The grand dame of Idaho's Silver Valley has again fallen on hard times as her operator dropped the lease, another mining company filed suit, and a third silver miner agreed to assume operation of the Sunshine Mine-a series of events that were all announced Monday.
Sunshine had only shipped its first silver concentrate in five years a little more than a year ago, when financially troubled Sterling Mining announced Monday its intention to vacate the Sunshine Mine lease due to the company's inability to fund ongoing care and maintenance costs at the mine site.
In a statement, John Ryan, who had only been CEO of the mining company for a few months, said, The company has been faced with a difficult struggle over the last four to five months of routinely coming up with the funding to provide the most basic services at the mine. By the end of this month the company was faced with losing electric power service, having its commercial insurance cancelled, and simply having no remaining funds to pay even the smallest of crews to provide basic security and maintenance at the site.
Returning the property to the owner in a manner than preserves the integrity of the mine and prevents damage to the facilities is the only reasonable option at this time, he added.
Meanwhile, Sterling is also beginning negotiations with the U.S. EPA over a settlement involving violations of the Clean Water Act between April 2007 through November 2008. The majority of these violations were a result of excess manganese being discharged into the effluent, a problem which was related to pumping the mine and which was eventually corrected. The company also suffered a fracture in a mine tailings line which resulted in significant tailings materials being spilled into the Big Creek near Kellogg, Idaho.
Minco Silver Monday announced it had filed an action to foreclose on Sterling Mining over a $5 million loan Minco made to Sterling on July 22, 2008, to meet general working capital and operating expenses of the Sunshine Mine. The loan was secured by all the real and personal property assets of Sterling including the lease on the Sunshine Mine.
Minco announced it has been granted a temporary restraining order prohibiting Sterling, its officers, directors and agents from removing, selling, destroying, disposing of, or concealing the Sterling Mining Company assets.
SNS Silver announced Monday that it has entered into an agreement with refiner Sunshine Precious Metals that the two companies have agreed to have SNS assume the Sunshine Mine lease and operation.
Effective on February 19th, SNS assumed all utility expenses and provided personnel and security to the mine site.
SNS President David Greenway said legal actions filed by various Sterling Mining creditors have no impact on SNS's assumption of the Sunshine Mine lease. SNS's primary asset is the Crescent Mine in Kellogg, Idaho, which is now the subject of an extensive drilling program.
The Sunshine Mine officially began operations in 1921. By the end of 1988, the mine had reached its full production; hit a peak production of 5.4 million ounces of silver in 1991, and eventually yielded nearly 365 million ounces, making it one of the nation's richest silver producers.
The mine suspended production in 1982. Since 2003, Sterling had worked to rehabilitate the mine and its facilities to resume production in 2007. In a 43-101 report completed in April 2007, mining consultant Behre Dolbear estimated that Sunshine has 23,486,698 ounces of proven and probable silver reserves. Measured and indicated ounces were estimated at 31,154,355 ounces.
Sunshine was also the site of one of the nation's worst mining disasters when 91 miners were overcome by carbon monoxide during a 1972 fire. Only two of the 93 miners working when the fire erupted survived.