COEUR D’ALENE — Lucky Friday miners pocketed an extra $3,000 each during the first quarter of 2004, the biggest bonus they’ve seen in years.
The extra cash came courtesy of higher silver prices.
Wages at the underground silver mine near Mullan, Idaho, are tied to the metal’s performance in the world market. When prices rose from $5 per ounce to $8 per ounce between November and early April, paychecks shot up accordingly.
“When prices go up, we all share the rewards, and when they go down, we all share the pain,” said Phil Baker, president and chief executive officer of Hecla Mining Co., which owns the Lucky Friday.
Silver prices have dropped down below $6 per ounce in the last two weeks. But a buoyant mood still prevailed at Hecla’s annual meeting on Friday.
The Coeur d’Alene-based company ended 2003 in the black, its second year of profitability after a decade of losses. After layoffs and asset sales and cutbacks, Hecla is growing again.
Low-cost gold and silver mines in Latin American were largely responsible for strengthening Hecla’s balance sheet. Now, some of that money is being reinvested domestically in the Lucky Friday mine.
“The Lucky Friday has been the cornerstone of Hecla Mining for a long time, and it’s going to continue to be a cornerstone of the company in the future,” Baker said.
In January, Hecla began an $8 million expansion of the 40-year-old mine. The work will create a 5,500-foot-long tunnel, or “drift,” to a new mining area, located more than a mile below the earth’s surface. Geologists estimate that the new area contains 28 million ounces of silver. When the new area goes into production in 2005, the Lucky Friday’s silver output will double to about 4 million ounces annually, Baker said.
“This is a mine that has operated for the last 40 years,” he said. “We think it will operate for another 10 years, and probably more.”
The Lucky Friday is a relatively high-cost mine to operate compared to the Latin American properties, but it has a tremendous silver resource, Baker said. The company wants to bring those resources into production, so it can capitalize on silver prices as they rise, he said.
“At $5 per ounce silver, you might not earn any money,” Baker said. “But at $6 you earn a significant profit.”
Analysts attribute the recent run-up in silver prices to a resurgence of investor interest in metals. Baker expects silver prices are likely to remain volatile throughout the year.
Expansion of the mine will also create new jobs in Idaho’s Silver Valley. The Lucky Friday currently employs 110 people, and officials expect to hire 30 more in the future.
Hecla is already receiving resumes from miners. Some moved out of the valley to find work during the last round of layoffs, but want to come back.
Mining has employed several generations of families in the Silver Valley, and there’s a lot of local expertise, Baker said.
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