Butte Highlands History
The Butte Highlands gold mine was an historic lode producer from 1937 until the War Production Board forced its closure in 1942. Total production is estimated at approximately 60,000 ounces of gold. The property was later explored by Battle Mountain, Placer Dome, ASARCO, and Orvana in the 1980s and 1990s which, in total, drilled nearly 100,000 feet at Butte Highlands, prior to its acquisition by Timberline in 2007.
In 2009, Timberline formed BHJV with Highland Mining LLC for the purpose of developing and mining the property. Montana State Gold Company LLC (“MSGC”) purchased Highland Mining in 2012, assuming its project loan and its commitment to fund all remaining mine development costs through to commercial production.
Following significant mine development paid for by Highland Mining, Timberline conducted a 53,000-foot underground diamond drilling program at Butte Highlands in 2011 to more precisely outline the first several years of forecast production, focusing on the upper portion of the “Old Mill Block” which has dimensions of approximately 275 feet along strike, 1100 feet down dip, and a mineralized thickness of 8 to 15 feet. The program returned many significant mineralized intercepts, including a highlight of 14.5 feet grading 6.77 ounces of gold per ton.
To-date, Highland Mining has invested nearly $40-million at Butte Highlands including more than 5,200 feet of underground development and construction of surface facilities, all of which are located on private lands owned by BHJV. Mine and facility construction at Butte Highlands was completed primarily by industry-leader Small Mine Development Corporation (“SMD”) of Boise, Idaho, which also constructed a modern gold mine at NJMC’s Golden Chest Mine project.
The BHJV partners envision a 4 to 5-year mine life with estimated production of 30,000 to 35,000 ounces of gold per year. Mining is proposed to be conducted by cut and fill methods at a rate of 400 tons per day with a cut-off grade estimated at 0.14 ounces of gold per ton. Waste rock will be replaced underground as cemented rock backfill in the mined ore zones to supply geotechnical stability. Based on a draft internal scoping study produced by Timberline, NJMC Management purchased the Company’s interest in Butte Highlands with a belief that the deposit has the potential to contain 300,000 to 500,000 ounces of gold.
The project has experienced significant timeline delays due, in part, to miscalculations of the permitting process and other technical issues. Permitting has advanced more effectively in recent years with the following critical milestones successfully achieved:
In July 2013, the Montana DEQ issued the final MPDES water discharge permit;
In January 2015, the Montana DEQ authorized BHJV to construct and operate an underground gold mine (still subject to approval and payment of bonds) by publishing positive Record of Decision on Final Environmental Impact Statement;
In October 2015, the U.S. Forest Service released its Final Decision Notice on haul road with a Finding of No Significant Impacts.
Preliminary metallurgical testwork indicates the potential to recover approximately 85-percent of the contained gold in a flotation concentrate. NJMC intends to investigate the possibility of building and operating its own mill at Butte Highlands. On-site milling is expected to improve project economics but will involve additional permitting.
The funding partners at Butte Highlands, through Highland Mining, decided to proceed with mine development on the basis of internal and/or historic mineralization estimates and without first completing a feasibility study or establishing NI 43-101 compliant mineral resources supported by an independent technical report. NJMC is not treating these estimates as current mineral resources and the historic estimates should not be relied upon. There is no current mineral resource or reserve estimate for the Butte Highlands project.
The Butte Highlands property covers approximately 1,310 acres and includes 11 patented claims, 65 unpatented lode mining claims, and 20 unpatented mill-site claims. BHJV owns all of the unpatented lode mining claims and unpatented mill-site claims, along with mineral and/or surface rights to certain of the patented claims, with other mineral and/or surface rights held via lease agreements with a third party.
In March 2016, NJMC signed a Memorandum of Understanding (MOU) to modify the Operating Agreement that governs management of Butte Highlands. The non-binding MOU calls for NJMC, based on agreed to budgets and financing, to assume control of permitting and other day-to-day management functions, most of which will be led by Vice-President Grant Brackebusch. The Company and Highland Mining have agreed to then formalize the MOU and execute a definitive agreement for purposes of moving the project forward and financing it into production.
A NI 43-101 compliant technical report for Butte Highlands was completed in May 2013 by Mine Development Associates of Reno, Nevada.