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Planned Gold Mine To Move Forward

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A company that wants to mine for gold in the Ortiz Mountains southeast of Madrid again has a lease to explore and mine in the area, thanks to the settlement of a federal lawsuit.

“Now that the litigation is behind us, we intend to proceed immediately with our proposed work programs,” Pierce Carson, president and CEO of Santa Fe Gold Corp., said in an announcement Wednesday.

“We believe new technical studies will support our previous preliminary conclusion that the Ortiz gold deposits form the basis of an economically attractive mine development.”

Carson, of Albuquerque, acknowledged in an interview that any mining is still probably several years away, following technical, biological, environmental and archeological studies and then efforts to get through the permitting process of both state government and Santa Fe County.

The county enacted a tough zoning ordinance regulating extractive industries after an oil and gas drilling proposal provoked controversy about five years ago.

“We think the effect on the environment is reasonably minimal,” Carson said. “We don’t have to use chemicals to extract the gold.”

Last year, Santa Fe Gold sued Kansas-based Ortiz Mines, Inc., after that company terminated Santa Fe Gold’s lease to explore and mine for gold and other minerals on about 43,000 acres of the Ortiz Mine Grant.

Santa Fe Gold obtained a seven-year mineral lease with Ortiz Mines in 2004 and made the deal public in 2008. Santa Fe Gold said in the 2011 lawsuit that it had made $753,224 in lease payments so far.

But Ortiz Mining served notice last June that it was terminating the lease, citing concerns that Santa Fe Gold wasn’t doing enough to move the project forward.

Santa Fe Gold maintained it had met all lease obligations. Santa Fe Gold also blamed Ortiz Mines for creating a negative climate for mining or drilling in the Santa Fe area because it had leased mineral rights to Texas-based Tecton Energy in 2007. Those plans set off a public uproar that drove off Tecton and resulted in the restrictive new county ordinance.

On Wednesday, Santa Fe Gold said in a news release that the lawsuit settlement confirms Santa Fe Gold’s “exclusive lease rights to explore, develop and mine gold, silver, copper and other minerals on 66 square miles of the Ortiz Mine Grant in Santa Fe County.”

The release said that historical drilling by other companies has previously identified about 2 million ounces of gold resources on the acreage now under Santa Fe Gold’s control.

The annual lease payments for the Ortiz mineral rights remain unchanged, but Santa Fe Gold has agreed, “subject to certain qualifications,” to spend at least $500,000 by Nov. 22 and a total of $1 million by May 22, 2013, “on work programs in support of project development,” the release said.

Santa Fe Gold plans to commission an independent technical report on the land’s mineral resources and a preliminary economic assessment and “proceed with baseline environmental surveys and other work necessary to submit applications for development permits,” the announcement said.

Initial permit granted

Santa Fe Gold last year obtained a permit from the state Mining and Minerals Division that allows a “mining disturbance” on two acres for collection of rock samples and other data at the Ortiz Mountains site.

Efforts have been made to mine for gold in the area before. Santa Fe Gold’s lawsuit last year said that environmental contamination from an Ortiz mining operation in the 1980s helped provoke the tough rules in the county ordinance that was developed in the fallout from the Tecton drilling controversy.

“Any time you start a mine in the United States of America, there are a lot of hoops you have to jump through with the permitting agencies,” Carson said Wednesday.

“We are certainly very sensitive to the environmental issues involved,” he added.

He said his company first has to start with a lot of data collection, and that’s what will happen now. “The quality of the resource" – the gold and other minerals – “from what we can tell is pretty good,” Carson said.

Santa Fe Gold’s emphasis in recent years has been a gold and silver mining operation in southwest New Mexico, Carson said.

The company’s lawsuit last year said it hopes that the Santa Fe area will be more receptive to a mining operation since the Tecton controversy has died down, gold prices are going up and the economy has stalled.

“While the population of Santa Fe County is politically liberal, current economic conditions make it more likely that public support can be generated for support of the Ortiz Project,” the suit stated.

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