Lucky Friday | #4 shaft project
The development of the #4 Shaft project which has been in progress since 2008, but more actively since 2010, is estimated to increase annual silver production by 60% from 3 million to 5 million ounces. The increased production will be a function of expected increased ore grade from 10.4 ounces per ton to approximately 14.0 ounces per ton, and expected increased throughput from 350,000 tons to approximately 375,000 tons per year. The #4 Shaft should further extend the mine life beyond 2030.
The internal shaft is expected to descend from 4,900 feet to an ultimate depth of 8,800 feet. The capital requirements for the project are approximately $200 million, of which we have spent approximately $90 million through the 4th quarter of 2011. Project completion is expected in the second half of 2015 with full production ramp-up to 5 million ounces of silver production expected by 2017. Hecla received full project approval from its board of directors in August 2011.
In the 4th quarter of 2010, the excavation of the hoist room and foundation were completed. The scope of the project was increased to include shaft depth from 7,800 feet to 8,800 feet. Through the 4th quarter of 2011, the major mechanical components for the hoist have been installed and are operational, and the majority of all shaft sinking set up work is done. The off-shaft development work has advanced a total of 7,593 feet; shaft development work has advanced 365 feet during the same time period. The next steps will be the shaft sinking, centralized refrigeration installations and remaining horizontal and ramp development excavations. The total project is now 45% complete, and 80% of major procurements have been ordered or installed.
In addition, an optimization study is under way at the Lucky Friday to evaluate throughput increases at the mine. Production is limited by mill capacity; therefore, this study will determine the mine's capacity and the economics of increasing mill capacity.
A study of optimal production levels for the Lucky Friday unit has been completed. This study identified opportunities for increasing mine production throughout the mine life which will be pursued at a feasibility level to refine the associated costs and develop an assessment of the economic viability of these opportunities.
