Hecla Announces Drill Intersections at San Sebastian Property, Mexico

High-grade intercepts on Middle and North Veins; increased resources expected in the coming months.

COEUR D’ALENE, Idaho--()--Hecla Mining Company (NYSE:HL) announced results from its shallow in-fill and exploration drilling program on the North and Middle Veins at its San Sebastian property in Durango, Mexico.

Highlights

  • Recent drilling success has elevated San Sebastian to Hecla’s highest priority pre-development project
  • Four veins now discovered with nearly 7 kilometers (4.4 miles) of mineralized strike length; and the recently discovered Middle and North Veins are open
  • Drilling in the last two quarters limited to 100 meters (328 feet) depth; mineralization continues at depth
  • Silver equivalent indicated resource of 25.9 million ounces and inferred resource of 29.5 million ounces expected to increase in the coming months (This resource does not include the North Vein.)
  • Near-surface mineralization appears amenable to oxide leaching; additional testing underway

“San Sebastian’s exploration success highlights the benefit of our strategy of owning large land positions that have significant geological potential and systematically exploring them,” said Phillips S. Baker, Jr. “Nine years ago we closed San Sebastian after five years of production. Since then our exploration has evolved as our knowledge has increased. We are seeing that knowledge and persistence payoff with the results on the recently discovered Middle and North Veins. While there is a lot more work to be done, our confidence is growing in San Sebastian’s ability to one day go back into production and the possibility of additional discoveries on the property package.”

Drilling Program

For the last four quarters the focus of the drilling program has been on near-surface targets on the Middle and North Veins. The two veins are parallel and located 140 meters (460 feet) apart. The Middle Vein has been intersected by 197 holes and 38 surface trenches and can be traced for nearly two kilometers (6,560 feet) along strike and to a depth of over 300 meters (980 feet). The upper portion of the Middle Vein contains near-surface, high-grade mineralization that may be suitable to open pit mining. Drill results in the second and third quarters were very impressive and included assay intervals such as 84.1 oz/ton silver and 0.40 oz/ton gold over 9.5 feet, 79.1 oz/ton silver and 0.43 oz/ton gold over 7.4 feet, 31.9 oz/ton silver and 0.32 oz/ton gold over 14.5 feet. See more complete drill assay highlights in Table A at the end of this release.

North Vein was the focus of a 40-hole shallow drilling program in the third quarter to test its continuity. This drilling resulted in several wide and high-grade intercepts including 0.11 oz/ton gold and 13.1 oz/ton silver over 15.0 feet, 0.16 oz/ton gold and 8.4 oz/ton silver over 14.6 feet, 0.17 oz/ton gold and 4.6 oz/ton silver over 18.6 feet. This vein has been traced for over 600 meters (1,970 feet) along strike and to a depth of over 100 meters (330 feet) and remains open along strike in both directions and at depth. The near-surface portion of the North Vein contains mineralization that may be suitable to open pit mining. Drill intersections are summarized in Table A at the end of this release.

With the success of this drilling program, the San Sebastian exploration budget has been increased by $750,000 to $3.1 million, and two drills have been added with the goal of expanding the North Vein near-surface resource further to the northwest and southeast and evaluating the possible southeast extension of the Francine Vein. An inaugural resource for the North Vein, as well as an updated resource for the Middle Vein, is expected upon completion of this drilling in the coming months.

RAB Drilling

Due to the successful application of Rotary Air Blast (RAB) drilling in conjunction with conventional trenching in areas of thick soil cover, Hecla is expanding the program further to the north and northwest from the Middle-North Vein area to evaluate a large, highly prospective area that is on-trend, or parallel, to known mineralized veins. This program has generated several strong gold and silver anomalies, and two new prospective quartz veins were discovered in trenches. This area with quartz veining is still in the early stage of evaluation but will likely be a priority core drilling target area in the near future.

Pre-development

At San Sebastian additional metallurgical work is being conducted and engineering design is being advanced for a potential open pit mine in the shallow Middle Vein area. A new resource for the North Vein is being created that will incorporate the results from the new drilling and surface trenching. A scoping study incorporating the Middle, Andrea, Francine (Hugh Zone) and North Veins is underway to determine the production viability, rate and sequencing of both underground and surface mines; sequencing the surface mines first has the potential to accelerate production.

