BUTTE -- Exploratory drilling returned better than expected results and two companies are on track to begin mining gold from the Highlands, south of Butte, by mid-2012.
Idaho-based Timberline Resources Corp. and Highland Mining released an initial plan on Thursday for the five-acre mine located near Red Mountain, about 15 miles south of town. The two joint partners are targeting production of 400 tons to 500 tons of ore per day for at least the first four years of operation.
How that ore will reach a nearby mill is one of the main questions that have yet to be decided.
Paul Dirckson, president and CEO of Timberline, said the mine and the U.S. Forest Service are still studying three possible haul routes out of the mountains: Basin Creek, Fish Creek and Moose Creek roads.
In early 2011, mine operators expressed support for hauling down Fish Creek and connecting through private property to Highway 2. Although it has not yet been finalized, the ore's final destination may be the Golden Sunlight Mine mill, northeast of Whitehall.
The drill results may lessen the impact on whichever roadway, if any, is chosen.
Timberline initially expected 47 trucks per day would travel along the route, and the company said it would widen the road to a width of at least 16 feet.
Dirckson now believes only 20 of the 30-ton trucks are expected to travel the route each day from Monday through Friday. The mine still plans to improve road conditions, he said.
"We've reduced the amount of material we're going to mine in a day (because of the higher than expected ore quality)," Dirckson said Thursday.
The U.S. Forest Service, which owns the Fish Creek road as well as Basin and Moose Creek roads, has the final say in permitting the haul route. The agency has hosted public meetings in Butte and Whitehall where residents have questioned the safety and environmental effect of using Fish Creek Road. A final decision has not been made.
Other information gleaned from a year of study and exploration has changed aspects of the initial plan by Timberline and Small Mine Development, the company that has been sub-contracted to operate the mine.
Dirckson said miners ran into more underground water than initially expected, and they are now recommending the construction of on-site water treatment facilities that had not been part of the original proposal.
"Now that we can see the water, we've got a better understanding of it," Dirckson said. "That has been the hold up for us, but it doesn't appear that there is anything there that is insurmountable in the permitting process."
He said a treatment facility represents a larger capital investment than first expected, but noted that the project remains economically feasible.
"It's something we're prepared to do, no question," he said.
Warren McCullough, environmental management bureau chief for the Montana Department of Environmental Quality, said his office is working through the permitting process and said they are expecting to receive updated plans from the developers soon.
McCullough said DEQ is specifically concerned with keeping nearby water sources, such as the Basin Creek Reservoir, unpolluted. The reservoir is used a backup source of drinking water for Butte during the peak summer season.
But McCullough said the location of the mine makes it a good candidate to move forward.
"It certainly isn't pristine," said McCullough of the mine site. "It is not on Forest Service land; it has been historically mined ... that area has been hit very hard by beetle kill. It's been pretty well used in the past, and that does make the analysis easier."
Dirckson said they hope to receive an operating permit soon and start extracting ore from the site by this summer.