Fire Creek Nevada

The Fire Creek mine, which Hecla acquired in July 2018, is located primarily in Lander County, Nevada, approximately 63 miles west of Elko, Nevada, overlooking Crescent Valley. The Project comprises private fee lands (both leased and owned) and unpatented lode mining claims. The land position includes approximately 15,420 acres of unpatented federal lode mining claims, 1,110 acres of private fee land and 230 acres of mineral leases. Overall, the Fire Creek land package is approximately 17,000 acres.

Map - Fire Creek
Overview & History

Fire Creek is a modern, mechanized narrow vein mine. Only the mineralized veins accessible from main development have been defined to a sufficient level of detail to categorize as reserves. Additional potential exists to extend reserves along strike in both directions and at depth as underground access is developed. As the footprint of the mine grows and the number of available mining areas grows with it, the mining rate can be increased, and cost reductions realized through economies of scale.

Ongoing mine development comprises most of the capital costs, and the ability to access multiple veins from common development greatly reduces the unit cost per ounce.

Geology & Mining

Gold mineralization at Fire Creek occurs in steeply dipping epithermal veins within Tertiary basalt flows and intrusive rocks. The mineralized basaltic rocks are a suite of mafic, extrusive rocks associated with the regional north-northwest-trending NNR structural zone. The NNR system has been documented in multiple geophysical and geological studies and is distinguished as a linear magnetic anomaly approximately 30 miles wide that extends 190 miles south-southeast from the Oregon-Nevada border to central Nevada. The NNR originates from the McDermitt Caldera in northwest Nevada and is likely related to impingement of the Yellowstone hot-spot on continental crust.

The deposit is a low-sulfidation epithermal deposit vertically-zoned within high-angle northwest striking structures, hosted in a mid-Miocene basalt package. Gold mineralization occurs as shallow structurally-controlled fault hosted gold mineralization in variably altered Tertiary basalts and as native gold in steeply dipping quartz-calcite veins or structures. A package of middle Miocene basalt and basaltic andesite flow has been cut by high-angle normal faults related to both Northern Nevada Rift (NNR) and Basin and Range extension that form grabens and half-grabens which are the structural controls for in the district.

High-grade gold mineralization has been delineated between approximately 4,900 feet and 5,700 feet AMSL and is open both up and down dip as well as along strike. Lower-grade gold mineralization occurs from the surface and mineralization is open at depth. Vein textures, gangue minerals, and alteration seen at Fire Creek are typical of low-sulfidation epithermal systems. Widespread propylitic alteration grades to argillic alteration proximal to veins and/or other structural fluid conduits. Low-grade gold mineralization is often spatially associated with the argillic alteration zone surrounding the high-grade gold. Mineralization that often occurs along discrete horizons within vein structures. An opaline silica cap is discontinuously preserved at surface above the main mineralization at Fire Creek. Mineralized faults near this opaline silica were targeted by early prospecting and later shallow drilling by previous operators in the 1980’s.

Fire Creek is defined by two major north-northwest striking vein arrays, each comprised of several en-echelon veins. Several new target areas outside of the known vein arrays have been defined by both gradient-array and dipole-dipole induced polarization surveys as well as VTEM geophysical surveys.

Production – Nevada Operations
(years ended December 31)
    2018
Silver (ounces)     172,301
Gold (ounces)     32,887
       
Historical        
2015 2016 2017  
Silver (ounces) 92,114 80,593 72,283
Gold (ounces) 77,055 101,286 107,143
 
Reserves & Resources

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

Underground Mineral Reserves (As of December 31, 2018 unless otherwise noted)
 Tons Au Ag Au Ag
(k) (opt) (opt) (koz) (koz)
Proven Reserves (1,2,3) 24 1.21 1.1 29 27
Probable Reserves (1,2,3) 91 0.44 0.3 40 30
Total Proven and Probable Reserves 116 0.6 0.5 69 57
 
(footnotes)
(1) The term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term “economically,” as used in the definition of reserve, means that profitable extraction or production has been established or analytically demonstrated to be viable and justifiable under reasonable investment and market assumptions. The term “legally,” as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, Hecla must have a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with Hecla’s current mine plans.
(2) Mineral reserves are based on $1,200 gold, $14.50 silver, $0.90 lead, $1.05 zinc, unless otherwise stated.
(3) Recoveries at Fire Creek for gold and silver are 94% and 92%. Cutoff grade of 0.339 Au Equivalent oz/ton and incremental cutoff grade of 0.11 Au Equivalent oz/ton. Unplanned dilution of 10% to 17% included depending on mining method.

