Cobalt Mine News from IdahoIdaho Cobalt Mine construction to start in January
BY TODD ADAMS
After years of effort, Formation Capital Corporation is seeing the light at the end of the tunnel, with plans to start construction of its Idaho Cobalt Mine in January and begin cobalt production in 2011.
The Salmon-Challis National Forest last week approved the first stage of the mine’s plan of operations. Under the agreement Forest Super-visor Bill Wood and Formation Capital Corporation U.S. President Bill Scales signed on December 8, the company can begin clearing timber for the mine’s tailings and waste rock storage, topsoil stockpile, roads around the mill site and pads for the mill and concentrator.
“I approved their plan of operations giving them the go-ahead for the first phase of construction,” Wood said in a news release. “It was a great day for them, and it was a great day for us.”
“What this means,” said Scales, “is that the company can now begin construction activities for the mining and milling operations for the ICP [Idaho Cobalt Project]. We can now refer to the Idaho Cobalt Project as the Idaho Cobalt Mine. The Forest Service and the company have worked very hard to develop a mine plan that is economically viable, socially responsible and environmentally sound. We are pleased to finally be able to get underway.”
Three stages of project construction are planned. Stage I involves timber clearing under snow and ice conditions for January through March 2010. Formation Capital has already put in place the surface reclamation bond for timber clearing.
Stage II, construction of the mill and other facilities and digging the underground mine shafts, is scheduled for the second quarter of 2010. Stage III, development of the mine below the water table, is set for the fourth quarter of 2010.
“I commend the efforts of the Forest Service and our operational team in finalizing the Mine Plan of Operations,” said Mari-Ann Green, Chairman and CEO of Formation Metals, Inc., parent company of Formation Capital U.S., in a recent news release. “We now have a clear path forward to start construction. Once mine financing is in place, we can build the mine and commence cobalt production in early 2011.”
Hurdles cleared
“The Plan of Operations approval is a huge step for us,” Idaho Cobalt Mine General Manager Guy Jeske told The Challis Messenger. Forest Service approval allows the company to close out mine financing, scheduled for later this week, and to get final approval by the Formation Metals Inc. Board of Directors.
In September, Formation secured a court order granting the company road and utility rights of way through the old Blackbird Mine Site, according to Jeske. The company plans to tap into the existing Idaho Power line that runs to the Blackbird Mine and build a new section to the new Idaho Cobalt Mine.
Construction of the mill and underground mine tunnels is scheduled to start in May or June after the snow melts, Jeske said. Formation plans to use Lemhi and Custer county contractors for as much of the work as possible. Dahle Construction of Salmon has already been hired for the timber clearing in January.
Formation estimates contractors will employ about 50 construction workers to build the $73 million mine and mill, with more building a hydrometallurgial facility in Kellogg. The mine, mill and cobalt refining facility are expected to cost a total of approximately $140 million.
With the latest news, the phone has been ringing off the hook and job applications have been pouring in, said Jeske, although cobalt production isn’t scheduled until the second quarter of 2011. People expect the company to start hiring immediately, he said, but “Obviously, we’re not hiring our operating crews until early 2011 when we get the mine and mill built.” Those now working in Nevada gold mines who used to live in Lemhi and Custer counties have shown a lot of interest in moving home and working at the Idaho Cobalt Mine. “We’re very encouraged with the response and quality of experienced applicants,” Jeske said.
The transportation plan Formation Capital signed with the Forest Service calls for contractors and the company to run buses or vans over Williams Creek Summit Road to the mine in the Panther Creek drainage to limit traffic on the road. The company does not have Forest Service authorization or current plans to plow Morgan Creek Summit to keep an alternate route open for Challis employees. Custer County miners hired on would have to drive Highway 93 in the winter and catch a van or bus at the company’s warehouse on the south end of Salmon, Jeske said.
Reaction
“Everyone’s excited and thrilled [in Formation Capital’s Salmon office],” Jeske said. “It’s been a long journey. We’re incredibly excited to be at this point.” The process of mine permitting has been long enough that some company officials are pinching themselves and wondering “Is it real?” Jeske said. “With the economy still hurting nationwide and unemployment high, the mine will be incredibly important for the economies of Lemhi and Custer counties.”
The economic downturn has actually worked in the company’s favor in some ways, mainly by keeping construction costs down and making more mine construction workers and equipment available for the project, Jeske said. With the worst of the financial crunch apparently over, capital is more available.
Formation Capital plans to employ 157 miners from the Salmon and Challis areas during production with a payroll of $9.5 million per year. Another 37 people would be employed in the Kellogg hydometallurgical plant for refining the ore into high purity cobalt metal for applications in aerospace and high tech rechargeable batteries. The project is expected to generate $8 million per year in taxes to local governments.