BIG CREEK, Idaho – Sunshine Silver Mines Corp.’s new board of directors paid an inaugural visit to their namesake property this week to assess the state of the once-prolific silver producer.
Purchased at a bankruptcy auction last year, the 127-year-old Sunshine Mine was showing its age Thursday afternoon. “Are those original buildings?” one board member asked politely, eyeing weather-beaten metal siding. “Yes, from the 1930s,” was the reply.
But a wealth of silver-copper ore could lie beneath aging structures. The mine east of Kellogg was one of North America’s richest silver strikes, producing more than 360 million ounces of silver over the past century. Sunshine Silver, part of the Electrum Group of Companies, bought the mine with the intent of reopening it.
Silver is trading at around $40 an ounce, which vastly improves the economics of the deep, underground mining done in Idaho’s Silver Valley. When the Sunshine Mine closed amid financial troubles in 2001, silver was $4.50 an ounce
“There’s a lot of exploration potential left here,” said Hugh Smith, the mine’s chief geologist.
Steve Orr, Sunshine Silver’s chairman and chief executive, said at least two years of hard work stands between the Sunshine and a reopening date. But he was bullish about the mine’s prospects Thursday.
A former manager of the 8,000-foot-deep Homestake Gold Mine in South Dakota, Orr used to compete with Idaho’s Silver Valley for experienced hard-rock miners. “I’ve watched this mine for years,” he said. “It was such a fantastic property.”
Denver-based Sunshine Silver plans to raise $250 million through an initial public offering, according to documents filed with the U.S. Securities and Exchange Commission. The money will be spent on the Sunshine Mine and development of a Mexican silver mine.
The Sunshine will go into production first, Orr said, because it already has infrastructure in place.
The company plans to hire a contractor to rehabilitate both the Jewel and the Silver Summit shafts at the mine. About 36 employees are already working at the Sunshine Mine, and “you’ll start to see the employment go up in the next two to three months,” Orr said.
Over the next two years, he said, the company will draw up a new mining plan and complete a feasibility study that details the cost of putting the Sunshine back into production.
Many of the workers already onsite are past Sunshine employees. Beaver Williams, the mine’s foreman, was hired there after he graduated from high school. After being laid off in 2000, he returned three years ago under previous owners.
“It was a good place for me to work for many years,” Williams said.