Hecla gets lease at El Callao Block B

Already active in eastern Venezuela, Hecla Mining (HL-M) has received notice from Venezuelan state enterprise Corporacion Venezolana de Guayana (CVG) that it has been awarded an 18-sq.-km lease in the El Callao gold-mining district of eastern Bolivar state.

The lease covers an area called Block B, which covers three former producing mines — Chile, Laguna and Panama. The mines produced a total of about 1.5 million oz. gold between 1921 and 1946.

The grant of the lease is preliminary and the parties are trying to negotiate a definitive lease agreement. Terms call for CVG to receive US$1.25 million six months after the lease is signed and a further US$1 million six months later. Hecla’s ownership of the lease would then be vested and CVG would retain a net smelter return of 2-3%.

At the Chile deposit, drilling by CVG has confirmed high-grade intersections on extensions of the previously mined structure. Chile, which produced 550,000 oz., will be Hecla’s first target, but the company also plans to test several others.

The lease area is 80 km northwest of Hecla’s La Camorra gold mine, which produced 150,000 oz. gold in 2001.