Open-pit mining expected to begin by year
end
Hecla Mining Company (NYSE:HL) today announced that it expects
to begin production at its San Sebastian project in the State of
Durango, Mexico, by the end of 2015.
Economic Assumptions
The following is a summary of high-level life of mine economic
assumptions of surface mining operations, as outlined in the
Preliminary Economic Assessment (PEA) by AMC Mining Consultants
(Canada) Ltd., to be completed within 45 days of this
announcement.1,2 The numbers shown are subject to change that is
not anticipated to be material.
Unit Value Total Projected Mill
Feed tons 273,352 Mill Throughput
tons per day 440 Gold Grade
oz/ton 0.14 Silver Grade oz/ton
23.9 Gold Recovery %
90.5% Silver Recovery % 85.5% Gold
Produced (recovered) ounces 35,959
Silver Produced (recovered) ounces
5,585,098 Silver Equivalent Production ounces
8,138,740 Capital (mining and milling) $
million 5.8 Cash cost, after by-product credits, per
silver ounce3 $/ounce 5.49 Total After
Tax Cash Flow (5% discount) $ million
43.0 IRR % 404
(1)
The PEA is preliminary in nature, and is based on a
mineral resource estimate that includes inferred mineral resources
(approximately 10% of projected production) that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves, and there is no certainty that the PEA will be realized.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability. The final numbers for the PEA are
still being generated but the Company is confident that any changes
will not materially affect the potential viability of the project.
(2)
Results in this table assume $1,103/oz gold and $15.53/oz silver
prices and a 12.5 Peso/Dollar exchange rate.
(3)
Cash cost, after by-product credits, per silver ounce represents a
non-GAAP measurement, and the most comparable GAAP measures are
cost of sales and other direct production costs and depreciation,
depletion and amortization.
“San Sebastian’s high-grade near-surface material is projected
to provide significant production, more than 8 million silver
equivalent ounces, and cash flow over the next two years,” said
Phillips S. Baker, Jr., Hecla’s President and CEO. “Our approach at
San Sebastian has been to minimize capital expenditures by using a
mining contractor and renting a nearby mill, allowing Hecla to
quickly generate exceptional returns in this low-price environment.
This approach reflects our strategy of simultaneously growing and
created value while protecting our balance sheet.”
Velardeña Mill
Hecla has secured the use of a Merrill-Crowe processing plant
near Velardeña in the State of Durango, Mexico, as announced on
July 15, 2015. Under the terms of the toll treatment arrangement,
Hecla has the ability to use the mill for 18 months, with the
potential to extend for up to another 12 months. Located within 100
miles of San Sebastian, the mill was previously used by Hecla to
process ore when it mined on the property from 2001 to 2005.
The mill has been idle for several years and is currently being
rehabilitated and updated. The filling of supervisory positions is
underway. The owner of the mill is in the process of reactivating
existing permits.
Mining Technique
The proposed mining technique focuses on shallow, near-surface
pits on the East Francine, Middle and North veins, targeting
high-grade material. The pits are expected to be small, extending
to a maximum of about 270 feet in depth. Near-surface material is
weathered, and should be easily excavated. Drill and blast
techniques are contemplated for deeper material.
The Company intends to use a contractor for mining operations,
and the RFP process is progressing well.
In-Fill and Exploration Drilling Program
The PEA does not include results of the recent in-fill and
exploration drilling program conducted on the East Francine, Middle
and North veins. The program has had considerable success in
extending the veins, increasing the thickness, and confirming the
high-grade nature of the material, as announced on August 6,
2015.
Previous Mining History
The San Sebastian property is located in the State of Durango in
the heart of the Mexican silver belt and contains a series of
precious and base metal-bearing epithermal veins. From 2001 to
2005, Hecla produced 545,476 tons of ore containing 177,541 ounces
of gold and 11.6 Moz of silver from the Francine Vein with an
average grade of 0.32 oz/ton gold and 22.5 oz/ton
silver, making it one of the highest-grade producers in Mexico at
the time.
About Hecla
Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver
producer with operating mines in Alaska and Idaho, and is a gold
producer with an operating mine in Quebec, Canada. The Company also
has exploration and pre-development properties in six world-class
silver and gold mining districts in the U.S., Canada, and Mexico,
and an exploration office and investments in early-stage silver
exploration projects in Canada.
