ALASKA & THE YUKON — Greens Creek cranks out silver for Kennecott, Hecla

With improving production costs and the discovery of new mineralized zones, the revived Greens Creek mine in Alaska is securing its position as one of the largest silver mines in the U.S.

Situated on Admiralty Island, southwest of Juneau, the silver-gold-zinc-lead mine is a joint venture between Kennecott Minerals, with a 70.3% interest, and Salt Lake City-based Hecla Mining (HL-N), with the remainder. Kennecott, a subsidiary of London-based Rio Tinto (RTP-N), is the operator.

The underground producer started up in 1989, but costs proved higher than expected and the mine was placed on standby in 1993. Some time later, a US$114-million redevelopment program was carried out, enabling operations to resume in the latter half of 1996 at a design rate of 1,320 tons per day.

In 1998, the operation milled 540,000 tons grading 22.74 oz. silver and 0.17 oz. gold per ton, plus 11.93% zinc and 5.13% lead, resulting in the production of 9.5 million oz. silver, 60,600 oz. gold, 58,900 tons zinc and 22,700 tons lead.

In 1997, Greens Creek milled 490,000 tons from which were produced 9 million oz. silver, 46,000 oz. gold, 34,000 tons zinc and 15,000 tons lead.

Mining and milling costs in 1998 were US$28.81 and US$20.62 per ton, respectively, whereas cash-operating and total-production costs were US$2.86 and US$5.06 per oz. silver.

These high costs have since come down. In the second quarter of 1999, total cash costs declined to US$2.04 per oz. silver, while total production costs fell to US$4.40 per oz. silver.

Today, the mine operates above design capacity, consistently achieving 1,500 tons per day.

At the end of last year, reserves at Greens Creek stood at 9.8 million tons grading 15.4 oz. silver, 0.142 oz. gold, 12.3% zinc and 4.5% lead, equivalent to 150 million contained ounces silver, 1.4 million contained ounces gold, 1.2 million tons zinc and 440,000 tons lead. The mine has a projected life of 17 years, depending on metal prices.

The deposit’s massive-sulphide geological model was updated in 1998, resulting in decreased proven and probable reserves from the Southwest zone. However, much of that loss was replaced by the discovery of the 200 South deposit, which entered production this year.

Exploration efforts continue to outline resources that could increase the reserve base and extend the mine’s life.

In August 1998, Kennecott and Hecla completed a drawn-out land-exchange agreement with the U.S. Forest Service that provides the partners with access and mineral rights to an additional 7,500 acres surrounding the Greens Creek property.

Kennecott says the new land package, previously closed to exploration, has excellent mineral potential and could extend Greens Creek’s reserves and mine life “substantially.”

In 1998, Greens Creek won the American “Sentinels of Safety” award for underground metal mines, for completing 434,236 work-hours without a lost-time accident. About 250 people work at the mine and concentrator.