Hecla Mining Co. announced that it expects to begin production at its San Sebastian project in the state of Durango, Mexico, by the end of 2015.
“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,” said Phillips S. Baker Jr., president and CEO. “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.”
Hecla has secured the use of a Merrill-Crowe processing plant near Velardeña. Under the terms of the toll treatment arrangement, Hecla has the ability to use the mill for 18 months, with the potential to extend it for up to 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. The filling of supervisory positions is under way. The owner of the mill is in the process of reactivating existing permits.
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.
Hecla intends to use a contractor for mining operations, and the RFP process is progressing well, according to the company.
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. From 2001 to 2005, Hecla produced 545,476 tons of ore containing 177,541 oz of gold and 11.6 million oz of silver from the Francine Vein with an average grade of 0.32 oz/ton gold and 22.5 oz/ton silver, making it one of the highest-grade producers in Mexico at the time.