With the acquisition of Aurizon Mines Ltd. in 2013, Hecla gained control of the Casa Berardi mine, an underground gold mine located in western Quebec, a politically stable and mining friendly region, with good geology and infrastructure. In 2015, the mine produced 127,891 ounces of gold at a cash cost, after by-product credits, per gold ounce of $772 (1). The mill throughput rate averaged 2,313 tons per day. The mine is expected to produce about 145,000 ounces of gold in 2016 at a cash cost, after by-product credits, of $700 per ounce (1).
(1) Cash cost, after by-product credits, per gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the legal page of this website.
The Casa Berardi mine is situated 95 kilometres north of La Sarre, Quebec and straddles a 37 kilometre section of the Casa Berardi fault.
The Casa Berardi gold deposits are located along a five kilometre east-west mineralized corridor. They include the East and West mines, and the Principal Zones. The Casa Berardi gold deposits can be classified as an Archean sedimentary-hosted lode gold deposit. The gold mineralization is superimposed on a continuous graphitic mudrock unit corresponding to the Casa Berardi Fault plane. Gold occurs mainly south of the Casa Berardi Fault, and occasionally on both sides of the fault.
The West Mine shaft deepening project, which included construction of loading pockets and other related infrastructure, was completed in the fourth quarter of 2014, and is improving mine operations by providing additional access to the 118 and 123 zones for transporting ore and waste from underground. Excavation of the 985 drift (previously referred to as 1010) from the deepened shaft is underway. This drift is expected to improve ventilation and material handling and also provide a platform for deeper exploration drilling.
The Company is moving ahead with the East Mine Crown Pillar (EMCP) pit. Located near the East mine, the capital for this shallow pit project is expected to be $39 million over 5.5 years, with about $20 million in 2016. The project has an expected IRR of 90% and should contribute 5,000 ounces in 2016 and about 30,000 ounces of gold starting in 2017 and until the end of the project.
Casa Berardi is an underground trackless mine accessed by declines and a shaft, which produced approximately 2,100 tonnes of ore per day in 2015. The mining methods are longhole transversal stoping in 10 metres or more mineralization width, and longitudinal retreat stoping in narrower ore bodies. The mineralized zones put in reserves are of varying thickness, ranging from a few tens of meters to 3 meters, which is the minimum mining width. Most of the hanging walls are sub-vertical (55° to 85°), with typically the graphitic Casa Berardi fault at the footwall. Throughput is expected to increase to 2,900 tonnes per day with the EMCP.
The mine has produced approximately 1.9 million recovered gold ounces since commencing production in 1988, including about 931,244 recovered ounces since production recommenced in November 2006.
|(years ended December 31)|
|Gold (ounces) (2)||62,532||128,244||127,891||145,975|
|Cash cost per ounce of gold, after by-product credits, ($/oz) (1)||$950.79||$826.35||$772.00||$764.00|
- (footnotes)(1) Cash cost, after by-product credits, per silver or gold ounce is a non-GAAP measurement. A reconciliation of cash cost, after by-product credits, per silver or gold ounce to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the legal page of this website.
(2) Casa Berardi gold mine was purchased on June 1, 2013, from Aurizon Mines Ltd.
Information with respect to proven and probable ore reserves, measured, and inferred resources is set forth below.
|(As of December 31, 2015 unless otherwise noted)|
|(000)||(oz/ton)||(oz/ton)||(%)||(%)||(000 oz)||(000 oz)||(Tons)||(Tons)|
|Proven Reserves (1)||2,119||–||0.11||–||–||–||234||–||–|
|Probable Reserves (1)||8,104||–||0.14||–||–||–||1,098||–||–|
|Proven and Probable Reserves (1)||10,222||–||0.13||–||–||–||1,332||–||–|
|Measured Resources (2)||1,769||–||0.18||–||–||–||326||–||–|
|Indicated Resources (2)||9,225||–||0.11||–||–||–||985||–||–|
|M&I Resources (2)||10,993||–||0.12||–||–||–||1,312||–||–|
|Inferred Resources (2)||2,854||–||0.18||–||–||–||510||–||–|
- (footnotes)Note: All estimates are in-situ. Resources are exclusive of reserves. Totals may not represent the sum of parts due to rounding.
(1) Mineral reserves are based on $1,100 gold and a US$/CAN$ exchange rate of 1:1.37. Reserve diluted to an average of 34.7% to minimum width of 9.8 feet (3 m).
Open pit mineral reserves of the East Mine were estimated in May 2015 based on $1,225 gold and a US$/CAN$ exchange rate of 1:1.10. Reserve block diluted.
Open pit mineral reserves of the Principal Mine were estimated in February 2011 based on $950 gold and a US$/CAN$ exchange rate of 1:1. Reserve diluted to 10%.
(2) Measured, indicated and inferred resources are based on $1,300 gold and a US$/CAN$ exchange rate of 1:1.37. Underground resources are reported at a minimum mining width of 6.6 feet to 9.8 feet (2 m to 3 m).
