Southeast mines hit pay dirt: producing mines enjoy high gold prices.

• Author: Lavrakas, Dimitra
• Position: SPECIAL SECTION: MINING

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Southeast Alaska was built on a foundation of fish and gold. The constant question of why Juneau is the capital of Alaska is rooted in its mining history and who hit pay dirt first.

In the late 1800s, Kowee of the Auk Tlingit Tribe received a reward from Sitka engineer George Pilz for bringing him ore samples. Later, Kowee directed prospectors Joe Juneau and Richard Harris to Snow Shoe Gulch where the main vein lay and Pilz grubstaked Juneau and Harris.

It was a golden capital and they called it Juneau.

Over the years, when mine names like Treadwell, A.J., Ebner, Nugget Creek and Perseverance have faded out new Southeast mines have stepped up, and with good reason--in mid-September, gold prices hit $1,275.60 per ounce.

GREENS CREEK MINE

Hecla Mining Co. moved swiftly to take over full ownership of the Greens Creek Mine on Admiralty Island in Southeast Alaska after April 2008, jumping from a 29.7 percent ownership to 100 percent. It was a wise move at a golden moment, for in 2008, gold was a mere $650 an ounce.

With headquarters in Coeur d'Alene, Idaho, the company oversees mining of silver, zinc, gold and lead on 17 patented lode claims and one patented mill site claim. In addition to the property leased from the U.S. Forest Service, Hecla has title to mineral rights on 7,500 acres of federal land nearby, according to its website,

Hecla employs more than 325 workers, who take a 40-minute ride from Juneau to Admiralty Island to work in the underground mine.

In 2005 Greens Creek reached an agreement to purchase excess hydroelectric power from Alaska Electric Light and Power Co. and completed infrastructure installation in 2006. When available, the company has been using hydroelectric power instead of relying on the diesel generation units at the mine site since the third quarter of 2006, reducing production costs at Greens Creek. Thanks to new capacity installed by AEL&P in 2009, the mine expected most of its power to be hydroelectric generated in 2010.

As of the end of 2009, the company recorded a $35.3 million asset retirement obligation for reclamation and closure costs and maintained a $30 million reclamation bond secured by the restricted cash balance of $7.6 million for Greens Creek. At that time, the net book value of the Greens Creek unit property and its associated plant, equipment and mineral interests was approximately $703 million.

"The cash flow that it generates is nothing like Hecla has seen in its...