Casa Berardi La Sarre, Quebec

Hecla’s 100% owned Casa Berardi mine, is an underground gold mine located in western Quebec, a politically stable and mining friendly region, with good geology and infrastructure. In 2016, the mine produced 145,975 ounces of gold at a cash cost, after by-product credits, per gold ounce of $764 (1). The mill throughput rate averaged 2,725 tons per day. The mine is expected to produce 150,000 to 165,000 ounces of gold in 2017 at a cash cost, after by-product credits, of $800 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.

Map - Casa Berardi
Overview & History

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 now producing ore from 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. The project has an expected IRR of 90%, contributed 8,547 ounces in 2016, and is expected to produce about 30,000 ounces of gold starting in 2017 and until the end of the project.

Production

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)
2013 2014 2015 2016
Silver (ounces) 12,381 25,014 29,639 33,641
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.

Year-End Production PDF

Reserves & Resources

Information with respect to proven and probable ore reserves, measured, and inferred resources is set forth below.

(As of December 31, 2016 unless otherwise noted)
 Tons Silver Gold Lead Zinc Silver Gold Lead Zinc
(000) (oz/ton) (oz/ton) (%) (%) (000 oz) (000 oz) (Tons) (Tons)
Proven Reserves (1) 2,575 0.11 272
Probable Reserves (1) 7,752 0.13 1,037
Proven and Probable Reserves (1) 10,327 0.13 1,309
Measured Resources (2) 2,108 0.16 340
Indicated Resources (2) 11,220 0.10 1,128
M&I Resources (2) 13,327 0.11 1,468
Inferred Resources (2) 4,635 0.14 628
(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 $1,200 gold and a US$/CAN$ exchange rate of 1:1.4. Reserve diluted to an average of 34.7% to minimum width of 9.8 feet (3 m).
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%.
Technical Report on the Pre-Feasibility Study for the Casa Berardi Principal Zone Open-Pit Project, La Sarre, Quebec, February 2011
Prepared by:  Patrice Live, Eng. – BBA Inc.; Amanda Fitch, Jr. Eng. – BBA Inc.; Andre Allaire, Eng., M. Eng., Ph.D. – BBA
(2) Measured, indicated and inferred resources are based on $1,350 gold and a US$/CAN$ exchange rate of 1:1.4. 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 in February 2011 by BBA Inc., based on $950 gold and a US$/CAN$ exchange rate of 1:1.
Technical Report on the Pre-Feasibility Study for the Casa Berardi Principal Zone Open-Pit Project, La Sarre, Quebec, February 2011
Prepared by:  Patrice Live, Eng. – BBA Inc.; Amanda Fitch, Jr. Eng. – BBA Inc.; Andre Allaire, Eng., M. Eng., Ph.D. – BBA
Open pit mineral resources of the 160 Zone were estimated by InnoExplo Inc., effective date 24 August 2011, based on $1,250 gold and a US$/CAN$ exchange rate of 1:1. Resources       diluted to 12%.
Preliminary Economic Asset on the Casa Berardi Mine – Zone 160, May 4, 2012
Prepared by:  Nathalie Gauthier, Eng., P.Eng. – InnovExplo; Gilles Carrier, Eng., Aurizon Mines Ltd.

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.

2016 Reserves & Resources PDF

Exploration

In 2016, Casa Berardi, almost a million tons were milled containing approximately 166,733 ounces of gold, with approximately 15% of the milled tonnage coming from the East Mine Crown Pillar open pit that began operating during the year.  Reserve tonnage at Casa Berardi increased 1% over 2015, while contained gold decreased approximately 2% to 1.3 million ounces.  Production from the 100 (Lower Inter), 113, 118, 123 and 124 zones was nearly offset by reserve additions in those zones and new reserves defined in the 103 (SW), 121, and 148 (UG) zones.  Measured and indicated gold resources increased 12% from 2015 levels with increases at the 100 (Lower Inter), 111, 113, 118, 123, 124 (Principal UG) and 148 (East Mine UG) zones.  Two new resource zones were added during 2016: underground resources were added at the 108 Zone (Inter) and near-surface resources were added at the 134 Zone, just east of the Principal Pit area. Significant inferred resources were also added at Casa Berardi during the year with a 23% increase in contained gold ounces.

During the fourth quarter of 2016 at Casa Berardi, up to six drills were operating underground and two on surface in an effort to refine current stope designs and expand reserves and resources in the 118, 121, 123, 124 and Lower Inter zones and near-surface targets at the 124 and 134 zones.

Drilling of the upper 118 Zone from the 530 level down to the 610 level has defined multiple shear zones that extend for over 1,200 feet down-plunge and include a series of continuous mineralized intervals up to 0.50 oz/ton gold with good mining widths. This zone continues to plunge to the west at depth and there is good potential to add both new reserves and resources when drilling resumes in early 2017.  Results from the lower 118 Zone definition drilling campaign at the 970 and 990 levels includes intersections of 0.47 oz/ton over 25.5 feet and 0.30 oz/ton gold over 42.5 feet and suggest the mineralization remains open at depth. Drilling along the lower and upper extensions of the 121 Zone from the 770 level intersected high-grade intervals that show the lenses are open both up and down plunge.

Drilling from the 870 and 910 levels along the eastern margin of the 123 Zone has confirmed multiple, stacked high-grade lenses of the 123 Zone defined for at least 2,000 feet of semi-continuous down-dip mineralization with an average strike length of 450 feet.  This drilling continues to intercept high-grade mineralization, including 1.51 oz/ton gold over 13.8 feet that is open at depth. Surface drilling of the 134 Zone concentrated on an area 150 to 500 feet from surface and high-grade lenses with continuity up to 350 feet of strike length have been identified. These quartz-rich zones represent broad mineralization and include intersections of 0.08 oz/ton gold over 70.9 feet and 0.08 oz/ton gold over 68.9 feet. The next phase of exploration will be determined once a preliminary resource is completed.

Underground exploration drilling at the west end of the mine off the 360 Drift, conducted to refine and expand four distinct mineralized zones, has intersected mineralization in the 104 Zone below the Lower Inter Zone.

The recent success in both surface and underground drilling led to near replacement of 2015 gold production with a slight decrease in overall grade.  Due to the identification of new resource trends near surface and underground throughout the West Mine, there was a significant increase in inferred ounces.  Infill drilling in 2017 may convert a large portion of those to indicated category and the eventual incorporation into the life of mine plan.  When the acquisition of Casa Berardi was made, there was an expectation of finding significant mineralization that could prolong gold production for many years to come, and we stand by that expectation. Hecla recently bought back Lakeshore/Tahoe’s 50% interest in the Lakeshore JV that flanks the Casa Berardi property and now the property is 100% Hecla owned.  The proposed 33,000-foot drill program on the property west of Casa Berardi is now permitted and drilling started on January 15, 2017.

Future Plans

The Company began 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)