Hecla Mining Company [HL-NYSE] today reported the highest silver, lead, and zinc reserves in its 129-year history and provided an update on its exploration programs during the fourth quarter of 2019.
Highlights
- Company-wide reserves increased 11% for silver ounces including 22% more silver ounces at Greens Creek, reflecting a commitment to exploration and improved data use.
- High-grade intersections drilled at Greens Creek and Casa Berardi.
- Reserve price assumptions of $14.50/oz silver (expected to be among the lowest in the industry), $1,300/oz gold, $1.15/lb zinc and $0.90/lb lead.
“The foundation of value creation for any mining company is increasing reserves, and Hecla’s silver, lead and zinc reserves are the most in our 129-year history,” said Phillips S. Baker, Jr., President and CEO. “Despite using what we believe is the industry’s most conservative price assumption and spending our second lowest amount on exploration in the last 10 years, Hecla grew silver reserves 11% last year with Greens Creek having its most reserves since 2001. We expect our exploration programs over the next few years to further add reserves across the Company.”
RESERVES AND RESOURCES
Hecla replaced silver production in 2019 (15.4 million silver ounces contained) and proven and probable reserves increased 11%, despite using $14.50/oz for the reserve calculation. In the last 12 years, Hecla has not only replaced silver production but added another 234 million ounces through exploration (Figure 1). Both zinc and lead production were replaced, and reserves increased by 8% and 5%, respectively. About 60% of gold production was replaced (341,064 gold ounces contained) and proven and probable reserves decreased only 5% over 2018; gold reserves were calculated at $1,300/oz.
Measured and indicated silver ounces increased 4% to a record 217 million ounces, an increase of 9 million ounces over 2018 with increases at Greens Creek, Lucky Friday, and San Sebastian. Measured and indicated gold ounces decreased 19% to 5.8 million ounces, a reduction of 1.34 million ounces over 2018 due to conversion and reclassification of some resources at Casa Berardi and Fire Creek to inferred. Inferred silver resources decreased 2% to 457 million ounces, a reduction of 8.3 million ounces due to decreases at Greens Creek, San Sebastian, and the Nevada properties. Inferred gold resources increased 35% to 4.9 million ounces with the 1.3 million ounce gain primarily due to reclassification of some resources at Casa Berardi and Fire Creek.
Greens Creek
At Greens Creek, the 846,076 tons processed at the mill in 2019 contained 12.4 million ounces of silver, 81,223 ounces of gold, 62,863 tons of zinc, and 24,704 tons of lead. Silver, gold and base metal production was replaced, and silver, gold, zinc, and lead reserves increased by 22%, 11%, 10%, and 16%, respectively, over 2018 reserves. The current proven and probable silver and gold reserves are the highest total reserve since 2001.
The current mine plan accesses higher-grade ore in the earlier years of the mine plan from existing workings which reduces the required development investment. In addition, the mine life from only reserves is expected to be to 2031.
Casa Berardi
At Casa Berardi, the 1,378,065 tons processed at the mill contained approximately 165,368 ounces of gold, with 57% of the milled tonnage coming from underground and 43% of the milled tonnage coming from the East Mine Crown Pillar (EMCP) Pit. Proven and probable gold reserves decreased approximately 10% to 1.72 million ounces and reserve tonnage at Casa Berardi decreased 4% to 20.6 million tons over 2018. There was an overall reduction in underground reserves of 105,600 gold ounces and a decrease of open pit reserves of 83,100 gold ounces compared to 2018. Most of these decreases were due to mining depletion. Hecla has mined over 1 million ounces of gold at Casa Berardi since acquisition in 2013.
Measured and indicated gold resources decreased 12% from 2018 levels as gains from underground drilling were offset by decreases in the Pit areas. The largest decreases were a result of conversion to underground reserves of the 148 Zone and reclassification of some resources to Inferred below the 160 Pit. Inferred gold resources increased 49% from 2018 levels.
San Sebastian
At San Sebastian, the 174,713 tons processed at the mill contained 2.06 million ounces of silver and 18,520 ounces of gold. Proven and probable reserves are currently 881,400 ounces of silver and 7,600 ounces of gold. At the end of the year there was an ore stockpile containing 165,800 silver ounces and 2,700 ounces of gold. The total underground reserves in the Middle Vein are 597,800 ounces silver and 2,400 ounces gold and represent 68% and 32% of the silver and gold reserves, respectively. The total open pit reserves in the North Vein are 117,800 ounces silver and 2,500 ounces gold and represent 13% and 33% of the silver and gold reserves, respectively.
