OURAY – A historic silver mine near Ouray has attracted the attention of new investors, and may soon creak back into production.
Star Mine Operations LLC, a subsidiary of the Denver-based private mining company Silver Star Resources, has a lease-purchase agreement on 500-600 acres of patented and unpatented mining claims associated with the Revenue-Virginius mine.
The property is located near Yankee Boy Basin, 6.9 miles south of Ouray, above the Camp Bird Mine, and below the Ruby Trust.
“We haven’t completed the purchase of [the mine]; but we have 100 percent of the rights,” said Project Manager Rory Williams of the pending deal. Williams was reached by phone for an interview earlier this week while he was on a business trip to Vancouver, Canada.
The company is currently drafting documents to obtain a production permit to allow underground mining at the Revenue-Virginius as soon as 2013. Ultimately, Williams said, the mine could produce about 250 tons of silver-rich ore per day, employing “up to 50” local residents year-round over perhaps a decade of operation. “It will be quite a big operation.”
“Our goal is to employ 100 percent locals,” Williams said. “And we have discovered a lot of them who are willing and capable, so we’re very excited about that. A lot of people [in Ouray] are eager for year-round, good, strong-paying jobs.”
At this point, however, the mine has just five employees with boots on the ground, including mine manager John Trujillo (a geologist and Ouray native), Trujillo’s son LJ and brother Mark, and two others. A contracting company from Silverton, Underground Specialties, owned by fellow Ouray native Jack Clark, is also providing services at the mine.
This small group started working up at the Revenue-Virginius last fall on mine rehabilitation. Mine, Safety and Health Administration records show the operation officially got underway on Oct. 19, 2011.
Since acquiring the property, Star Mine has filed a safety plan with MSHA and an initial exploration permit through the Colorado Division of Mining, Reclamation and Safety. The company is permitted to conduct core drilling at the site, Williams said, but has not done so yet.
Workers are currently in the process of refurbishing surface facilities and making the 125-year-old underground workings safe for more extensive mining operations.
“It was in bad disrepair,” Williams said. “Roofs were caving in. We’ll get there, but it just takes time.”
San Miguel Power Association ran a power line up to the mine just last Tuesday.
All projected mining activity will take place on patented claims (which are private lands); the operation is buffered by unpatented claims on United States Forest Service property, but no surface activity will take place on these public lands. Thus, the operation does not require a USFS permit to move forward, Williams said.
While mine operators have come and gone over the years, the Revenue-Virginius Mine Company itself has remained in the same family since its first claims were staked in 1876, Williams said. Original family descendant David Tippett is the company’s current president.
In its heyday, the mine was a profitable venture, producing more than 14.5 million ounces of silver between 1876 and the late 1940s. It weathered the Silver Panic of 1893 while many other silver mines in the region and across the west failed.
“We’ve been looking all over Colorado to find good mine like this one, with a good background and history, and strong data,” Williams said.
The Revenue-Virginius vein is a narrow, steeply dipping mesothermal-quartz vein rich in silver. Mesothermal veins, commonly loaded with high-grade ore, are formed at moderate temperature and pressure, crystallizing from hydrothermal fluids injected into fissures and other openings in rocks.
In spite of its riches, the Revenue-Virginius lay dormant through the latter half of the 20th century, largely due to a regulatory and economic climate that was not mining-friendly. Interest in the property perked up again in the 1980s, when quite a lot of work was done amassing new about the mine’s production potential. The property saw additional exploration activity in 2001.
“Based on that, we believe it will be a profitable endeavor,” Williams stated.
Once production is permitted and gets underway, Williams said, ore will be drilled and blasted out the vein, and transported to an underground mill (currently in the engineering and design phase) via a tracked pulley system powered by electricity and compressed air.
Absolutely no diesel vehicles or machinery will be used underground, Williams said, due to the problems with air quality from exhaust emissions.
Small batches of ore concentrate from the underground mill will be trucked down the mountain to Ouray once a day, then transported to a site yet to be determined for further processing.
Housing the mill and additional equipment underground has a lot of potential benefits, Williams said. “It reduces the noise. It reduces the eyesore. There won’t be a giant mill building. It will look and sound nicer.”
Mill tailings will initially be laid on top of abundant gravel waste material that already scars the landscape around the historic mine workings, and later perhaps stashed (or “gobbed”) within the mine itself as more room opens up underground.
Surface tailings will be blended with soil and then planted with grass. Reclamation will be an ongoing process, Williams said, simultaneous with mining.
“We want to make sure the whole site gets reclaimed properly,” Williams emphasized. “We want to be as environmentally friendly as possible. We’re definitely willing to spend extra money to make sure the area stays nice. We’re not a random company trying to make a quick buck and leave.”
Silver Star Resources LLC has approximately 15 employees, Williams said. The company’s roots are in oil and gas operations. Records show it was established in 2009 and incorporated in Colorado, with offices is in Denver. Star Mine Operations currently has one other active mining project – a large iron-rich sand deposit in the deserts of central Peru.
Williams declined to divulge information about Star Mine Operations’ projected start-up costs at the Revenue-Virginius, although he did allow that they will be “substantial.” The venture’s primary investors are “individuals from Colorado,” he said.
An internal feasibility study conducted by a previous mine operator in 1998-1999 projected that the Revenue-Virginius property could be reopened at a production rate of approximately 2.5-3 million ounces/year following a $12-15 million capital investment. Net cash costs of production at that time were estimated to be approximately $4/ounce.
Silver prices this week hovered at around $32/ounce.
Williams stressed that the Star Mine Operations has no intention of going public. “All of our companies are private, and we plan on keeping them private,” he said. “We want the environment to be protected while offering jobs. I’d be a little worried, if too many outsiders became involved, that we may not be able to preserve the interests of local people. We definitely do not want to jeopardize tourism.”
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