Opinion ID: 2633548
Heading Depth: 3
Heading Rank: 1

Heading: Whether the initial decision to mine was reasonable.

Text: Hecla's decision to undertake production at the 4900-foot level of Gold Hunter was based on the 1997 report presented to Hecla's board of directors. Independence claims that decision breached Hecla's implied duty because the report on which it was based was flawed. Specifically, Independence takes issue with Hecla management's price projections and determinations as to the size and quality of the Gold Hunter deposit. The district court found that though a retrospective analysis of the feasibility study revealed certain deficiencies in geological and financial data, when taken as a whole, the study was prepared in accordance with customary industry practice and standards. As to the price projections, Hecla's expert testified the projections made by Hecla were similar to the price projections made by Merrill Lynch, Salomon Brothers, Smith Barney, the Silver Institute, Lehman Brothers, and Coeur d'Alene Mines for the same time period. With regard to the geological data, Hecla's expert testified it was very common in the mining industry to make decisions based on materials other than proven and probable reserves because it is simply too expensive to do all the underground work necessary to prove estimated resources actually exist, especially in the vein type deposits found in Gold Hunter. Given a reviewing court's deference to a district court's findings related to the credibility of witnesses and weight of the evidence, we conclude the district court's finding Hecla acted reasonably was supported by substantial and competent evidence.