Marysville gold mine to cease operations

2013-04-25T00:12:00Z Marysville gold mine to cease operationsBy EVE BYRON Independent Record Helena Independent Record
April 25, 2013 12:12 am  • 

The historic Drumlummon Gold Mine near Marysville will close down the majority of its mining operations by the end of June due to plummeting gold prices.

In a letter given to employees on Wednesday, Bob Taylor, the chief operating officer, wrote that at this time, given current gold market conditions, “it is expected that the closing of regular operations will be permanent.”

However, in a news release, mine owner U.S. Silver & Gold Inc. backed off of the permanent closure statement, saying it would put its Drumlummon Mine on “care and maintenance” status. In recent weeks, the price of gold has dropped from a high of $1,888 per ounce in August 2011 to $1,431 per ounce at the close of the market Wednesday.

“Unfortunately, production at the Drumlummon Mine is not economically viable at current gold prices,” said Darren Blasutti, U.S. Silver & Gold president and chief executive officer. “We have been working very hard since the beginning of the year to reduce costs and increase productivity at the mine, and while we expected to see improvements over the course of 2013, current gold prices and forecast gold production do not warrant continuing our operations there.”

Drumlummon spokesman Darryl James said by June 28 they expect to have laid off about 107 people between the mine and at the milling facility in Phillipsburg.

“Until that time, we will continue to process any available broken rock in the mine, but won’t be doing any additional blasting or removal of new ore,” James said. “We will ramp down operations in the next 60 days, but intend right now to continue some small-scale exploration at the mine and surrounding areas, and across the state.”

He said employees were informed of the decision at shift change at 6 p.m. Wednesday.

Between 2009 and 2011, the price of gold almost doubled from $900 to $1,800 per ounce. The New York Times reported last week that since then, the price of gold has been “undergoing an extraordinary reversal” and that the pace has been picking up in recent days.

The Times reported that Dennis Gartman, a gold investor, wrote to clients last week that they’ve traded gold for nearly four decades and “never … ever … EVER … seen anything” like what he witnessed in recent trading sessions. With the 20 percent drop in price, gold officially is considered to be in the bear market category.

Irish immigrant Tommy Cruse discovered gold near Marysville in the 1870s, and the Drumlummon mine made him one of the richest men in Montana. Prior to the recent efforts, work stopped at the mine in 1953 and water flooded the lower levels.

With the newest mining efforts, Drumlummon Gold Corporation has pumped thousands of gallons of water from the mine’s lower reaches and removed arsenic from it, then discharged it outside the mine. They managed to lower the water level from about 400 feet down to 800 feet and explore the deeper sections, and spent more than

$10 million blasting new tunnels and reinforcing ancient ones, while chasing old and new veins they believe hold $100 million in gold and silver.

In December 2011, the company filed paperwork with the state seeking an operating permit, which is a step up from the small miner’s exclusion permit under which they were conducting mining activities. After the state responded with a lengthy list of additional questions, the forward movement on the permitting request ground to a halt.

The mine was both a blessing and a boondoggle to Lewis and Clark County and its residents. While many people appreciated the economic boost and good wages paying about $80,000 annually, others said the mine operated with blatant disregard for Marysville residents.

County Commissioner Mike Murray said he was “shocked and disappointed” at news of the impending closure.

“I’ve very surprised,” Murray said. “We were hoping to have an active mine here. They have been a good partner to work with. … I was hoping they were the golden goose, so to speak.”

But Marysville resident Billy Christensen was overjoyed. He used to live in a house that overlooked the Helena Valley — and the Drumlummon Mine — and said the continual noise and lights at what had turned into an industrial site forced him to sell his home at a loss and build a new one on other property he owned. Residents complained about heavy truck traffic and alleged illegal water discharges by the company. He said dewatering at the mine caused at least seven wells recently to go dry, including that of the Marysville Fire Department last week, and that the community was kept in the dark about mining operations.

“I’m happy, but curious as to what it really means and whether they’ll be coming back here in six months and start all over again,” Christensen said. “There were a lot of people disrupted here who had lived here all their lives and it was a tragedy in a lot of ways.

“But this is amazing news. I thought it would be there for 20 years and they would ruin everything.”

James noted that they’ve re-drilled the wells they impacted, and would be doing the same for the fire department.

