Some words of caution and a plea

by Michael Howell

For whatever reason, U.S. Critical Materials did not share any information with anyone in the Bitterroot, including the Ravalli County Commissioners, about its plans to mine Sheep Creek until the day before jumping on the federal government’s FAST-41 dashboard.

They only sent a representative, Scott Osterman, to clue us in once the Commissioners held a public meeting to discuss opposing that listing. Osterman was introduced as a former Montana Secretary of Commerce. It seemed to boost his credibility at the time. But was he the best man for the job? 

While it is true that he once served as Director of the Montana Department of Commerce, the nature of his departure from the job raises some serious questions about his credibility. Following an investigation into his practices, he submitted his resignation and paid $29,700 back to the state that he had apparently misappropriated.

Did he not know what he was doing at the time was inappropriate and possibly illegal? Or did he just think he could get away with it? Either way, it raises questions about his trustworthiness to lead the Department of Commerce, and he was right to resign. 

It seems to me that appointing him as their mouthpiece was a very poor choice on U.S. Critical Materials’ part. After all, it’s a company that is asking us to trust them, and to risk our river and its associated economic, ecological, cultural and spiritual values, for a “Mine of the Future.” But they have only ignored us and done nothing to earn our trust.

I would rather put my trust in someone like Dr. Phillip Ramsey, a well-respected scientist who spent a good part of his career working on the clean-up of the Clark Fork River and who has first-hand experience dealing with what can be left behind by a mining operation. I believe he asked the right question at the recent hearing where Osterman expressed his company’s commitment to a benign and environmentally friendly operation.

Who is this that wants to mine the headwaters of the Bitterroot River? After looking into it, Ramsey’s answer was “it’s a shell company,” and “these shell companies line up one after another. They cover each other and they are designed to disappear when any problem shows up.” 

I believe he’s right. But you be the judge. Here is an edited snippet from the announcement of the deal behind the Sheep Creek Mine proposal:

“Vancouver, British Columbia–(Newsfile Corp. – July 26, 2022) – US Critical Metals Corp. (“USCM“) and US Critical Materials Corp. (“Materials Corp.“) are pleased to announce they have entered into a definitive agreement, dated July 25, 2022 whereby USCM, through its wholly owned subsidiary, US Energy Metals Corp., will invest in rare earth projects, including the Sheep Creek Property in Ravalli County, Montana…USCM has the right to acquire up to a 50% equity interest in US Rare Elements Corp. (“USRE“), a newly formed entity that will be assigned a 100% interest in the Properties by Materials Corp., and the option to earn an additional 25% interest for an aggregate total of 75% equity interest in USRE, subject to the mutual approval of the Parties.”

“The transaction has been structured in order to provide phased capital contributions by USCM and maximize the professional resources available to USRE while providing flexibility in terms of generating future liquidity events.”

One has to wonder, why did they make this announcement in Canada and not in the United States? And what does it mean by “providing flexibility in terms of generating future liquidity events”?

There are several positive types of “liquidity events” but one of the more negative ones is bankruptcy or liquidation. This is the kind of “flexibility “that Darby Lumber Company exercised to become an “orphan” party in the ongoing state Superfund clean-up site at the defunct S & W Sawmill facility in Darby. The “orphan share” of the clean-up liability is being assumed by the Montana Department of Environmental Quality. It now totals about 58% of the costs of the clean-up operation. 

Without going into the details of the complex financial arrangements and various “options” involved in the Sheep Creek deal, it is interesting to note the disclaimer that accompanies the press release. It reads in part:

“This news release contains certain information that may be deemed “forward-looking information” with respect to USCM within the meaning of applicable securities laws. Such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause USCM’s actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking information. Forward-looking information includes statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur.”

I believe what we heard from Osterman at the public meeting about his “mine of the future” was chock full of “forward-looking information.” 

When Osterman said that he and U.S. Critical Materials were going to do everything they could to ensure that nothing happens to the Bitterroot River, he added, “Now that is not a promise, that’s a commitment. Lots of people can make promises, but we are committed…”

If he and the company are truly committed, why can’t they promise anything? I suspect it is because circumstances may change and a lot of those “commitments” will change as well and the company that made all those commitments might just disappear.

I urge the Ravalli County Commissioners, our Congressional delegation and Governor Gianforte to do more than just oppose the fast tracking of the Sheep Creek Mine. I urge them to oppose the Sheep Creek Mine. 

I am not asking anyone to oppose mining. There are plenty of other places in the state with projects already in progress that can make Montana a major producer of the rare earth elements that our country needs. The Montana Environmental Quality Council has recently endorsed five of those projects. The Sheep Creek Mine was not one of them. I urge everyone to support the MEQC recommendations. But I urge you all to oppose the misguided effort to mine the headwaters of the Bitterroot River.