Hecla has eye on long term with deal to buy Rock Creek Mine

Hecla Mining Co. is poised to buy a large silver-copper deposit in northwest Montana whose location beneath a wilderness area has spurred decades of debate over whether it should be developed into a mine.

Through a $20 million stock deal expected to close in the second quarter, Hecla would purchase Revett Mining, the owner of the Rock Creek deposit. It’s one of the richest undeveloped mineral properties in North America, with an estimated 229 million ounces of silver and 2 billion pounds of copper.

The deposit holds enough silver and copper to keep a mine running for 30 years, which fits Coeur d’Alene-based Hecla’s strategy of acquiring long-lived properties. But years of litigation have dogged the Rock Creek project.

Extracting the copper and silver would require tunneling underneath the 94,272-acre Cabinet Mountains Wilderness, which is one of the nation’s first designated wilderness areas. The region is home to federally protected grizzlies and bull trout. More than 40 streams tumble out of the wilderness to feed the Kootenai and Clark Fork rivers.

After the Wilderness Act was passed in 1964, mining companies were allowed to stake claims in wilderness areas for another 20 years. The Rock Creek claims passed through several owners before Revett acquired them in 1999.

Opposition to the project “is mostly about location,” said Mary Crowe Costello, executive director of the Rock Creek Alliance, which represents about 600 mine opponents, primarily in Sandpoint and Spokane.

Developing the mine would put heavy industry on the perimeter of a pristine wilderness area, she said. Water quality is also a concern. The operation would discharge treated wastewater into the Clark Fork River, which flows into Lake Pend Oreille.

“The economy of Sandpoint is based on keeping Lake Pend Oreille clean,” Costello said.

Over the years, even Tiffany’s weighed in on the debate. In 2004, the New York jeweler ran an advertisement in the Washington Post, saying the area’s recreational values were more important than mineral extraction.

But the legal battles may be winding down. This summer, the Forest Service will release a supplemental environmental impact statement on the Rock Creek Mine, which a federal judge ordered after he found deficiencies in the first EIS. The new document could clear the way for the mine’s eventual permit, said John Shanahan, president and CEO of Revett Mining.

Shanahan described the company’s pending sale, which must be approved by shareholders, as a “bittersweet” financial necessity.

Revett closed its Troy, Montana, mine in January amid falling copper prices. That left the Spokane Valley company without revenue. The company posted a $61 million loss for 2014, mostly from write-downs on the book value of its assets.

Hecla would bring deep pockets, expertise in underground mining and the ability to wait out poor metals markets to the Rock Creek project.

“We see the Rock Creek project as a long-term investment,” said Luke Russell, Hecla’s vice president of external affairs. “We know it will be many years before it comes into operation.”