John Riley

HELENA (KPAX) — The Montana Department of Environmental Quality (DEQ) will initiate the bond forfeiture process for the Montana Tunnels Mine near Jefferson City.

If the process plays out to completion, the mine could see new operators.

Gold, sliver, zinc and lead ore have previously been mined at the Montana Tunnels Mine, although it has not been active since 2008.

DEQ issued violation letters to Montana Tunnels beginning in 2018. In 2022 the operation filed for Chapter 11 federal bankruptcy protection.

The action from the department comes after the operation failed to make a $1.5 million payment in December as part of a court-approved bankruptcy stipulation.

An initial $1.5 million payment was made in November 2023. The funds go toward the company’s reclamation bond, money set aside to restore the site once mining is complete.

“DEQ has worked diligently with the current operator to come to a resolution,” said DEQ Mining Bureau Chief Dan Walsh. “While this wasn’t the outcome we were hoping for via the bankruptcy proceedings, we will take the necessary steps to forfeit the bond and allow other operators to consider the mining permit or we’ll ensure that the site is reclaimed.”

Forfeiture of the bond allows other potential operators to assume the permit and work the mine or lets the DEQ begin the reclamation process.

A potential successor would be required to post the difference between the required $40.9 million bond and the bond currently held by DEQ. DEQ may use a small portion of the currently held bond to maintain the mine site during the interim period.

If a successor operator is not identified or if the state determines the property would not be viable for a successor operator, DEQ will begin the reclamation process.

"DEQ works with operators to ensure sites are properly bonded and meeting state and federal requirements. When requirements are not met, we must take action," said DEQ Director Chris Dorrington. "We have been working for a long time on this site, and this forfeiture letter is the first step toward resolution."