The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Idaho miner looks to Canada to deepen, diversify its project pipeline
The 6.4 million ounces of low-cost silver recovered from the Greens Creek Mine in Southeast Alaska during 2012 is funding growth aspirations at Hecla Mining Co., including a foray into Canada's mining sector.
This growth begins with the first silver production from the Lucky Friday Mine since the Idaho operation was put out of commission for safety and operational upgrades at the end of 2011.
With the Idaho operation scaling back up to full capacity in 2013, Hecla is looking at producing between 8 million and 9 million ounces of silver this year.
In the meantime, the company is eyeing candidates to deepen its pipeline of precious metals assets.
"We have a focus on looking at things that are in North America - U.S. and Canada in particular," Hecla President and CEO Phillips S. Baker Jr. informed investors in February.
Keeping to this strategy, on June 1 Hecla finalized the acquisition of Aurizon Mines Ltd., owner of the Casa Berardi gold mine in western Quebec.
The merger is shifting Hecla's metals profile from predominately silver to generating nearly as much revenue from gold as it does silver. In 2014, the company is expected to produce roughly 10 million ounces of silver and nearly 150,000 ounces of gold.
By 2017, the company plans to have two new silver mines online, one in each Colorado and Mexico. With these new operations, coupled with increased production at Lucky Friday and Casa Berardi, Hecla forecasts that by 2017 its silver production will be roughly 15 million ounces and its gold production will near 200,000 ounces.
"The acquisition of Aurizon and associated financing was a pivotal event for Hecla, despite the associated costs resulting in a loss for the second quarter," Baker explained.
"With Greens Creek operating well, the Lucky Friday ramping up and Casa Berardi in the final quarters of completing major improvements, we are in a strong operating and financial position. However, in response to lower precious metals prices we have significantly scaled back capital, exploration and pre-development expenditures from original plans this year," he added.
Greens Creek high-grade
Despite the scaled back exploration spending, Hecla made long strides towards expanding the 94.6 million ounces of silver reserves, and 719,500 ounces gold reserves at Greens Creek.
"This mine currently has a mine life of about 10 years, but we know that where we are drilling that we will, over the course of the next two years, move material into reserves," Baker explained in August.
Hecla's early 2013 exploration efforts at Greens Creek focused on defining high-grade extensions to mineralization along the Deep Southwest, 5250 and Gallagher ore trends. Deep Southwest is a recently discovered zone which lies below and further west of the Southwest Zone.
Significant Deep Southwest intersections include: 27.1 oz/ton silver, 0.39 oz/ton gold, 13.3 percent zinc and 6.1 percent lead over 8.6 feet (2.6 meters); and 21.5 oz/ton silver, 0.31 oz/ton gold, 8.9 percent zinc and 4.1 percent lead over 10.5 feet (3.2 meters).
The emphasis later in the year shifted to in-fill drilling of the 200 South in an effort to convert resources to reserves and exploration drilling to the south and west. This exploration helped define three stacked high-grade folds that encompass the mineralization at 200 South, which has been drilled for over 215 meters of strike length and is open down-dip and to the southwest along strike.
"The material that we are going to move into reserves is high-grade material," Baker explained.
Significant intersections include 32.4 ounces per ton silver, 0.57 oz/ton gold, 4.3 percent zinc and 2.4 percent lead over 10.8 feet; 47.4 oz/ton silver, 0.12 oz/ton gold, 16.4 percent zinc and 7.5 percent lead over 7.5 feet; 41.1 oz/ton silver, 0.08 oz/ton gold, 11.2 percent zinc and 12.9 percent lead over 7 feet; and 43 oz/ton silver, 0.09 oz/ton gold, 8.3 percent zinc and 3.5 percent lead over 3.5 feet.
"The 13 years that I have been looking at Greens Creek, the best drill results that I have seen from the mine have come in the last four quarters - grades of over half-ounce gold and widths of more than 35-40 feet," Baker touted.
Surface drilling near the Southeast Alaska mine targeted Killer Creek, an area about 1.5 miles (2.4 kilometers) west-northwest of the mine portal. Hecla said the five completed holes show zones up to 400 feet with stringer veins containing copper, zinc, lead and silver mineralization in the footwall rocks. In general the northern holes are more copper-rich with veins up to 2.1 meters wide.
Historic Dolly Varden
At the western end of Canada and on the far side of Hecla's growth pipeline, the Idaho miner has invested in two junior companies exploring silver-rich deposits in northwestern British Columbia.
In 2012, Hecla spent C$3.2 million to buy 20 million shares, or a 19.9 percent stake, of Dolly Varden, a junior explorer focused on the development of the historic Dolly Varden Silver Mines property located about 30 kilometers (19 miles) southeast of Stewart, B.C. The Idaho-based miner has since bought an additional 6.2 million shares of the junior.
