When Colorado Goldfields purchased the Pride of the West mill in 2008, the company touted the imminent return of mining to the historic, financially strapped town of Silverton.

But on Thursday, the Mined Land Reclamation Board voted unanimously to revoke Colorado Goldfields’s permit for the mill, likely ending the Denver-based company’s attempt to revive the long-gone industry.

“We had two local mines ready for production, and that mill to process the ore,” Colorado Goldfields director Stephen Guyer told The Durango Herald on Wednesday. “We were getting ready to move forward.”

This summer, Division of Mining, Reclamation and Safety inspectors discovered a tailings pond that holds millings waste had overflowed, spilling sludge and sediment into the upper Animas River, about four miles east of Silverton.

On July 12, the mining division ordered Colorado Goldfields to repair the tailings pond, among other needed actions that date to 2005, by Oct. 1 or face revocation of its permit.

Lucas West, environmental protection specialist for the mining division, said an Oct. 4 inspection found Colorado Goldfields had not completed or even initiated the corrective actions.

However, Guyer, pleading his company’s case, argued that the Pride of the West was purchased in 2015 by Todd Hennis (owner of the Gold King Mine), who has denied the company access to the mill.

“In cases like this, the operator (Colorado Goldfields) would get an access agreement from the owner of the land (Hennis),” Guyer said. “However, because of litigation brought by Todd Hennis, our ability to communicate with him is very poor.”

The situation between Colorado Goldfields and Hennis is mired in litigation and an immense amount of moving parts.

In 2007, Hennis was president of Colorado Goldfields.

However, he resigned in fall 2008, immediately filing litigation for issues regarding payment option agreements and unpaid salary.

In 2013, Hennis brought actions against Colorado Goldfields that forced the company to put the Pride of the West into foreclosure.

Hennis then purchased the mill – assessed at $4.2 million – for $300,000 in July 2015 at the foreclosure auction.

Hennis, in attendance at Thursday’s hearing, was not allowed to comment, with state officials arguing the matter was between the state mining division and the permittee.

Hennis told The Durango Herald he denied Colorado Goldfields access to the mill because the company failed to provide its workers with insurance, making him liable if injuries occurred on site.

Hennis said rights to the permit were included in the purchase of the mill, but the state mining division has failed to recognize that transfer. Now that the permit is formally revoked, he must restart the application process, which can cost up to $3 million.

“We have lots of other properties in (San Juan County) that form a cohesive unit,” said Hennis, who also owns the Gold King Mine and Gladstone, both under the Environmental Protection Agency’s control after the Aug. 5, 2015, blowout.

“We’re feeling a bit snakebitten, as it were.”

Russ Means, environmental specialist for the division, said the legal issues or business dealings of Colorado Goldfields and its partners “or enemies” is not part of the division’s concern.

“Our rules stand alone,” Means said.

As part of the board’s revocation, the state mining division seized Colorado Goldfields’s more than $515,000 bond to be used for reclamation of the site this spring. Guyer estimated that required work should cost about $30,000.

Guyer told The Durango Herald after the meeting that appealing the board’s decision is an option as the company continues counter-suits against Hennis in an attempt to regain ownership of the mill.

The company was also recently forced into an involuntary bankruptcy, another effort led by Hennis.

Hennis, for his part, said he will explore legal options to gain ownership of the revoked permit, and have it reinstated.

“I’ve fought the fight for 35 years, and the fight ain’t over,” he said. “I have a responsibility to the community up there to try and help turn that economy around in Silverton.”

jromeo@durangoherald.com