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The Galena mine has a history dating back to 1887, but modern history and mining commenced in 1953 under the management of ASARCO. Since 1953, production was primarily a silver-copper ore, with minor production of silver-lead ores. Total production since 1953 has exceeded 160 million ounces of silver, 116 million pounds of copper, and 22 million pounds of lead from 7 million tons of ore. The average grade of the silver-copper ore was 22.9 ounces of silver per ton and 0.83% copper. The average grade of the silver-lead ore was 8.2 ounces silver and 8.8% lead, per ton of ore.
Lead-silver ore was discovered in an outcrop on this property in 1887, four years after the initial discovery of precious metals in the Coeur d'Alene Mining District. For the next 30 years, ore was mined from a series of surface tunnels and in 1917 the Day brothers started sinking what is now known as the Galena shaft. In 1946 ASARCO began work deepening the Galena shaft to the 3000 level. The mine operated discontinuously until 1953 when the discovery of the Silver Vein on the 3000 level prompted ASARCO to continue sinking the Galena shaft to its current depth of over 5,500 feet. Over the past 56 years, the Silver vein alone has produced in excess of 100 million ounces of silver and is still in production today. The No. 3 shaft was sunk in the 1960's and is now the principal shaft on the property, operating to a depth of 5800 feet. The Galena shaft is currently under repair.
In 1995, a new joint-venture company was created between ASARCO and Coeur D'Alene Mines Corporation called Silver Valley Resources. This JV included the Coeur and the Caladay Mines as well. In 1999 Coeur d'Alene Mines Corporation purchased 100% of the assets of Silver Valley Resources and named the operation Coeur Silver Valley. This wholly owned subsidiary was purchased 100% by U.S. Silver Corporation in June 2006, for US $15 million.
During 2007 and 2008, management placed an increased emphasis on development and diamond drilling of the silver-lead zones that exist at the Galena mine. Recent exploration demonstrated that the silver-lead zone may be larger than originally indicated. While this exploration and development work was successful, due to recent changes in commodity prices, management plans to place a greater emphasis on silver-copper ore during 2009. The mine and mill have the flexibility to easily shift emphasis from silver-copper to silver-lead production, as needed.
The Company commenced production of silver-lead ore during the fourth quarter of 2007 and restarted the Coeur mill to process the silver-lead ores. Development activities were focused on the exploration and development of the multiple areas where silver-lead ores were identified in historic workings or drill holes in the Galena mine. Exploration and development activity produced silver-lead ores on the 2400, 3000, 3700 and 5200 levels by the end of 2008. Silver lead ore is now being produced from all of these levels. With the activation of the second circuit in the Galena mill, the silver-lead ore is now processed there and the Coeur mill has been placed on care and maintenance since January, 2009.
Development of silver-copper ores continues on the 2400, 3700, 4600, and 4900 levels. Production started in a new 3400 level discovery during 2007, a new 4600 level discovery during the first quarter of 2009 and will commence from a new discovery on the 2400 level in the second half of 2009. Development on the 3700 and 4900 levels should result in production during the second half of 2009.
The rehabilitation of the Galena shaft began in 2007. Two separate ground failures in the Galena shaft in 1999 and 2000 resulted in the inability to use the shaft from the 2400 level to the 3200 level. The Company is repairing the collapsed section by installing a 12 foot diameter concrete lining. The concrete extends, as of March 1, 2009, from the 2400 level to the 3056 level leaving about 140 feet to be excavated and lined. The repair was stopped in mid-January, 2009 as part of the effort to conserve cash.
As a result of the of the successful completion of the equity offering as described in the press release dated July 16, 2009, the repair of the Galena shaft resumed on July 27, 2009 and continues as planned. Repairs and installation of the concrete lining advanced 52 feet during the third quarter of this year. As of November 24, 2009 there is now approximately 28 feet to be excavated and lined with concrete in order to complete rehabilitation, expected by February 2010.
The repaired shaft will initially be used for hoisting men and materials. This will significantly increase time avaible for ore and waste hoisting in the #3 Shaft. Additionally, access to a number of key silver-lead and silver-copper resources in the upper levels of the mine will be enhanced once the Galena shaft becomes fully functional. Additionally, completing the shaft repairs will increase ventilation to the lower levels of the mine which will help improve productivity as well as safety.
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