Exploration Guidance

Hecla’s overall 2014 exploration budget has increased approximately $3.0 million to approximately $21.0 million. In addition to the increased exploration program at San Sebastian previously described, the increase to the exploration budget is designed to advance a number of targets where results have been very encouraging in the Killer Creek and Deep 200 South and NWW Zones at Greens Creek, and in the 124 and 134 Zones in the Principal Area and the 140 Zone further east at Casa Berardi.

 

Table A - Drilling Intersections

 
ALL Q2 2014 MIDDLE VEIN INTERCEPTS  
QUARTER   DRILL HOLE   FROM (m)   TO (m)  

DRILLED
WIDTH (m)

 

TRUE
WIDTH (m)

  Au (ppm)   Ag (ppm)  

DRILLED
WIDTH (ft)

 

TRUE
WIDTH (ft)

  Au (opt)   Ag (opt)   AgEq (opt)  
Q2 2014   SS-489   22.44   22.87   0.43   0.42   0.08   8.1   1.4   1.4   0.002   0.24   0.4  
  SS-490   57.25   59.25   2.00   2.00   4.10   1009.3   6.6   6.5   0.119   29.44   37.2  
  SS-491   22.00   22.36   0.36   0.36   0.09   53.5   1.2   1.2   0.003   1.56   1.7  
  SS-492   29.63   31.46   1.83   1.83   0.84   236.9   6.0   6.0   0.025   6.91   8.5  
  SS-493   64.09   66.35   2.26   2.26   14.85   2711.3   7.4   7.4   0.433   79.08   107.2  
  SS-494   40.78   42.10   1.32   1.32   1.13   213.6   4.3   4.3   0.033   6.23   8.4  
  SS-495   71.54   72.83   1.29   1.29   0.59   275.6   4.2   4.2   0.017   8.04   9.1  
  SS-496   18.94   20.00   1.06   1.06   0.80   29.8   3.5   3.5   0.023   0.87   2.4  
  SS-497   47.41   51.85   4.44   4.42   10.90   1092.5   14.6   14.5   0.318   31.87   52.5  
  SS-498   14.90   15.62   0.72   0.71   0.03   6.0   2.4   2.3   0.001   0.18   0.2  
  SS-499   49.85   51.96   2.11   2.08   0.58   124.1   6.9   6.8   0.017   3.62   4.7  
  SS-500   21.60   24.04   2.44   2.23   1.43   244.2   8.0   7.3   0.042   7.12   9.8  
  SS-501   55.44   57.78   2.34   2.30   1.36   228.3   7.7   7.5   0.040   6.66   9.2  
  SS-502   26.17   27.45   1.28   1.23   2.62   320.4   4.2   4.0   0.076   9.34   14.3  
  SS-503   55.73   56.65   0.92   0.91   0.14   8.9   3.0   3.0   0.004   0.26   0.5  
  SS-504   14.63   15.66   1.03   1.02   0.07   6.0   3.4   3.3   0.002   0.18   0.3  
  SS-505   50.70   52.39   1.69   1.65   2.41   221.5   5.5   5.4   0.070   6.46   11.0  
  SS-506   22.95   24.05   1.10   0.96   0.21   6.9   3.6   3.2   0.006   0.20   0.6  
  SS-507   48.60   49.75   1.15   0.98   0.31   13.1   3.8   3.2   0.009   0.38   1.0  
  SS-508   33.69   36.60   2.91   2.91   13.58   2882.5   9.5   9.5   0.396   84.08   109.8  
  SS-509   25.68   26.38   0.70   0.67   0.96   302.6   2.3   2.2   0.028   8.83   10.7  
  SS-510   37.22   37.52   0.30   0.29   0.35   71.5   1.0   1.0   0.010   2.09   2.7  
  SS-511   13.67   14.80   1.13   1.03   3.97   316.8   3.7   3.4   0.116   9.24   16.8  
  SS-512   13.10   14.90   1.80   1.68   0.02   1.7   5.9   5.5   0.001   0.05   0.1  
  SS-513   25.85   28.06   2.21   2.13   3.20   571.4   7.3   7.0   0.093   16.67   22.7  
  SS-514   21.78   22.40   0.62   0.61   1.34   240.7   2.0   2.0   0.039   7.02   9.6  
  SS-515   27.22   27.68   0.46   0.40   0.12   5.1   1.5   1.3   0.004   0.15   0.4  
  SS-516   33.55   35.05   1.50   1.45   1.80   133.9   4.9   4.8   0.053   3.90   7.3  
  SS-517   37.90   39.45   1.55   1.34   2.86   136.0   5.1   4.4   0.083   3.97   9.4  
   
