Hecla Mining Co. Tuesday signed an agreement with Schaumburg, Ill.-based Santa Fe Pacific Gold Corp. to develop a gold deposit near Hecla’s closed Republic mine in northeastern Washington.
Santa Fe Pacific Gold will have the chance to earn 70 percent interest in the Golden Eagle deposit if the large mining and transport company spends $7.5 million over a 3-year period and if Santa Fe completes a feasibility study.
The Golden Eagle gold deposit lies less than a mile from Hecla’s Republic mine, which closed in January after decades of successful gold mining.
The deposit contains about 11.3 million tons of ore with an average grade of 0.1 ounces of gold per ton. Officials with Coeur d’Alene-based Hecla say the area has extensive exploration potential beyond the Golden Eagle deposit.
Santa Fe Pacific Gold has special methods to work with the refractory ore that characterizes the Golden Eagle deposit. The ore is difficult to refine, and that’s where Santa Fe’s technology will be most needed, Hecla officials said in a news release.
Santa Fe Pacific Gold can withdraw from the project at any time after spending $2.5 million, according to the agreement reached in principle Tuesday.
The possibility of another large gold mine is good news to the town of Republic and the rest of northeastern Washington.
Nearly 100 miners lost their jobs when the Republic mine closed in January. With a weak wood-products industry draining jobs from local mills, the resource-based economy in Stevens and Ferry counties needs a boost.
However, it could be several years before mining actually begins at the Golden Eagle site.
Hecla, primarily known as a silver producer, continues to add resources to its gold portfolio. With gold mines such as Grouse Creek in central Idaho, La Choya in Mexico and promising gold projects such as Rosebud in Nevada, Hecla continues to take advantage of gold’s higher value compared to silver.
At $380 an ounce, gold is far more valuable and far less volatile in its price than silver, which hovers currently around $5 an ounce.
The agreement with Santa Fe Pacific Gold remains subject to final approval after both boards of directors have studied the deal.