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
(years ended December 31)
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 November 30, 2017 unless otherwise noted – Reserves at US$1,200/oz Au and US$17.00/oz Ag)
 Tons Au Au Ag Ag AuEq AuEq Au Ag AuEq
(k) (opt) (g/t) (opt) (g/t) (opt) (g/t) (koz) (koz) (koz)
Proven 108 1.079 36.98 1.033 35.42 1.089 37.34 117 112 118
Probable 211 0.517 17.74 0.514 17.61 0.524 17.98 109 108 111
Total P&P 319 0.708 24.27 0.690 23.66 0.716 24.55 226 220 229
 
(footnotes)
Reserves have been estimated using a gold price of US$1,200/ounce and a silver price of US$17.00/ounce;
Metallurgical recoveries for gold and silver are 93% and 88% respectively;
Gold equivalent ounces were calculated based on one ounce of gold being equivalent to 74.60 ounces of silver;
Mineral Reserves were estimated at a cutoff grade of 0.288 Au opt and an incremental cutoff grade of 0.09 Equivalent Au opt;
Mine losses of 5% and unplanned mining dilution of 10% have been applied to the designed mine excavations.

Underground Mineral Resources
(As of November 30, 2017 unless otherwise noted – Resources at US$1,400/oz Au and US$19.83/oz Ag)
 Tons Au Au Ag Ag AuEq AuEq Au Ag AuEq
(k) (opt) (g/t) (opt) (g/t) (opt) (g/t) (koz) (koz) (koz)
Measured 154.0 1.215 41.65 1.118 38.33 1.230 42.18 187 172 189
Indicated 532.5 0.526 18.04 0.554 18.99 0.534 18.30 280 295 284
Total M&I 686.4 0.681 23.33 0.680 23.33 0.690 23.66 467 467 474
Inferred 1,141.7 0.457 15.67 0.430 14.74 0.463 15.88 522 491 529
 
(footnotes)
Mineral resources have been estimated at a gold price of US$1,400/troy ounce and a silver price of US$19.83per troy ounce;
Mineral resources have been estimated using metallurgical recoveries for gold and silver of 94% and 92% respectively;
Mineral resources have been estimated at a grade thickness cut-off grade of 0.974 Au equivalent opt-feet and a diluted Au equivalent cut-off grade of 0.228opt;
Gold equivalent ounces were calculated based on one ounce of gold being equivalent to 72.12 ounces of silver;
The minimum mining width is defined as four feet or the vein true thickness plus two feet, whichever is greater;
Mineral resources include dilution to achieve mining widths and an additional 7% unplanned dilution;
Mineral resources include allowance for 5% mining losses;
Mineral resources are inclusive of mineral reserves;
Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant factors;
The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there is insufficient exploration to define these inferred mineral resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category;
The underground Mineral Resource is exclusive of the open pit Mineral Resource.

Open Pit Mineral Resources
(As of November 30, 2017 unless otherwise noted – Resources at US$1,400/oz Au and US$19.83/oz Ag)
 Tons Au Au Ag Ag AuEq AuEq Au Ag AuEq
(k) (opt) (g/t) (opt) (g/t) (opt) (g/t) (koz) (koz) (koz)
Indicated 42.9 0.025 0.87 0.055 1.88 0.026 0.88 1.1 2.4 1.1
Inferred 31.7 0.034 1.17 0.091 3.12 0.035 1.19 1.1 2.9 1.1
 
(footnotes)
Mineral resources are calculated at a gold price of US$1,400 per ounce and a silver price of US$19.83 per ounce;
Metallurgical recoveries for gold and silver are 65% and 30%, respectively for oxide mineralization and 60% and 25% respectively for mixed mineralization;
One ounce of gold is equivalent to 152.94 ounces of silver;
Mineral Resources include 10% dilution and 5% mining losses;
Cut off grades for the Mineral Resources are 0.01opt AuEq opt;
Mineral Resources which are not Mineral Reserves have not yet demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues;
The quantity and grade of reported Inferred Resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category;
The open pit Mineral Resource is exclusive of the underground Mineral Resource.

Exploration

Exploration potential at Fire Creek is considered to be good. Recent drilling was focused primarily on increasing the confidence level in the current resource estimate as well as extending mineralization to the north, south and up-dip. Results to date continue to support high grade mineralization continuity.

At Fire Creek, exploration drilling in the third and fourth quarters of 2018 will be focused on expanding resources along strike of the main mine vein systems including the Guard Shack, Zeus, Spiral 10, Spiral 9 and Far View target areas while making new discoveries at the South Notice target area. Additional geophysical surveys will be completed over the South Notice target area in combination with the current gold and arsenic soil anomalies will allow more precise target definition for drilling.

Both locally and regionally the veins are untested in all directions along strike and depth. A proven repeatability of the structural pattern can be documented using VTEM and IP Resistivity geophysical techniques and soil geochemistry. This predictive pattern and relative consistency of the mineralized cymoid structures, which is crucial to vein formation and gold mineralization at nodes, should allow focused exploration drilling and increased success rate for expanding resources in the Fire Creek area.