State shuts down Red Arrow Mine

A gold miner nine miles northeast of Mancos denies allegations that he used mercury to refine gold.

Reached by telephone Monday morning, Craig Liukko told the Cortez Journal he declined to comment regarding the gold mine he owns outside of Mancos, but he did agree to consider the questions if he could reply via email.

"We are not violators of the law," Liukko said via telephone.

Questions emailed to Liukko included the amount of ore mined and gold recovered, an explanation of his mining operations and procedures and whether Liukko knowingly or intentionally broke any mining rules or harmed the environment. As of press time, Liukko had not replied.

According to the Denver Post, Liukko, president of the Red Arrow Gold Corp., was notified by the Colorado Department of Natural Resources of 11 possible violations at the mine and mill property. Records show Liukko has owned and intermittently operated the Red Arrow Gold Mine outside of Mancos since 1988.

The state's list of possible violations at the Red Arrow range from the unregulated use of mercury to refine gold at an unapproved milling facility to the failure to control weeds on the premises, the Denver Post reported.

According to reports, no deficiencies were found when the mine operation was last inspected in May 2012.

The Denver Post reports that state regulators ordered the mine to cease and desist all activity June 18, "for an activity suspected of causing an emergency situation." The cease-and-desist order said that the unpermitted mill "resulted in an immediate and undue risk of serious harm to persons, property, or the environment."

Initial test results are scheduled to be complete within weeks, according to reports, and a hearing before the Mined Land Reclamation Board is scheduled for Aug. 14 in Denver.

According to the financial website macroaxis.com, Liukko has a 51 percent ownership stake in the Red Arrow mine, and Rock Energy Resources, Inc., for which Liukko serves as chief operating officer, owns the remaining 49 percent interest. The website warns investors that Red Rock Resources has more than $4 million in debt, and estimates it has more than a 96 percent chance of bankruptcy within two years.

According to a Standard & Poors report, the Red Arrow mine held claims to approximately 790 acres, and when mining started last spring, the mine's potential recoverable reserves were projected at more than 400,000 ounces of gold in one of four known veins.