The world financial crisis and crashing metal prices have forced several mining companies to abandon or at least put on hold their plans to open new mines.
Marathon PGM president Phil Walford said his board of directors are “fighters” and are determined to see his base metal-copper deposit developed through to the finish with an $385 million mine and mill, hopefully sometime in 2010.
The Toronto junior miner is steadily progressing toward building an open pit mine north of the airport in the town of 3,600 on the north shore of Lake Superior.
Walford said don't expect to see too much activity on-site site this summer until the government permits are in place. The company is in the midst of a full environmental assessment which started last fall and is expected to take two years.
“The key issue is financing.”
With $14 million in the treasury, Walford said it's enough to do the permitting and some exploration drilling, but not enough to put the project into operation.
This year is all about preserving cash. The environmental assessment costs $2.5 million, while the whole permitting process is $5 million.
Walford said his company is no different from other juniors working on advanced project and facing low metal prices and potentially high procurement costs for labour and equipment.
It's about looking for ways to shave operating and equipment costs outlined in their mine feasibility study which was written in the summer of 2008, before world financial markets crash.
Walford hopes a series of metallurgical tests at Xstrata Nickel in Sudbury will help improve their recoveries of platinum and palladium. “If we get better recoveries we will revise the mine plan and that will impact revenues as well.”
The company has been steadily expanding its land base, mostly recently by acquiring the adjoining Bamoos property from Benton Resources and the Geordie Lake deposit 15 kilometres away. It tops up Marathon PGM's estimated total measured and indicated resource to 170 million tonnes of PGM, copper, gold and silver.
Walford expresses optimism of renewed investor confidence in PGM's since
its more rare than gold and only 14 million ounces are produced globally. At Marathon, half the property is copper giving them far more flexibility as a multi-metal deposit.
He's even open to entertaining joint venture possibilities. In calling their 60 cent share price “undervalued” after a precipitous drop from $5 last year, Walford said they've been “prudent and careful” not to dilute their stock, starting out with six million shares in 2004 and now post a total of 31 million.
An open pit mine would be a real economic boost to the Town of Marathon, hard hit by the loss of its pulp mill last winter.
It would mean drawing a workforce of 277 from the communities of Marathon, Terrace Bay, Manitouwadge and First Nations while pumping a $20 million annual payroll into the local economy.
Walford said with one direct mining job creating three spinoff positions, “the impact on the area would be very large.”
For Marathon Mayor Rick Dumas, the potential of a new mine close by represents future hope in easing the pain of the sudden bankruptcy closure of Marathon Pulp, the town's largest employer in February.
Once touted as the 'Little Mill That Could,” the ill-fated joint venture between Tembec and Kruger cost the town 200 jobs when it permanently closed March 17. It's now in the hands of a bankruptcy trustee PriceWaterhouse and officials are looking for a buyer.
The mill closure meant a $939,000 tax hit for the town in 2009.
To cover that loss, the municipality cut operating hours at the town office, arena and pool, laid off three employees, cancelled ski hill operations next winter and deferred about $400,000 in capital projects.
The town has hired a consultant to do a mill feasibility study to investigate if it can be operated as kraft mill, for wood pellets, green energy, or other alternatives.
However it's not all doom and gloom. Dumas said there's extensive drilling activity by juniors like MetalCorp around Hemlo, a world famous mining camp, about 40 kilometres away.
Many use Marathon as a base. “We're definitely a hub and we're seeing the activity from the exploration,” said Dumas, with dollars spent locally buying buildings and procuring supplies.
The town also collects $1 million a year in taxes from Barrick Gold's two operating mines, David Bell and Williams, 40 kilometres away. About 500 of the 700-employee workforce at Williams Operating Corp. live in Marathon.
While some highly-skilled former Marathon Pulp workers have moved away, Dumas said there remains mill operators, engineers, electricians and carpenters that could make the transition into open pit mining. Some have retrained as heavy equipment operators.
www.marathonpgm.com
www.marathon.ca
