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The turn of the millennium marked Hecla’s move into Mexico and Venezuela: San Sebastian and La Camorra, respectively. Both were part of the 1999 acquisition of Monarch Resources Investments Limited for $25 million – $9 million in cash and 6.7 million shares of Hecla common stock.
La Camorra was an underground gold mine located near the town of El Callao in the eastern Venezuelan state of Bolivar, and was accompanied by nine other exploration concessions encompassing 8,000 hectares near the mine. After improvements to the mine and mill, the first gold pour under Hecla management took place on October 18, 1999. Over the next nine years, La Camorra produced over a million ounces of gold for Hecla, making the company the largest gold producer in Venezuela.
By 2008, however, Venezuelan President Hugo Chavez, who, early in his term, was instrumental in bringing
in foreign investment to develop the country’s natural resources, was in the midst of what could only be called an expropriation spree. In June, the government announced that it would mediate between workers and Hecla management concerning working conditions at the company’s Isadora mine – about 70 miles north of La Camorra. Anticipating that the La Camorra mill and concession would revert to the state by January 1, 2009, Hecla sold its interest to Rusoro Mining for $25 million.
San Sebastian, in Durango, Mexico, was a different story altogether. Production began there in 2001 and continued through the end of 2005, yielding 11.2 million ounces of silver. Having extracted the high-grade ore, Hecla put
the mine on care and maintenance while continuing
its exploration activities on the 200-square-mile land package. For the next 10 years, exploration and definition drilling continued. In December 2015, following an infill drill program that confirmed high-grade material and a positive Preliminary Economic Assessment indicating an expected 400 percent internal rate of return, work began again at San Sebastian – this time on shallow pits to mine the high-grade supergene material.
San Sebastian is a case study in patience. Hecla geologists believed they were in the right spot – and it turns out they were. Careful planning and built-in efficiencies (the company is leasing a nearby mill rather than purchasing one outright) will make the mine a strong cash flow generator for the next 18 months to two years – even as further underground exploration continues.
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