December 5, 2010 in Idaho

High prices, booming silver industry bankroll mine’s expansion

By The Spokesman-Review
 
Audio slideshow: Lucky Friday mine expands
Jesse Tinsley photo


(Full-size photo)

Deep company

Other deep hard-rock mines in North America:

The Kidd Creek Mine in Timmons, Ontario, is in the midst of an expansion that will deepen the mine to 9,500 feet. The mine produces copper, lead, cadmium and silver.

Before it closed in 2002, the Homestake Gold Mine in Lead, S.D., was one of the deepest mines in the Western Hemisphere at more than 8,000 feet below the surface.

MULLAN, Idaho – At the Lucky Friday Mine, a descent of nearly a mile takes only 2  1/2 minutes.

You climb aboard the “cage” on the Silver Shaft, which operates like a high-speed elevator. Rock walls, encased in concrete, whiz by. When the cage stops with a rattle and a shake, you’re 4,900 feet below the Earth’s surface, deep in the Bitterroot Mountains, where the rock is shot through with silver veins.

The Lucky Friday is already one of North America’s deepest hard-rock mines. Now, the 62-year-old mine is about to get much deeper.

Owner Hecla Mining Co. is sinking a new shaft to depths of nearly 9,000 feet. It will allow the mine to go after richer silver deposits.

“We know what’s under us is a terrific ore body, and we’re not willing to walk away from it,” said Mike Dexter, the Lucky Friday’s general manager.

Hecla officials have known about the high-grade deposit for years. But until metals prices rebounded, sinking the new shaft didn’t pencil out. Silver prices have averaged $20 per ounce this year – the highest level in 30 years.

“Paying for this stuff,” Dexter noted, “is easier at $20 silver as opposed to $5 silver.”

The new shaft could cost as much as $200 million, ranking it among the Inland Northwest’s largest construction projects.

“That’s pretty serious money,” said Mike Taylor, the city of Spokane’s director of engineering services. In comparison, Spokane County’s new sewage treatment plant has a $167 million price tag.

The shaft work is creating a mini-boom in Idaho’s historic Silver Valley, where the Lucky Friday is one of two remaining silver mines.

Cementation USA, the Salt Lake City contractor hired to sink the shaft, has 90 workers – many of them hired locally. Dexter said the Lucky Friday needs its own 267-person work force to produce silver.

“Things are good in our business right now,” he said.

Global angst is fueling the silver industry’s boom times. Mike DiRienzo, executive director of the Silver Institute in Washington, D.C., correlates a six-year rise in silver prices to shaky financial markets.

“It pushes people into hard assets such as silver,” he said. “It’s not unlike what’s happening with gold.”

Silver prices have also received a modest boost from the industrial sector, as factory orders for silver used in electronics, solar panels, batteries, glass coatings and other uses are starting to pick up.

“Demand for industrial metals is coming back,” said Carol Raulston, the National Mining Association’s spokeswoman.

Producing silver is demanding work. At the Lucky Friday, miners blast ore out of argillite, a metamorphic rock that was once sediment in an inland sea.

For topsiders, the underground workings are an alien environment. Bolts and rebar pierce the Lucky Friday’s jagged rock walls, providing structural support. It’s a reminder that millions of tons of rock – the weight of a mountain – lies overhead.

The faint tang in the air is the smell of explosives.

A constant flow of refrigerated air through the Lucky Friday keeps temperatures near a tropical 80 degrees. Without the cooling system, working conditions would be a suffocating 90 degrees with 90 percent humidity.

As you go deeper underground, the air gets denser and heat radiates from the rock. The cooling system will be even more critical as the Lucky Friday gets deeper, said Dave Berberick, the new shaft’s project manager. At 9,000 feet, rock temperatures will hit 150 degrees, he said.

Bob Burden, an electrician, is a second-generation Lucky Friday employee, following in the footsteps of his dad, a mine mechanic.

Working inside a mountain doesn’t seem strange to him.

“I don’t think about the depth … other than it gets hot,” said the 46-year-old Kingston, Idaho, resident.

“But I’m always wondering what the weather is doing up above.”

For Burden and other Lucky Friday workers, the shaft project represents job security. Access to the deeper ore will push the mine’s operating life beyond 2030, according to Hecla officials. When the shaft is operational in 2014, annual silver output is expected to increase from 3 million ounces to 5 million ounces.

To date, Hecla has spent more than $100 million on the new shaft. Next year, the company’s board of directors will vote on the final expenditures.

“It’s pretty exciting to see it going forward,” Burden said.

Lucky Friday’s prosperity is already benefiting the mine’s employees, Dexter said. Through a profit-sharing plan, the hourly workers will each take home $32,000 this year beyond their hourly wage.

‘A lot of spinoff’

Keeping the mine at peak production during the shaft work poses logistical challenges. Since the construction site is nearly a mile below the surface, supplies and equipment must be shipped underground on the existing Silver Shaft, which is also the main haul route for the Lucky Friday’s miners and silver ore.

The new shaft, for instance, will require 20,000 cubic yards of concrete. To keep from tying up the Silver Shaft with concrete deliveries, workers drilled a parallel chute to pour batches of concrete into the mine. It’s called the “slick line.”

Getting heavy equipment underground is also a challenge. Most of it goes down the Silver Shaft in pieces. Construction Manager Ron Krusemark spent months pondering the best way to get a 25-foot mechanical driveshaft to the construction site.

“We practiced with a dummy,” he said.

By late November, contractors had excavated the first 200 feet of the new shaft, which will eventually descend to the 8,800-foot level. As they worked, contract employees stood on a steel-aluminum platform built by Mike’s Specialty Welding of Wallace. “There’s a lot of spinoff from a project like this,” said Mike Hayman, the company’s owner.

The platform was part of a $50,000 contract that included 20,000 pounds of steel beams and other supports for the hoist that will raise and lower the new shaft.

The spinoff has also benefited Tri-State Metal Fabrication of Spokane. A $200,000 contract to make concrete forms for the new shaft came at a good time for Tri-State, said Mike Bolton, the general manager. Tri-State had lost other clients through downturns in the local timber industry, which is still reeling from the national housing recession.

The cyclical nature of industries isn’t lost on Karl Hartman, a mining engineer. He’s back at the Lucky Friday after a 10-year hiatus as a real estate agent.

In 2001, Hartman was part of a layoff at the mine. At the time, silver was trading at $4.30 per ounce, and the Lucky Friday was losing nearly $1 on each ounce of silver it produced.

Hartman went to work for his wife’s real estate company in Post Falls. “Business was booming,” he said. “We showed houses every night until 8 or 9 o’clock.”

After the housing market stalled, Hartman reapplied at the Lucky Friday. He got his old job back in November.

“It all has to do with the price of metals,” he said.


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