Hecla Plans To Begin Mining At San Sebastian By End Of 2015

Wednesday September 16, 2015 09:54

(Kitco News) - Hecla Mining Co. (NYSE: HL) expects to begin open-pit mining at its San Sebastian project in the Mexican state of Durango by the end of 2015, the company announced Wednesday.

“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 chief executive officer.

Hecla projected initial cash costs, after credit for by-product metal sold, of $5.49 per ounce of silver.

“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,” Baker said. “This approach reflects our strategy of simultaneously growing and creating value while protecting our balance sheet.”

Hecla has secured the use of a Merrill-Crowe processing plant near Velardeña for 18 months, with the potential to extend for 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, Hecla said. The mill owner is in the process of reactivating existing permits, Hecla said.

The proposed mining technique focuses on shallow, near-surface pits on the East Francine, Middle and North veins, targeting high-grade material, Hecla said. 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 being contemplated for deeper material, the company added.

Hecla said it intends to use a contractor for mining operations.

From 2001 to 2005, Hecla produced 545,476 tons of ore containing 177,541 ounces of gold and 11.6 million ounces of silver from the Francine Vein with an average grade of 0.32 ounces per ton gold and 22.5 ounce/ton silver. This made it one of the highest-grade producers in Mexico at the time, Hecla said.

By Allen Sykora of Kitco News; asykora@kitco.com