Hecla reaches deal for clean-up

Denver — Hecla Mining (HL-N) has reached an agreement in principle with the U.S. government and the state of Idaho concerning its share of environmental clean-up costs in northern Idaho’s Coeur d’Alene river basin, which produced more than 1 billion oz. silver in the past century.

A decade ago, the Coeur d’Alene Indian tribe launched legal action against silver producers in the region, including Hecla, Asarco, Coeur d’Alene Mines (CDE-N) and Sunshine Mining & Refining (SSMR-O), seeking redress from decades of mining abuses.

The case gained momentum in 1996 when the U.S. Justice Department demonstrated support for the cause. The suit originally called for cleanup of the river basin outside of the already established Superfund site at Bunker Hill, the main smelter facility in the valley where much of the silver refining took place.

Cost estimates for damage claims and clean-up range from as low as US$150 million to upwards of US$3 billion.

As part of the recent settlement, Hecla agreed to payments and clean-up obligations of US$5 million in the first two years, increasing to US$6 million over the next eight years. It agreed to further commitments of US$4 million per year for the next 20 years, plus an additional royalty on positive cash flow during that time.

In the past four years, the company has spent US$32 million on clean-up, including its contribution to the Bunker Hill Superfund site.

The settlement, if implemented, resolves five years of protracted litigation and releases Hecla from any further government liability in the Coeur d’Alene river basin.

Hecla’s involvement in the Coeur d’Alene river basin lawsuit stems from 110 years of operations in the area. Chief among these was the Lucky Friday mine, where the company produced more than 100 million oz. silver over the past four decades.

Hecla’s settlement includes its payments into the Bunker Hill Superfund site, as well as environmental clean-up costs associated with the Grouse Creek and Stibnite operations in central Idaho.

“It is good to bring some closure for our shareholders concerning the uncertainty posed by this process over the past five years,” says Hecla Chairman Arthur Brown. “We have worked hard to come to a settlement that protects the viability of the company over the long term.”

The settlement stretches out payments over a long period, making them manageable for the company.

Brown wants to make sure the money is used for clean-up, and his company will continue to work with the federal and state governments in the final consent decree. He said he hopes to be able to include the Indian tribe in the agreement.

Sunshine settled with the government as a condition of recent bankruptcy proceedings, whereas Coeur, which played a smaller role in the basin, agreed to a production royalty and a US$4-million payment. Asarco, now a wholly owned subsidiary of Grupo Mexico, has yet to settle.