Cautionary Statements Regarding Forward-Looking
Statements
Statements made or information provided in this news release
that are not historical facts are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and “forward-looking information” within the meaning of
Canadian securities laws. Words such as “may,” “will,” “should,”
“expects,” “intends,” “projects,” “believes,” “estimates,”
“targets,” “anticipates” and similar expressions are used to
identify these forward-looking statements. Such forward-looking
statements or forward-looking information include statements or
information regarding estimates of mining, grade, recovery, free
cash flow generation, mine life, IRR, ability to reactivate
existing mill permits, production of silver, gold and silver
equivalent ounces, ability to begin mining by year end, and the
ability to mine the high-grade ore. The material factors or
assumptions used to develop such forward-looking statements or
forward-looking information include that the Company’s plans for
development and production will proceed as expected and will not
require revision as a result of risks or uncertainties, whether
known, unknown or unanticipated, to which the Company’s operations
are subject.
Forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated, expected or implied. These risks
and uncertainties include, but are not limited to, metals price
volatility, volatility of metals production and costs, litigation,
regulatory and environmental risks, operating risks, project
development risks, political risks, labor issues, ability to raise
financing and exploration risks and results. Refer to the Company’s
Form 10-K and 10-Q reports for a more detailed discussion of
factors that may impact expected future results. The Company
undertakes no obligation and has no intention of updating
forward-looking statements other than as may be required by
law.
Qualified Person (QP) Pursuant to Canadian National
Instrument 43-101
Phillipe Lebleu, P.Eng (mining), Allen Anderson, P.E.
(metallurgy), and Keith Blair, C.P.G. (resource modelling), are
QPs, as set out in National Instrument 43-101 (NI 43-101) and have
supervised the preparation of the scientific and technical
information concerning Hecla’s San Sebastian project in this news
release and have reviewed the news release for accuracy.
Information regarding data verification, surveys and
investigations, quality assurance program and quality control
measures and a summary of sample, analytical or testing procedures
is contained in “Technical Report for the San Sebastian Ag-Au
Property, Durango, Mexico for Hecla Mining Company” to be completed
within 45 days (the “Technical Report”), which is being prepared
for Hecla Mining Company (“the Issuer”). Also included in this
technical report is a description of the key assumptions,
parameters and methods used to estimate the project’s economics and
a general discussion of the extent to which the estimates may be
affected by any known environmental, permitting, legal, title,
taxation, socio-political, marketing or other relevant factors.
Copies of this report will be available under Hecla’s profile on
SEDAR at www.sedar.com.
Cautionary Statements to Investors on Reserves and
Resources
Reporting requirements in the United States for disclosure of
mineral properties are governed by the SEC and included in the
SEC’s Securities Act Industry Guide 7, entitled “Description of
Property by Issuers Engaged or to be Engaged in Significant Mining
Operations” (“Guide 7”). However, the Company is also a “reporting
issuer” under Canadian securities laws, which require estimates of
mineral resources and reserves to be prepared in accordance with
Canadian National Instrument 43-101 (“NI 43-101”). NI 43-101
requires all disclosure of estimates of exploration potential,
mineral resources and reserves to be disclosed in accordance with
its requirements. Such Canadian information is being included here
to satisfy the Company’s “public disclosure” obligations under
Regulation FD of the SEC and to provide U.S. holders with ready
access to information publicly available in Canada.
Reporting requirements in the United States for disclosure of
mineral properties under Guide 7 and the requirements in Canada
under NI 43-101 standards are substantially different. This
document contains a summary of certain estimates of the Company,
not only of proven and probable reserves within the meaning of
Guide 7, which requires the preparation of a “final” or “bankable”
feasibility study demonstrating the economic feasibility of mining
and processing the mineralization using the three-year historical
average price for any reserve or cash flow analysis to designate
reserves and that the primary environmental analysis or report be
filed with the appropriate governmental authority, but also of
mineral resource and mineral reserve estimates estimated in
accordance with the definitional standards of the Canadian
Institute of Mining, Metallurgy and Petroleum referred to in NI
43-101. The terms “measured resources,” “indicated resources,” and
“inferred resources” are Canadian mining terms as defined in
accordance with NI 43-101. These terms are not defined under Guide
7 and are not normally permitted to be used in reports and
registration statements filed with the SEC in the United States,
except where required to be disclosed by foreign law.
Investors are cautioned not to assume that any part or all of the
mineral deposits in such categories will ever be converted into
proven or probable reserves. “Resources” have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of such a “resource” will ever be upgraded to a higher
category or will ever be economically extracted. Investors are
cautioned not to assume that all or any part of a “resource” exists
or is economically or legally mineable. Investors are also
especially cautioned that the mere fact that such resources may be
referred to in ounces of silver and/or gold, rather than in tons of
mineralization and grades of silver and/or gold estimated per ton,
is not an indication that such material will ever result in mined
ore which is processed into commercial silver or gold.
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version on businesswire.com: http://www.businesswire.com/news/home/20150916005355/en/
Hecla Mining CompanyMike Westerlund, 800-HECLA91
(800-432-5291)Vice President - Investor
Relationshmc-info@hecla-mining.comwww.hecla-mining.com
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