Hecla plans Lucky Friday expansion

A newly discovered deposit is expected to reduce overall mining costs and more than double the silver output of the Lucky Friday mine near Mullan, Idaho.

Operator Hecla Mining (NYSE) intends to start phased development of the Gold Hunter deposit, north of the current Lucky Friday workings, more than one mile underground.

The Gold Hunter deposit was discovered in 1991, when an underground exploration program intercepted the downward extension of the old Gold Hunter mine. Based on work to date, the discovery is estimated to contain a potential 2-3 million tons of mineralization grading 14 oz. silver per ton, 4.7% lead and 1.3% zinc.

Hecla notes, however, that more drilling is required to define this mineralization and to bring it into the minable resource category. The first phase of the expansion program will add 20 employees and cost US$4.7 million. Work will involve driving a 6,000-ft. tunnel on the 4900 level of the Lucky Friday mine to gain access to the deposit at depth, and to provide a platform for 22,000 ft. of drilling to delineate the deposit. This phase is expected to be completed by late 1995, and will be followed by a production decision.

Art Brown, president of Hecla, said the new deposit, if brought into production, would reduce overall costs of production at the Lucky Friday mine. The work force would also be expanded, to about 200 by 1997. Total costs of the 3-year expansion project would be in the US$18-million range. “If expectations are met, the Lucky Friday mine could add up to 3 million oz. of additional silver production per year, returning the mine to historic production levels in the range of 5 million oz. annually,” Brown said. The Gold Hunter property is controlled by Hecla under a long-term operating agreement with other parties. Hecla is entitled to a 79.08% interest in the net profits from the property. Royalties of 18.52% and 2.4% from net profits are payable to two parties after Hecla recoups its exploration and development costs.

Hecla is a 103-year-old mining company with gold and silver operations in the U.S. and Mexico. The Idaho-based company reported net income of US$700,000 for the 1994 second quarter, before payment of preferred dividends. In the 1993 second quarter, Hecla reported a loss of US$2.8 million.