Hecla Mining announced in mid-September that it expects to begin production by the end of 2015 at its San Sebastian project in Durango state, Mexico. The San Sebastian property is located in the heart of the Mexican silver belt and contains a series of precious and base metal-bearing epithermal veins. Hecla mined the Francine vein from 2001 to 2005, producing 545,476 short tons (st) of ore containing 177,541 oz of gold and 11.6 million oz of silver. Grades averaged 0.32 oz/st gold and 22.5 oz/st silver, making it one of the highest-grade producers in Mexico at the time.
Hecla President and CEO Phillips S. Baker said, “San Sebastian’s high-grade near-surface material is projected to provide significant production, more than 8 million silver equivalent oz, and cash flow over the next two years. 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. This approach reflects our strategy of simultaneously growing and creating value while protecting our balance sheet.”
Total mill feed is estimated at 273,362 st to be processed at a rate of 440 st/d. Mill feed grades will be 0.14 oz/st gold and 23.9 oz/st silver. Metal to be recovered is estimated at 8.14 million silver equivalent oz, comprising 35,959 oz of gold and 5,585,098 oz of silver. Capital expenditures to the start of mining are estimated at $5.8 million. Cash costs of production are estimated at $5.49/oz of silver, after byproduct credits.
Hecla has secured the use of a Merrill-Crowe processing plant near Velardeña in Durango state. Under the terms of the toll treatment arrangement, Hecla can use the mill for 18 months, with the potential to extend it up to another 12 months. The mill is located within 100 miles of San Sebastian and was previously used by Hecla to process ore when it mined the San Sebastian property from 2001 to 2005.
The mill has been idle for several years and is currently being rehabilitated and updated. The filling of supervisory positions is underway. The owner of the mill is in the process of reactivating existing permits.
Hecla intends to use a contractor for mining operations. The proposed mining technique focuses on shallow, near-surface pits on the East Francine, Middle, and North veins, targeting high-grade material. The pits are expected to be small, extending to a maximum of about 270 ft in depth. Near-surface material is weathered and should be easily excavated. Drill and blast techniques are contemplated for deeper material.