“Their well wasn’t dry; we did some pump testing and sucked some mud into the pump when we were looking at whether it met our criteria for replacement,” he said, adding that during that time they made arrangements that would allow the fire department to fill their trucks from the Drumlummon guard shack. “So there’s not an immediate need, but we intend to do that (fix the fire department’s well) this spring. That will be done before we shut off the pumps” inside the mine.

Blasutti said that they appreciate the commitment and outstanding contributions made by Drumlummon employees.

“We will do our best to help ensure a smooth transition for everyone affected by this change,” he added.

Reporter Eve Byron: 447-4076 or eve.byron@helenair.com

Follow Eve on Twitter @IR_EveByron

Copyright 2016 Helena Independent Record. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(6) Comments

  1. jlarsen
    Report Abuse
    jlarsen - May 01, 2013 7:54 am
    Agreed, Christensen's comments in the article stood out as particularly ignorant. The guy built a house next to an intermittent mining operation, he should have known the potential and had no reason to complain. It also sounds like he is clueless about the history of his own town.
  2. Agent Smith
    Report Abuse
    Agent Smith - April 27, 2013 1:40 am
    Nevermind, Montanchick1... I found the number in another article; and I agree - for around here, 100 lost jobs is a lot.
  3. Agent Smith
    Report Abuse
    Agent Smith - April 26, 2013 12:49 am
    How many jobs where there at the mine that constitutes 'a lot' ?
  4. iceman
    Report Abuse
    iceman - April 25, 2013 6:40 pm
    The mine has been around since 1870. The town of Marysville was started BECAUSE of the mine. The mine has been opened and closed several times since the 1870's. Is there any person in Marysville still alive that was there when the mine first started? Perhaps they may be able to explain to us just how quiet the mining operations were during that period of the 19th century. True there are several descendants of those original settlers and miners that currently still reside in Marysville. But the town would not exist if not for that mine!!
  5. steeline
    Report Abuse
    steeline - April 25, 2013 2:46 pm
    The mining operation was a scam in the first place. They made money but not off the gold that they said was in the earth. They made the money off the greed of the investors that believed there was gold in the earth. If there was gold in the mine they would still be digging and stock up for when the gold prices went back up. It is an old mining trick to get greedy investors all stired up with stories of lots of gold in them thar hills. It is too bad that the workers were part of the deal.
  6. Montanachick1
    Report Abuse
    Montanachick1 - April 25, 2013 12:47 pm
    I think this is very sad, there are a lot of jobs at stake. And now Helena will suffer even more. No more RV parks getting money, hotels, gas stations, and banks it will take a hit all over. I feel so sad for the families that are going to be affected.

Civil Dialogue

We provide this community forum for readers to exchange ideas and opinions on the news of the day. Passionate views, pointed criticism and critical thinking are welcome. Name-calling, crude language and personal abuse are not welcome. Moderators will monitor comments with an eye toward maintaining a high level of civility in this forum. Our comment policy explains the rules of the road for registered commenters. If you receive an error after submitting a comment, please contact us.

If your comment was not approved, perhaps:

    1. You called someone an idiot, a racist, a dope, a moron, etc. Please, no name-calling or profanity (or veiled profanity -- #$%^&*).

    2. You rambled, failed to stay on topic or exhibited troll-like behavior intended to hijack the discussion at hand.

    3. YOU SHOUTED YOUR COMMENT IN ALL CAPS. This is hard to read and annoys readers.

    4. You have issues with a business. Have a bad meal? Feel you were overcharged at the store? New car is a lemon? Contact the business directly with your customer service concerns.

    5. You believe the newspaper's coverage is unfair. It would be better to write the editor at editor@helenair.com. This is a forum for community discussion, not for media criticism. We'd rather address your concerns directly.

    6. You included an e-mail address or phone number, pretended to be someone you aren't or offered a comment that makes no sense.

    7. You accused someone of a crime or assigned guilt or punishment to someone suspected of a crime.

    8. Your comment is in really poor taste.

    9. Don't write a novel. If your comment is longer than the article you're commenting on, you might want to cut it down a bit. Lengthy comments will likely be removed.
Add Comment
You must Login to comment.

Click here to get an account it's free and quick