January 11, 2012 in Business, Idaho

Lucky Friday workers face year-long mine closure

From staff reports
 
Molly Quinn photo

Lucky Friday Mine.
(Full-size photo)(All photos)

Hecla Mining Company said this morning that it would close the Lucky Friday silver mine for a year to clean its main shaft as required by federal regulators, a move that will put 200-some miners and contract workers out of jobs.

The Coeur d’Alene company’s stock tumbled on the news to its lowest price in nearly two years. It closed down $1.23, or 21 percent, to $4.61. It was the lowest closing for Hecla since Feb. 8, 2010.

Federal mine inspectors, who are investigating accidents at the Mullan, Idaho, mine, closed down Lucky Friday’s main shaft last week as a result of hazards associated with sand and gravel buildup in the shaft. The vertical shaft is the underground silver mine’s main entrance and exit, and hauls both workers and materials.

Inspectors closed the shaft last Friday after determining that conditions flagged during a Dec. 20 inspection had not been fixed, said Amy Louviere, a spokeswoman for the federal Mine Safety and Health Administration (MSHA).

Hecla voluntarily closed a shaft providing secondary access to the mine on Friday until repairs are made. That shaft had also been cited for loose material, Louviere said.

In a news release, Hecla said compliance with the federal order “is expected to take through year-end.” The company added, “Production is expected to resume in early 2013.”

As a result, Hecla revised its expected 2012 silver production to about 7 million ounces, down from 9.5 million ounces.

The work involves shaving cement-like material from the sides of the shaft. The thickness of the material varies.

Two miners working for Hecla died at the Lucky Friday Mine last year. Larry “Pete” Marek, 53, was crushed under a 25-foot-high rock pile when his work area collapsed April 15. Brandon Lloyd Gray, 26, was buried in rubble Nov. 17 while trying to dislodge jammed rock. He died two days later.

In mid-December, seven miners were injured in a rock burst at the mine. Hecla said it would tunnel a 750-foot bypass to route workers away from a portion of the mile-long corridor where that rock burst happened.

About 275 people work at the mine.

During a conference call with analysts, Hecla CEO and president Phillips S. Baker, Jr., said to his knowledge, only one accident has ever been caused by the cement-like material falling — “it cut someone’s hand or someone’s face.”

He emphasized that “this is not the same rock burst issue” that caused Marek’s death and injured the miners in December.

The work on the mine and money spent to keep it operational in the year will cost about $20 million, Baker said.

He said he’s hoping that some employees could transfer to Hecla’s other mines to accelerate work at those properties in an effort to maximize production while the Lucky Friday is shut down. He estimated 40 to 50 people might be re-deployed in that fashion.

Hecla mines silver and gold in the U.S. and Mexico.

Baker said Hecla officials are not aware of any other mines being required to clean their shafts as MSHA is requiring of the Lucky Friday.

Analysts involved in the conference call today clearly were dubious of the order, but Baker turned aside that speculation.

“With respect to attributing some larger intent to MSHA, I wouldn’t suggest they have any intent to do anything other than what they’re mandated, which is to ensure we have safe operations,” he said. “While we may disagree, we wouldn’t suggest that they have any bad intent on their part.”

Baker said the company is considering an appeal of the shut-down order relating to the main silver shaft.

The Lucky Friday has been under a closure order since Dec. 14, when a rock burst injured seven miners. However, federal inspectors had modified the closure order to allow access to some areas of the mine, Louviere said.


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