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Revett, DEQ agree on reclamation bond increase

| May 17, 2006 12:00 AM

Revett Silver Co. and the Montana Department of Environmental Quality have finalized an agreement to increase the reclamation bond for Revett's Troy Mine.

Under the agreement, reached following a regular five-year review process, the bond increased immediately from $10.5 million to $11.9 million and will increase to $12.9 million over the next three years.

The bond is based on state estimates of its own costs to reclaim the mine should Revett default on its obligations. It is substantially higher than Revett's estimated cleanup cost of $6-7 million, said Doug Ward, who serves as vice president for corporate development for the Spokane Valley, Wash., company.

Ward characterized the bond as "an insurance policy" and said the company has established a reclamation trust fund targeted to reach $7.5 million by the time mining at Troy is complete. The company will use that fund for reclamation with the bond serving as a backup, Ward said.

"We've got a little over five years of mining left there," Ward said, but he added that the life of the mine could be extended by continued high metal prices or by successful exploration for additional ore deposits.

If additional deposits are found and a decision is made to expand the mine, the reclamation plan would be revised immediately, Ward said.

"Next year we may be in this process all over again," he said.

The copper and silver mine was permitted in 1978 and was operated by ASARCO until it was closed in the early 1990s. It was later reopened under Revett's management and currently employs about 150 workers. The company recently reported a profit for the first time, credited to increased production at Troy and strong metal prices.

Revett initially expected a lifespan of about 3 1/2 years for the Troy Mine and planned to move workers to its planned mine at Rock Creek near Noxon when work ends at Troy. Although Rock Creek's permitting process remains stalled by litigation filed by environmental groups, Ward is optimistic that operations at the two mines may overlap.

"Then we'll have to be in the enviable position of saying, 'Do we hold off on Rock Creek or do we just go ahead,'" he said.

Rock Creek is expected to create 250 to 300 jobs paying around $40,000 a year.

"There's certainly enough jobs in Rock Creek to absorb the entire Troy workforce," Ward said.