Gold King settlement, explained
Why did Sunnyside Gold pay for an accident in a mine it didn't own? It's complicated ...

The $90 million settlement relating to the 2015 Gold King Mine spill did not bring an end to the legal saga that has dragged on for years (lawsuits against the federal government are still pending).

But when the agreement is finalized, Sunnyside Gold Corp. – the owner of the nearby, shuttered Sunnyside Mine – will finally be free of the mess. Extricating themselves from any further liabilities has cost them about $67.6 million: $40.5 million to the feds; $6.1 million to Colorado; $11 million to New Mexico; and $10 million to the Navajo Nation. Not to mention the tens of millions they’d already spent cleaning up a century’s worth of mining mess.

In agreeing to the payments, Sunnyside and its parent company, Canada-based Kinross, have made it clear they are not admitting wrongdoing. They don’t own the Gold King Mine and never did. So why did the company fork out so much money?

The simple answer is that the bulkheads Sunnyside installed in the American Tunnel in the 1990s/2000s caused water to back up inside Bonita Peak and make its way into the Gold King Mine, resulting in the blowout. The truth is more complicated.

The real question is not whether Sunnyside’s bulkheads backed up water into the Gold King. That’s pretty much a given. More important is where exactly the water came from. And to get at that, we need to go back in time more than a century ago to the days when the Gold King Mine was one of the most profitable operations in Colorado.

A Timeline of the American Tunnel

1887: Olaf Arvid Nelson, while working a nearby mine, locates the original Gold King claim on the slopes of Bonita Peak.

1891: Nelson dies. A year later his widow, Louisa, patents the Gold King claim, taking title to it. In 1894, she sells the claim to Northeastern Capitalists for $15,000.

1898: The Gold King owners construct a lower-elevation, safer access to the mine several hundred feet below the current access adit, to be called Level #7. This is the level that will blow out in 2015.

1900: USGS notes Gold King is not draining water, which is highly unusual, guessing Level #7 was “deep draining” water from upper operations.

1906: A photo of Level #7 shows about 250 gallons of water draining per minute.

1908: The structures at the mouth of the Gold King #7 Level catch fire, killing six. In 1909, the new boarding house burns, killing one, and in 1911, an avalanche hits the boarding house, killing four. After that, operations are on-again, off-again.

1921:  Gold King miners are working again to open the American Tunnel to provide a haulage tunnel for Gold King ore, thereby rendering the treacherous trams obsolete. But the connection to the upper mine is never made. The tunnel “deep drains” the groundwater of Bonita Peak, leaving the Gold King virtually dry.

1922: Gold King owners go bankrupt.

1960: Standard Metals takes over the dormant Sunnyside Mine and revives it by extending the partially complete American Tunnel to access it. When it’s finished, the tunnel is 11,000 feet long, and brings mining and prosperity back to Silverton.

1978: On a Sunday, when no miners are working, the floor of Lake Emma collapses into the Sunnyside Mine, sending millions of gallons of water out the American Tunnel at Gladstone and shutting the mine down for months. To this day, some folks remain suspicious of the collapse, theorizing that it was planned by a beleaguered company looking for an insurance payout. Ultimately, Standard Metals goes bankrupt and sells the mine to Echo Bay, a Canadian company, doing business as Sunnyside Gold Corp.

1986: Gerber Minerals takes over Gold King. They apply for a mining permit but not a discharge permit, because: “No drainage occurs from any of the portals – the district is deep-drained by the American Tunnel located at Gladstone.”

1988: Sunnyside overhauls the old American Tunnel water treatment plant, cleaning the 1,600 gallons per minute.

1991: The Sunnyside Mine closes for good. A year later, the re-born Gold King suspends operations. A hydrological study concludes that bulkheads in the American Tunnel should not cause flooding of Gold King, and that it would take 150 years for mine pool water to reach Cement Creek.

1996: Sunnyside enters into a consent decree with the state, a sort of pollution trading scheme. Sunnyside will install three bulkheads in the American Tunnel. The state inspects the Gold King and finds it’s draining just 1 to 2 gallons of acidic, metal-laden water per minute, a mere trickle.

