A legal challenge has been lodged by opponents of Sandfire Resources America’s (TSXV: SFR) Black Butte copper project against the company as well as the Montana Department of Environmental Quality (MT DEQ), which granted an operating permit for the proposed underground mine in early April.
According to Sandfire, the Johnny Lee deposit at Black Butte represents one of the highest copper grade undeveloped projects in the world.
For years, the Black Butte project has divided opinions amongst local communities because of its close proximity to Smith River, one of the state’s most popular recreational rivers. The proposed mine is located on privae land 17 miles north of the town of White Sulphur Springs in central Montana.
The lawsuit filed by conservation groups Thursday alleges that state officials did not thoroughly study the environmental harm that could result from the mine, which would extract 15.3 million tonnes of copper-laden rock and waste over 15 years.
In response to the imminent legal battle, Sandfire CEO Rob Scargill said his company will review the challenge and work with the MT DEQ to “defend this litigation vigorously.”
He also noted that “no major natural resource project in Montana seems to go unchallenged” despite the state’s strict regulations, reiterating that MT DEQ’s decision on Black Butte was the “most protective permit” the department has ever issued.
Meanwhile, the initial bond requirement for the copper project has been set by the state of Montana at $4.65 millon, which Sandfire as operator must secure before construction can begin.
The initial bond increment covers only Phase 1 surface construction of the mine site, the company said. A second bond increment must be calculated by the MT DEQ to cover Phase 2 development, which includes further underground development, mill construction and any activities involving beneficial water use.
While total bonding for the Black Butte project has not yet been released, company officials say it is expected to operate for 13 years.
Sandfire is also finalizing a construction contract for surface earthworks, which are scheduled to start this summer after the company secures the Phase I bond amount.
Shares of Sandfire Resources traded 5.4% lower on the TSXV by midday Friday. The Vancouver-based miner has a market capitalization of C$213.6 million.