A judge appointed in December to help mediate an agreement between Montana Tunnels Mining, its key creditors and potential buyers that might resolve the company’s long-running bankruptcy case has hoisted the white flag.
In a Mar. 17 letter to the U.S. Bankruptcy Court for the District of Montana, Judge Whitman L. Holt wrote: “Some of the parties to the settlement process have indicated that they are not amendable to a further extension of the process.”
Holt continued: “Given this position and my view that a judicial settlement or mediation process should be strictly voluntary and dependent on the willingness of all parties to participate, I determined it would be appropriate for me to conclude the process here and end my role as Settlement Judge in this matter.”
Holt was appointed in December by Montana Bankruptcy Court Judge Benjamin P. Hursh to to oversee a so-called judicial settlement conference aimed at bringing Tunnels’ Chapter 11 bankruptcy case, which began in October, 2023, to resolution. The conference was arranged in response to Jefferson County’s petition that the court reverse its earlier dismissal of the case.
Montana Tunnels owns a gold, silver, zinc and lead mine outside Jefferson City. The mine has not operated since 2008, but its investors have estimated that it still contains upwards of $1.4 billion of ore reserves. The company has not paid the DEQ $17 million of a bond meant to cover the costs of repairing environmental damage from the mine. And it owes the county $3.1 million in back Metal Mine Taxes.
Holt organized a confidential meeting between Montana Tunnels and “certain parties” during the week of Feb. 10, then extended the process for another month “so certain issues could be explored,” he wrote.
Those talks, aimed primarily at reaching an agreement to sell the mine, apparently broke down. Holt wrote: “I have encouraged the parties to continue to discuss possible consensual paths to resolve this complex situation.”
But he also advised Hursh that he should “proceed to rule on the matters pending before you in due course.” The most urgent issue to be decided is the County’s motion seeking a reversal of the bankruptcy case’s dismissal.
Meanwhile, the State Senate is scheduled to begin hearings Apr. 4 on House Bill 717, which could have significant bearing on the Montana Tunnels situation. HB 717 would empower the state Department of Environmental Protection (DEQ), in cases where a mining permit has been suspended, to take possession of the respective mine property by eminent domain, and then to transfer that property to a buyer. In the case of Montana Tunnels, the law, if passed, could allow DEQ to seize the mine property and transfer it and an operating permit to another entity — potentially recovering the money owed to meet the costs of environmental remediation and, eventually, allowing the mine to be brought back into production.