Indicated resources increased from 2018 by 44% to 17.9 million ounces for silver and 42% to 154,500 ounces for gold. Indicated resources are separated into ‘Oxide’ and ‘Polymetallic’ mineral styles; oxide is cyanide-amenable material and polymetallic is base-metal-sulfide-rich material amenable to a flotation milling process. The ‘Oxide’ portion of the measured and indicated resources contain 56% of the silver (9.98 million oz) and 88% of the gold (135,400 oz). The recently discovered El Toro Vein system south of the main mining area contains 52% of the ‘Oxide’ silver (5.23 million oz) and 38% of the ‘Oxide’ gold (51,800 oz) in the measured and indicated class. Polymetallic resources represent 44% of the silver and 12% of the measured and indicated gold resources and have associated lead, zinc, and copper. Inferred resources are essentially unchanged from 2018 with 22.2 million ounces of silver and 147,300 ounces of gold. ‘Oxide’ resources account for 84% of the silver and 95% of the gold in the Inferred resource.
Open pit mining continued in 2019 in the expanded North Pit to the west and at depth and an additional smaller ‘satellite pit’ to the west and mining of this pit is expected to continue into 2020. New high-grade, precious metal resources on the El Toro Vein south of the main mining area are being evaluated for open pit and underground mining. Test mining and milling of the polymetallic resource in the Hugh Zone of the Francine Vein during 2019 produced encouraging results for possible conversion to reserves during 2020.
Lucky Friday
At Lucky Friday, the 57,091 tons processed at the mill contained approximately 675,387 ounces of silver, 4,487 tons of lead, and 2,426 tons of zinc. Proven and probable reserves are currently 80.3 million ounces of silver, 505,740 tons of lead and 223,520 tons of zinc and are essentially unchanged from 2018. Measured and indicated resources have increased 10% to 82.4 million ounces for silver, 8% to 523,670 tons for lead and 7% to 276,660 tons for zinc. Inferred resources increased slightly year-over-year and include 26.2 million ounces of silver (+5%), 190,500 tons of lead (+5%) and 82,250 tons of zinc (+11%).
Nevada
Mill production in Nevada during 2019 was 210,397 tons containing 75,953 ounces of gold and 345,051 ounces of silver.
Proven and probable reserves at Fire Creek are 54,100 ounces of gold and 50,600 ounces of silver and are a reduction from year-end 2018 of 22% for gold and 11% for silver. Measured and indicated underground resources are 182,400 ounces of gold and 176,100 ounces of silver and inferred resources are 278,200 ounces of gold and 294,900 ounces of silver.
There are currently no mineral reserves at Hollister or Midas. At Hollister, measured and indicated resources are 164,300 ounces of gold and 785,800 ounces of silver and inferred resources are 184,800 ounces of gold and 1.25 million ounces of silver. At Midas, measured and indicated resources are 287,500 ounces of gold and 3.99 million ounces of silver and inferred resources are 182,800 ounces of gold and 1.49 million ounces of silver.
A breakdown of the Company’s reserves and resources is set out in Table A at the end of this news release.
EXPLORATION
Exploration (excluding corporate development) expenses were $2.2 million, and $15.2 million for the fourth quarter and full year 2019, respectively. This represents a decrease of 74% and 58% from the fourth quarter and full year 2018, respectively. These decreases were primarily the result of reductions in exploration in Nevada with smaller decreases in exploration at all other sites.
Greens Creek – Alaska
At Greens Creek, strong definition drilling assay results received in the fourth quarter have upgraded and expanded the East Ore and 200 South zone resources (Figure 2). In the East OreZone (Figure 3), intersections at the north end of the zone, including 56.6 oz/ton silver, 0.13 oz/ton gold, 4.5% zinc and 1.5% lead over 4.3 feet, confirm previously modeled Inferred resource estimates along 150 feet of strike length. In the 200 South Zone, drilling intersections at the northern end of the 200 South Bench over 200 feet of strike length include 16.8 oz/ton silver, 0.24 oz/ton gold, 12.7% zinc and 6.1% lead over 22.4 feet. The focus of the first quarter of 2020 is to further define the East Ore and 200 South zones.
