Hecla Board Approves Completion of Shaft Project
Hecla Mining has received board approval to complete the No. 4 Shaft project at its Lucky Friday mine at Mullan, Idaho. The project entails sinking of an internal shaft from the mine's 4900 level to the 8800 level. The hoist room and associated equipment installation for the project were completed in the first half of 2011, and shaft sinking is expected to begin in the fourth quarter of 2011. The project was 38% complete as of early August 2011, and 78% of major procurements had been ordered or installed. Project capital is estimated at about $200 million. Production ramp-up is scheduled for 2014 to 2016.
Production metrics for the Lucky Friday mine once the No. 4 Shaft comes into production are a life-of-mine production rate of 1,000 mt/d for more than 20 years at ore grades averaging 14.3 oz/st silver, 8.5% lead and 2.7% zinc. Silver production is forecast at 4 million to 5 million oz/y at an average cash cost of less than $3/oz.
The economics of the No. 4 Shaft Project are currently limited by the capacity of the mill. Hecla has initiated a mine optimization study to understand the limits of the mine infrastructure and anticipates the study will open up ways to increase production beyond 5 million oz/y. Hecla expects to complete the study by year-end 2011.
Hecla also reports progress on its Star (Silver Valley, Idaho) and Equity/Bulldog (San Juan Silver joint venture, Colorado) pre-development projects.
The Star project is studying reopening the Star-Morning mine, which historically was the second-largest producer by tonnage in the Coeur d'Alene district. Crews are currently rehabilitating the infrastructure and re-establishing ventilation on the Star 2000 level. Once access is re-established, drilling will begin to evaluate extensions of past-producing vein systems in proximity to historic mine infrastructure. The current understanding of the vein structures suggests potential to define more than 30 million oz of silver, with significant zinc and lead, above the water table. The rehabilitation work is expected to be complete by year-end, and drill platforms will be established shortly thereafter.
While the Star drift will provide access for exploration and potential production above the water table, further dewatering and refurbishment of the historic Star production shaft could allow access to deeper resources that were formerly classified as reserves when the mine closed in 1982. Additional development also could create a common connection to the existing underground development at the Lucky Friday mine for ventilation and exploration.