ALL Q3 2014 MIDDLE VEIN INTERCEPTS  
QUARTER   DRILL HOLE   FROM (m)   TO (m)  

DRILLED
WIDTH (m)

 

TRUE
WIDTH (m)

  Au (ppm)   Ag (ppm)  

DRILLED
WIDTH (ft)

 

TRUE
WIDTH (ft)

  Au (opt)   Ag (opt)   AgEq (opt)  
Q3 2014   SS-518   7.04   7.42   0.38   0.38   0.12   30.3   1.2   1.2   0.004   0.88   1.1  
  SS-519   13.08   13.95   0.87   0.87   0.08   9.6   2.9   2.9   0.002   0.28   0.4  
  SS-520   15.50   16.80   1.30   1.28   0.81   154.8   4.3   4.2   0.024   4.51   6.1  
  SS-521   20.50   21.07   0.57   0.56   0.05   1.6   1.9   1.9   0.001   0.05   0.1  
  SS-522   45.10   45.23   0.13   0.12   0.09   26.7   0.4   0.4   0.003   0.78   0.9  
  SS-523   41.95   43.45   1.50   1.50   0.21   42.7   4.9   4.9   0.006   1.24   1.6  
  SS-524   36.79   38.66   1.87   1.75   0.30   81.7   6.1   5.7   0.009   2.38   3.0  
  SS-525   72.42   72.75   0.33   0.33   0.15   35.0   1.1   1.1   0.004   1.02   1.3  
  SS-526   43.40   44.18   0.78   0.78   2.01   39.6   2.6   2.6   0.059   1.16   5.0  
  SS-527   53.14   54.20   1.06   1.01   5.68   677.8   3.5   3.3   0.166   19.77   30.5  
  SS-528   61.46   61.66   0.20   0.20   0.82   292.0   0.7   0.7   0.024   8.52   10.1  
   
ALL Q3 2014 NORTH VEIN INTERCEPTS  
QUARTER   DRILL HOLE   FROM (m)   TO (m)  

DRILLED
WIDTH (m)

 

TRUE
WIDTH (m)

  Au (ppm)   Ag (ppm)  

DRILLED
WIDTH (ft)

 

TRUE
WIDTH (ft)

  Au (opt)   Ag (opt)   AgEq (opt)  
Q3 2014   SS-529   33.49   37.43   3.94   3.57   3.80   116.9   12.9   11.7   0.111   3.41   10.6  
  SS-530   34.70   41.65   6.95   6.65   2.59   57.2   22.8   21.8   0.076   1.67   6.6  
  SS-531   37.08   39.73   2.65   2.58   1.62   105.9   8.7   8.5   0.047   3.09   6.2  
  SS-532   35.09   40.80   5.71   5.67   5.86   158.9   18.7   18.6   0.171   4.64   15.8  
  SS-533   55.64   60.38   4.74   4.30   1.03   96.4   15.6   14.1   0.030   2.81   4.8  
  SS-534   55.77   58.61   2.84   2.70   4.31   85.7   9.3   8.9   0.126   2.50   10.7  
  SS-535   52.55   57.10   4.55   4.45   5.32   289.4   14.9   14.6   0.155   8.44   18.5  
  SS-536   48.69   53.20   4.51   4.48   2.88   74.7   14.8   14.7   0.084   2.18   7.6  
  SS-537   34.74   39.31   4.57   4.57   3.59   447.4   15.0   15.0   0.105   13.05   19.9  
  SS-538   56.38   59.76   3.38   3.38   1.87   64.4   11.1   11.1   0.055   1.88   5.4  
  SS-539   36.66   42.10   5.44   5.43   0.52   33.7   17.8   17.8   0.015   0.98   2.0  
  SS-540   60.53   62.89   2.36   2.36   0.82   72.5   7.7   7.7   0.024   2.11   3.7  
  SS-541   47.94   50.62   2.68   2.52   6.25   149.2   8.8   8.3   0.182   4.35   16.2  
  SS-542   21.00   22.35   1.35   1.27   3.93   175.1   4.4   4.2   0.115   5.11   12.6  
  SS-526 EXT   83.89   85.86   1.97   1.80   8.45   284.0   6.5   5.9   0.246   8.28   24.3  
  SS-543   95.11   96.61   1.50   1.26   2.37   234.1   4.9   4.1   0.069   6.83   11.3  
  SS-546   48.93   50.42   1.49   1.49   1.23   26.8   4.9   4.9   0.036   0.78   3.1  
  SS-548   70.17   72.44   2.27   2.27   1.65   164.9   7.4   7.4   0.048   4.81   7.9  
                       
