The MAX Molybdenum Mine, located on a mountainside just above Trout Lake, B.C., may see new life after a flurry of activity on the finance markets in the past two weeks.
In September, 2010, the molybdenum mine suffered a serious underground collapse, bringing a halt to mining and milling operations at the on-site refining mill. The company conducted remediation work and did resume milling and some mining, but a combination of weaker molybdenum prices and geotechnical challenges underground eventually shuttered the mill.
On Nov. 4, 2013, Max Mine’s parent company Roca Mines Inc. announced it had received notice from the TSX Ventures Exchange that it was about to be de-listed from the Toronto-based stock exchange.
This set off a succession of wheeling and dealing in the next few days. By Nov. 6., Vancouver-based Discovery Ventures Inc. announced it had entered into an agreement with Roca to acquire the MAX Mine. The deal will see Discovery Ventures pay $5.675 million in cash and stocks to Roca for the 59 mineral claims that make up the 5,489-hectare MAX project. The deal is not complete; the buyers are still seeking just under $1 million in funding to complete the transaction.
On Nov. 7, Discovery Ventures announced it had received conditional approval of the transaction from the TSX Venture Exchange.
Discovery Ventures is led by Akash Patel. The Vancouver-based president and CEO is an accountant who specializes in corporate taxation. “We are very excited about the proposed acquisition of the MAX Mine and mill complex and the strategic synergies that may result by combining Discovery’s existing Willa Project with the Max Mine processing facility.”
The 5,238-hectare Willa Project is key to the deal. It is a gold, copper and silver deposit located eight kilometres south of Silverton, B.C. on Red Mountain.
The mineral deposit has been explored since the 1890s, when the area was known as the ‘Silvery Slocan.’ Since the 1960s, a long list of mining companies have conducted exploration work at the Willa Project.
According to Discovery Ventures, a 2005 exploration showed that metal prices wouldn’t provide adequate returns to justify proceeding.
The plan now is to use the MAX Mine mill to process minerals from the Willa Project. The mines are 135 kilometres apart by road.
In an interview with the Times Review, Patel said the Willa site was not financially viable partly because it lacked a mill. “It’s like having a sawmill without trees,” he said.
The idea is to truck about 500 tonnes of ore per day – to start – from Silverton to Trout Lake via Nakusp, then mill on site. Patel said that would mean a few trucks doing a few round-trips per day.
The mill at the MAX Mine would require modifications to process silver, gold and copper, Patel said. He didn’t have technical details, saying company engineers are working on it.
Patel said they are exploring backfilling the MAX Mine with tailings from Willa to help stabilize it. He said MAX is not viable as a molybdenum mine under current prices, but if they went up, they could also explore re-opening the mine.
Further permitting for mining at Willa and processing at MAX Mine will be required.
Patel said social licence for the operation is key. “The only way to make this work is to have the communities with us.” he said. “We truly want to make this work; we don’t want to make any uproar. We understand the roads were just paved, the highways are in gorgeous conditions … and we want to keep it that way.”
Testing at the Willa site is ongoing.
“If we can add some employment and bring some buzz back to the [area], we’d love to be able to do that. We are not there to make a big impact and shake [things] up,” Patel said.
He said he couldn’t provide a timeline on development due to many different variables.
Patel also said if market prices rebound, the company could resume mining molybdenum; backfilling the mine with tailings from Willa would be designed to deal with ongoing instability issues at the mine.
Molybdenum is a metal added to alloys to bring them heat- and corrosion-resistant properties.
Patel said significant new pipeline projects, for example, could push molybdenum prices up past the mine’s economic viability threshold.
