Hecla Mining Co. has reached a tentative settlement with the federal government, Coeur d’Alene Tribe and state of Idaho over its role in turning the Coeur d’Alene basin into a Superfund site, company officials said Friday.
Hecla is the last large mining company to settle its Superfund obligations in the Coeur d’Alene basin. The litigation has dragged on since 1991.
Under the proposal, Hecla would pay $263.4 million over the next four years to resolve the company’s financial liability for historic releases of heavy metals into the environment. By April 15, the parties must report on the status of their negotiations in U.S. District Court in Boise.
“The opportunity to settlement this litigation is an important milestone for the company,” Phil Baker, Hecla’s chief executive officer, told financial analysts Friday during a conference call.
Flush from several years of high silver and lead prices and record output, Hecla can pay the proposed settlement without sacrificing future business opportunities, Baker said. The Coeur d’Alene-based company is debt-free and has nearly $300 million in cash and cash equivalents on hand.
The company is in the midst of a $200 million project to expand the Lucky Friday mine in Mullan, Idaho, to boost silver output and extend mine operations for at least another 20 years. Hecla also has an Alaskan mine and additional mining properties in Mexico and Colorado.
U.S. Environmental Protection Agency officials said settlement discussions are under way and that the negotiations are confidential. “Hecla has indicated that its disclosure relating to those negotiations was required by (U.S. Securities and Exchange Commission) rules,” said Marianne Holsman, an EPA spokeswoman. “If a final settlement with Hecla is reached, we will have a public announcement about the settlement at that time.”
Dating to 1891, Hecla is the oldest mine operator in Idaho’s Silver Valley. Until a practice stopped in 1968, mining companies dumped about 100 million tons of waste rock laced with heavy metals into the Coeur d’Alene River system. The pollution contaminated more than 160 miles of the river, its shorelines, and other downstream water bodies, including Lake Coeur d’Alene and the Spokane River. Each spring, tundra swans die from ingesting toxic doses of lead in the marshes along the Coeur d’Alene River.
The federal government has spent more than $230 million on Superfund cleanup in the Coeur d’Alene Basin. An estimated $2 billion worth of work remains.
Hecla was responsible for 31 percent of the tailings discharged into the Coeur d’Alene Basin, according to a federal court ruling. Baker said the company’s practices were “fully legal” at the time.
Under the proposed agreement, Hecla would pay $102 million in cash and $55.5 million in cash or stock within 30 days of signing a settlement. The company would be responsible for payments of $25 million in the second year and $15 million in the third year. By August 2014, a final payment of $65.9 million would be due.
A federal judge would have to approve the settlement in Idaho District Court.