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 As a result of the success of our San Sebastian exploration program in 2014 – which included a significant increase in high-grade, near- surface resources – Hecla bucked the industry-wide trend by increasing the project’s exploration budget to $3 million mid-year and finished the year at over $4 million in expenditures. That success could be instrumental in the project becoming a viable operation.
Our concession holdings at San Sebastian are located in the middle of the prolific Mexican Silver Belt. The silver equivalent indicated resource increased 46 percent to 37.7 million silver ounces, and the silver equivalent inferred resources increased 18 percent to 34.9 million ounces over 2013 levels (see Reserves and Resources table at the end of this report). From 2001 to 2005, Hecla produced 545,476 tons of ore containing 177,541 ounces of gold and 11.6 Moz of silver from the Francine Vein, making San Sebastian one of the highest-grade producers in Mexico at the time.
This year’s discovery of the East Francine Vein, with indicated resources grading 81 oz/ton AgEq, when combined with the North and Middle Veins, provides San Sebastian with near-surface, high- grade resources. Near-surface mineralization appears amenable to cyanide leaching; additional testing is underway.
San Sebastian, Durango, Mexico
We believe we’re still in the early stages of discovery, with over six kilometers (3.7 miles) of mineralized strike length identified already, and we’re focusing on further exploration and engineering in an effort to quickly return San Sebastian to production. A Preliminary Economic Assessment (PEA) with AMC Consultants and M3 Engineering and Technology Corp is expected this year.
In terms of exploration beyond San Sebastian, Hecla has focused on brownfields exploration surrounding its three operating mines, and greenfields exploration in Quebec, Canada. 2014 marks our ninth consecutive year of increasing silver reserves – to 173 million ounces proven and probable – despite using a lower silver price assumption than 2013. The strength of our reserves is a good indication of the underlying quality of our assets, their ability to withstand lower prices, and our skilled exploration teams that continue to be successful in finding new resources.
We also looked beyond our mines, exploring on several of our Quebec properties – like Opinaca/Wildcat, Fayolle, and Heva-Hosco – as well as at Creede, Colorado; Republic, Washington; and in Idaho’s Silver Valley.
strength through exploration
   SAN SEBASTIAN BY THE NUMBERS
 acquired:
 100% in 1999
   operational 2001-2005
   production to date:
 silver – 11.6 M oz @ avg grade 22.5 oz/ton
     gold – 177,541 oz @ avg grade 0.32 oz/ton
   M&I resources:
  silver – 19.8 M oz
   gold – 171,000 oz
   Inferred resources:
 silver – 15.7 M oz
   gold – 129,000 oz
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