A Spokane group looking to revive the historic Bunker Hill Mine in Idaho’s Silver Valley abandoned its effort Friday, blaming a federal lawsuit for spooking investors.
Royal Silver Mines Inc. dropped its option to buy the Bunker Hill Mine after failing to come up with the estimated $60 million needed to restore the mine workings.
The weight of a federal lawsuit against several mining companies scared away investors in Canada and abroad, according to the company.
Federal environmental officials want Hecla Mining Co., Sunshine Mining Co., Coeur d’Alene Mines Corp. and New York-based Asarco Inc. to pay hundreds of millions of dollars to clean up what it believes to be metals pollution in the basin leeched from mine waste rock upstream.
The lawsuit pits government and environmentalist science suggesting lead and other metals poison basin wildlife - as well as people - against mining company studies suggesting the levels don’t pose serious risk.
The proposed Bunker Hill Mine deal, which could have brought several hundred mining jobs to the Silver Valley, is a casualty of that suit, said Bob Jorgensen of Royal Silver Mines.
The startup mining firm explored the historic mine, which closed from full-scale operations in 1981, and found plenty of lead, silver and zinc left underground.
“From a mining perspective it penciled out wonderfully,” Jorgensen said “It would have been very profitable for our investors and brought jobs to the valley.”
Royal Silver Mines had “wonderful” cooperation from federal Environmental Protection Agency officials overseeing the cleanup of the Bunker Hill Superfund Site, and from Idaho environmental officials. Jorgensen said the company was confident it could have worked out any issues about restarting mining at the site.
“The single issue for us was the publicity that the suit has brought the region,” Jorgensen said. “The potential for liability from it just made our investors too nervous.”
The company’s blaming the suit for its money woes overlooks the bigger problem, according to Scott Brown of the Idaho Conservation League.
“The heavy metal pollution is the problem, not the litigation,” said Brown, whose group supports some local studies suggesting lead and other metals have washed down the Coeur d’Alene River basin, damaging ecosystems and even collecting in the bones of children along the river.
“The suit is meant to be part of the solution, not part of the problem. I think it may be our best hope for cleanup of the basin. They have it all backward.”
News of Royal’s decision hit hard for Bob Hopper, current owner of the Bunker Hill workings. Hopper has spent the past few years painstakingly restoring underground equipment and exploring for more reserves in hopes of attracting investors to restart the mine.
“I think with the market being pretty soft, and, of course, the press that the valley has gotten recently, well, you put those two together and it’s made a tough road,” Hopper. “I think Royal did about as much as anyone could to make this happen.”
Hopper stood to be paid $7 million, along with a royalty on metals produced by the mine, if Royal bought Bunker Hill. Hopper said he’d continue to do what he’d done since 1991: go underground each day and work the mine.
If conditions change with the basin suit and financial markets, neither Hopper nor Jorgensen ruled out a possibility of reopening the project.
Other factors clearly hurt the mining investment market. For instance, silver prices continue to lag around $5 an ounce, despite market pressures that had analysts guessing the price would move up for the past three years. An investment in Bunker Hill really is a long-term investment in silver, although the mine is just as notable a lead and zinc producer.
In recent weeks, the investment market for new mines went into chaos after an Indonesian gold deposit discovered by Calgary’s Bre-X Minerals Inc. turned out not to have nearly as much gold as first thought. The market for mine projects has cooled considerably after this discovery, Hopper said.
“I’m not surprised,” at the news, said Holly Houston, a spokeswoman for the Coeur d’Alene Basin Mineral Information Center. “We feel like this is just another example of the federal government run amok.”