Dolly Varden's land package is in a geologic setting with world-class projects such as the past-producing Eskay Creek Mine, which is a similar deposit type to Hecla's Greens Creek Mine.
The Dolly Varden property hosts two historical mines - Dolly Varden, which produced 1.5 million ounces of silver at an average grade of 35.7 oz/t in the early 1920s and the Torbrit mine which produced 18.5 million ounces of silver at an average recovered grade of 13.58 oz/t during the 1950s. Two other deposits, North Star and Wolf, have been defined and partially developed but have not seen any production. All told, these four deposits have a historic resource of 14.5 million ounces of silver.
Dolly Varden is working towards upgrading these resources to NI 43-101 compliance and expanding them to a targeted 40 million to 50 million oz.
In September, Dolly Varden reported assays from the first four holes of a 14-hole (3,063 meters) summer exploration program at the Dolly Varden property in northwestern British Columbia. The drilling focused on confirmation and extension of mineralization from the Torbrit Mine, one of two historically mined high-grade silver deposits on the property.
Highlights from this drilling include: TB13-01 cut 32.7 meters grading 91.1 grams per metric ton silver, including 4.3 meters averaging 220 g/t silver; TB13-02 cut 41.2 meters averaging 198 g/t silver; and TB13-03 cut 17.1 meters averaging 509 g/t silver, including 3.2 meters averaging 1,458 g/t silver.
Dolly Varden President and CEO Ron Nichols said, "The results provide us with a clearer picture of the local structure and where thicker and higher grade silver mineralization should trend within the deposit."
A stake in Thorn
In late February, Hecla also grabbed a 20 percent stake in Brixton Metals Corp., a junior focused on exploring the precious metals-enriched Thorn project located 50 kilometers (31 miles) northwest of the past-producing Golden Bear Mine in the Atlin Mining District.
Hecla's C$2.6 million strategic investment bought the company a 19.8 percent ownership in Brixton. And, like its deal with Dolly Varden, Hecla has the right to maintain its nearly 20 percent interest in Brixton by participating in future financing of the junior and has appointed a representative to sit on the explorer's board of directors of Brixton.
"Exploration results at the Thorn property show several different styles of precious metal mineralization that highlight the potential for a substantive discovery," said Baker. "We're excited to be an integral part of their plans with our investment and believe Brixton has a strong management team in place to build shareholder value. Hecla also brings a wealth of knowledge gained from more than 120 years of mining and exploration experience, and this expertise will benefit the Brixton team."
Brixton applied a portion of the proceeds from the financing to completing the acquisition of 100 percent interest in the Thorn project from Kiska Metals Corp., the balance of the funds are earmarked for the 2013 exploration program at Thorn.
Brixton has found substantial near-surface, high-grade mineralization at the largely untested Oban Breccia Zone, which is located in the heart of a six-kilometer (3.8 miles) mineralized corridor on the Thorn property.
A 28-hole drill program carried out by Brixton in 2013 focused on the Oban breccia zone, where discovery hole THN11-60 cut 95 meters averaging 628.3 grams per metric ton silver, 1.71 g/t gold, 3.31 percent lead and 2.39 percent zinc and 0.12 percent copper. Surface samples at Thorn have returned 6,149 g/t silver.
Highlights from the 2013 program include: THN13-89, collared approximately 60 meters west of hole 60, cut 1 meters averaging 1,060 g/t silver within a 113.5-meter intercept averaging 58.65 g/t silver, 0.14 g/t gold, 0.01 percent copper 0.37 percent zinc and 0.13 percent lead; and THN13-101, drilled 70 meters north of hole 60, intersected 1.31 meters of 1,275.00 g/t silver within 17.1 meters averaging 165.3 g/t silver and 0.22 g/t gold.
A new sphalerite-galena zone was discovered in THN13-93 and THN13-103 which are about 30 meters from each other and 90 meters north of hole 60. THN13-103 intersected 1.28 meters of 156 g/t silver within 4.28 meters averaging 66.3 g/t silver, 0.08 g/t gold, 0.02 percent copper, 4.79 percent zinc and 2.26 percent lead.
"Additional drilling is required to further expand these high-grade zones and to test the many high-grade silver-gold targets that exist on the Thorn property. Our goal is to conduct follow-up exploration before the end of the 2013 season," said Brixton Chairman and CEO Gary Thompson.
In addition to gaining a sizable stake in Dolly Varden and Brixton, Hecla paid C$2.52 million earlier in 2012 to buy a 15 percent interest in Canamex Resource Corp., a junior exploring the Bruner property, a high-grade gold project in central Nevada.
Hecla said its equity position in the trio of Vancouver-based companies is for investment purposes, and the Idaho-based miner currently does not have any present intention to acquire ownership of the explorers.
"Clearly at some point, we hope that it is something we would want to own. In the meantime we will be supportive and help these guys move these things along," Baker expounded.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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