Plans for open-pit gold mine ditched

July 25, 2001

By Eric Pryne, Seattle Times staff reporter
STEVE RINGMAN / THE SEATTLE TIMES
Buckhorn Mountain, left, the Okanogan County site where a Texas mining company had plans of clawing out a vast open-pit gold mine. Now, if any gold is extracted at all from the mountain, it would probably be via underground shafts and tunnels.After investing 11 years and $60 million, a Texas mining company has abandoned plans to blast a huge open-pit gold mine into a remote mountaintop in Okanogan County.

Battle Mountain Gold of Houston, which led a joint venture to develop the proposed Crown Jewel mine on Buckhorn Mountain near Chesaw, confirmed yesterday that it has pulled out of the project, retaining only the right to a royalty on any gold the property might one day produce.

Crown Resources, a small Denver gold-exploration company and the venture's remaining partner, said it will seek permits for a smaller, largely underground mine it said would be much less environmentally disruptive.

"This is a radical departure from what was proposed before," said Christopher Herald, Crown's president and chief operating officer.

But the director of an environmental group that has battled the mine for years said Battle Mountain's pullout means any mining on Buckhorn Mountain is unlikely.



"I don't underestimate them. I take them seriously," David Kliegman of the Okanogan Highlands Alliance said of Crown Resources. "But they're going to have to find a partner and some financing. There are still legal and environmental questions. Their odds don't look very good to me."

He called Battle Mountain's decision "a victory for the rule of law over big money."

The Crown Jewel mine would have been Washington's largest open-pit hard-rock mine, this state's introduction to the kind of large-scale mining now practiced in the Rocky Mountains and elsewhere. It would have reshaped a square mile of mostly federal land to extract 1.4 million ounces of gold — worth about $385 million at today's prices — from Buckhorn Mountain over eight years.

The mine became an environmentalist cause célèbre in the early 1990s, and emerged as a prominent issue in last fall's U.S. Senate race between Republican Slade Gorton and Democrat Maria Cantwell.

Cantwell, who won, ran TV ads ripping Gorton for championing an amendment in 1999 that kept the project alive after a Clinton-administration ruling threatened to kill it.

Crown Jewel suffered a serious setback 18 months ago when the state Pollution Control Hearings Board overturned crucial water rights and water-quality permits, citing concerns over the mine's pollution-mitigation plans.

Battle Mountain fought on, filing an appeal, but Herald said that defeat probably was the key factor in the decision to pull out.

Doug Hock, spokesman for Newmont Mining, Battle Mountain's corporate parent, said the company considered permitting problems, the relatively small size of the deposit and its distance from most other Newmont properties. Newmont, which acquired Battle Mountain in January, is one of the gold-mining industry's giants.

The Crown Jewel project "just didn't make sense for us as something to continue to put capital into," Hock said.

Battle Mountain promised 150 high-wage jobs to rural Okanogan County, where unemployment is high. County Commissioner Dave Schulz said he's sorry to see the company go.

"The appeals just drag on decade after decade," he said. "We need some jobs."

Herald briefed county commissioners on Crown Resources' plan Monday. "They are going to approach it differently," Schulz said. "We'll have to wait and see how that goes."

Herald said the smaller, underground mine the company now envisions would support as many jobs as the open-pit mine, because underground mining is more labor-intensive. But it would process half as much ore, produce 90 percent less waste rock and use 60 percent less water and half as much cyanide, he said.

Processors use a cyanide solution to leach ounces of gold from tons of pulverized ore.

Herald said Crown must restructure its corporate debt over the next six weeks and secure new financing before it can proceed. The company has made progress, he said, traveling to New York and London seeking money, but "there is no assurance of a favorable outcome."

Kliegman of the Okanogan Highlands Alliance said his group will oppose any mining on Buckhorn Mountain — underground or open-pit — because of the effect on ground water and other resources.

"Just because there's gold there doesn't mean you should mine it," he said.

Eric Pryne can be reached at 206-464-2231 or epryne@seattletimes.com.


Copyright © 2001 The Seattle Times Company

Company kills plans for gold mine
Pursuit of open pit site in Okanogan County ends

Becky Kramer - Staff writer


Battle Mountain Gold Co. is dropping plans to develop Washington state's first large open-pit gold mine.

After spending $84 million on the project in Okanogan County during a decade of legal and permit battles, the Houston-based company announced Tuesday that it was pulling out.

"It was really a business decision," said Doug Hoak, director of public affairs for Newmont Mining Co., which acquired Battle Mountain Gold in January. "We look at how we allocate capital very carefully, particularly in a low gold price environment."

Newmont leans toward larger projects, he said. And the core of its business is in other areas -- Nevada, South America and Indonesia.

Battle Mountain's partner, Crown Resources of Denver, still hopes to develop a smaller underground mine on the site.

Environmentalists and Battle Mountain waged fierce skirmishes over the Crown Jewel Mine, proposed for a remote area of the Okanogan Highlands near the Canadian border. The mine would have removed part of Buckhorn Mountain to extract 1.4 million ounces of gold -- roughly a pickup load -- over its eight-year life. A weak cyanide solution would have leached the gold from the rock.

Environmentalists feared the mine would suck up scarce water resources and leave behind a toxic lake. The company disputed those charges.

The battle over the mine became national news in 1999. When the Clinton administration denied the Crown Jewel's operating permit, former U.S. Sen. Slade Gorton tacked approval onto an emergency spending bill for Kosovo -- a point environmentalists harped on during his 2000 senatorial campaign.

An underground mine would be a less controversial operation, said Christopher Herald, Crown Resources' president and CEO. "It changes a lot of things with the project," he said.

Battle Mountain's mine plan would have resulted in 97 million tons of waste rock. An underground mine would reduce that by 90 percent or more, Herald said. It also would eliminate an open pit lake. In size, the mine would be similar to the Kettle River gold mine operated by Echo Bay Ltd. near Republic, Herald said. Battle Mountain Gold retains a right to earn royalties on the project.

Crown Resources hopes to have new permits in place within two years. The company also is looking for financing.

With gold at $269 per ounce, attracting investors is much more difficult than it was four or five years ago. Gold prices averaged $390 an ounce in 1996.

However, "this is a very good ore body. If we didn't think we could do it, we wouldn't even try," Herald said.

Local opinion has been split over the mine. Some residents welcome the idea of more high-paying jobs in the area. Others fear that the mine would affect the area's hydrology, drying up springs used by ranchers and leaving toxic metals.

"I'm very positive about the mine," Okanogan County Commissioner Bob Hirst said. "It's a sad day for Battle Mountain Gold, that's true. But it's a very viable project."

Hirst was among 40 members of the Common Sense Resource League who met with Herald in Oroville, Wash., Monday night.

The underground mine would extract slightly less gold, but employ roughly the same number of people, because underground mines are more labor intensive, Herald said. That's 150 new jobs over eight years, he noted.

But Dave Kliegman, director of the Okanogan Highlands Alliance, said potential long-term problems outweigh the economic benefits.

"I don't think a mine should be developed on Buckhorn Mountain. An underground mine would still pollute the water," Kliegman said.

Battle Mountain Gold finally got the message after a 10-year struggle, he said. "It's unfortunate that Crown Resources has not yet seen the light."

There still are significant barriers to the mine's development, including financing, Kliegman said.

"Who is going to want to invest in the Crown Jewel project after what it's been through, and after Battle Mountain has pulled out?" he asked. "They still have to deal with us. We live here, and we're not going away."

• Becky Kramer can be reached at (208) 765-7122 or by e-mail at beckyk@spokesman.com.