Galena Mine will be sold

Coeur d’Alene Mines Corp. is leaving the valley that birthed it with the sale of the 53-year-old Galena Mine.

The company announced Monday that it has struck a deal to sell the mine and other properties in Idaho’s Silver Valley to a privately held company, U.S. Silver Corp., for $15 million. The sale is expected to close by June 1.

“It’s kind of tough to see a name like Coeur d’Alene Mines leave the valley. They’ve been here forever,” said Vince Rinaldi, executive director of the Silver Valley Economic Development Corp., even as he expressed optimism about the new owner’s plans for the mine.

The Galena’s 180 workers are expected to keep their jobs, and officials at U.S. Silver Corp. said they plan to invest aggressively in the mine in hopes of reversing its downward slide. The Galena lost $2.2 million last year despite rising silver prices.

Coeur d’Alene Mines Corp. Chairman Dennis Wheeler declined a request for an interview Monday, but he said in a statement that cash from the sale will be reinvested in more profitable operations. In recent years, the company has focused on low-cost silver properties in South America and Australia.

The Galena is one of the deepest mines in North America, with workers descending roughly a mile underground to extract silver and copper ore. Labor and mining costs, already high, spiked last year amid lower ore grades.

News of the sale, however, saddened Justin Rice, Wheeler’s 87-year-old uncle.

“It really is a shame. It really breaks my heart, because I was born and raised Coeur d’Alene Mines,” said Rice, who retired as the company’s chairman in 1992.

Rice’s father, Harlow Rice – a baker by trade – helped shepherd the firm from a penny mining stock into a going concern during the 1950s and ‘60s. Coeur d’Alene Mines was one of many small mining companies that sprang up during the Silver Valley’s heyday, but among a select few that went on to trade on the New York Stock Exchange.

In addition to the Galena Mine, the sale includes the closed Coeur Mine and other exploration properties in the Silver Valley. Coeur d’Alene Mines operated the properties in conjunction with Asarco Inc. until 1999, when it acquired full ownership. At the time, Wheeler had ambitious plans for the Galena, setting a production goal of 8 million ounces of silver from the mine by 2007. Last year’s performance, however, was a disappointing 2.1 million ounces of silver.

The Galena is one of two operating silver mines left in the valley.

U.S. Silver Corp. formed specifically to purchase Coeur d’Alene Mines’ Silver Valley assets. Even though the Galena doesn’t fit Coeur d’Alene Mines’ profile for low-cost properties, it’s still a valuable mine – particularly with silver prices topping $12 an ounce, said John Ryan, U.S. Silver’s chief executive officer. The firm expects to spend heavily on exploration and capital improvements at the Galena, areas where Coeur d’Alene Mines cut back during lean years of low silver prices.

“In order for this mine to be successful in the long term, there needs to be additional discoveries of silver resources,” said Mark Hartmann, U.S. Silver’s president.

Hartmann expects to meet with the mine’s employees within the next week to answer questions about the sale. U.S. Silver isn’t expecting any changes in the work force in the near term and hopes to expand the number of employees over time, he said. A contract with the hourly workers that expired March 1 has been extended for six months.

Though U.S. Silver is new, both Ryan and Hartmann have ties to the Silver Valley. Ryan graduated from Wallace High School and earned a mine engineering degree from the University of Idaho. He’s been involved in a number of startup companies. Hartmann formerly worked for Sunshine Mining Co.

U.S. Silver was incorporated in Delaware. Its headquarters will be in Wallace.

Most analysts believe that metals prices are in a period of sustained growth, Ryan said, based on demand from the rapid industrial expansion in China, India, Russia and Brazil. That bodes well for the Galena, which produces copper as well as silver, he said.

“We just hope like heck that silver prices stay where they’re at,” added Rinaldi, director of the Silver Valley EDC. “Those 180 jobs are really important to us.”