Mining Explorers 2016: Hecla Mining Co.

Established in 1891, Hecla Mining Company has survived two World Wars, the Great Depression and numerous crests and troughs of a cyclical metals market that has sunk many of the silver miner's contemporaries over the past 125 years. Over this century-plus span, the Idaho-based miner has grown adept at navigating tumultuous markets in a way that enables the company to be well-positioned for smooth sailing in calm waters.

"We have operated through many price cycles; from recessions and depressions to boom times, and it is a testament to the power of our projects and the strength of our team that we have weathered them all and are now a transformed company having recently seen the highest reserves and production of our history," said Hecla Mining Co. president and CEO Phillips Baker Jr.

In 2016, the 125-year-old miner began to reap the rewards of its longstanding strategy of growing production during times of lower metal prices.

Over the past 75 years, Lucky Friday has produced more than 155 million oz. of silver, along with healthy quantities of lead and zinc. Today, Hecla is taking this long-lasting mine to new depths by investing roughly US$225 million in the No. 4 shaft, the largest capital project in Hecla's storied history.

By reaching silver-rich mineralization 10,000 feet below the surface, the No. 4 shaft is expected to add more than 25 years of silver-rich resources to Lucky Friday.

In 2013, the company purchased the Casa Berardi Mine in Quebec, an acquisition that tipped the balance of its metals profile from dominantly silver to slightly in favor of gold. Hecla is anticipating the Casa Berardi Mine to produce 145,000 ounces of gold during 2016, boosting the company's total gold production to roughly 233,000 oz. for the year.

At mid-year, Hecla said it had six underground drills and two surface rigs turning as Casa Berardi.

Much of Hecla's 2016 exploration focused on expanding existing deposits and defining new resources at San Sebastian, a past producing silver-gold mine in Mexico the company put back into production at the end of 2015. Going into 2016, this mine had 289,000 tons of proven and probable reserves, averaging 27.7 oz. per ton (8.0 million oz.) silver and 0.22 oz. /t (64,000 oz.) gold.

It is the Greens Creek Mine in Southeast Alaska, however, that has been the foundation of Hecla's growth since the company bought full ownership of the operation in 2008.

Today, Greens Creek is one of the largest and lowest-cost primary silver mines on the planet - producing roughly 200 million oz. of silver and 1.5 million oz. of gold since its startup in 1989.

The 8.5 million oz. of silver recovered at Greens Creek in 2015 helped propel Hecla's companywide silver production of 11.6 million oz. for the year, a new record for the 125-year-old company.

After crediting the value of the gold, zinc and lead produced as by-products, the cost of mining an ounce of silver at Greens Creek was only US$3.91 per oz. last year.

This year, Hecla anticipates the mine will produce roughly 8.3 million oz. of silver at US$5.00 per oz. At yearend 2015, Greens Creek had 7.21 million tons of reserves averaging 12.3 oz. /t (88.7 million oz.) silver; 0.09 oz. /t (677,000 oz.) gold; 8.1 percent (582,640 tons) zinc; and 3 percent (218,400 tons) lead.

Definition drilling at Greens Creek focused largely on refining the resources of the 9A and NWW zones for conversion to reserves. This drilling confirmed the continuity and refined the geometry of a mostly vertical eastern limb of mineralization at 9A. Highlights include: 20.4 oz./t silver, 0.09 oz./t gold, 16.2 percent zinc and 5.2 percent lead over 17.5 feet; and 15.1 oz./t silver, 0.08 oz./t gold, 11.2 percent zinc and 4.1 percent lead over 15.6 feet.

Drilling of the northern most targets of the NWW Zone cut 76.4 oz./t silver, 0.17 oz./t gold, 19.9 percent zinc and 4.4 percent lead over 10.2 feet; and 56.1 oz./t silver, 0.13 oz./t gold, 3.3 percent zinc, and 0.8 percent lead over 10.2 feet.

At mid-year, Hecla upped its 2016 exploration and pre-development budget to US$19 million, an increase of US$4 million.

-SHANE LASLEY