Lucky Friday closure could mean 300 out of work

COEUR d’ALENE — Hecla Mining Co. said Wednesday that 185 of its workers, possibly more, are out of work after the primary access shaft in and out of the Lucky Friday mine was ordered closed.

The closure also will affect 50 to 100 workers employed by contractors at the silver mine.

“This has a significant impact on our employees, on our contractors and on the community,” Phil Baker, Hecla’s president and CEO, said during a press conference at the company’s Coeur d’Alene headquarters.

Miners at the Lucky Friday silver mine can earn $100,000 per year or more, with incentives and benefits. About 260 Hecla staff and hourly employees had been working at Lucky Friday before the most recent accident on Dec. 14. The 260 doesn’t include workers employed by contractors working at the mine.

“We are going to do everything we can to work with the state programs to help these people that are laid off,” Baker said.

There is a potential for 40 to 50 of the laid off employees to be given work at other Hecla operations.

Many of those employees that do leave to find work elsewhere, for Hecla or others, will likely return to Lucky Friday once it re-opens, he said.

The community will feel other pain from the closure.

Annual expenditures at Lucky Friday will drop to $20 million in 2012, down from $100 million.

“So, (it’s a) huge impact on the community,” Baker said.

The federal Mine Safety and Health Administration wants loose material, including sand and concrete, removed from the main shaft’s walls before it’s reopened.

“We’re going to continue to discuss with MSHA if that is the best way to do things,” Baker said.

“We will also consider whether we should do anything administratively to appeal their decision.”

He said it will take a year to remove the sand and concrete material that has deposited on the walls of what Hecla calls the Silver Shaft, which is 18 feet in diameter and goes a mile down at Lucky Friday, located in Mullan.

“We believe the shaft is safe,” Baker said.

He said the shaft has been inspected on a weekly basis for about 30 years.

The sand and concrete material leaked from a pipe over the years and accumulated on the shaft walls. Baker said the material the federal regulators want removed isn’t related in any way to the Dec. 14 rock burst, which injured seven miners.

On Dec. 20, MSHA cited Hecla for the deposits, and the company had to clean it off in 10 days, which didn’t happen. The shaft closure followed.

The material will have to be power washed from the walls before ore production can resume. Baker said it will cost Hecla about $20 million to do the work and keep the mine operational in 2012.

He said he hopes the cleaning work can be completed in less than a year.

Meanwhile, Hecla reduced its 2012 silver production estimate to approximately 7 million ounces, down from an estimate on Dec. 21 of 9.5 million ounces.

Shares of Hecla stock dropped 21 percent in value on the New York Stock Exchange on Wednesday, slipping $1.23 to $4.61 per share.

Baker said the entire 7 million ounces of silver will be produced at the Greens Creek mine, in Alaska, which is one of the top 10 largest silver mines in the world.

Last month, Hecla said it would create a bypass around the Dec. 14 rock burst area. The 750-foot bypass was supposed to be established by the end of February, when production would resume.

Baker said the company won’t be able to work on the bypass, either, because of the shaft closure.

In order to produce ore in the mine, or create the bypass, operators need at least two ways in and out, for safety. The Lucky Friday also has what Hecla calls the No. 2 Shaft, which was built after the Silver Shaft.

Federal mine safety regulators discovered the deposits on the walls of the Silver Shaft during inspections that followed the rock burst accident.

Two miners were killed in accidents in 2011 at Lucky Friday, one in April and the second in November.