EDITORIAL PAGE — Viceroy’s victory

California has long been in the vanguard of environmental activism. To get an idea of what kind of restrictions might be placed on any kind of development elsewhere in North America, one had only to look to California to see the future.

In the past, that raised a level of paranoia among mining professionals that may not have been warranted.

There is certainly cause for concern. Environmental efforts such as the California Desert Protection Act (CDPA) and excessive regulations to protect such species of animals as the desert tortoise have bordered on the hysterical.

The CDPA, for example, if passed, would close off millions of acres of mineral-rich desert to exploration and production, threaten the loss of thousands of mining jobs and limit public access for recreation and other uses.

But there have been some success stories on the mining side, too. The ability of Homestake Mines to get its McLaughlin gold mine up and operating, for example, was a remarkable achievement considering environmentalists’ stiff opposition in the early 1980s. Located in the Sierra Club’s backyard just hours out of San Francisco, the project was able to meet and exceed all environmental standards.

Homestake had the foresight to take a proactive stand. It went out and asked people what their concerns were and invited regulatory authorities to establish standards that the environmentalists themselves could live with. Mind you, the capital cost of meeting those environmental concerns probably means that McLaughlin will not be able to turn a profit over the life of the mine. Although Homestake shareholders will not likely be too happy with a break even performance, McLaughlin is proof that mining operations can meet the most stringent of environmental standards.

But given the consistently high risks in mining, a project has to be able to demonstrate the potential for a significant rate of return before any company is likely to go ahead with it. Break even is just not good enough. That’s why the most recent example from California — Viceroy Resources’ Castle Mountain gold mine — is even more encouraging.

Again, to get this mine up and running required a great deal of politics and public relations in order to calm the fears of California’s strong environmental lobbyists. It took four years more than originally planned, 63 formal meetings with environmental groups and government agencies and more than 100 mitigation measures before Viceroy obtained project approval. But Viceroy has met all of the environmentalists’ concerns and, much to the relief of local residents who supported the development all along, has put the mine into production. After just three months of commercial operation, Castle Mountain is already earning profits for the shareholders who stood behind it during its protracted development phase.

Castle Mountain is an extraordinary mineral deposit. A base metal mine, which has to move a lot more rock to make money, or a deposit with a lesser grade probably could not have got over the hurdles placed in Viceroy’s way. Still, this mine is further evidence that mineral extraction can be undertaken in a fashion that will satisfy all but the most strident environmentalists. Viceroy shows the world that it is possible for all parties to win — the company and its shareholders, the environmental activists, the state which will reap the tax revenue, and even the desert tortoise which has a new 60,000 acre home donated by the company.