Mining group sells Greens Creek

Posted: Wednesday, February 13, 2008

Mining group Rio Tinto PLC announced Tuesday it will sell its stake in Juneau's Greens Creek Mine to its joint-venture partner, Hecla Mining Co., for $750 million.

Juneau Empire File
Juneau Empire File

"They're going to get a new jacket and a different color paycheck," said General Manager Clayton Walker. "Everything else is going to stay the same."

Hecla leadership told him there will be no change in production, no freezes on hiring or capital, no layoffs and no change in the senior leadership at the Admiralty Island mine, he said.

"They're 100 percent committed to keeping everybody who wants to be kept," he said.

Coeur d'Alene-based Hecla has agreed to buy Rio Tinto's 70.3 percent stake in the subsidiaries Kennecott Greens Creek Mining Co. and Kennecott Juneau Mining Co.

Hecla already owns the other 29.7 percent of Greens Creek; Hecla and Kennecott have been the major partners in the mine for the last 20 years.

United Kingdom-based Rio Tinto has said it intends to sell $10 billion in assets this year, after taking on a heavy debt load to buy aluminum producer Alcan. This sale is part of that strategy.

Rio Tinto rejected a takeover bid from British mining company BHP Billiton earlier this month.

Greens Creek is the world's fifth largest silver mine. Last year the mine produced 8.6 million ounces of silver, 68,000 ounces of gold, 63,000 tons of zinc and 21,000 tons of lead.

The buy will double Hecla's current silver production to 11 million ounces a year, the company said in a statement.

Hecla considers Greens Creek to be a low-cost mine. The mine's average cash cost of silver last year was estimated at -$5.77 per ounce, because the byproducts pay for the silver production.

Hecla Mining Co. mines, processes and explores for silver and gold in the United States, Venezuela and Mexico.

The company made $69 million net profit in 2006 and $45 million in the first nine months of 2007.

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