Gold in Them Thar Hills

A gold mining operation that wants to start digging soon in the Ortiz Mountains of Santa Fe County has financial ties with an Australian mining business, Delaware incorporation and Arizona roots. Yet, Santa Fe Gold Corp. is a “homegrown company,” its president and CEO, W. Pierce Carson tells SFR.

A geologist by training, Carson earned a Ph.D from Stanford University, and says he’s been in mining his whole life, including stints at Exxon Mobile and Kennicott Copper. But he stresses that he and other top officials in the 65-employee  firm have been New Mexico residents for years.

“We’re sort of a homegrown company,” Carson tells SFR.

Carson is banking on that image to assuage local concerns and outright opposition to his company’s plans to mine for gold beneath  a cattle ranch that produces Kobe beef near the small town of Golden—along New Mexico’s historic Turquoise Trail, in the southwestern corner of the county.

Henry Carey, consultant for Bob and Mary Estrin’s Lone Mountain Cattle Ranch, says they want to be sure state and local environmental rules are followed  if and when mining begins.

New Mexico has what’s called “split estate,” which means, as is the case for their ranch, a different owner can hold claim to mineral rights below a parcel of land.

The split-estate situation can raise tricky legal questions.

In 1992, LAC Minerals, Inc. and others filed a federal complaint against then-ranch-owner Marion Lloyd and Mary Estrin, her daughter, alleging they interfered with mining by publically advocating against it. The two parties settled out of court.

A District Court request filed Tuesday by the Estrins alleges that legal process was costly and has had “a chilling effect” on the family’s “actions as citizens and surface land owners.” It asks the court to declare whether the Estrins can exercise First Amendment and other rights in expressing concerns about Santa Fe Gold’s plans.

The request alleges that the mining operation’s plans for waste rock will leave tailings piled 60 feet high on 106 acres of the ranch.

The Los Angeles, Calif. couple raises between 250 and 400 head of Wagyu Japanese cattle, on the  the 27,545-acre ranch. Mercury contamination from other mining projects, dust and disturbance of the cattle are just some of the Estrins’ concerns about Santa Fe Gold’s proposal, Carey says. “They’re just concerned about the mining companies compliance with all of those rules, which have been designed to safeguard the environment and local people’s lifestyle.”

Others have definitive opposition to a new mine.

“This gold mine is not something that should be a part of this community’s sustainability plan,” says Marc Choyt, president of Santa Fe-based jeweler Reflective Images and co-founder and director of Fair Jewelry Action, an organization that advocates for environmental sustainability in jewelry production and traceability through its supply chain.

Choyt is serving as a spokesperson for a campaign against Santa Fe Gold’s proposal. He argues that a 1,000-foot deep crater created by mining the deposits, water-use required by a mining operation and possible mercury contamination leftover from past mining ventures pose environmental threats if there’s a new gold mine.

The Santa Fe Gold claim is near the Ortiz Mountains Educational Preserve, a 1,350-acre public space created after LAC Minerals settled a lawsuit with area-residents due to waste contamination that resulted from previous use of open-pit and cyanide heap-leaching of the Ortiz Mountains in the 1980s.

Choyt also questions whether Santa Fe Gold would actually hire locals for a mining operation on the Ortiz Mountains as they have promised.

“There is no real guarantee of local hiring jobs,” he says, noting the company’s association with Australian mineral company International Goldfields Ltd.

Whatever local opposition Santa Fe Gold is encountering isn’t preventing the Albuquerque-based mining company from moving forward with its plan to extract gold from the Carache and Lukas canyons of the Ortiz Mountains. A preliminary economic assessment released by the company in September—conducted by the Minerals Advisory Group, LLC—“announced positive results,” Santa Fe Gold says in a statement. The assessment estimated the two deposits would produce 874,000 ounces of gold over an operating life ranging from 9 to 18 years. Using an average three-year gold price of $1,550 per ounce, revenues for Santa Fe Gold could total $1.35 billion, the assessment says.

Prospecting and mining the Ortiz Mountains dates to the arrival of the first Spanish settlers in 1598, according to Santa Fe Gold. Low-grade gold deposits were again discovered in 1832, and by the 1840s, mining had ceased in the 10.7 square-mile Ortiz Mine Grant.

Mining again ramped up in the 1980s in the eastern portion of the grant, when Consolidated Gold Fields produced 250,000 ounces of gold from open pit mining.

Carson, Santa Fe Gold’s president and CEO, tells SFR his company would not use chemical leaching. Instead, he says, the company would use a more environmentally friendly process by extracting raw material and separating the gold through a gravity concentration technique at a mill.

Furthermore, Carson says the company plans on spending more cash to use “about a quarter or a third” of the water typically used. He says the company is talking to two or three different private water users about acquiring rights to the scarce resource, but won’t say who.

He argues that the mining project would be a boon for the local economies, by way of direct jobs, indirect jobs and taxes the company would pay. The company’s mining project in Lordsburg employs 50 to 60 people at wages ranging from $18 to $35 per hour. He also says a certain percentage of the mining operation’s profits go toward “support activity for the school systems and also for some of the environmental groups out there.”

Santa Fe Gold recently started its regulatory process—expected to take a year or longer.  The firm submitted a Sampling and Analysis Plan with the state’s Energy, Minerals and Natural Resources Department. Santa Fe County officials would also have to approve a development plan before mining could start. A county spokesperson says they’ve been in discussions with the company, but it hasn’t submitted an application yet.

The company is also under pressure from the owner of the mineral rights, Ortiz Mines Inc., to develop the mines. The two parties entered into an out-of-court settlement that mandated Santa Fe Gold spend at least $1 million by last May toward developing the Ortiz project—which it has.

“We’re supposed to be an arm of this international mining company that’s supposed to rape the mine, rape the land,” he tells SFR, noting that the reality is opposite that impression. The small mining company has yet to make a profit.

Santa Fe Gold—formerly an Arizona-based company, Azco Mining—reporting in its FY2013 filing with the US Securities and Exchange Commission that it hasn’t been in the black since its inception in 1991. Carson says Santa Fe Gold and the Australian International Goldfields Ltd. have not merged as some project opponents contend, but rather, he says, the Australian company invested $5 million in Santa Fe Gold.

Santa Fe Reporter