 

Table B - San Sebastian Resources (as of 12/31/13)

                         

Indicated
Resources

  Tons   Au   Ag   Pb   Zn   Cu   AgEq   Au   Ag   Pb   Zn   Cu   AgEq
  T   opt   opt   %   %   %   opt   ozs   ozs   tons   tons   tons   ozs
Hugh Zone   488,000   0.026   6.8   3.0   3.9   1.72   18.1   12,500   3,335,300   14,540   18,930   8,370   8,816,500
Andrea   675,400   0.086   1.3   -   -   -   7.1   58,000   887,400   -   -   -   4,775,700
Middle Vein   830,400   0.061   10.8   0.1   0.1   0.03   14.8   50,500   8,994,700   480   710   240   12,309,900
Total Indicated   1,993,900   0.061   6.6   0.8   1.0   0.43   13.0   121,000   13,217,500   15,020   19,640   8,620   25,902,100

Inferred
Resources

  Tons   Au   Ag   Pb   Zn   Cu   AgEq   Au   Ag   Pb   Zn   Cu   Ag
  T   opt   opt   %   %   %   opt   ozs   ozs   tons   tons   tons   ozs
Hugh Zone   1,244,500   0.005   5.1   1.80   2.56   1.51   12.7   5,600   6,402,900   22,430   31,910   18,800   15,804,600
Andrea   2,288,700   0.044   3.12   -   -   -   5.9   99,600   7,135,700   -   -   -   13,560,300
Middle Vein   15,800   0.016   5.0   0.09   0.12   0.03   6.0   300   79,400   10   20   5   94,300
Total Inferred   3,549,000   0.030   3.8   0.6   0.9   0.53   8.3   105,500   13,618,000   22,440   31,930   18,805   29,459,200
 
  • Metal prices: $1,300/oz gold, $20.00/oz silver, $0.90/lb lead, $0.80/lb zinc and $3.00/lb copper.
  • Cut-off grades: Hugh Zone: $100 NSR; Andrea: $50 NSR; Middle Vein: $100 NSR
  • Resources reported at a minimum mining width of 2.0 meters for Hugh Zone and 1.5 meters for Andrea Vein and Middle Vein.
  • Tonnages rounded to nearest 100; contained metal in ounces (Au, Ag) rounded to nearest 100; contained metal in tons (Pb, Zn, Cu) rounded to nearest 10. Totals may not agree due to rounding.
  • Ag Equivalent Factor calculated as follows (example for Au): [(($Price Au) - ($Refining Au)) / (($Price Ag) - ($Refining Ag))] x [(%Recovery Au) / (%Recovery Ag)] x [(%Payable Au) / (%Payable Ag)] = AgEq Factor
  • The United States Securities and Exchange Commission (SEC) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this presentation, such as “resource,” “measured resources,” “indicated resources,” and “inferred resources” that are recognized by Canadian regulations, but that SEC guidelines generally prohibit U.S. registered companies from including in their filings with the SEC, except in certain circumstances. U.S. investors are urged to consider closely the disclosure in our most recent Form 10-K and Form 10-Q. You can review and obtain copies of these filings from the SEC’s website at www.sec.gov.
 

