A Canadian company planning to explore for gold in the Keystone area has filed for state authorization to drill up to 250 test holes.

Mineral Mountain Resources Ltd., of Vancouver, British Columbia, has applied for an exploration permit from the state Department of Environment and Natural Resources to drill test holes at 25 locations on private land near Keystone. Company officials hope the exploration will eventually lead to the development of an underground gold mine.

Mike Cepak, a mining specialist with DENR in Pierre, said Wednesday that Mineral Mountain Resources plans to disturb a total of about six acres of land at the 25 drill pads to be used under the state permit. Each pad could have no more than 10 test holes.

None of the test holes could be more than 3,000 feet deep, although some could be longer if drilled at an angle.

Cepak said Mineral Mountain Resources is also working to acquire two existing exploration permits for that area held by a company that did some exploration there in the 1990s.

DENR officials are holding up the new permit process to get more information from the company, including details on ownership of surface rights and mineral rights, Cepak said. The DENR staff has the authority to grant the permit.

"They have a few more things they need to do to finish," Cepak said, adding that the company and the state were still at the "talking stage" of the permit process.

Mineral Mountain Resources has an option agreement on more than 500 acres of mineral rights near Keystone, with some segments reaching into Keystone. Company officials have said the exploration work would have little impact on the community or the environment.

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DENR officials will check the proposed locations for the drill sites before granting the exploration permits to look for possible environmental impacts. Potential impacts on streams and other water resources will be among the areas considered, Cepak said.

Barring a problem with the permit application, the exploration work is likely to begin yet this year. The exploration stage could take two or three years. And if the company decides to continue toward mine development, that more-complicated permitting process could take another two or three years and require review and action by the state Board of Minerals and Environment.

The company must pay a $250 exploration permit fee and also put up a bond to cover possible problems related to the exploration work. That bond is likely to be for $20,000, Cepak said.

Mineral Mountain also must have a reclamation plan for the exploration impacts, likely to include restoring topsoil removed before drilling, repairing surface damages and reseeding in consultation with government conservation specialists.

The company intends to use existing two-track trails on the property for work under this permit but plans to add about 200 feet of trail. 

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com

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