Settlement opens way for gold mine

SANTA FE — 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.

“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 May 24, 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.