COEUR D’ALENE, Idaho (AP) — Some shareholders have sued Hecla Mining Co. for stock losses they endured after the federal government shut down the Lucky Friday Mine for safety violations.
The Bricklayers of Western Pennsylvania Pension Plan this week filed the lawsuit in federal court in Idaho against Hecla, which is based in Coeur d’Alene.
Hecla announced on Jan. 11 that the mine will be closed for a year to make the changes ordered by federal regulators after two miners died in separate accidents last year.
The lawsuit contends the closure caused Hecla’s stock price to fall 21 percent to $4.61 per share on Jan. 11 and that the company prior to that had made false and misleading statements that artificially inflated the price of its stock.
“Defendants lacked a reasonable basis for their positive statements about the company’s operations and its expected silver production,” the lawsuit said, accusing the company of fraud.
Officials for Hecla said the company’s comments on its financial prospects were appropriate and the company will defend itself.
“This lawsuit has no merit,” said spokeswoman Melanie Hennessey, adding such lawsuits were common when a stock price dropped.
The company’s stock has since rebounded to more than $5.30 per share.
In January, Hecla announced that the Mine Safety and Health Administration had ordered it to remove sand and concrete material that had built up in the main elevator shaft of the Lucky Friday, one of the nation’s deepest underground mines. The company said the work would take up to a year, and the mine would be closed during that time.
The closure prompted Hecla to reduce its estimated silver production for 2012 from more than 9 million ounces to about 7 million ounces, all from its remaining Green’s Creek mine in Alaska.
Production is expected to resume in early 2013.
The mine has been shuttered since mid-December, when a rock burst injured seven miners.
Federal regulators have been conducting a close inspection of the mine because of the series of 2011 accidents. They decided they wanted the sand and concrete material removed because it can break off and fall down the shaft, injuring people or damaging the elevators.
The silver mine is located about 50 miles east of Coeur d’Alene in a region called the Silver Valley.
Miner Brandon Lloyd Gray, 26, was buried in rubble while trying to dislodge jammed rock last Nov. 17, and died two days later.
On April 15, miner Larry “Pete” Marek was crushed when his work area collapsed.
Federal inspectors found company safety failures led to his death.