Just over two years ago, ASX-quoted Black Mountain Resources’ Chairman, Peter Landau, suggested to an interested lunchtime audience of potential investors and media, including Mineweb, here in London that the company’s New Departure high grade silver property in Montana, USA, would be the next U.S. silver mine and would be brought into production in a matter of weeks and its Conjecture property should be on stream perhaps a month later. It seems that he was being a little over-optimistic as two years later we are still waiting for either of these properties to mine any of their high grade silver!
In the latest Black Mountain announcement the company waxes lyrical about the latest sampling results from its New Departure property reporting that “extremely high grade sampling results surpass expectations with up to 422 oz/ton of silver returned over 1.9m from channel samples – grades never before seen even in the old high grade mine’s historical results” and that “25% of samples taken from the Blue Dot Level showed mineralisation of 3oz/ton silver or above.”
The company went on to note that overall 111 channel samples were taken in total from the Main Drive and Blue Dot Level in line with the company’s strategy to complete its 3-D mine model ahead of production upon securing financing.
Landau stated that “We are focused on delivering high grade silver ounces for production and these excellent results, including a significant number of samples that returned over 20 oz/ton silver, provide encouraging support for this model. With this in mind, as we finalise funding to enable us to meet our production goal at New Departure, we are strengthening our understanding of the historic mine and further sampling will be undertaken in the coming six weeks which will contribute to our 3-D mine model and ultimately the commencement of mining.”
See: Black Mountain – high grade silver production imminent
So two years and around a month after that presentation lunch in London a mine which was back then supposedly due to come into production in a matter of weeks still apparently has an undefined start date!
At the time, Mineweb noted that the geologist who oversaw the then most recent resource assessment on the Conjecture property and was a technical consultant to the Black Mountain board and a great believer in the mine, nonetheless told us that he remained sceptical regarding some of the potential mining problems likely to be faced, particularly regarding dilution, likely overall ore grades and the stated time to be taken to bring the mine into production. It looks like these same factors must have applied to New Departure too.
Landau is perhaps renowned as a perennial optimist – maybe to be in the mining sector one needs to be to stay sane – but nonetheless, if he is going to carry his investors with him he needs to be a bit more accurate in his predictions. Black Mountain’s properties undoubtedly do offer very high grade, but probably small tonnage, potential, but the company still has not been able to provide a market compliant resource statement which can be the kiss of death when trying to raise finance when markets are as depressed as they have been of late.
Resurrection of old high grade properties like New Departure and Conjecture can be a profitable business – as shown by a number of Mexican operators who have succeeded in doing this. But the old miners will indeed have taken out most of the initial high grade material and that remaining is likely to be patchy – and mining narrow channels, even of ultra high grades, is difficult to do without serious dilution thus reducing mill grades substantially. It is perhaps notable that many of the rebuilt operations in Mexico are working largish tonnages of lower grade material left behind by the old miners which have become economic through better mining and processing techniques. It is not certain from drilling and sampling to date how much of this, if any in significant quantities, remains at Black Mountain’s properties which still though have to remain interesting because of some of the very high grades being found to date and perhaps of other silver mineralisation surrounding them and/or at depth. It is presumably still uncertain whether there is enough of this yet to make for a profitable mining operation.
The Conjecture property in particular, though, does offer the interesting prospect of mining the unworked Revett formation – source of considerable amounts of silver in the prolific Idaho silver mines, but this is at depth at Conjecture and would thus require substantial amounts of capital to test out, develop a resource (if it is there) and then mine. It would make for an interesting exploration project for a miner with bigger pockets than Black Mountain presumably has.
The company is noticeably uncomitted nowadays in coming up with a production schedule. It still talks in non-definitive statements. For example from the latest half yearly report released in March: “Commencement of first silver production at New Departure is the Company’s predominant near term goal and in the coming weeks the Company will be focussed on implementing all the necessary corporate and operational requirements in order to reach this transformational goal. With the Conjecture Project due for development immediately following this, we are not far from having two productive high grade silver mines within our stable US portfolio. At this point we will be perfectly poised to undertake rigorous exploration programmes to uncover the proven high grade mineralisation spanning the surrounding patented and unpatented claims, which will be funded, at least in part, from internal revenues.” This looks like junior miner speak for ‘this year, next year, sometime..’ Black Mountain needs to come up with some kind of more definitive schedule to keep its shareholders on board.