PIERRE -- The state Board of Minerals and Environment decided Thursday to allow the transfer by one company to another company of a permit to mine gold in an area about five miles west of Lead near the rim of Spearfish Canyon.
The transfer is one of the steps that VMC LLC has under way en route to starting a new mining operation called the Deadwood Standard Project at the site. Deadwood Standard is a reference to one of the companies that mined gold there prior to 1920.
But state board member Tim Johns, of Lead, stressed that the permit transfer doesn't have any bearing on whether a new permit will be granted for the new company's plan that would cover a larger area than the previous permit holder, Bald Mountain Mining Company, wanted to do.
Johns, a retired circuit judge, said state law doesn't appear to give the board any discretion on transferring the existing permit.
He said Bald Mountain Mining Company and VMC LLC are in compliance with state, federal and local laws and therefore meet South Dakota's legal requirements for the transfer.
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Johns further noted that nothing has occurred that caused the permit to become invalid.
The same permit was at issue more than 20 years ago. At that time it was held by Homestake Mining Co.
The state board ruled then that the permit couldn't be transferred because it hadn't been used in the previous eight years. But the South Dakota Supreme Court in 1991 overturned the board's decision.
In the current matter VMC posted a $13,362 bond to replace one of the same amount that Bald Mountain Mining had submitted for the permit.
Gary Heckenlaible, of Rapid City, objected by teleconference Thursday to the transfer. He wondered what the Supreme Court would do now that 21 more years have passed without any mining under the permit.
Wharf Resources has the only large-scale gold mine still operating in the Black Hills. All of the other modern mines are in reclamation, while many old sites are abandoned and often dangerous because of exposed shafts and decaying works.
Wharf produced 67,147 ounces of gold in 2011. As estimated by the state Department of Environment and Natural Resources, the estimated value was $105.5 million, based on an average price $1,571.52 per ounce.
Wharf also produced 192,941 ounces of silver, which DENR valued at nearly $6.8 million, using an average price of $35.12 per ounce.
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The high prices for gold are the reason Wharf has continued operating at its site and returned to some old areas that were previously mined. Those prices also play a big role in VMC's new plans.
VMC was legally organized as a new company in South Dakota last August. Its board of managers includes Barry Bender of Spearfish, Kenneth Jensen of Mobridge, Mark Nelson of Nemo, Don Valentine of Steamboat Springs, Colo., and Don Silva of Hayden, Colo.
VMC currently has an application for a conditional use permit for the proposed mine site pending before the Lawrence County planning and zoning board. VMC has research under way to be used in its application for a new state permit.
