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Businessexcellence July 07 64 mine and the company moving toward profitability after its initial investment resulted in a financial loss in 2006. The company went public on the Toronto Stock Exchange, where it trades under the symbol “USA,” a move that gives it access to additional capital as needed to ramp up operations. The new owners also targeted operational improvement starting on day one. The company has put different mining techniques and processes in place where appropriate to reduce dilution of the ore being mined, to make sure that only high-quality ore loads are hauled out of the mine shafts. It also signed long-term contracts with smelters in Canada to ensure it could get its metals to markets, an important consideration given that global price increases have caused a surge in mining activity and caused a bottleneck in some instances along the refining chain. Cost savings are an important part of the overall approach, too. While metal prices are high due to strong demand around the world, US Silver wants to be able to produce its ore at the lowest cost possible, to ensure it can withstand any price drops. Last winter, the company undertook an energy reduction program that focused on “just trying to be smarter” about power use. The program reduced energy usage by 30 percent. US Silver employs about 150 and has another 50 people working on specific projects at the facility on a contract basis, such as the restarting of the second processing line. The company is feeling the same pinch as many of its contemporaries when it comes to finding enough qualified mine workers. “The problem limited future environmental liability at the same time. The site is fully permitted for both silver/ copper and silver/lead ores and can be expanded to produce up to two thousand tons a day of various ores, or about four times current production. That gave the mining operation a huge head start. “There are mines that spend years or even decades in the permitting stage,” Hartmann notes. “We were able to be up and running in a few months. That was a huge plus.” Although Coeur d’Alene Mines was shutting down the operation, it was not down yet. The mine was still in operation when US Silver took over, but the mine infrastructure was in very poor condition, exploration was inadequate, and the mine was in difficult condition from an operating standpoint. The company’s plan was to return the mine to “the glory of its historical past” (at its peak it produced between three and a half to four million ounces of silver annually) through investment and an aggressive exploration program. Within seven months of taking ownership, US Silver had boosted reserves by 40 percent and the total resource by 18 percent, to an estimated 48 million ounces of silver. Among the exploration finds was a “very, very significant silver/lead zone” in the mine area. While the facility now focuses on silver/ copper ore, once a second concentrator facility is up and running, the mine can process the two types of ores at the same time. With lead fetching a dollar a pound on the market, “it’s a very significant resource that has been ignored in the past,” says Hartmann. US Silver expects 2007 to be a turnaround year in a number of ways, with output boosted at the

July 07 Businessexcellence 65 “There are mines that spend years or even decades in the permitting stage. We were able to be up and running in a few months” is that because metal prices were depressed for a while, we basically lost a generation of miners,” Hartmann notes. The result is few qualifi ed mining technicians and a shortage of experienced mining professionals such as geologists and engineers. US Silver has responded with a mentoring program that matches experienced miners with those with less experience and with a bonus program that pays employees for referring new hires and the new hires themselves for coming aboard. Looking forward, Hartmann feels US Silver is putting itself in a position to thrive in whatever type of conditions the market brings. From copper (from which the company gets a tenth of its revenue) to lead and silver, metals remain in short supply and hot demand. “Even if the price of silver were to go down from where it is now, the prices would still be historically high,” he notes. Production costs are currently high due to the investments being made in revamping infrastructure and expanding capacity, but even if silver prices fall from their current $13-plus levels, US Silver will be positioned to thrive. “With the improvements we’re making, our costs are only going down.” US Silver