For years, a prospector who discovered a controversial mineral deposit outside Haines has offered to sell federal mining claims to a state-run trust.
That entity, the Alaska Mental Health Trust Authority, owns much of the land around the deposit and mineral exploration effort, known as the Palmer Project. But the trust decided in February it would not purchase the claims from prospector and former Haines resident Merrill Palmer.
Palmer staked the claims in the 1960s after discovering zinc and copper mineralization in the mountains north of Haines, near the village of Klukwan. The claims became the heart of the copper, zinc, gold, silver and barite exploration project, which has long divided the nearby communities.
Developing a mine could create high-paying jobs and inject a lot of investor dollars into the local economy. But the site sits above a tributary that runs into the Chilkat watershed, which supports a run of all five species of Pacific salmon. Critics worry the local environment, which is home to one of the world’s largest concentrations of bald eagles, could be harmed.
Why Palmer wants to sell his claims – and what the trust’s decision might mean for the project – remains unclear. But Jessica Plachta, the executive director of Lynn Canal Conservation, a Haines-based environmental non-profit that opposes the potential mine, says that a slew of factors make the project risky.
“The Palmer project is located in a remote and hazardous location. It’s inaccessible under deep snow for half the year,” Plachta said. “Not to mention that it’s dubious whether the deposit itself is worth mining, which is of course the bottom line for mining companies.”
The “best interest of the Trust”
The Alaska Mental Health Trust was created to fund programming and services for Alaskans who experience mental illness, traumatic brain injuries, intellectual and developmental disabilities and more. The state corporation does so using various resources – including roughly one million acres of land that it manages to make money.
The organization declined an interview request or to say how much money Palmer wanted for the claims, citing the confidential nature of the negotiations.
But a spokesperson, Allison Biastock, emphasized in an email that the organization’s resources must be used in the “best interest of the Trust and its beneficiaries.” She said the trust considered the cost of the claims and potential returns when making the decision.
The trustees notified Palmer of the decision after a closed-door session during its last regular board meeting, Biastock said. American Pacific Mining Corp., the junior mining company that owns the nearby exploration project, was also notified.
Palmer could not be reached for comment. American Pacific did not respond to a request for comment. And Constantine Mining LLC, an American Pacific subsidiary that operates the local project, declined to comment.
Questions about what comes next
The trust has considered buying Palmer’s claims since at least 2020.
The claims mean Palmer could earn royalties on minerals if a mine ever opens. But he offered to relinquish the claims for compensation to the trust more than five years ago. The state entity already owns much of the surrounding land and leases it out for exploration.
When Palmer offered his claims to the trust, Jusdi Doucet, who served as the deputy director of the trust’s land office, said purchasing them would be a risk. But Doucet said it could also pay off, if the minerals on Palmer’s claims connect to minerals under trust land.
“If we don’t do anything, if we don’t purchase the relinquishment of the claim, the Trust could have zero value on minerals beneath the ground on trust land,” Doucet told KHNS at the time.
The trust had been weighing the offer ever since. Its decision not to move in that direction came after the news in November that Dowa Metals and Mining, a multinational metals company that had backed the project for years, was giving up its 70% stake in the project. That made American Pacific Mining – Constantine’s parent company – the sole owner.
The deal was prompted by differing visions for the project, American Pacific executives said in a November video announcement. Warwick Smith, the company’s CEO, billed it as a “fantastic move” for American Pacific shareholders that puts the company on “very solid footing.”
“If you were an America Pacific shareholder yesterday, you went to bed and the company had about $2.5 million in cash and owned about 29% of the Palmer project,” Warwick said. “When you wake up this morning, we have $16 million in cash and we own 100% of the 14-million-ton VMS Palmer project.”
Smith also noted that Republican control of the U.S. Senate, House and White House would also contribute to what he says are “very, very bright days ahead for American Pacific.”
President Donald Trump signed an executive order in January that promised to unleash what he called Alaska’s extraordinary resource potential, including as it relates to minerals.
“The feeling, in particular for Alaska, and I’ll give an example of this, is things like permitting and these projects are going to move ahead quite rapidly,” Warwick said.
Palmer project critics, for their part, say Dowa’s exit and the trust’s decision raise questions about the project’s value – and what comes next.