Exploration drilling in the fourth quarter focused on the 200 South Zone (Figure 4) and expanded upper bench mineralization 350 feet and lower contact mineralization 800 feet down plunge from the current resource model. Recent intersections from the upper bench mineralization includes 11.5 oz/ton silver, 0.06 oz/ton gold, 6.6% zinc and 3.6% lead over 15.3 feet and 50.5 oz/ton silver, 0.05 oz/ton gold, 1.5% zinc and 0.7 lead over 12.0 feet. Recent intersections from the lower contact mineralization include 4.5 oz/ton silver, 0.05 oz/ton gold, 7.7% zinc and 3.6% lead over 4.0 feet. Drilling in 2020 is planned to continue defining the East, 9A, West, Upper Plate and 200S zones and explore down-plunge of the Gallagher Zone.
More complete drill assay highlights from Greens Creek can be found in Table B at the end of this release and a presentation showing drill intersection locations is available at the following: http://ir.hecla-mining.com//interactive/newlookandfeel/4130678/Hecla_Q4-2019_ExplorationUpdate.pdf.
Casa Berardi – Quebec
During the fourth quarter, up to seven underground drills were used to refine stope designs, expand reserves and resources in the 113, 118, 119, 124, 128 and 148 zones and confirm further potential at depth and to the east and west (Figure 5). One drill on surface completed in-fill and exploration drilling within and near the proposed 160 Pit (Figure 5) and continues to confirm continuity with the pit outline and expand resource outside of the current pit design.
Drilling in the East Mine focused on defining continuity and expanding mineralization in the high-grade 148 Zone and open pit mineralization within and outside the proposed 160 Pit. Within the 148-01 lens in the 148 Zone, high-grade intersections include 0.48 oz/ton gold over 11.8 feet, 0.89 oz/ton gold over 14.8 feet and 0.47 oz/ton gold over 29.8 feet confirming continuity within the lens (Figures 6 and 7). Drilling in the 160 Zone within and below the current pit outline continues to define broad intervals of mineralization and adding resources with recent intersections including 0.11 oz/ton gold over 113.2 feet and 0.13 oz/ton gold over 68.6 feet.
In the West Mine area, drilling in the 113 and 118 zones targeted multiple lenses along the Casa Berardi Fault in order to extend known mineralization at depth and to the east outside of the current resources. Recent intersections including 0.11 oz/ton gold over 26.2 feet suggest this zone continues to be open at depth. High in the mine, drilling targeted the eastern extension of the stacked 119 Zone ore lenses at the contact between the sediments and volcanics associated with pyritic chert and stacked quartz veins south of the Casa Berardi Fault. Recent intersections include 0.25 oz/ton gold over 29.5 feet including 0.42 oz/ton gold over 5.9 feet and 0.12 oz/ton gold over 37.1 feet.
In the first quarter of 2020, underground drilling is expected to expand and refine resources in 123 Zone in the West Mine and the high-grade 148 Zone in the East Mine. Underground exploration drilling during the year is planned to evaluate the lower extension of the 113-118 and 128 zones in the West Mine and the 146, 148, and 152 zones in the East Mine.
More complete drill assay highlights from Casa Berardi can be found in Table B at the end of the release and a presentation showing drill intersection locations is available at the following: http://ir.hecla-mining.com//interactive/newlookandfeel/4130678/Hecla_Q4-2019_ExplorationUpdate.pdf.
San Sebastian–Mexico
During the quarter, three surface core drill rigs operated at San Sebastian focused on an in-fill drilling program along the shallow, potentially open pit minable, portions of the El Toro and El Toro Hanging Wall veins (Figure 8). Mineralization at the El Toro Vein has been identified over 5,000 feet of strike length and over 900 feet down dip. Recent core drilling includes intersections of 10.7 oz/ton silver and 0.14 oz/ton gold over 16.3 feet, 18.5 oz/ton silver and 0.14 oz/ton gold over 10.6 feet, and 12.1 oz/ton silver and 0.10 oz/ton gold over 14.4 feet (Figure 9).
In the first quarter of 2020, grid pattern Short Vertical Reverse Circulation (SVRC) drilling is planned to continue to explore through cover for new veins and near-surface oxide mineralization by sampling overburden and bedrock west of the current El Toro resource area. During the year, additional exploration core drilling will follow up on additional vein systems near El Toro.
More complete drill assay highlights from San Sebastian can be found in Table B at the end of this release and a presentation showing drill intersection locations is available at the following: http://ir.hecla-mining.com//interactive/newlookandfeel/4130678/Hecla_Q4-2019_ExplorationUpdate.pdf.