When Spokane Valley-based Revett Minerals Inc. renewed operations in late 2004 at the Troy Mine, near Troy, Mont., its directors projected perhaps four years of copper and silver production there.

Revett's founders thought of the Troy operation more as a training ground for the company's main focus—developing another new underground mine, called Rock Creek, near Noxon, Mont., and about 50 miles southeast of Sandpoint.

"When we started the Troy Mine in 2004, it was all about Rock Creek," Revett President and CEO John Shanahan says. "We were thinking we can probably break even. Let's get it back into production, and we could use it for training."

Fast forward seven years. An unexpected treasure has come from the Troy Mine, which after seven years is bringing forth profitable metals production. With recent favorable exploration there, it's expected to offer much more, Shanahan adds.

"We're into the seventh year of production at Troy and have identified excellent exploration potential, and we anticipate another seven years," or longer, says Shanahan, who has headed Revett since October 2008 and earlier served on its board. "We're probably in the best phase of operation. Troy Mine has been the real surprise package here."

Areas being targeted are a couple of miles to the north and east of the current mining operations, and the company sees potential from the geophysical work completed so far.

Meanwhile, Rock Creek is mired in a legal battle involving environmental groups that fear the proposed mine would harm grizzly bear and bull trout habitat, as well as water quality in the nearby Pend Oreille River. Revett disputes that, and Shanahan says he hopes for a favorable U.S. appellate court ruling this year or early next year, and to move forward with first-phase development by spring 2013.

Revett recently announced record second-quarter net income of $7.9 million. It attributed that gain largely to higher metal prices, but also partly to the mine's improved metal grades and higher metallurgical and mine operating efficiencies.

Troy's production this year is expected to total 1.3 million ounces of silver and 11 million pounds of copper. Last year, the mine produced 1 million ounces of silver and 8.7 million pounds of copper.

Revett's story with the Troy Mine dates back 12 years. Previously, Asarco LLC held majority ownership and had operated the Troy Mine, though the property was shuttered in 1993 after 12 years of operation because of low metal prices. In 1999, Revett bought Asarco's interest in Rock Creek, where the latter company planned to tunnel beneath the Cabinet Mountains Wilderness, but as part of that deal, Revett also acquired the Troy Mine, Shanahan adds.

In starting Troy back up, he says the general manager insisted on hiring and training Troy-area residents, many of whom were laid off from the area's forest industry. Today, the Troy Mine employs 195 people.

Revett also has about half a dozen people based at its Spokane Valley headquarters. Shanahan lives on the East Coast, from where he travels for the company, including making regular trips here.

By 2007, the Troy Mine had shown better than expected results, and Revett posted $3.9 million in net income after the first nine months. However, that's when major challenges hit.

In July of that year, a rock fall inside the mine killed a miner, and operations were shut down for 12 days. Some parts of the mine closed until October 2007. The company's third-quarter results reflected the closure, showing an about 35 percent reduction in tons of ore milled. Things got worse the following year.

"In 2008, metal prices came crashing down," Shanahan says. "We had 125 employed, and we were days away from closing the doors. I had just taken over."

While Shanahan analyzed the stark facts, he says the miners conveyed a clear message of how important Troy's jobs were to families and the community. "They voluntarily took a pay cut, 10 percent," he says. "Management voluntarily took a 20 percent pay cut. Workers worked longer hours. We got our costs down. I was at a point I saw just how important these jobs are. I worked hard at securing financing to get us through."

"We're a very different and better company (now)," Shanahan adds. He credits the Montanan miners for much of the turnaround. "We're turning out cash, making a nice profit, costs are down."

For year-end 2010, the company posted net income of $4.4 million, up from a 2009 net loss of $4.9 million, which mainly was due to some higher-than-normal cost that year, such as to restore full pay for workers. By the end of last year, it had $10.6 million in working capital.

Helping to meet its anticipated financial needs, Revett announced in the fall of 2010 that it had completed a roughly $3 million private placement to help it accelerate exploration and further development of the Troy Mine.

Meanwhile, the company's push to start Rock Creek hasn't diminished, although Shanahan concedes that litigation has bogged it down. "Nothing fatal," adds Shanahan, whose Australian accent is apparent. "Uncorking Rock Creek is what we're going to do; that's our objective."

Shanahan's career started with mining-related companies in Australia. He moved to New York in 1990 with Rio Tinto's lead, zinc, and silver company, and then completed an MBA at Columbia University. Following that, he worked on Wall Street trading base and precious metals. In 2002, he left Wall Street and worked as an adviser and served on boards of mining companies.

He asserts that Rock Creek would have the latest technology for clean operations, and that Revett has local, state, and federal support of its proposed operation there. If started, the mine is expected to employ 300. Its potential production is estimated at 229 million ounces of silver and 2 billion pounds of copper. Revett is proposing to build entrances to the mine outside of the wilderness area, then dig tunnels to access the ore.

"Rock Creek should be and will be the cleanest and least environmentally impacting place," he claims. "Thirty years of data at Troy show us there is no effect to water quality or to fish. Our processing is extremely clean."

The Rock Creek deposit is within U.S. Fish & Wildlife Service-administered Kootenai National Forest land, and under the Cabinet Mountains Wilderness, and requires federal and state approvals to develop. In mitigating impact, Revett has agreed to spend about $30 million to improve grizzly bear habitat.

A Helena, Mont., district court judge in July ruled that Revett must go through a more rigorous permitting process to build Rock Creek, based on the potential degradation of the bull trout habitat from the sediment generated by the mine's construction.

Also in July, oral arguments were held in the 9th U.S Circuit Court of Appeals in Portland for separate litigation, involving the nonprofit Rock Creek Alliance, et al, versus the U.S. Fish & Wildlife Service. The federal wildlife agency and Revett had received a favorable lower-court federal decision on issues related to the Endangered Species Act, Shanahan says, and the conservation groups appealed.

The U.S. District Court decision, however, also remanded an environmental impact statement and project decision back to the U.S. Forest Service for further analysis, delaying its start.

"By about the middle of next year, we should have the supplemental EIS completed and public comment, and we should have a new record of decision and court of appeal's decision," Shanahan says. "I'm still looking at spring 2013 for starting Phase 1."