1996: The valve is shut on the first bulkhead over 6,000 feet into the American Tunnel. Water backed up behind this will inundate the Sunnyside Mine workings and create “the Sunnyside mine pool.”

1998: An inspection finds that the Gold King #7 Level portal had collapsed and is impassible. It does not say how much water is draining from the mine.

2000: Steve Fearn buys Gold King. State inspectors note: “Though this year has been abnormally dry, the #7 Level discharge appears to have increased significantly … from around 30 gpm to around 45 gpm.”

2001: The Sunnyside Mine pool likely reached equilibrium. Sunnyside installs bulkhead #2, and in 2002, bulkhead #3. By now Sunnyside Gold has spent over $25 million on cleanup and reclamation. Discharges from both the Gold King and the nearby Mogul Mine – also mostly dry prior to the first bulkhead – continue to increase.

2003: Sunnyside water treatment plant is transfered to Fearn, allowing Fearn to treat Gold King water, and allowing Sunnyside to leave – in theory. Todd Hennis, owner of the Mogul Mine, acquires most of the Gladstone townsite. The deal will go bad a year later when Hennis evicts Fearn, and thus the water treatment plant, from his property at Gladstone, shutting down water treatment (proving detrimental to downstream fish). Hennis eventually acquires the Gold King.

2005: Gold King discharges have increased to 200 gallons per minute or more. The Animas River Stakeholders Group calls in the Environmental Protection Agency to help. Hennis warns of a “blow out of potentially impounded mine waters.”

2009: The State Division of Mining Reclamation and Safety calls the Gold King, now dumping nearly 200,000 pounds of metals into the watershed per year, “one of the worst high-quantity, poor-water-quality draining mines in the State of Colorado.” The EPA backfills the mine portal, because it had collapsed and installs drainage pipe.

2015: EPA contractors excavate dirt piled up at the opening of Gold King Level #7 until the operator notices a “spring” spurting out. In minutes, the tiny fountain grew to a 3-million-gallon torrent of electric-orange, acidic, heavy metal-laden water.

So, yeah, I know: It’s about as clear as the Animas River in the days following the blowout. This puzzle will never be solved definitively. Bonita Peak’s hydrology is a tangled maze of fractures, faults and veins, a sort of lithic Swiss cheese comprised of hundreds of miles of drifts, shafts, crosscuts and tunnels, creating innumerable potential paths the water could follow.

But from the history we can conclude:

• The Gold King had water flowing early on. When the first American Tunnel, aka #7 Level, was dug, it deep drained the upper levels, making them appear to be dry.

• About 200 to 300 gallons of water per minute flowed out of the #7 Level adit until the new American Tunnel was drilled under the Gold King in the 1920s, deep draining the entirety of Bonita Peak.

• It wasn’t until after Sunnyside installed bulkheads in the American Tunnel that drainage returned to the Gold King #7. It’s safe to conclude causation: The installation of the bulkheads caused drainage to return to the Gold King.

Not clear, though, is precisely where the water was coming from: Did the Sunnyside mine pool back up, then find a pathway to the Gold King? If so, then it would seem Sunnyside is at least partially responsible for the blowout. Or did the lower two bulkheads – on Gold King property – simply return Bonita Peak’s hydrology to a pre-American Tunnel conditions, or a “natural flow regime”? In that case, it is not Sunnyside’s water, it’s the Gold King’s, which would absolve Sunnyside of responsibility.

While conclusive answers to those questions aren’t exactly forthcoming, a look at the timeline suggests that the water that spewed from Gold King on Aug. 5, 2015, may have come from both sources. Drainage from the Gold King first started increasing – albeit only marginally – in 1997, after bulkhead #1 had been installed but before the next two were sealed. But flows remained pretty low until after the valves on bulkheads #2 and #3 were closed. It was only then that the Gold King became a major source of acid mine drainage, establishing conditions that would lead to the blowout.

But at this point, maybe it doesn’t matter. Whether Sunnyside is culpable or just in the wrong place at the wrong time is probably irrelevant. In either case, the company would have had to take responsibility or risk damaging its corporate image. That’s the price for playing the mining game.