-- Posted 15 March, 2007 | |

The Wallace Street Journal

By David Bond, Editor

The Silver Valley Mining Journal

Wallace, Idaho – Back in the mid-1970s, with gold and silver awakening from the anesthetic Franklin Delano Roosevelt had given them 30 years earlier, appeared a cute television sit-com with the title “Welcome Back Kotter,” whose delightful theme song was penned and performed by John Sebastian of the Lovin' Spoonful – New York's only successful electric folk band at the time. “Welcome Back Kotter,” whilst a tad schmaltzy by modern standards, was a cut above the Brady Bunch treacle of that era, to be sure.

The storyline of “Welcome Back Kotter” centered around a junkyard dog bad-boy from the wilds of Brooklyn who left his home turf for some fancy school out West, only to return to the 'hood to teach social studies to a bunch of hoodlums, calling themselves the Sweat Hogs and led by John Travolta,  at his Flatbush alma mater.

Might we nominate a sequel to that series: “Welcome Back Hecla.”

What a delightful pair of news stories we awoke to a few mornings ago. Firstly, that Hecla Mining Co., now headquartered in that poofter burgh of Coeur d'Alene, Idaho, but birthed, reared, nurtured, fire-tested and matured in the mean streets of Burke and Wallace, reported that its income and profit for 2006 was the best in the company's 116-year history – and not by degrees, but by orders of magnitude. But secondly, and more important, was Hecla's announcement of an ambitious future for the Silver Valley's Lucky Friday Mine – the company's flagship silver property. Those plans likely are to include a pair new deep shafts – one breaching the surface and other an internal winze – along with expansion of surface milling facilities as might befit a world-class primary silver mine. A figure of $200 million is being bandied about.

At the end of Hecla's follow-through a couple of years hence, you will see a primary silver mine kicking out ounces heretofore the exclusive property of dreamers, at grades that, even (or especially) diluted by base metals would make your average Mexico producer green with envy.

It is not possible to live in the Coeur d'Alene Mining District without becoming aware – infuriatingly aware – of the two approaches NYSE-listed companies have taken toward this camp. One is Hecla, errant child, prodigal son, returned home and forgiveness all in. The other models for our study include Gulf Resources & Chemical Corp. (former owners of the great Bunker Hill complex), the old Sunshine Mining Co., and Coeur d'Alene Mines Corporation, which thankfully has left this place, but not before kicking us in the balls not once, not twice, but so many times that we have lost count. The lessons learnt by Gulf and Sunshine MC are this: bail out of the Silver Valley at your own peril. Bankruptcy is next. Whether Coeur's fates follow the perilous path of its predecessors at  Gulf and Sunshine MC is, we suppose, up to  the Bolsheviks in Bolivia, the salmon fishermen of Skagway, and the karma gods. Helluva long bet, you ask us.

But why fret over the negative?  The good guys who've stayed, or recently plunked down roots here, will benefit their shareholders even as they benefit from being in the Silver Valley. There are, in case one needs to be reminded, at least 1 billion ounces of silver – that's 1,000,000,000 ounces – in the ground here south of the Osburn Fault in addition to the 1,000,000,000 ounces already mined. Which doesn't include, of course, an  estimated 2,000,000,000 ounces north of the Fault just being scratched at by the likes of Coeur's last decent CEO, Justin L. Rice.

Let's talk about what one billion means, here directly plagiarized, hyper links and all, from Wikipedia:

·       One billion seconds is 31 years.

·       About a billion minutes ago, the Roman Empire was flourishing. (One billion minutes is roughly 1,900 years.)

·       About a billion hours ago, modern human beings and their ancestors were living in the Stone Age (more precisely, the Middle Paleolithic). (One billion hours is roughly 114,000 years.)

·       About a billion days ago, Australopithecus, an ape-like creature related to an ancestor of modern humans, roamed the African savannas. (One billion days is roughly 2.7 million years.)

·       About a billion months ago, dinosaurs walked the earth during the late Cretaceous. (One billion months is roughly 82 million years.)

·       About a billion years ago, the first multicellular organisms appeared on Earth. (The universe is currently thought to be about 13.7 billion years old.)

In terms of distance:

·       A billion centimeters is about the distance from Chicago, Illinois, USA to Tokyo, Japan.

·       A billion inches is 15,783 miles, more than halfway around the world and sufficient to reach any point on the globe from any other point.

·       A billion meters is almost three times the distance from the Earth to the Moon.

·       A billion kilometers is over six times the distance from the Earth to the Sun.

A billion is a boat-load of stuff. Now just imagine all that silver, piled in your living room in the form of one-ounce rounds. Now, that's how much silver we've already shipped out of this place. With another 1 billion, 2 billion, 3 billion ounces loading up at the station.

No wonder Hecla is returning to the well. And they are welcome home. Lucky Friday miners last year made something on the order of $30,000 in silver price-indexed incentives and bonuses, on top of their hourly wages and contracts. It's nice to see the parking lots at the Lucky Friday and the Galena full, and parked-up with new SUVs. It's been 25 years since this place had a break.

Sterling is prepping the Sunshine Mine for a Q4 reopening. U.S. Silver is reporting fabulous new finds at the Galena, in the upper country no less, and the guys who've hung with them stand to reap a huge stock dividend this year. SNS Silver, formerly Strategic Nevada, intends to plunk $3.5 million down on Crescent mine exploration this year. Aura Silver will drop 300-large into the Pine Creek District on exploration, even as their Mexico silver and gold property next to Fortuna and Continuum is beginning to shine like a jewel. Just over the hill, New Jersey Mining Co. is going great guns at the Golden Chest, and talk on the street is of a 1,000 ton/day operation there – that's Sunshine size. Rumours of deals around the Lucky Friday at Vindicator and Independence, and around the soon-to-be-producing Bunker Hill and Sunshine, and the suddenly red-hot Galena, are rampant. Time to get out the map.

Jerome Bunde reports to us that for the first time in 25 years, miners are investing a portion of their paychecks in the mining stocks here. We've got churn again, and that's good for all concerned. Whether silver is $9 or $90 this time next year, won't matter. This rusty old mining camp has shed the surly bonds of earth, is set to soar and shine. With all those 1,000,000,000s of ounces, would you expect any less?