TLR Part One
It is often said that the best place to find a gold mine is … at a gold mine. That is exactly what Timberline Resources (AMEX:TLR; TSX:TBR.V) did and exactly why they, along with Ron Guill’s Small Mine Development (SMD) are in the process of blasting and digging a pretty big tunnel into a mountain side in southwestern Montana right now in the summer of 2010.
The Butte Highlands gold deposit sits below what was an underground gold mine as WWII began. The existing mine was cut short by the War Powers Act in about 1942. Gold mining was deemed unessential to the war effort and the miners who didn’t ship out to Europe or the South Pacific were sent to mines then producing essential metals like copper, zinc, manganese and bauxite.
The Butte Highlands area then fell asleep for all practical purposes, until about twenty years ago, when a series of larger companies each drilled holes into the mountain. Placer Dome, Battle Mountain, ASARCO and Orvana each took a look at the area and drilled some holes over two decades during mostly rough times for the gold industry in the grip of a 20-year bear market.
Over that span of time a gold resource emerged under the old historic gold mine. Not exactly an “elephant-sized” deposit, like the Big Boys of the mining biz go looking for, but enough for a smaller, leaner and more nimble company to grub stake in an era of $1,000-plus gold – nicely profitably.
When completely finished, the access ramp will be over a mile long and will have wound its way down through a series of thick ore modules, the limits of which remain to be found. The company plans to begin underground drilling from the access ramp this summer, so there is potential to add to the roughly 500,000 to 750,000 ounces of possibly recoverable gold there at Butte Highlands.
(Photo Timberline Resources)
According to documents supplied by Timberline senior geologist Art Glover, compiled from historic pre-NI 43-101 drilling and some TLR drilling, the Butte Highlands deposit contains an internally calculated “measured and indicated” 322,972 ounces of average 0.28 ounces per ton (about 8.7 grams per ton) contained in about 1.15 million tons of ore. Add to that an internally calculated “inferred” 435,974 ounces of average 0.254 ounce per ton material locked in 1.7 million tones of Montana’s Wolsey formation rock.
The mine plan for Butte Highlands calls for a 750-tonne per day mining rate which should produce something on the order of 50,000 to 70,000 ounces of gold per year, at an estimated cash cost of about $450 or so per ounce, but we are getting a little ahead of the story here. First things first, what about the area of the Butte Highlands project?
Boulder Batholith
Butte Montana is a mining town on the edge of the Bolder Batholith, a volcanic geological smorgasbord of mineral wealth laid down in the Late Cretaceous period. The batholith gets its name from the many large granite boulders which have been calved out of its signature gray granite.
(Image Courtesy http://www.unc.edu/~breckj/boulder_batholith.htm )
About 75 million years ago, when the batholith formed, upwelling magma heated the native groundwater, dissolving minerals brought up in the rock. Dissolved copper, gold, silver and other valuable metals and minerals found their way along fissures, faults and over the ground, coalescing into convenient “traps.”
As the granite slowly cooled, the pregnant fluids carrying the metals ended up locked in adjacent sedimentary and other rocks the granite had thrust up into, producing concentrated ore bodies for humans to find today.
The town of Butte lies on the southwestern edge of the Boulder Batholith, just north of the Highland Mountains. It got its start in the 1870s when prospectors discovered the mineral promise of the region in the form of silver and copper.
Butte has been a mining town ever since. Historic photos of Butte hold the caption, “The Richest Hill on Earth.” An informative video at the World Museum of Mining at Montana Tech University is titled, “Butte, a mile high and a mile deep” – a reference to the elevation (about 5,400 feet) and to the labyrinth of excavated tunnels that lie underneath this friendly, picturesque place. Some of them are over 5,000 feet deep!
The old excavations are from large-scale copper and silver mining which dominated the town over the years. Some local estimates are upwards of 10,000 miles of old excavations under and surrounding Butte. That’s a lot of digging.
