Hecla’s Lucky Friday silver mine resumes production

Hecla’s Lucky Friday silver mine resumes productionLucky Friday is Hecla's third-largest silver producing mine. Credit: Hecla Mining

Hecla Mining (NYSE: HL) has begun to resume activities at its Lucky Friday silver mine in Idaho, after operations were halted last September to repair areas damaged by wildfires in August. 

The mine restarted production on Jan. 9 and is expected to ramp up to full production in the current quarter, the company said.

Lucky Friday, Hecla’s third-largest silver mine, produced 3.1-million oz. of the precious metal in 2023, a 30% decrease from the previous year, owing to the temporary suspension. 

Despite challenges at Lucky Friday and the Keno Hill mine in Canada’s Yukon territory, Hecla managed to beat its 2022 production, delivering 14.3-million oz. of the precious metal last year.

BMO Capital Markets silver analyst Kevin O’Halloran said in a note on Thursday that he expects full production to resume relatively quickly at the northern Idaho mine because the damage that caused the shutdown was in a non-producing shaft. In addition, the development of a new egress with a 487.7-metre ramp and 88.4-metre vertical escapeway designed to bypass the damaged section was completed on schedule. 
 
In terms of insurance, Hecla has said it expects to start receiving insurance payments this quarter, and it has property and business interruption insurance with an underground sublimit of US$50 million ($67.1 million). 
 
“We conservatively model a US$12 million insurance payment in Q1, covering our estimated cost of the new secondary egress development,” O’Halloran said. “This is a conservative placeholder that we expect to revise once further detail is announced.”
 
Yukon mine inspectors raised several concerns around the Keno Hill operation last year after they found sediment runoff from tailings facilities, poor storage of hazardous materials, hydrocarbon stains on the ground, and discharged water that was toxic to fish.

“Despite these challenges, silver production exceeded last year as Greens Creek delivered another strong year, Lucky Friday’s production through July with our patented UCB method produced more silver than the mine typically produced in a full year with the old mining method, and the roughly half year of production at Keno Hill shows its potential to be a meaningful producer,” president and CEO Phillips Baker said in a statement.

The Keno Hill mine produced 1.5 million oz. of silver in 2023, with 608,301 oz. produced in the fourth quarter. The Bermingham deposits, which form the backbone of Hecla Yukon’s current mining operations, achieved their highest production in December, exceeding 9,500 tonnes mined. Ore inventory at the end of the year was approximately 3,000 tonnes at a silver grade of 27 oz. per tonne.

The Greens Creek mine, in Alaska, churned out 9.7 million oz. of silver and 60,896 oz. of gold in 2023. This operation has faced scrutiny and the United States Environmental Protection Agency imposed a more than US$143,000 fine on Hecla last June for violating hazardous waste management and disposal requirements.

The Casa Berardi mine, in Quebec, produced 90,363 oz. of the grey metal and 22,517 gold oz. last year. 

Hecla’s yearly gold production declined by 14%, due to wildfire-related closures and lower underground tonnage as the mine transitions to a surface operation by mid-2024.

Shares in the company, the largest silver producer in the U.S., were down 1.4% on Thursday morning in New York to US$4.22 apiece, leaving the miner with a market value of US$2.6 billion.

Hecla is targeting silver production of up to 20 million oz. a year by 2025.

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