2009 Montana Mining - Montana Mining Association

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At Revett’s Troy Mine, dedicated employees are the key to success By Carson Rife During the fourth quarter of 2008 and the first quarter of 2009, Revett officials were shown what their employees at the Troy Mine were really made of. As the world and U.S. economies headed into crisis mode, global manufacturing and construction came to a halt followed quickly by abrupt declines in copper and silver prices. Numerous mines across the country were either cutting back production and laying off employees, or shutting operations down completely. Due to the plummeting metal prices in the last half of 2008, Revett incurred approximately $11 million in negative price adjustments in concentrate sales, which quickly consumed working capital. The future was not looking good. What was the reaction of the Troy employees to all of this? Quite simply, their reaction was, “Okay, we know that times are tough, but what do we need to do to continue operations?” and “Tell us what we need to do.” We reviewed the options, considered the prospects of future metal prices, and decided to take a gamble. The single biggest factor in our final decision was the “Common Chemicals With Uncommon Service” Chemical Montana Company 2000 Boulder Avenue Helena, MT 59601 (406) 442-8900 • Fax (406) 442-8035 Greg Peterson - PRESIDENT Mark McAlmond - OPERATIONS MANAGER LOCALLY OWNED & OPERATED Proudly serving the mining industry with a full line of chemical reagents, water treatment, refinery and speciality chemicals. Make us your one stop shop for all your chemical needs. Total inventory management and technical services available. One drum or one truckload give us a call we are ready to serve you. Toll Free 1-800-242-6515 email: cmcompany1008@qwestoffice.net 34 Montana Mining 2009 considerable progress made by the Troy employees in increasing production and reducing costs in the fourth quarter while maintaining proper focus on safety. This tipped the scales toward a decision to continue operations. Our feeling was, if we could make it through the first quarter of 2009, metal prices might recover enough to justify continuing operations. In a nutshell, we decided that our company was worth fighting for. Our employees are The Company, and they definitely are worth
fighting for. Obviously, employees did not want to quit, so the decision was made to “go for it”. Firstly, on December 12th, due to the uncertainty brought about by the metal price collapse, a required 60-day notice was given to all our employees under the Worker Adjustment and Retraining Notification (WARN) Act that “operations may be placed on care and maintenance if metal prices remain at currently depressed levels”. Also, a 10 percent “across the board” wage reduction for all employees at Troy (coupled with a 20 percent reduction at the corporate level) was implemented. Comments were solicited from employees for any possible ideas to reduce costs and improve production. An action plan was put together and the results have been significant. Secondly, we met with our concentrate buyer and worked out an agreement for repayment of the remaining amount owed (approximately $4 million). Meetings were held with employees to discuss cost control and production improvement details. The employees have held up to their end of the bargain and then some. The chart on the preceding page shows monthly ore production (tons per day) and operating costs ($ per ton) during the last half of 2008 and through January of 2009. As the chart clearly shows, we have reason to remain optimistic about the future of the Troy Mine. While much work remains to be done and the company is in the process of soliciting additional financing, we remain hopeful. What better “economic stimulus” can there be than continuing to keep existing employees working to produce the minerals required for preserving the quality of life that we’ve all come to expect? While there certainly are no guarantees as we move forward, we strongly believe in our employees and therefore in the future at Troy. Given the remaining reserve base of approximately six years and additional exploration potential around the mine, if copper and silver prices hold at current levels and eventually return to higher levels, the Troy mine could be in operation for many years to come. The Troy Mine is operated by Genesis, Inc., a subsidiary of Revett Silver. The underground copper-silver mine is located 15 miles southwest of Troy in Lincoln County, and employs about 180 workers. The company has fully funded all reclamation obligations and Montana DEQ holds a reclamation bond in the amount of $12.9 million. Revett has completed the permitting of the Rock Creek Mine, located nearby in Sanders County, and is in the final stages of litigating opposition brought by a number of environmental groups. Revett has provided interim funding for the hiring of two MFWP employees as a key part of the Rock Creek grizzly bear mitigation plan. Like Troy, Rock Creek will be an underground copper-silver mine and will employ about 250 to 300 workers. � Right Size. Maximum Yield. Minimum Fines. Every Time. That’s a Gundlach Roll Crusher. When precise coal product sizing with fewer fines and maximized yield is important, Gundlach Roll Crushers get it right. Every time. Every day. Day after day. And with its patented Nitroil ® Adjustment and Relief System, Gundlach Roll Crushers even let you produce different sized, precisely sized product on-the-fly. Find out why Gundlach Roll Crushers and CAGE-PAKTOR ® cage mills are the preferred crushing solutions for coal, potash, salts and lime. Learn more at www.Gundlach.us/mm Gundlach Roll Crusher High Capacity – Coal up to 10,000 TPH Size Control – Adjustable while operating Non-Crushables – Automatic passing and reset Precise Product Sized for Maximum Yield �� Gundlach Equipment Corp., One Freedom Drive, Belleville, Illinois 62226 USA �� Montana Mining Association www.montanamining.org 35
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2009 Montana Mining - Montana Mining Association

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