As 2012 winds down and I look ahead to the investment climate in 2013, I’m troubled by increasing warnings of potential “hyperinflation” ahead. As an investor, one way I can deal with this potential threat is to look for producing mining companies with large, verified resource deposits, and the capacity to develop these resources.
One Company which fits that description is Revett Minerals Inc. (TSX: T.RVM, Stock Forum) (NYSE: RVM, Stock Forum), a copper and silver miner that I recently had the pleasure of visiting on a recent tour of their operations.
Imagine if you will, a morning walk, the muted foot-falls of leather on a dirt path. The quiet of a valley morning unbroken, the view ringed by the Cabinet Mountain Wilderness of Montana. An inverted mist hanging over a stream, the air so moist it seems a shame to let the morning sun break up such a splendorous sight. A bend in the road, and another scene evolves.
There are banked hills, and earthworks akin to what The Army of Engineers would create, such as for a small reservoir. Upon further inspection, this appears as an upper plateau, tall grass growing pale under the sun, the valley a few hundred meters distant. In that valley, a stream runs through, laden with trout; frogs sunning themselves on the bank. A stand of yellow pines blankets the far hillside, fair cover for elk to calf in the spring.
This scene is disrupted by activity in the foreground, pipes are delivering a brown, clay-like slurry coming from the direction of the mountain range above. Its contents landing like a soft serve, piling up over time. Pan out, and one sees that there were hundreds of square meters of this dried slurry, aging, drying out, creating fields that are being planted. Something is going on here, perhaps some conservation experiment by the forest service?
Readers need to appreciate the natural beauty of Northern Montana. I just described the scene at the Troy Operation of Revett Minerals – an operating copper/silver mine -- amid the Cabinet Mountain Wilderness of the surrounding area. The “conservation experiment” is their tailing pond/fields.
This isn’t some “sideshow” for Environmentalists, but an operation within the operation, and one that Revett is very proud of. We spent as nearly as much time touring the tailings and conservation areas as we did the mine and the mill. Many in society have a pre-existing distrust of large mining operations, and the environmental hazards that they pose.
That being stated, it can be hard for some to wrap their heads around the idea that mining operations and conservation aren’t mutually exclusive. Yet when visiting Revett Minerals, you simply wouldn’t know you were near a mining operation if you didn’t have the sign to remind you.
One approaches the plant, and mine on a simple gravel road, ending in what appears to be a town garage in a rural area. The mine is further above, at the foot of the mountain with the ground-level entrance virtually out of sight. The ramp and tunnels ascend into the mountain. This is a unique ore body. While “underground”, it isn’t deep. There are few watering issues, the water runs naturally from mountaintop, down through the mountain. Even when its raining outside, or with snow melting in the spring, the water drainage issues through the mountain are minimal.
The ore-body consist primarily of 0.7% copper and 1 oz/ton silver, and is reportedly quite benign, having no arsenic or other chemicals that would harm the groundwater. They have to monitor the copper they are extracting, and a few other trace elements. The mine is a pleasant 55-60 degrees or so, and remains fairly constant throughout the year: mining heaven, and a robust workforce that appreciate how good they have it.
Because the ore-body is nearly devoid of chemicals such as arsenic, this makes it a comparatively clean operation from mine to mill to tailings pond below. The plant has no cyanide circuit, the end product is concentrate which is shipped to a smelter, for electrowinning and the eventual production of copper and silver. There are no leach fields, no liners; so consequently the ground water is not in danger of contamination by cyanide or other toxic chemicals.
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Read more: Revett Minerals: Copper, Silver, and ‘Green’