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Improving market gives hope to Troy Mine

by Canda Harbaugh & Western News
| January 19, 2009 11:00 PM

Troy Mine workers found out this week that they will keep their jobs at least through February, a momentary relief after receiving a 60-day notice last December that the mine could temporarily close due to low metal prices.

“We’re going to continue operating through February, and continue operating thereafter as long as we remain profitable,” said Carson Rife, Revett Silver Co. vice president of operations. Revett is the parent company of Genesis Inc., which operates Troy Mine.

“We’ll look at the actual costs from January’s numbers,” said Rife, “and make a decision in February of what we’ll be doing from there.”

Copper and silver prices have been creeping upward and production costs have decreased, allowing the mine to stay afloat.

Copper prices plunged from a five-year high of more than $4 per pound to a market low of $1.25 over a six-month timeframe ending in December. Copper prices are now hovering daily between $1.45 and $1.55.

“Hopefully, it’s bottomed out and it will get back to the prior three-year average, prices closer to $3,” Rife said.

In mid-November, silver prices dipped below $9 per ounce but have since climbed up past $11. The prices peaked at $21 per ounce last February, but the market’s three-year average is $13.32, Rife said.

Metal prices dropped abruptly last year as economically-strained consumers purchased less. Demand for raw materials to produce anything from cars to jewelry plummeted, according to Rife.

“There’s been some significant progress in terms of reducing costs at the mine,” Rife said. “Generally we’re seeing cost reduction in the 10 to 20 percent range.”

Rife attributed part of the reduction to a 10-percent wage cut, which was implemented in December and estimated to be in place until mid-year when metal prices are predicted to stabilize.

Lower prices for fuel and some consumable materials, such as steel, have also relieved some financial pressure. The mine’s equipment runs on diesel fuel, while steel is used for various purposes such as truck bed liners and rock excavating equipment.

Rife also credits Troy mine workers, the approximately 185 of them, for enduring a wage cut and continuing to challenge themselves to produce more.

“The employees are making good efforts to keep production levels up,” Rife said.

Revett will continue to evaluate the mine’s cost production levels on a month-by-month basis to determine further action.