Juneau's new Kensington Mine is in good financial shape but could face construction delays and difficulty maintaining its current work force if the federal government does not soon complete its review of the mine's major permits, the chief executive officer and president of the Coeur d'Alene Mines announced Wednesday.
The mine, 45 miles northwest of downtown Juneau, recently attracted $146 million in new investment on Wall Street, reported Dennis Wheeler, whose Idaho-based mining conglomerate owns the mine.
In addition, some exploration outside the Kensington Mine's federally listed mineral reserve has shown even higher concentrations of gold than what is inside the 1.1 million-ounce reserve, Wheeler said.
The mine's major permits are being challenged in court and scrutinized in a federal review due to allegations of violations of the Clean Water Act. Wheeler said Wednesday he is optimistic the project's disputed permits will be re-instated.
The environmental lawsuit remains on hold during the federal agency review.
Now is a good time for Alaska to invest in the precious metal industry because production of gold is declining around the world, but prices are hitting a 22-year-high, Wheeler urged members of the Southeast Conference, meeting in Juneau Tuesday and Wednesday. The two-day event was a gathering of the region's civic and business leaders, who have generally supported the mine.
Last fall, Coeur decided not to trim back its work force of about 200 in Juneau, though the U.S. Army Corps of Engineers withdrew two of its construction-related permits for internal review, Wheeler said.
The permit withdrawal caused a reduced pace of construction at the mine, but Coeur assumed that the federal review process would last 90 days. Instead it has continued for 120 days. The delay has cost Coeur about $30 million, Wheeler said.
Coeur would need its permits back within the next few weeks to remain on track with its construction and production start date. Also, the company will face a decision soon over whether it can maintain its labor force "when they can only do a limited amount of work," Wheeler said.
Contacted earlier this week, Juneau's Corps of Engineers field officer, John Leeds, said he did not know when the agency would complete its review of the permits.
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Gov. Frank Murkowski, who attended Wheeler's speech, said state officials have been monitoring the review process "every day."
Environmentalists in Juneau are fighting the Corps' original decision to approve a permit allowing the mine to put its tailings, or rock waste, into a subalpine lake, saying it violates the Clean Water Act.
The Southeast Alaska Conservation Council, the Sierra Club and Haines-based Lynn Canal Conservation filed a lawsuit challenging the mine's major permits last fall.
Wheeler said Wednesday that the tailings are a "nonissue" because they are benign, but the Southeast Alaska Conservation Council disagreed.
"It definitely is an issue," said Kat Hall, a mining coordinator for the council. "This is precedent setting. If it is allowed here in Juneau, it would be easier for it to happen elsewhere, in places such as Bristol Bay."
The southwestern Alaska bay is home to one of the world's largest salmon fisheries, as well as another controversial gold deposit called the Pebble prospect. The mine could require a similar water body-disposal method, according to state officials.
Wheeler gave an upbeat assessment of the company's economics Tuesday.
"Precious metals markets are very strong right now," Wheeler said, noting that Coeur d'Alene Mines had an all-time record quarterly net income of nearly $10 million for its fourth quarter in 2005.
In the last six months of 2005, global consumption of gold jewelry grew by a "surprising" 13 percent, Wheeler said.
"If you look worldwide, the production of gold and reserves is declining. There are really only a handful of deposits in the world today entering the construction state that are considered to be world-class deposits. ... Kensington happens to be one of those," Wheeler said.