Opinion ID: 2633548
Heading Depth: 3
Heading Rank: 2

Heading: Whether the decision to continue mining was reasonable.

Text: Despite the low metals prices during the first five years of the Gold Hunter project, Hecla continued to mine the 4900-foot level. At the time of trial, the 4900-foot level was mined out and Hecla began pursuing plans to undertake production at the 5900-foot level. Hecla defends its decision to continue mining because (1) while the project was not generating profits, it was generating cash flow; (2) shutting down the mine would negatively impact the community and make it difficult to find employees when the decision to reopen was made; and (3) the process involved with reopening the mine could take up to 18 months, at which time volatile metal prices might drop again. Hecla's strategy was to continue mining Gold Hunter so long as any cash loss was less than the estimated holding, or care and maintenance, costs. There was testimony at trial that the care and maintenance costs could reach $1.8 million annually. Based on this evidence, the district court correctly determined Independence failed to carry its burden of showing Hecla did not act fairly and in good faith.