Hecla to explore La Fortuna in Mexican joint venture

Hecla Mining (NYSE) has formed a joint venture with War Eagle Mining (VSE) on the Mexican silver-gold project known as La Fortuna.

Hecla can earn a 60% interest by spending US$5 million over the next four years and paying all costs thereafter.

After startup, War Eagle will receive 15% of cash flow until Hecla recovers its costs (except the initial US$5 million), at which point War Eagle will start receiving 40% of cash flow.

A 36-hole program of reverse-circulation drilling has identified two zones of significant mineralization:

* the Northwest, which has an estimated strike length of 2,300 ft. and consists of five separate, vertically dipping, parallel quartz lodes; and * the Central, which has an estimated strike length of 1,600 ft. and consists of two parallel quartz lodes.

Based on limited drilling, War Eagle estimates a geologically inferred potential of 17.5 million tons grading 21.5 oz. silver and 0.093 oz. gold per ton.

Both zones are open at depth, and the potential for discovering additional zones is believed to be excellent.

Initially, Hecla will carry out diamond drilling to confirm the reverse-circulation holes. Stepout drilling will then attempt to expand the area of known mineralization.

The agreement allows for an area of mutual interest covering 500 sq. miles, of which about 160 sq. miles have already been staked or optioned by War Eagle.

Outside the area of mutual interest, War Eagle has staked another 560,000 acres. It owns a 99% interest in these new claims, which are not subject to the agreement with Hecla.