An East Wenatchee geologist with a decades-old claim on the Excelsior Mine says he hasn't given up on someday resuming gold and silver production at the site on U.S. Forest Service land less than a mile south of Nooksack Falls, east of Glacier.
Doug McFarland, who formerly worked as a geologist for onetime mining giant ASARCO, filed a claim on the Excelsior Mine site in 1972, after ASARCO dropped its own claim there. He has made intermittent attempts to get the mine into production since then.
Excelsior Mine shut down in 1916. Although the site is on federal land, McFarland wants to get legal title to the property under provisions of federal mining law. The U.S. Bureau of Land Management earlier contested his claim for a "fee patent" title, and in 2008 a federal administrative law judge ruled against McFarland.
The judge noted that the law required McFarland to demonstrate the potential profitability of the mine in order to get the title he sought, and the evidence at that time indicated that the mine would not be profitable.
McFarland noted that the price of gold is now above $1,400 per ounce. That is $500 to $600 more than the prices that prevailed in 2008. As McFarland sees it, that would put the Excelsior mine back in the black.
"We believe that the Excelsior can be profitably and responsibly operated as a small underground mine, with the mine waste (rock) placed back underground and/or locally used for road base," McFarland said in an email.
The mine's recent ownership history has been colorful.
In December 2012, a publicly traded Nevada-registered corporation using the name "Helmer Directional Drilling Corp." announced that it was finalizing a deal to acquire Excelsior Gold Inc. and its "two mining properties" in Washington and Montana, and was naming McFarland as its chief executive officer.
Here's where things get murky. According to its own publicly available filings with the U.S. Securities and Exchange Commission, "Helmer Directional Drilling" got its start in 2006 as a Nevada-registered corporation then named "Exclusive Apparel Inc." The company originally announced it would operate as "a developmental stage company that had a principal business objective of offering premium baseball cap-type headware for women with exquisite taste and extravagant appetites as exclusive accessories to differentiate themselves."
That business objective could not be realized: "Due to lack of capital, the company had not been able to commence any business."
So in July 2011, the company decided to change its name to Helmer Directional Drilling Corp. "in anticipation of entering the directional well-drilling industry," the company reported in its annual report for that year.
Strangely enough, that name, or its near equivalent, was already being used by Helmer Directional Drilling Inc., and its president, Richard Helmer. The Louisiana-based company was founded in 1965, and its website lists major oil industry players as its customers. The Louisiana firm is privately owned, meaning you can't buy stock in it on the market.
After the seven-year-old Nevada Helmer-Exclusive corporation announced the pending purchase of Excelsior and another potential mine site, penny-stock Internet bulletin boards and websites that promote penny-stock companies quickly began trumpeting Helmer-Exclusive's stock as a hot opportunity for investors.
One such site, Jet Life Penny Stocks, said the chances of actually developing Excelsior and its "493,298 equivalent ounces of gold" were excellent, because of Helmer's proven track record. Jet Life then elaborated on all the accomplishments of the Louisiana Helmer, with links to the Louisiana Helmer's website.
A diligent reader of Jet Life's website who clicked on the small link labeled "Disclaimer" would have found, among many other things, this:
"The information contained in our website, message board posts, video charts, charts, e-mails, social media, or in any other medium should be viewed as commercial advertisement and is not intended to be investment advice or to be relied upon in any manner whatsoever."
The lengthy disclaimer page also notes that federal SEC rules require stock-promoting websites to disclose the payments they get from companies whose stock they promote. The long list that follows includes "up to $2500.00 for a one day awareness campaign on EXLA (Helmer-Exclusive's stock symbol) from a third party."
Nobody from the Louisiana Helmer wanted to go on the record about the situation. It does appear that company officials contacted Jet Life and similar websites and got them to remove the incorrect references to their company.
In any event, the price of Helmer-Exclusive stock went from 5 cents a share on Dec. 13, 2012, to 10 cents on Dec. 17, when the company announced its purchase of the mines. After several months of fluctuations, the stock is now selling for a microscopic seven-tenths of a cent per share.
In a Thursday, May 2, phone interview, McFarland noted that he did not join Helmer-Exclusive until after the company had come up with its new name. He said he was in the process of getting the name legally changed to Excelsior Gold and Metals Inc., but the SEC was holding things up.
"They are very slow and not very cooperative," McFarland said.
On Friday, May 3, McFarland sent another email to announce that he had resigned as company CEO and board member that very day "for personal reasons," although he expected to continue work on the mine properties as a consultant or operations manager.
A diligent reader of Excelsior's website would find a disclaimer there, too:
"CAUTIONARY NOTE TO U.S. INVESTORS - The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this website which the SEC guidelines generally prohibit U.S. registered companies from including in their filings with the SEC."