From: Becky Kramer, The Spokesman-Review
Published July 15, 2005 12:00 AM

Coeur d'Alene Mines Begins Work on Alaska Gold Mine

Randy Wanamaker's grandfather took part in southeast Alaska's historic gold rush, so perhaps it's no surprise that Wanamaker -- a geologist and an Alaska Native -- is an advocate for the Kensington Mine.


Coeur d'Alene Mines Corp. began construction last week on the $85 million gold mine, located 45 air miles north of Juneau, Alaska. The mine is located in a traditional Tlingit fishing, gathering and trading spot. Through 15 years of permitting battles, the Coeur d'Alene-based company has relied on the powerful political support of three Native corporations with ties to the area.


"Some people think it's odd that Natives would support a mining project," said Wanamaker, a board member of the Goldbelt Corp., which represents 3,000 Native shareholders in southeast Alaska. However, "within living memory of a lot of people like me" are stories of grandfathers and great-uncles who worked at gold mines during the early 1900s, he said. "They were proud of our history in helping build these things."


The Goldbelt, Klukwan and Kake Tribal corporations will play a significant role in the new mine as well.


Under a joint agreement with Coeur d'Alene Mines, Alaska Natives will hold at least 25 percent of the mine's jobs, which pay an average annual wage of $67,000. Other money-making opportunities also exist. Goldbelt will shuttle workers by bus and ferry from Juneau to the remote mine site. The other corporations will provide supplies and contract services to the mine.


The Kensington Mine is expected to open in late 2006, employing 225 people during a 10- to 15-year mine life. Though the project has been controversial with environmentalists, Wanamaker said he's comfortable with it.


"We're talking about my grandfather's backyard," he said. "I'm convinced they had a responsible mining plan."


Alaska Natives make up about 30 percent of Juneau's population. Traditionally, it's been a group with high unemployment rates.


"It's a real mutual benefit for both of us," said Gary Banbury, a senior vice president at Coeur d'Alene Mines. "For them, it's employment and business opportunities. For us, it's (political) support and an employment pool to draw on."


Wanamaker helped foster the relationship. After he heard the company's CEO, Dennis Wheeler, give a speech on the importance of good relations with the local community, Wanamaker invited Wheeler to contact him if the company ever had an Alaska project. In the late 1980s, Coeur d'Alene Mines bought the Kensington property, a historic gold mine in a sensitive area.


The mine is located near Berners Bay, a rich marine ecosystem. A prolific run of eulachon -- a smelt -- draws hundreds of bald eagles, endangered stellar sea lions and humpback whales to the bay each spring. The area is also culturally significant. Tlingit people have visited Berners Bay for thousands of years, leaving behind petroglyphs and archeological sites. The area is still used for subsistence fishing.


The collaboration made the project stronger, according to Wanamaker. "Coeur knows how to operate mines," he said. "We know how to operate within our environment, our cultural traditions and our community."


The beginning of mine construction represents a significant milestone for Coeur d'Alene Mines. Since 1988, the company has sunk $150 million into the project. The underground mine had two prior designs, but neither was economically feasible when gold slipped to $260 per ounce.


A revival in gold prices, along with a cost-cutting plan, helped revitalize the project. Gold is currently trading at $425 per ounce. By eliminating a live-in work camp at the mine site and revamping the mine's tailings disposal, the company will break even -- on a cash-flow basis -- at gold prices of $300 per ounce.


"We also expect gold prices to continue to rise," said Heather Turner, company spokeswoman. "Analysts are projecting $500 to $600 gold prices over the next one to two years."


The new plan is less environmentally intrusive than earlier versions, said Kurt Russell, the company's vice president of environmental resources. Without the work camp, the mine site occupies a smaller footprint on the Tongass National Forest, he said. No cyanide will be used at the site, and daily ferry access lowers the amount of fuel and other chemicals stored at the mine.


But the project remains controversial with Juneau environmentalists. Berners Bay is a popular kayak and wildlife viewing area. Conservation groups have raised concern about the company's plans for tailings disposal and the ferry's impact on marine mammals.


As a cost-cutting measure, Coeur d'Alene Mines will dump the mine tailings in a 20-acre natural lake, instead of building a land facility. The tailings are the crushed rock that remains after the gold has been extracted. After the mine is closed, the lake would be restocked with fish.


"The company feels pretty confident that they can basically trash the lake, then reclaim it and make it better," said Kat Hall, mining and water quality coordinator for the Southeast Alaska Conservation Council. "It all comes down to whether the tailings will be habitable for fish and other creatures."


Russell describes the tailings disposal as a tightly controlled, tightly monitored process. The company and Native corporations must also comply with stringent rules to protect wildlife in Berners Bay, he said.


The ferry dock, for example, can't be used when herring are spawning in nearby kelp beds. When the eulachon are running, the ferry has to drop its speed. Stellar sea lions and whales come into the bay to feed during the run, and that's when the risk of collisions is highest.


"We'll have observers on board trained by the National Marine Fisheries Service," Russell said. "We'll be working to minimize encounters."


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Source: Knight Ridder/tribune Business News


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