Open pit mineral resources of the Principal Mine were estimated based on $950 gold and a US$/CAN$ exchange rate of 1:1.
Open pit mineral resources of the 160 Zone were based on $1,250 gold and a US$/CAN$ exchange rate of 1:1. Resources diluted to 12%.
Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in the SEC’s Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (Guide 7). However, the Company is also a “reporting issuer” under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (NI 43-101). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is being included here to satisfy the Company’s “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.
Reporting requirements in the United States for disclosure of mineral properties under Guide 7 and the requirements in Canada under NI 43-101 standards are substantially different. This website contains a summary of certain estimates of the Company, not only of proven and probable reserves within the meaning of Guide 7, which requires the preparation of a “final” or “bankable” feasibility study demonstrating the economic feasibility of mining and processing the mineralization using the three-year historical average price for any reserve or cash flow analysis to designate reserves and that the primary environmental analysis or report be filed with the appropriate governmental authority, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. The terms “measured resources”, “indicated resources,” and “inferred resources” are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are not normally permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. The term “resource” does not equate to the term “reserve”. Under Guide 7, the material described herein as “indicated resources” and “measured resources” would be characterized as “mineralized material” and is permitted to be disclosed in tonnage and grade only, not ounces. The category of “inferred resources” is not recognized by Guide 7. Investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into proven or probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a “resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a “resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.
At Casa Berardi, up to seven drills have been operating underground in an effort to refine current stope designs and expand reserves and resources in the 118, 123, 124 and Lower Inter zones. Other exploration drilling has extended mineralization on the 101 Zone (Northwest), 124 Zone and the recently discovered 117 Zone.
In-stope and definition drilling of the upper 118 Zone from the 530 level intersected a 15 to 55-foot wide shear zone that includes a mineralized interval of 0.37 oz/ton gold over 30.8 feet. Mineralization is open and deeper drilling suggests the zone continues to plunge to the west. Drilling to the east has defined mineralization below and above the level and this mineralization remains open to the east and upward. Drilling from the 910 level on the lower 118 Zone has extended a lens to the east and depth.
Drilling from the 550, 770, and 850 levels in the mine has identified multiple, stacked high-grade lenses of the 123 Zone that represent at least 2,000 feet of semi-continuous down-dip mineralization with an average strike length of 450 feet. Definition and step-out drilling from the 550 level continues to confirm and expand current resource boundaries of the upper lenses. Intersections in this drill program include 2.02 oz/ton gold over 40.4 feet and 2.73 oz/ton gold over 24.3 feet. This mineralization is continuous from the 770 level up to the 550 level and is open upward. Drilling from the 850 level has extended the current resource boundaries further to the east and at depth past the 870 level and include intersections of 0.97 oz/ton gold over 22.6 feet and 0.80 oz/ton gold over 38.1 feet. Future drilling is expected to expand the resource to the east and at depth; the close proximity of these new lenses to mine infrastructure is expected to allow near-term production from these areas.
Underground drilling on the 124 Zone west of the Principal Zone area defined a 15 to 60-foot thick, quartz-bearing zone with over 300 feet of strike length. Within this zone are high-grade lenses drilled from the 330 level including intervals of 0.39 oz/ton gold over 20.7 feet and 0.43 oz/ton gold over 8.5 feet. Deeper drilling of the 124 Principal Zone from the 530 level intersected broad mineralization with good continuity including an interval of 0.51 oz/ton gold over 14.1 feet that confirms the current high-grade resource is open up-dip. Surface drilling of the 124 Zone includes an assay interval of 0.15 oz/ton gold over 9.2 feet to the east of the current resource.
Exploration drilling from the 810 level to investigate the lateral extent of the newly defined 117 Zone has shown mineralized lenses both north and south of the Casa Berardi Fault extend for over 325 feet down-plunge and this drilling may have also defined a third lens. Recent drill results include an interval of 0.13 oz/ton gold over 21.7 feet in a new lens north of the Casa Berardi Fault. At the west end of the mine, surface drilling of the Lower Inter Zone intersected 1.2 oz/ton gold over 16.1 feet at the upper extension of a multiple vein system. The surface exploration drilling targeting north of the Inter area intersected 0.23 oz/ton gold over 26.9 feet in the 101 Zone. Surface exploration drilling of the 119 Zone (Golden Pond) area yielded 0.22 oz/ton gold over 6.9 feet. At the East Mine the last surface drillhole of the season intersected 0.14 oz/ton gold over 9.8 feet in the vicinity of the Casa Berardi Fault.
The recent successes in both surface and underground drilling led to near replacement of 2015 gold production with increases in overall grade and to the identification of new resource trends throughout the West Mine, and now the East Mine of Casa Berardi. When the acquisition of Casa Berardi was made, there was an expectation of finding significant mineralization that would prolong gold production for many years to come, and this expectation is being realized.
The Company plans to begin producing gold from the first surface pit in 2016. Once the EMCP is exhausted, it is expected that the Principal pit will begin operating to maintain the 2,900 tonnes per day throughput.
125 Years of Mining (French)