n the late 1950s I was a grade school kid who gained her first awareness of the mining industry during a summer vacation. The family trekked to the Idaho panhandle, specifically Coeur d’Alene and Lake Pend Oreille. Truly a scenic wonder and a great place to get sunburned.
Someone, probably my mother who made it a mission to learn something about every place we visited, said the area was home to the famous Sunshine silver mine and that the principal silver ore was galena. Very nice, thought my 10-year-old brain, let’s go to the beach. That was my early, and inadequate, introduction to the mining industry.
The richest silver mine in the United States began production in 1921, and it produced nearly 365 million oz before it was closed in 1982. It was also the site of a 1972 underground fire that killed 91 of the 93 men on shift at the time.
Recently, more troubles have dogged the Sunshine mine. Sterling Mining of Coeur d’Alene took control of the property in 2003 and restarted production late in 2007. Nine months later, in September 2008, mining was again suspended. Sterling also ran afoul of the US Environmental Protection Agency due to high levels of manganese in the effluent and a broken tailings pipeline.
Before the latest closure and while silver was a hot commodity in July 2008, Vancouver-based Minco Silver proposed a business combination with Sterling. The Minco offer valued Sterling at US$62.3 million. The proposal was withdrawn in September.
Now it seems Minco believes it gained control of the Sunshine mine when it foreclosed on a US$5 million loan it made to Sterling. Minco said the loan was secured by all assets including all the personal property of Sterling and the Sunshine lease.
Naturally, lawyers are involved. On Feb. 23 when Sterling announced its intention to vacate the Sunshine mine, it said it was returning control of the site and the mining lease back to the owner, Sunshine Precious Metals. As a secured creditor, Minco had obtained a temporary restraining order on Feb. 18 to prevent Sterling from selling, transferring or disposing of any Sunshine assets without Minco’s prior approval.
A lawsuit filed in Shoshone County District Court between Sterling and Sunshine further muddies the waters. Minco has filed a motion to join the suit and protect what it says was security for its loan.
The final twist to the Sunshine saga is the March 2, 2009, signing of a letter of intent by Vancouver’s SNS Silver and Sunshine Precious Metals to “continue providing care, maintenance and development” of the mine. Having agreed to make a non-refundable payment of US$250,000, obviously, SNS believes Sunshine Precious Metals has the right to sell the leases.
These things grind very slowly through the courts. Does anyone want to make a guess as to what the price of silver will be before this case is settled? Perhaps it will be high enough to make mining at Sunshine economically attractive.