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.

Underground Mineral Resources (As of December 31, 2018 unless otherwise noted)
 Tons Au Ag Au Ag
(k) (opt) (opt) (koz) (koz)
Measured (1,2) 64 0.92 0.7 58 47
Indicated (1,2) 307 0.54 0.5 164 158
Total M&I 371 0.6 0.6 222 205
Inferred (1,2) 565 0.53 0.5 299 288
 
(footnotes)
(1) Mineral resources are based on $1350 gold, $21 silver, $1.10 lead, $1.20 zinc and $3.00 copper, unless otherwise stated.
(2) Recoveries at Fire Creek for gold and silver are 94% and 92%. Au equivalent cutoff grade of 0.297 oz/ton. The minimum mining width is defined as four feet or the vein true thickness plus two feet, whichever is greater.

The underground Mineral Resource is exclusive of the open pit Mineral Resource.

Open Pit Mineral Resources (As of November 30, 2017 unless otherwise noted)
 Tons Au Ag Au Ag
(M) (opt) (opt) (koz) (koz)
Indicated (1) 42.9 0.03 0.1 1.1 2.4
Inferred (1) 31.7 0.03 0.1 1.1 2.9
 
(footnotes)
(1) Indicated and inferred open-pit resources for Fire Creek were calculated November 30, 2017 using recoveries for gold and silver of 65% and 30% for oxide material and 60% and 25% for mixed oxide-sulfide material.
Open pit resources are calculated at $1400 gold and $19.83 silver and cut-off grade of 0.01 Au Equivalent oz/ton and is inclusive of 10% mining dilution and 5% ore loss.  Open pit mineral resources exclusive of underground mineral resources.
NI43-101 Technical Report for the Fire Creek Project, Lander County, Nevada; Effective Date March 31, 2018; prepared by Practical Mining LLC, Mark Odell, P.E. for Hecla Mining Company, June 28, 2018.

2018 Reserves & Resources PDF

Exploration

At Fire Creek, the 47,573 tons processed at the mill for Hecla in 2018 contained approximately 17,993 ounces of gold and 22,482 ounces of silver.  Reserves at Fire Creek are  69,300 ounces gold and  56,900 ounces of silver and are a reduction from the second quarter of 2018 primarily due to model changes that interpret the veins to be thinner (47% of reduction), mining depletion (29% of reduction), and increased costs resulting in higher cut-off grades (17% of reduction).  Measured and indicated underground resources are 215,200 ounces of gold and 197,900 ounces of silver and inferred resources are 298,700 ounces of gold and 288,400 ounces of silver.

There were up to four drill rigs operating underground at Fire Creek in the fourth quarter of 2018 with definition drilling focusing on upper and lower portions of Spiral 4, upper portions of Spiral 3, and up-dip of Spiral 2 mineralization.  One drill rig is evaluating the upper portions of Spiral 3 along the Honey Runner, Karen, Hui Wu and Joyce structures and will attempt to extend mineralization along strike to the Spiral 2 sills.  A narrow, high-grade intercept of 2.79 oz/ton gold over 0.7 feet is within a larger, lower-grade envelope of 0.76 oz/ton gold over 5.0 feet.  Other high-grade intercepts in Spiral 3 include 0.64 oz/ton gold over 7.8 feet and 4.08 oz/ton gold over 2.0 feet.

Two drills are evaluating the upper and lower portions of Spiral 4. The drill targeting the southern up-dip extents of the Vonnie, Vein 6, Joyce, and Vein 8 has defined multiple narrow, gold-bearing structures that persist into the upper extents of the Spiral 4 area. Recent intersections include 0.22 oz/ton gold over 10.0 feet and 0.20 oz/ton gold over 3.3 feet. The sill drill completed additional definition drilling in Spiral 2 on the Joyce Vein and Vein 39 that expanded mineralization up-dip.  The 2019 underground drill program at Fire Creek is designed to upgrade and expand resources at Spirals 2, 3, 4 and 9 and the Titan and North zones.

Surface exploration rigs evaluated the Zeus and Far View targets for high-grade, gold-bearing structures.  Intercepts along strike of the Zeus target encountered multiple structures with strong argillic clay alteration that had intercepts of 0.21 oz/ton gold over 2.0 feet and 0.18 oz/ton gold over 2.3 feet.  Drilling identified a new structure to the southwest that graded 0.18 oz/ton gold over 3.4 feet.  A new vein, grading 0.17 oz/ton gold over 4.5 feet was also identified to the northeast on a new structure between Zeus and the Spiral 10 veins.