Febrary 2008

Will Rico have a molybdenum mine?

By Jim Mimiaga

The sleepy mountain town of Rico, Colo. could revert to its bustling mining past pending a deal being negotiated between a local land developer and a Canadian mine company.

Bolero Resources Inc. of Vancouver, British Columbia, has entered into contracts to purchase 1,800 acres just northeast of Rico for a large molybdenum mine.

Despite a missed purchase deadline, company officials are hopeful the deal will go ahead. But questions over ownership of some sections involved in the deal, along with financial, social and environmental concerns, could derail the project.

“We are extremely excited about the potential of this project,” said Bolero’s President and CEO R. Bruce Duncan on the company web site, unitedbolero. com.

“We believe that it may represent a significant molybdenum project in Colorado, and while it is early days for Bolero, we have been able to recover much of the historic exploration data which confirms the exploration model used by Anaconda, consequently, we have been actively staking the region.”

The news of the proposed mine came as a shock to local residents because the seller, local land developer Rico Renaissance LLC, had been partnering with the town for nearly a decade to create new subdivisions and much-needed infrastructure using the land.

The sudden switch from a planned housing development that preserved mountain views to a large mine in the watershed of Rico’s municipal water source “was really disappointing to the town,” said town planner Jen Stark.

“Residents only found out after a story about the purchase contract ran on the front page of the Telluride Daily Planet.”

Stan Foster, a key investor with Rico Renaissance, could not be reached for comment for this story.

Rico Renaissance, along with a local consortium of investment partners, hopes to sell the land and mining claims to Bolero Resources for $10 million once clear title has been verified. The Anaconda Company, which operated mines in the area in the early 1980s, estimated from test holes that there is a total of 198 million tons of molybdenum ore at the site. That could produce an estimated 273 million pounds of molybdenum.

Molybdenum is an element used to strengthen steel and other metals. Its price recently jumped from $5 per pound to $40 per pound, which would equal almost $11 billion worth at the Rico site.

The deal appears to be hitting some snags, but is not dead, company officials said.

Bolero put down a non-refundable deposit of $100,000 with a closing date set for Nov. 16, which they missed. Another $500,000 is due once free and clear title can be assured.

“They have been very busy with this. The deal has been pending beyond the closing date of Nov. 16,” said Bolero media spokesman Adam Ross.

“Nothing has changed, (but) it’s not something that is a one-document signing and everything is done, so there are a couple more pieces to the puzzle.”

What those pieces are he wouldn’t say, but once they are resolved, then the public will be informed, Ross said.

Phone calls made to Bolero CEO Duncan were not returned for this report.

Land-title issues have been problematic for the region. In 2001, the Environmental Protection Agency was forced to take action and repair a series of 11 tailing ponds there because of a dispute over ownership and liability.

The area proposed to be mined is located in rugged mountain terrain along the Silver Creek drainage, the source of drinking water for Rico, a community of 160 year-round residents.

Duncan has touted the fact that the deal, if successful, would bring new jobs to the area. That would significantly boost the Rico economy, which now relies on seasonal tourism and is a bedroom community for the nearby Telluride resort.

However, the boom-and-bust history of mining in the area and the oftennegligent clean-up afterwards are fueling opposition.

Telluride Mayor Stuart Fraser took issue when Duncan told a reporter at the Telluride Daily Planet that the town would grow “in excess of 1,000 people, very quickly.”

In a Jan. 2 letter to Bolero headquarters, Fraser lamented the downside of mining-related jobs.

“While this may be viewed as economic development in your world, the housing, transportation, environmental and public infrastructure impacts associated with 1,000 new residents do not paint such a rosy picture in our world,” he wrote.

“We have neither the capability nor the desire to host 1,000 new residents, particularly in the boom-and-bust cycles associated with the mining industry.

“While both Rico and Telluride have a proud history in the mining industry, those days are long past. Our economy is now based in tourism and outdoor recreation, activities often in direct conflict with mining on the scale proposed by your corporation.”

Rico could use an economic boost beyond tourism, officials there say. But lack of infrastructure, such as a central sewer system, have stalled economic growth.

Housing development for second homes and Telluride workers seemed like a good fit and would have helped to finance a sewer system and spark business growth.

Stark, the Rico planner and member for the North San Juan Advisory Committee, explained how, in part, the mining legacy itself caused the housing project to fall through.

Rico’s Regional Master Plan calls for the protection of viewsheds along the steep slopes surrounding the town. Rico Renaissance owns much of the land in the surrounding foothills so the idea was to conduct land swaps with the Forest Service for land more suitable for development lower in the valley.

The result would have been a buffer of Forest Service land surrounding Rico. However, Stark said that in order for the exchange to take place, the Forest Service requires that the 24 parcels they obtain under the deal are free of mine contaminants from past operations.

“It would have been a tremendous amount of expense for the developers to do the environmental clean-up required for the exchange,” she said.

Lack of water, poor downtown viability, and endangered-species habitat (in particular, the Canada lynx) in some development locations also were substantial hurdles.

What type of development will “save” Rico is not clear. A large mine is disruptive, but second homes marring the views in every direction may not be the answer locals want, either.

“This is a very difficult place for development, which may be Rico’s saving grace,” Stark said.

“The question becomes, is it worth it? The molybdenum is a mile down — what is going to fill the hole?

“Strip-top mining could also be utilized to reach the material, so what is that going to look like and how will it impact people who live just over a mile away?”