Convention reflects industry strength

There was a surprising unanimity of opinion on the future of the United States precious metals industry by key executives at the Northwest Mining Association convention held here recently.

A special feature this year was “The Mining Board Room” which included a number of prominent speakers from the precious metals sector.

Michael Boswell, chief executive officer for Sunshine Mining Company, noted that Sunshine recently concluded a contract with unionized employees which “defines labor costs in terms of silver.” Striking miners agreed to a settlement package which will see their wages capped and a profit sharing plan initiated after the maximum wage level is reached.

With 37 million oz of proven reserves, he was hopeful the Sunshine mine would become the “best silver mine in the United States.” Cash costs are now $5.25 (US) per oz and he said a restructuring program last summer left the company with $85 million in cash, long-term debt of $8 million, and a debt-to-equity ratio of 1:1.3.

Boswell said he wanted to expand the company’s gold producing capabilities and he felt it could be the time to acquire additional silver and gold reserves.

Hecla Mining Company President Arthur Brown pointed out that his company was active in 12 U.S. states and several Canadian provinces. Cash costs for its Republic mine were $100(US) per oz of gold and mine life is about seven years, he told the gathering.

“The Republic unit in Washington State has been our best performer and we hope to expand production there in the future,” he said.

The Lucky Friday mine near Mullan, Idaho was re-opened in June 1987 after the signing of a new labor contract which significantly reduced labor costs; workers were also put on a profit sharing plan and a commitment was made to change the mining method to underhand longwall stoping. Hecla is targeting a cash cost of $5 per oz silver for the operation.

Brown said that Hecla was vigorously pursuing feasibility work on its Thor Lake beryllium property near Yellowknife, N.W.T. The property also contains significant amounts of yttrium, rare earths, niobium, and tantalum.

“We should have something on that by mid-1989,” he concluded. Hecla is also looking at the purchase of Musto Explorations dormant Apex mine in Idaho, a small gallium-germanium producer.

Echo Bay Mines Chairman Robert Calman, described how his company made $29 million by forward selling silver from its Port Radium, N.W.T. mining operation in the late 1970s. He expressed gratitude to the Hunt Brothers who managed to corner the market long enough for Echo Bay to turn a handsome profit.( They ended up buying Lupin with the money). Calman predicted that Echo Bay would produce about 550,000 oz gold this year at a cash cost of $220(US). Commenting on the gold price, he suggested that forward selling and gold loans were responsible for the recent price weakness.

Pegasus Gold President James Foreman noted that his company operated some of the lowest grade gold mines in the world. Indeed, the average grade for its operations is about 0.024 oz gold per ton. Gold production this year is expected to be 270,000 oz and 250,000 in 1989, he added.