The Midas Property, which Hecla acquired in July 2018, is located approximately 58 miles northeast of Winnemucca, Nevada, in Elko County and covers approximately 30,000 acres and includes owned fee lands and unpatented mining claims in addition to seven lease agreements. The Midas Property includes the underground mine, the 1,200 tons per day Merrill Crowe processing facility, related support infrastructure, and mining and milling equipment. Hecla has an approved plan of operations with the BLM for exploration activities on the property and a second plan of operations associated with the construction of five vent raises which were designed for ventilation to remote areas of the proposed expanded underground. The mill and most of the Midas infrastructure are located on private lands.
The portal to the underground mine is located approximately one-half mile west of the mill and other site facilities. The portal provides entry to a system of declines and ramps that access the gold and silver-bearing veins. Mining levels are developed at vertical intervals of nominally 50 feet to access the mineralized vein. The mineralized material is excavated and loaded into underground haul trucks, which transport it to a surface transfer stockpile located outside the mine portal. The mineralized material is then trucked from the transfer stockpile to the main stockpile area adjacent to the mill. In the mill, the mineralized material is crushed, processed, and refined to extract gold and silver. Molten gold/silver is poured from the refinery furnace into molds, and the resulting doré is shipped off-site for refining.
Midas is a historic mining district, with recorded production beginning in the early 1900s. Most accounts estimate approximately 300,000 ounces of gold and three million ounces of silver production between 1907 and 1942 when non-essential mining activity was suspended by the War Production Board. This production was from predominately underground mining of high grade veins that outcropped at surface, sporadically augmented by discoveries of placer deposits. The largest historic producer was the Elko-Prince mine in the northern part of the district. Since modern mining began in 1998, 2.2 million ounces of gold and 26.9 million ounces of silver were produced by Franco-Nevada Mining, Normandy, and Newmont. Production rates peaked in 2011 and declined in succeeding years along with gold grades. Silver grades increased in 2013 indicating the shift in production from the Main Veins to the East Veins where the silver gold ratio is substantially greater.
The Midas Mine is the largest known Au-Ag epithermal deposit along the Northern Nevada Rift (“NNR”), and is located in the Midas mining district, also known as the Gold Circle district. The Midas deposit consists of a series of complex steeply dipping, quartz-calcite-adularia precious metal veins hosted by volcanic and volcanoclastic rocks and locally contains mineral grades greater than ten ounces per ton (oz/ton) of gold. Gold mineralization occurs as electrum and is intimately associated with selenide and sulfide minerals. It belongs to a suite of middle Miocene low-sulfidation epithermal gold and silver mineralizing systems associated with magmatism and faulting along the NNR (Leavitt et al., 2004). The mineralization model at Midas is a shallow, low-sulfidation, vertically- and laterally-zoned, epithermal gold-silver system. Rocks in the Midas district are primarily ash flow, air-fall and lithic tuffs, felsic plugs, volcanoclastic sediments and gabbroic sills and dikes.
Gold and silver mineralization at Midas is hosted in several northwest-striking veins. The veins are divided into four principal groups based on their location and orientation. The two principal groups that host the majority of the Mineral Resources are the Main Veins and East Veins. The Main Veins dip easterly and are gold dominant, while the East Veins dip to the west and contain higher silver content than the Main Veins. The Main Veins produced more than 2.2 million ounces of gold and 26.9 million ounces of silver between 1998 and 2013, principally from the Colorado Grande and Gold Crown Veins. Initial development and production from the East Veins began in 2012. The third group of veins is comprised of the Queen and Trinity Veins located to the south of the existing workings and south of the regional South Owyhee (SOW) Fault. They are defined by limited underground and surface drilling and there has been no mine production from them to date. The Queen Vein and Trinity Vein systems are included in the overall Mineral Resource estimate and represent high-priority, near-mine exploration targets. The fourth group of veins are west of the Main Vein system and includes the Link and Midas Trend Veins. Like the southern vein group, these veins have yet to be delineated from underground; no Mineral Resources are carried on these veins.
Mineral Resources have been identified on the Main and East veins and other veins near the active mine workings. Active drill testing is taking place in these areas and is being prioritized based on ounce expectations, accessibility from existing development and geotechnical, ventilation, and hydrological considerations. Mine plans are being updated on a regular basis as results are received.
The Midas Mine is located on the southeast flank of the Snowstorm Mountain range near the eastern margin of the NNR structural domain, hosted in a bimodal suite of volcanic rocks. Several other structurally controlled, epithermal precious-metal vein deposits are hosted in similar Miocene-age volcanic rocks along the NNR, including Hecla’s Fire Creek Project, and Newmont’s Mule Canyon Mine (“Mule Canyon”). These mineral deposits occur along the NNR and share similar mineralization characteristics, including epithermal textures and trace-elements, locally high-grade Au and Ag, mid-Miocene ages of mineralization (15.1-15.6 Ma) and close temporal association with the Miocene host rocks.
