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Originally published July 1, 2007 at 12:00 AM | Page modified July 1, 2007 at 2:03 AM

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An Idaho valley's perfect storm

A year into Ronald Reagan's first term, the streets of Wallace were a much different place than they are today. "I would have guessed that...

The Idaho Statesman

WALLACE, Idaho — A year into Ronald Reagan's first term, the streets of Wallace were a much different place than they are today.

"I would have guessed that for $300,000 total you could have bought two-thirds of the homes in Wallace," Mayor Ron Garitone said.

After a year of record-breaking silver prices, the industry crashed in 1981. Out-of-work miners left Wallace and neighboring towns in droves.

The future was bleak. Scarred by decades of mining, the 40-mile valley between Coeur d'Alene and the Montana border had little to offer new industry.

But the Silver Valley is booming again. Silver prices are up, and mines are rising from the dead. Efforts by local leaders to erase the scars of mining are paying off. Developers are pouring millions into new homes, condominiums and resort properties, taking advantage of the valley's recreation opportunities.

In Wallace, old homes that housed generations of miners are hot properties for out-of-staters. Downtown is peppered with art galleries, antique stores and coffee shops.

In Kellogg, the valley's largest town, hundreds of new condominiums dominate the horizon. A mountain golf course and housing overlooking town are being built.

The valley even has its first Wal-Mart Supercenter, in Smelterville, west of Kellogg.

And mining is booming.

In 1982, when most mines had closed, silver was selling at less than $8 an ounce. Silver was less than $5 an ounce in 2001.

By 2006, prices hit more than $11 an ounce, up nearly 60 percent in one year, according to Silver Institute data.

Today, silver is selling for more than $13 an ounce, the highest price in decades but still far less than the 1980 high of more than $40. Prices for lead, zinc and copper — minerals mined with silver — also are more than $1 an ounce.

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"We have the perfect storm for metal prices," said Mike Dexter, general manager of Hecla Mining's Lucky Friday Mine in Mullan, near the Montana border. "This is as high as we've been for a long, long time."

Hecla has decades worth of silver left, Dexter said. Other companies share similar stories. And demand isn't declining.

Silver is used in almost all high-tech gear, from cellphones to laptops. With China and other countries growing at a rapid rate, silver experts expect demand to remain high.

Silver first was discovered in the Silver Valley in the late 1800s. The most notable discovery was in 1885, when Noah Kellogg discovered what would become the Bunker Hill Mine. It would become what was billed as America's largest underground mine and provide thousands of jobs to the town that took his name. The Silver Valley is the richest silver-mining district in the world, having produced more than 1 billion ounces.

Mining companies are pouring millions into the Silver Valley, ramping up production and reopening long-closed mines such as Sunshine, the valley's largest and the site of a 1972 fire that killed 91 miners.

Four hundred miners work in the valley. The mines have more jobs — many that pay significantly more than $50,000 a year — than they can fill.

The opportunities are bringing people to the valley after years of population decline.

"We're finally turning the corner in terms of population since the early 1980s," said Harley Johansen, professor of geography at the University of Idaho. "And that's happening at the same time as the old mining economy is reviving."

The valley's 2006 population was estimated at 13,180, still nearly 10,000 fewer than in the 1950s.

After the mining industry crashed, leaders turned to recreation and tourism.

In Kellogg, city leaders hatched a plan to expand the city-owned ski hill.

The ski area, opened in 1968, was known as Jackass Ski Bowl. It was renamed Silverhorn in 1973.

In the late 1980s, residents hatched a seemingly outlandish idea: Build a gondola that would take skiers from Kellogg to the ski resort.

The gondola opened in 1990, and Silverhorn, by then renamed Silver Mountain, had its inaugural ski season. Eagle Crest Partners bought the ski area in 1996 and has been slowly changing the resort into a four-season destination.

The resort is leading the valley's recreational development. A third phase of condominiums is under construction in the heart of Kellogg. At the center of the development is an indoor water park with a wave pool for surfers.

"Our goal is to be one of the top destination resorts in the Northwest," said Jeff Colburn, general manager of Silver Mountain Resort.

Silver Valley streams today are clear and teeming with trout. Hillsides are green with forests. The picture was much different 30 years ago.

Lax environmental regulations and mining's byproducts had left the valley looking like a war zone. Hills were bare and brown. Streams were void of trout.

"We dumped everything in the creek," Garitone said. "We called it lead creek. You would put your arm in, and it would come out milky white."

Because of tightened environmental regulations, Garitone and others say, they don't fear a repeat of history.

"The mining industry has been educated over the years," Garitone said. "I know there are still staunch environmentalists who would just as soon not see any mining, logging or anything else on Mother Earth, but we have to have it whether you like it or not."

In Wallace, more than 1,000 condominiums and new homes are either under construction or in planning phases. Property prices are rising.

Few leaders fault the benefits that higher property values bring — more revenues and an opportunity to fix long-neglected streets and ailing water and sewer systems.

Garitone sees nothing but a bright future, though, a future he says residents have worked hard for.

"We realized we weren't economically indestructible," he said. "But we've gotten smarter, we're more diversified and I'm feeling good right now with what's going on."

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