Highland Copper subsidiary Orvana Resources U.S. Corporation halted exploratory drilling on February 19, 2017, in the Porcupine Mountains State Park due to unusual warm weather for the Upper Peninsula of Michigan. Winter drilling is required by the Michigan Department of Natural Resources because the ground must be frozen. The ground in the western Upper Peninsula has thawed too much to drill per DNR requirements.
The company based out of Vancouver, British Columbia, Canada, leased the mineral rights from the Michigan DNR for the purpose of exploration of copper and silver deposits in the Keweenaw Peninsula. Currently, there are three projects underway in the park: White Pine, Copperwood, and Keweenaw.
The state of Michigan established the Porcupine Mountains Wilderness State Park in 1945. Mineral rights ownership however is separate from land ownership in Michigan, which means the owner of the mineral rights may legally lease to another company or mine for minerals regardless of who owns the land. Keweenaw Land Association retains the rights, and leased to Orvana Resources.
The Michigan DNR and DEQ both closely monitor the situation, to ensure no damage comes to trees, land or water in the park. The portion of the park where the company is working has seen core drilling in the past.
That the company had to stop work due to lack of frozen ground in mid-February must be a concern for Highland Copper. They have considerable capital invested in the three projects at the park, and according to the December 31, 2016 financial report, the company needs more funds to settle their current deficiency.
The conditions and uncertainties described above indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. If the going concern assumption was not appropriate for these unaudited condensed interim consolidated financial statements, adjustments which could be material would be necessary to the carrying value of assets and liabilities, in particular an impairment of exploration and evaluation assets,as well as adjustments to
What this means for the future of copper mining exploration in the Keweenaw Peninsula remains to be seen. With unseasonably warm temperatures in the Upper Peninsula making it difficult for Highland Copper to continue exploring for minerals, the likelihood of being able to resume drilling this season is poor. Highland Copper/Orvana Resources may have to wait until the winter of 2016/2017 before they can get back to work. Current weather forecasts for Northern Michigan don’t show any significant cooling trends that would refreeze the ground.