the board stated in its letter.

Also, the DEQ's Hard Rock Mining Program said the mine had expanded to 4.71 acres.

If the new permit is issued, it would allow the company to extract up to 255,000 tons of ore a year and operate around the clock for 340 days per year. The permit covers 614 acres, though company officials said they expect to disturb only 52 acres.

If the permit is approved, the company expects to increase production to between 500 and 750 tons of ore per day.

"That 500 tons is expected to be the target production rate for the life of the mine, but RX may consider increasing or decreasing that as exploration continues," the company said in the permit.

The company said it expects the mine to last for seven years at that rate. But Herb Rolfe, the DEQ's Hard Rock Op Permit supervisor, said he expects the mine to operate longer as mining companies start with short periods and then expand with exploration.

Rolfe said it will be at least eight months before officials decide on the permit. The agency has 90 days to review the permit, and then an additional 90 days to write an Environmental Assessment or more involved Environmental Impact Statement. A 30-day public comment period follows, and then another 30 days for the agency to issue its Record of Decision.

The company, which employees about 100 people at the mine it has been exploring since 2009, has been removing about 170 tons of ore per day, recovering about $2 million in precious metals. The mine produced 65,000 ounces of silver and 4,000 ounces of gold between June 1 and Sept. 30 of this year.

The mine started in the 1880s and produced $29 million in gold and silver when gold sold for $20 an ounce. But it flooded during an ownership dispute.

Officials with RX Exploration said modern mining techniques and new technologies will allow them to reach gold and silver they believe remains in the mine.

Plans to get that gold and silver include building a processing plant near the mine where ore would be crushed, mixed with water and chemicals and put through a centrifugal process. Currently, ore is hauled to another location to be milled. Taylor said it could be cheaper to mill the ore closer to the mine.

The company said mine tailings would be put in a lined landfill below the mill and covered.

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Information from: Independent Record, http://www.helenair.com