Sandfire signs build deal for Black Butte earthworks
2020-08-17 07:14 ET - News Release
Mr. Rob Scargill reports
BLACK BUTTE COPPER PROJECT UPDATE
Sandfire Resources America Inc. has provided the following update on its Black Butte copper underground mining project in Montana, United States.
Final mine operating permit granted
The company is pleased to announce that on Aug. 14, 2020, the Montana Department of Environmental Quality (MT DEQ) issued a final approval for the phase I bonding for the underground Black Butte copper project. The company has posted a $4.65-million (U.S.) surety bond for the project, and the MT DEQ has approved the bond posting and has issued a final mine operating permit allowing the company the right to commence phase I development surface construction at the mine site.
The issuance of the final mine operating permit is the result of the company meeting all the requirements of the project record of decision as published by the MT DEQ on April 9, 2020.
Commencement of phase I development surface earthworks
The company has signed a construction contract for the commencement of surface earthworks with MK Weeden, a Lewistown, Mont., company. In addition, it has signed a fencing contract with a local Meagher county business, Menard Construction Inc. These two contractors will employ up to 30 Montanans on the early earthworks project this year.
Commenting on the achievement of this milestone, Sandfire America's chief executive officer and vice-president of project development, Rob Scargill, said: "Putting local Montana companies to work has always been an important company goal and now, more than ever, it will help with the economic recovery as we continue to deal with COVID-19 pandemic. Strength in the natural resources sector is crucial to creating lasting opportunities for the people of Montana."
Hard-rock mining impact plan account fully financed
The Montana hard-rock mining impact act, a law unique to Montana and of great importance for local governments, requires a large-scale mineral development to prepare a hard-rock mining impact plan (HRMIP) which describes the social and economic impacts the mineral development will have on affected units of local government. The company must then provide the local governmental units financing to address identified financial impacts. The units of local government affected by the Black Butte copper project are Meagher County, the City of White Sulphur Springs, and the White Sulphur Springs Public School District No. 8. The agreed Black Butte copper HRMIP requires the company to place $437,000 in an escrow account available for access by the local government entities as needed during mine construction. The account undergoes an annual review ensuring it adequately covers impacts.
Vice-president of communication Nancy Schlepp stated: "This law is a fabulous monetary bridge for our community ensuring no lag time is felt as our community infrastructure needs change as the tax base expands -- ultimately benefiting everyone. This brilliant law should be considered by other areas of Montana business."
Feasibility study reaching finalization
Work on the feasibility study for the project is being finalized, using the agreed bonding amounts and with updated market inputs after COVID-19. The feasibility study is expected to be published in the September quarter, 2020.
Financing
Following a review of financing options by the non-executive independent directors, the company entered into to an unsecured loan with its majority shareholder, Sandfire Resources Ltd., to provide $5-million (U.S.) to cover anticipated expenditures for early earthworks and to defend the mine operating permit from legal challenges. This brings the company's total debt to $10-million (U.S.). On release of the feasibility study, the board will consider the company's midterm and long-term financing options.
Qualified person
Jerry Zieg, vice-president of exploration for the company, is a qualified person for the purposes of National Instrument 43-101 and has reviewed, verified and approved the data disclosed and information of a scientific or technical nature contained in this news release.