The NNR originated at the McDermitt caldera in northwest Nevada, site of the initial eruption of the Yellowstone hot spot and propagated 500 km into southeast Nevada. The rift is readily visible on regional aeromagnetic maps as a narrow positive anomaly for approximately 250 km and is defined by an accumulation of basaltic to dacitic lava flows and dikes of mid-Miocene age. In the central portion of the rift between the Malpais Rim and Midas, John et al. (2000) defined it as a 5- to 30-km wide north-northwest-trending zone that corresponds to a magnetic high, to mafic dikes and high-angle normal faults that parallel the anomaly, and to middle Miocene volcanic flows that overlie the anomaly. The primary extension direction during rift development and magmatism at 16.5 – 15 Ma was ENE to WSW, perpendicular to the N22°W axis of the rift. These syn-rift faults sharply bound the present-day NNR on the west and decrease towards the east. From 10 Ma to about 6 Ma, the regional stress field rotated clockwise, resulting in an extension direction that was NNW-SSE. This resulted in the formation of horst and graben faults that cut the NNR to form ENE-trending grabens such as the Midas Trough, the Argenta Rim, and the Malpais Rim.
The chemical composition of the volcanic and intrusive rocks varies greatly within the rift, ranging from mafic to intermediate volcanic flows at the Malpais and Argenta Rims, mafic flows at Fire Creek, felsic tuff and andesite at Ivanhoe, and a bimodal sequence at Midas of felsic flows, tuffs and domes, and basaltic sills and dikes. Consequently, rocks from one mining district generally cannot be correlated directly with those from another, except in a time sense where high-resolution radiometric dates are available. Gold mineralization at Midas is structurally controlled by normal faults within the NNR. The style of structurally controlled mineralization observed at the Midas Mine is typical of rift-hosted epithermal style mineralization associated with an intrusive center.
The Midas mine is a modern, mechanized narrow vein mine. Design constraints included four feet minimum width for longhole stopes with development drifts spaced at 50-foot vertical intervals. Stope development drift dimensions maintained a constant height of 11 feet and a minimum width of seven feet. Cut and fill stopes are a minimum of six feet in width, and each cut is ten feet high. Mining and backfill tasks were created from all designed excavations. These tasks were assigned costs and productivities specific to the excavation or backfill task type. Alternative mining methods such as shrinkage stoping and alimak stoping are being investigated. The veins at Midas can vary in thickness from a few inches to over ten feet. Potentially economic mineralization must meet standard cut-off grade criteria as well as a grade thickness criterion before it is included as a mineral resource.
The Midas Mill uses Counter-Current-Decantation leaching method and Merrill-Crowe precipitation, with gravity concentration after crushing and grinding. The mill facility is an efficient well maintained modern mineral processing plant capable of processing 1,200 tons per day (tpd). The plant can operate with a minimum crew compliment resulting in cost reductions when operated at capacity. Excess milling capacity will allow the mill to process material from Hecla’s nearby properties and potentially from third-party toll milling sources.
Toll milling of material from third-party sources has been processed periodically at the Midas Mill since 2008. The focus of ongoing metallurgical testing has been to determine how these materials typically behave in processing as blended with Midas mineralization.
|(years ended December 31)|
Information with respect to proven and probable ore reserves, measured, and inferred resources is set forth below.
|Mineral Resources (As of December 31, 2018 unless otherwise noted)|
|Total M&I Resources||905||0.39||4.9||349||4,463|
|Inferred Resources (1,2)||573||0.34||3.0||198||1,723|
(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 Midas for gold and silver are 93% and 88% Au equivalent cutoff grade of 0.217 oz/ton. The minimum mining width is defined as four feet or the vein true thickness plus two feet, whichever is greater.
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.
2018 Reserves & Resources PDF
Surface and underground exploration drilling on the Trinity target, which is a small, high-grade deposit south of the Midas Mine, was completed in August 2018. Intersections including 0.47 oz/ton gold and 0.60 oz/ton silver over 4.5 feet and 0.51 oz/ton gold and 26.4 oz/ton silver over 2.5 feet, are associated with silicification and banded quartz veins. This drilling suggests vein mineralization may be strongest along the edges of the Trinity Corridor and mafic dikes and appears to be open to both to the south and north. The third quarter 2018 drilling extended the strike and dip of several known high-grade ore shoots and filled in gaps of the drill spacing, which should provide the confidence necessary for an inferred resource category. The Trinity mineralization is being remodeled in the fourth quarter of 2018 in advance of a new resource estimate by the end of the year.