About Hecla

Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska and Idaho, and is a growing gold producer with an operating mine in Quebec, Canada. The Company also has exploration and pre-development properties in five world-class silver and gold mining districts in the U.S., Canada, and Mexico, and an exploration office and investments in early-stage silver exploration projects in Canada.

Qualified Person (QP) Pursuant to Canadian National Instrument 43-101

Dean McDonald, Ph.D., P.Geo., Senior Vice President - Exploration of Hecla Mining Company, who serves as a Qualified Person under National Instrument 43-101 (“NI 43-101”), supervised the preparation of the scientific and technical information concerning Hecla’s mineral projects in this news release.

Cautionary Note Regarding Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian Securities laws. Such forward-looking statements may include, without limitation: (i) expectations regarding the development, growth and exploration potential of the Company’s San Sebastian project; (ii) the possibility for open pit mining in the future at San Sebastian, including at the North and Middle veins; (iii) the expectation for an inaugural resource at the North Vein upon completion of planned drilling; (iv) the possibility of expanding the near surface resource and identifying new veins at San Sebastian; (v) the possibility of advancing engineering design and metallurgical testing at San Sebastian; (vi) the possibility of a scoping study incorporating the Middle, Andrea and North Veins to determine the production viability, rate and sequencing of both underground and surface mines, and the possibility that sequencing the surface mines could improve initial cash flows at the project; and (vii) the possibility of San Sebastian generating a significant return for Hecla shareholders. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political/regulatory developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) the exchange rate for the Canadian dollar to the U.S. dollar, being approximately consistent with current levels; (v) certain price assumptions for gold, silver, lead and zinc; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy of our current mineral reserve and mineral resource estimates; and (viii) the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements.” Such risks include, but are not limited to gold, silver and other metals price volatility, operating risks, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, community relations, conflict resolution and outcome of projects or oppositions, litigation, political, regulatory, labor and environmental risks, and exploration risks and results, including that mineral resources are not mineral reserves, they do not have demonstrated economic viability and there is no certainty that they can be upgraded to mineral reserves through continued exploration. For a more detailed discussion of such risks and other factors, see the Company’s 2013 Form 10-K, filed on February 19, 2014 with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.

Cautionary Statements to Investors on Reserves and Resources

Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in the SEC's Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (Guide 7). However, the Company is also a “reporting issuer” under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (NI 43-101). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is being included here to satisfy the Company's “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.

Reporting requirements in the United States for disclosure of mineral properties under Guide 7 and the requirements in Canada under NI 43-101 standards are substantially different. This document contains a summary of certain estimates of the Company, not only of proven and probable reserves within the meaning of Guide 7, which requires the preparation of a “final” or “bankable” feasibility study demonstrating the economic feasibility of mining and processing the mineralization using the three-year historical average price for any reserve or cash flow analysis to designate reserves and that the primary environmental analysis or report be filed with the appropriate governmental authority, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. The terms “measured resources”, “indicated resources,” and “inferred resources” are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are not normally permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. The term “resource” does not equate to the term “reserve”. Under Guide 7, the material described herein as “indicated resources” and “measured resources” would be characterized as “mineralized material” and is permitted to be disclosed in tonnage and grade only, not ounces. The category of “inferred resources” is not recognized by Guide 7. Investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into proven or probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a “resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a “resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.

Contacts

Hecla Mining Company
Investor and Public Relations:
Jeanne DuPont, 1-800-HECLA91 (1-800-432-5291)
hmc-info@hecla-mining.com
Corporate Communications Coordinator

Release Summary

Hecla Mining Company announced results from its shallow in-fill and exploration drilling program on the North and Middle Veins at its San Sebastian property in Durango, Mexico.

Contacts

Hecla Mining Company
Investor and Public Relations:
Jeanne DuPont, 1-800-HECLA91 (1-800-432-5291)
hmc-info@hecla-mining.com
Corporate Communications Coordinator