Midas Nevada

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.

Map - Midas
Overview & History

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.

Geology & Mining

Local Geology
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.

Regional Geology
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.

Mining
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.

Production
(years ended December 31)
2015 2016 2017
Silver (ounces) 1,513,112 1,345,989 780,316
Gold (ounces) 28,838 29,824 34,343
 
Reserves & Resources

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

Mineral Reserves
(As of June 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 141 0.261 8.95 9.18 314.8 0.388 13.31 37 1,295 55
Probable 307 0.335 11.47 3.84 1231.6 0.388 13.29 103 1,180 119
Total P&P 449 0.311 10.68 5.52 189.2 0.388 13.30 140 2,475 174
 
Mineral Resources
(As of June 30, 2017 unless otherwise noted – Resources at $1400/oz Au and $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 417 0.400 13.72 7.97 273.4 0.511 17.51 167 3,325 213
Indicated 697 0.362 12.41 4.73 162.1 0.428 14.66 252 3,295 298
Total M&I 1,114 0.376 12.90 5.94 203.7 0.459 15.73 419 6,620 511
Inferred 671 0.303 10.39 2.93 100.5 0.344 11.79 203 1,966 231
 
(footnotes)
Reserves
Mineral Resource is inclusive of Mineral Reserve;
Mineral Reserves are calculated at a gold price of US$1,200 per ounce and a silver price of US$17.00 per ounce;
Metallurgical recoveries for gold and silver are 94% and 92%, respectively;
One ounce of gold is equivalent to 72.12 ounces of silver, and;
Cut off grades for the Mineral Reserves are 0.343 and 0.305 opt AuEq, respectively.

Resources
Mineral Resources are calculated at a gold price of US$1,400 per ounce and a silver price of US$19.83 per ounce;
Mineral Resources include resource dilution to a minimum mining width of four feet or the vein width plus two feet, whichever is greater;
Cut off grades for the Mineral Resources are 0.228 and 0.196 opt AuEq, respectively; and,
The effective date for the Mineral Resource is June 30, 2016 and May 31, 2016, respectively.

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. Mineral Resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.

Exploration

Exploration potential at Midas is considered to be good. Near term potential occurs in vein systems near the mine such as the Trinity Corridor vein system. There are currently four long-term targets identified that will require further follow-up drilling and exploration. These include the Opal Hill target with one hole cutting 7.3 feet of 0.073 oz/ton gold, the Grant Jackson/Missing Link target with one hole cutting 5.0 feet of 0.25 oz/ton gold, the Rescrabble target with a 31.0 feet intercept containing 0.04 oz/ton gold, and the Hardscrabble target with one 14.1 feet intercept grading 0.68 oz/ton gold and 4.6 oz/ton silver. Additional longer-term targets include the Midas Trend, North Block, Rattler, SV South and East Graben target areas.

At Midas, drilling in the third and fourth quarters of 2018 will be focused on expanding resources in and along the Trinity Corridor, both from underground and from surface. Mineralization is currently defined along multiple, west-dipping, en echelon structures and is open to the SOW fault on the north and open to the south along strike. Drilling during 2018 will expand the Trinity Resource and add to the geologic understanding of the Trinity Corridor allowing refinement of the stratigraphic and structural setting.