Lucky Friday Mine Quarterly Silver Production To Exceed 1 Million Ounces
COEUR D’ALENE, ID - Hecla Mining Company President and CEO, Phillip S. Baker Jr., said, “All of our mines generated positive free cash flow despite inflationary cost pressures, slow supply chains, and some COVID-19 related labor challenges. Hecla, not only is the largest silver producer in the U.S., but also the country’s third largest zinc miner, and by-products contributed to the silver mines’ strong performance and help offset inflationary pressure. Over the last eight quarters, we have generated $434 million in cash flow from operations and this quarter marked our eighth consecutive quarter of free cash flow, with $232 million generated over that period. This strong, consistent performance has strengthened our balance sheet and led to credit rating upgrades. With strong grades and our innovative mining method at the Lucky Friday Mine, in Idaho, we expect the mine’s quarterly silver production for the rest of the year to exceed one million ounces contributing to our increasing silver production profile. Growing U.S. silver production is particularly rewarding as demand for silver to generate green energy is growing and the need for domestically sourced metals is being understood because of the pandemic and the Ukrainian war.”
The impact of inflationary pressures, supply chain challenges, and manpower constraints due to various factors, including COVID-19, impacted each operation differently. Overall, the Company’s silver assets operated as planned with Greens Creek, in Alaska, outperforming due to higher grades while Lucky Friday saw some production impact due to delays in equipment delivery. Although all operations were impacted by inflation, AISC for consolidated silver assets declined over the prior quarter as higher by-product credits and higher silver production more than offset the inflationary cost pressures. Casa Berardi, in Canada, saw the largest impact because it mines the greatest volume of material (approximately 8 times that of Greens Creek annually) and processes the largest volume of ore (approximately 1.8 times that of Greens Creek), therefore increases in the cost of fuel, steel, reagents, and other consumables have a greater impact on the mine. Casa Berardi was also constrained by the lack of available manpower due to competition for skilled workers in the Abitibi. The Company is monitoring and attempting to proactively mitigate the impact that inflation, supply chain delays, and lack of available manpower has on production and per ounce costs, and if current by-product credits continue, believes that it can successfully navigate these challenges.
Casa Berardi produced 30,240 ounces of gold compared to 37,266 ounces in the prior quarter. This represents a decrease of 19% due to lower grades milled as more material was sourced from the 160 pit. The mill continued to perform well, operating at an average of 4,291 tons per day (“tpd”) in the first quarter of 2022 compared to 4,207 tpd over prior quarter with availability exceeding 90% in both periods. Seven underground and three surface core drills focused on resource conversion and exploration drilling to upgrade and expand resources in the West, Principal, and East mine areas. Drilling in the West Mine targeted the eastern edge of the 113 Zone to define continuity and expand mineralization to the east and targeted the 118 Zone to define and expand mineralization in the 14 and 15 lenses up and down plunge and to the east. Highlights from this drilling include intercepts grading 0.55 oz/ton gold over 23.0 feet and 0.43 oz/ton gold over 12.1 feet, expanding and upgrading high-grade mineralization in the 113 Zone.
Drilling in the Principal Mine targeted the lower part of the 123 Zone and the extensions to the 124 and 134 zones. In the 123 Zone, drilling confirmed the eastern plunge of mineralization hosted within a chert and massive sulfide horizon crosscut by quartz veins where additional drilling is planned. Surface drilling targeting the area between the 124 and 134 zones focused on expanding and connecting mineralization between these two zones which could have a positive impact on future mining in the proposed Principal and 134 open pits. Highlights from this drilling include 0.05 oz/ton gold over 86.6 feet and 0.08 oz/ton gold over 31.4 feet.
Drilling in the East Mine targeted upgrading and expanding mineralization in the 146 and 148 zones. Results from the 146 Zone drilling indicate the original 146-09 lens is expanding into multiple stacked mineralized lenses characterized by pyrite and pyrrhotite bands within the sedimentary rocks located 300 feet south of the Casa Berardi Fault. Highlight assay results from the 146 Zone drilling contain 0.18 oz/ton gold over 11.5 feet which includes 0.70 oz/ton silver over 3.0 feet.
Sonic drilling at Casa Berardi began in January with one drill focused on testing three areas in the East, Central, and West blocks of our property package. The focus of this drilling is to test historical gold till overburden anomalies and core into the bedrock for gold and lithogeochemical analysis in addition to mapping alteration. Results to date indicate that sonic drilling is a very useful tool to identify vectors to mineralization under cover.
At Greens Creek, three underground core drills focused on resource conversion in the Southwest Bench, West, East, and 200 South ore zones and exploration in the East and Gallagher Fault Block zones. All assay results from the last of the 2021 drilling programs in the 9A and 200 South ore zones have been received confirming and expanding mineralization in both zones. Highlights from the 9A drilling include intercepts containing 18.3 oz/ton silver, 0.05 oz/ton gold, 2.8% zinc, and 1.6% lead over 20.7 feet and 7.4 oz/ton silver, 0.02 oz/ton gold, 6.8% zinc, and 3.0% lead over 41.5 feet. Drilling in the 200 South Zone targeted expanding and upgrading resources in the southern portions of the zone and highlights include intercepts containing 40.4 oz/ton silver, 0.43 oz/ton gold, 12.4% zinc and 4.7% lead over 5.7 feet and 25.1 oz/ton silver, 0.42 oz/ton gold, 4.2% zinc, and 2.0% lead over 10.5 feet.
At Nevada operations, drilling with three drill rigs at Midas has been focused on drill testing the prospectivity of the Racer structure within the East Graben Corridor along 1.7 miles of strike length at a drill hole spacing of approximately 1,000 feet and initial drill testing of the Vapor Trail structure. Hollister, exploration drilling continued in January and February from the second drill station of the Hatter Graben decline completing exploration drill hole HUC-112. In February, development drifting at the Hatter Graben exploration area encountered high water inflows which eventually halted development. As a result of this inflow, exploration drilling was suspended while water management options are being evaluated. Two exploration drill holes have been completed targeting multiple zones of narrow banded quartz veins and veinlets south of the existing resource. Recent assay results from these initial two drill holes show multiple narrow vein zones with intercepts including 0.10 oz/ton gold and 17.6 oz/ton silver over 0.6 feet estimated true thickness and 0.10 oz/ton gold and 3.1 oz/ton silver over 1.5 feet estimated true thickness.
Exploration at San Sebastian, in Mexico, continues to advance drill testing multiple targets within the district in addition to expanding our SVRC (short vertical reverse circulation) drilling in areas under cover. Near the San Sebastian Mine Area, core drilling targeted the deeper portions of the past producing veins for silver dominant polymetallic mineralization. Recent assay results from this area include 4.9 oz/ton silver, 2.0% copper, 2.5% lead, 5.3% zinc over 1.6 feet from the West Francine Vein. Drilling at La Roca, interpreted to be an area where an entire epithermal vein system is preserved, discovered several large vein zones up to 51.7 feet true thickness, with anomalous silver with samples grading up to 10.5 oz/ton silver. These early drilling results are helping to define the orientations of the targeted vein structures and drilling now is focused on testing the favorable depth of mineralization, which is believed to be deeper than the current levels tested.