The history of the region is inescapable. Old historic 100-foot tall metal head frames still dot the landscape. The head frames are the old hoists for pulling the rock out of the ground and sending the men down into it. Quite a few of the old structures are still standing in and near downtown Butte.
(Photo Gene Arensberg)
The mostly warm, exceedingly friendly locals, who call themselves “Buttians,” celebrate mining. They are not ashamed of metal or mineral extraction and they welcome mining companies looking for labor there. At least the locals we ran across do.
The point is that Butte is not only a good place to find minerals, it is mining friendly, and as Timberline Resources Executive Chairman Paul Dircksen says, “Butte is a long way and in a different world than Robert Redford’s “A River Runs Through It.”
Of course Dircksen is talking about the ill-fated McDonald Meadows gold deposit near the Blackfoot River, and the Canyon Resources Seven-Up-Pete deposit, the ones that Montana infiltrators ginned up enough anti-mining sentiment to get a no-cyanide leaching law passed in 1998 – effectively stopping those projects in mid-stream.
That law, called “I-137” bans heap leach mining that uses cyanide. Mining industry experts say that the law wasn’t really about cyanide as such. Cyanide was just the excuse the proponents of the bill used to put a stop to open pit mining. For more on that topic readers can start with a paper that was written in support of a later public initiative designed to repeal I-137. See http://www.nwmtgoldprospectors.com/downloads/cyanide.pdf
The reason we even mention it is that some investors have an impression that Montana is off limits for mining. As of now I-137 prohibits open pit mines that use cyanide. The project we are about to review, Timberline Resources’ Butte Highlands gold deposit and soon to be gold mine, won’t use those methods at all. It is an underground operation, with a tiny surface footprint of approximately 20 acres and all of the ore produced will be shipped offsite to a nearby mill already permitted and operational.
Montana mining authorities have issued permits for TLR to build up to 6,700 feet of development ramp (literally a large 14’ wide X 16’ tall access tunnel), a ventilation shaft/secondary escape route (from the ramp up to the surface), up to 60,000 feet of new underground drilling and to extract a 10,000 ton bulk sample of the ore for testing. TLR has already applied for the final operating permit while it is under construction with the underground facilities.
That doesn’t sound like a government that intends to deny TLR the right to produce the gold ore at Highlands or deny the State the revenues the mine will produce. Indeed, now that the locals are aware of the enormous loss of state revenues and jobs the I-137 law has cost the state, sentiment may be swinging back toward repeal of I-137 perhaps someday. Montana is the only state to have enacted such legislation in the United States.
Site Visit
In an ordinary Suburban, along with TLR Corporate controller Craig Crowell, Peter Spina (GoldSeek.com), Thom Calandra (Stockhouse.com), Tim Haakenson and John Worrell (Pennaluna & Company, a Coeur d’ Alene brokerage) and with TLR CEO Randal Hardy at the wheel, we drove up from town to the Butte Highlands project on a partly rainy and quite cool early June day.
(Timberline CEO Randal Hardy (left) and TLR Executive Chairman Paul Dircksen at "The Saddle," overlooking Nevin Hill and the Butte Highlands project site. Dircksen explains the geology and TLR's plan of operation. Photo by Gene Arensberg.)
The trip takes less than half an hour via good Forest Service roads up the mountain, literally right to the shoulder of Nevin Hill, where TLR’s new portal faces west, out across the Continental Divide. We will stop here for today’s installment, but there is much more to come.
We will have more in the next installment, part two, but we wanted to set the stage and to give an impression as to the mineral wealth (billions of pounds of copper and millions of ounces of gold and silver) which has already been produced here in the southwestern part of the Montana mountains near and in the Bolder Batholith.
Also, just a taste of what we think is very probably a worthy speculation for all us Vultures.
Next time: Why TLR Should be on Your Radar Screen Right Now.
Disclosure: The author and/or his family currently holds a long position in Timberline Resources and plans to add to his position in the near future, once readers have had a chance to add it to their radar screens.
Gene Arensberg
http://www.gotgoldreport.com/
