Hecla Mining announced it has entered into a toll milling agreement with Excellon Resources in which sulphide ore from San Sebastian would be trucked 26 miles to Excellon’s Miguel Auza flotation mill facility in Zacatecas Mexico, for processing.

Under the terms of the agreement, Excellon will provide 440 tons per day of milling capacity to Hecla and, in due course, the mill will be upgraded to include a copper flotation circuit.

“This is a significant step toward extending the life of the San Sebastian mine, and is in keeping with our strategy of maximizing the cash flow and minimizing capital investment by using third-party facilities,” said Phillips S. Baker Jr., Hecla’s president and CEO. “We will take a bulk sample in the third quarter and if it is positive, could begin mining sulphide ore next year.”

Baker said San Sebastian sulphides have the potential for five years of mine life and considerable upside with the recent exploration discoveries.

“We hope to mine oxides and sulphides concurrently since this agreement does not impact the current arrangement where oxide ore from shallower depths of the mine is being processed at the third-party owned Velardeña mill,” he added.

The five-year agreement is subject to due diligence, the successful processing of a 4,400-ton bulk sample of sulphide ore from the polymetallic Hugh Zone this summer, and receipt of any regulatory approvals and third-party consents. Hecla has an option to extend the agreement for an additional two years.