Greens Creek | Admiralty Island, Alaska
The Greens Creek silver-gold-zinc-lead ore body was discovered in 1975 by the Pan Sound Joint Venture of Noranda, Marietta Resources, Exalas Resources and Texas Gas. Since the start of production, Greens Creek has been owned and operated through various joint venture arrangements involving a variety of partners, including Hecla, Kennecott, BP Minerals America, Inc. and other minor interests. Full-scale development started in 1987 with concentrate production beginning in 1989. Low metals prices closed the operation in 1993, followed by a $114 million modernization and redevelopment investment over a three-year period. Operations resumed in 1996. Kennecott Greens Creek operated the mine up to 2008 with Hecla Mining Company holding a 29.73% interest. In 2008, Hecla acquired a 70.3% interest of two Rio Tinto subsidiaries to control 100% of the Greens Creek mine.
Pursuant to a 1996 Land Exchange Agreement, giving Greens Creek a 99-year exploration lease to the area, the joint venture transferred private property equal to a value of $1 million to the U.S. Forest Service and received exploration and mining rights to approximately 7,500 acres of land with mining potential surrounding the existing mine and additional 697 unpatented lode and millsite claims located to the north of the Land Exchange.
Production from new ore discoveries on the exchanged lands will be subject to federal royalties included in the Land Exchange Agreement. The royalty is only due on production from reserves that are not part of Greens Creek’s extralateral rights. Thus far, there has been no production triggering payment of the royalty. The royalty is 3% if the average value of the ore during a year is greater than $120 per ton of ore, and 0.75% if the value is $120 per ton or less. The benchmark of $120 per ton is adjusted annually according to the Gross Domestic Product (GDP) Implicit Price Deflator until the year 2016, and at December 31, 2009, was at approximately $158 per ton when applying the latest GDP Implicit Price Deflator observation.
Drilling efforts over the past ten years have replaced production and added new reserves and resources. Exploration efforts are ongoing along the trend of numerous orebodies underground and aggressively exploring the highly prospective 27-square-mile land package on surface.