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ounces of silver reserves by 3%; our 737,290 tons of lead reserves by 8%; and our 840,870 tons of zinc by 15%. At San Sebastian, extensions of the Hugh Zone and a discovery in the Middle Vein have increased the
polymetallic resource, heightening its importance in the future of the mine.
Growing reserves and resources is one of the best ways to create value. As we grow our reserves and
increase our already long mine lives, we can improve productivity by increasing throughput or lowering costs so we can generate returns in most price environments.
ROCK CREEK AND MONTANORE
At Rock Creek, which we acquired in 2015 with the acquisition of Revett Mining Company, the U.S. Forest Service issued its Final Supplemental Environmental Impact Statement in late June 2017 and its draft Record
of Decision (ROD). That draft decision was subject to a 45-day formal comment period. The agency will consider any comments and issue its final ROD, which is anticipated in early 2018. Depending on possible legal challenges, we could be in position to go underground for the exploration phase in late 2018 or early 2019.
On the other hand, the Montana Federal District Court overturned previously granted environmental approvals at Montanore – a 2016 acquisition from Mines Management Inc. – remanding the ROD and related documents of the U.S. Forest Service and U.S. Fish and Wildlife Service for further review by the agencies. The Forest Service is preparing a new ROD and the Fish and Wildlife Service a new Biological Opinion to address the deficiencies identified by the court; they’re expected in late 2018 or early 2019.
Despite the notice recently received from the Montana Department of Environmental Quality to prevent exploration, which we will challenge vigorously because we firmly believe it is without merit, we remain confident that we will receive approval to conduct exploration studies to confirm the information from the feasibility studies – and to then move forward with construction.
While these steps may take several more years, it’s important to remember that these properties are both large silver/copper deposits. And each will operate for decades. They have the potential to double the size of our metal production, delivering significant value to shareholders. These types of assets are very rare, and to control two of them is rarer still.
WHAT’S NEXT FOR HECLA
What can we expect from Hecla over the next few years? We have stable operations at Greens Creek and Casa Berardi. We have tremendous economics at Greens Creek, which has been generating significant cash flow for some time now. Casa is now falling into that mode – generating lots of free cash flow – and Lucky Friday, when it comes back online, should perform better as well. In fact, I think its best years are ahead. And we’re working hard to put San Sebastian into the same category. These four operations not only give Hecla a solid base of production and cash flow now, they’ve also got a future in front of them that I think will easily run
HL | 7
250
SILVER RESERVES
200 150 100
50 0 (50) (100) (150) (200)
177 Moz
Greens Creek Acquisition
2007 2008
2009 2010
CUMULATIVE PRODUCTION
2011 2012 2013
2014 2015
138 Moz
2016 2017
Silver Ounces (millions)
PRODUCTION RESERVE
TOTAL GAIN 263 MILLION OUNCES