Hecla Mining Company (NYSE:HL) today announced it expects to increase its silver resource base by approximately 30 million ounces in 2006, or about 20%. The anticipated resource increase has been identified at Hecla's Lucky Friday silver mine in northern Idaho and at the Hugh Zone on the San Sebastian exploration property in central Mexico.
About 25 million ounces of silver are expected to be added to the resource at the Lucky Friday mine, growing the reserve and resource base to more than 115 million ounces of silver, with a large lead and zinc by-product value. San Sebastian is a silver deposit with significant by-product copper, zinc and lead. The new resource there is anticipated to include about 4 million ounces of silver, which is about 20% of the value of the resource increase. The other 80% of the value of the increased resource at San Sebastian consists of copper, zinc, lead and gold.
On a silver equivalent basis, the new resource at the Lucky Friday and San Sebastian combined would equal more than 100 million ounces of silver, including base metals values.
Hecla's President and Chief Executive Officer Phillips S. Baker, Jr., said, "To put this in perspective for investors, the total value of these new silver resources at these two properties is the equivalent value of about two million ounces of gold, nearly twice the company's total gold resource. The entire resource increase is located in North America and is largely a result of new exploration programs on existing properties, as opposed to an acquisition of existing resources. It provides ongoing confirmation of our strategy of operating and exploring in world-class mining districts. This is a taste of more to come because we've not yet completed our work at these and other properties."
The Lucky Friday resource expansion is due to a deeper drilling program down to 6,900 feet below the surface at the Silver Shaft. That drilling extended the eastern half of the known resource at Lucky Friday down to the 6900 level, leaving the potential for the possible identification of additional resource on the western half as drilling continues. Because of the excellent results, an additional hole was drilled to the 7900 level, confirming continued mineralization. More holes are planned.
The increased resource at San Sebastian is a result of additional surface drilling on the deposit during 2005 and 2006, bringing the total silver resource at San Sebastian to about 8 million ounces, plus nearly 250 million pounds of zinc, lead and copper. The resource increase during 2006 is from a polygonal resource estimate based on an average drill hole spacing of 80 meters. Additional targets remain to be tested, because the Hugh Zone was discovered as a stacked system more than 100 vertical meters directly beneath the earlier-mined Francine vein. Hecla will soon test the potential that the Hugh Zone is stacked on top of yet an even deeper system and is planning a drill program that would test the area about 150 meters deeper than the known base of the Hugh Zone. A scoping study is under way to study key issues to move this resource into reserve.
The calculation of resources was based on metals prices well below current levels. The prices used for resource calculation, as well as the determination of silver equivalent, were $8.00 per ounce of silver, $500.00 per ounce of gold, $0.67 per pound of zinc, $0.42 per pound of lead and $2.00 per pound of copper. The determination of gold equivalent is based on a 50:1 ratio of silver to gold, the approximate ratio of current prices.
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines, processes and explores for silver and gold in the United States, Mexico and Venezuela. A 115-year-old company, Hecla has long been well known in the mining world and financial markets as a quality silver and gold producer. Hecla's common and preferred shares are traded on the New York Stock Exchange under the symbols HL and HL-PrB.
Cautionary Note to Investors -- The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this news release, such as "resource" and "reserve," that the SEC guidelines strictly prohibit us from including in our filing with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K and Form 10-Q. You can review and obtain copies of these filings from the SEC's website at http://www.sec.gov/edgar.shtml.
Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, costs, and prices or sales performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, exploration risks and results, political risks, project development risks, labor issues and ability to raise financing. Refer to the company's Form 10-Q and 10-K reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements.
Hecla's Home Page can be accessed on the Internet at: http://www.hecla-mining.com