San Sebastian Durango, Mexico

San Sebastian is a silver and gold mine, with the most recent mining beginning in December 2015. Mining of ore was completed in the third quarter of 2020 and milling was completed in the fourth quarter of 2020. Hecla’s concession holdings at San Sebastian are located in the middle of the prolific Mexican Silver Belt and cover approximately 42,000 hectares (162 square miles). Within this land position is the Francine Vein, Hugh Zone, Middle Vein and Don Sergio-Andrea vein systems as well as multiple prospective exploration targets.

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Map - San Sebastian

Overview & History

The Saladillo mining district is located 90 km northeast of the city of Durango, Mexico, near the border of the state of Durango and Zacatecas. The district was discovered in 1995 and acquired by Hecla through the purchase of Monarch Resources in 1999. The Francine Vein was originally developed and put into production by Minera Hecla producing gold and silver from 2001 to 2005. During that time, the district produced 494,848 tonnes of ore containing 186,951 ounces of Au and 12.4 million ounces of Ag with an average grade of 11.7 g/t (0.34 oz/ton) Au and 777 g/t (22.7 oz/ton) Ag, making it one of the highest-grade producers in Mexico.

Hecla geologists have long recognized the potential for the district to host similar high-grade mineralization, and a systematic, ongoing exploration effort has been in place since Hecla took control of the district in 1999. Much of the initial exploration work in the Cerro Pedernalillo area was focused on the Don Sergio Au-Ag Vein, which was developed by Minera Hecla from 2003 to 2005. This mine produced 55,677 tonnes of ore containing 27,066 ounces Au and 187,044 ounces Ag, with an average grade of 15.1 g/t (0.44 oz/ton) Au and 104 g/t (3.03 oz/ton) Ag. Renewed drilling in 2011-2012 added mineral resources to the Andrea Vein.

The Hugh Zone Resource (deeper Francine Vein) was discovered in 2004 and contains a polymetallic (Ag-Au-Cu-Pb-Zn) resource.  A bulk sample was mined to test longhole stoping and flotation milling results in 2019 and 2020. An update to the Hugh Zone scoping study was completed in 2020. The Middle Vein and North Veins are in the footwall of the Francine Vein. The East Francine Vein is located northeast of the Francine Vein and is interpreted to be a fault offset portion of the Francine Vein.  Additional Resources were added at the Middle, North and East Francine veins during the period of 2012 to 2015 and open-pit mining on these veins began in late 2015. Renewed underground mining began in January 2018 on the Middle Vein.

The El Toro Au-Ag Vein area was discovered under soil cover in late 2018 by a combination of Short Vertical Reverse Circulation (SVRC) drilling and follow-up conventional RC drilling and core drilling and a mineral resource has been identified. Some definition core drilling was focused in this area during 2020. Two new veins were discovered in 2020 as a result of the SRVC program: The El Tigre and El Bronco Veins. Exploration drilling continues on these veins to develop a mineral resource on one or both of these structures.

Mining was discontinued during 2020 and reclamation activities are in progress. San Sebastian currently has no mineral reserves but contains 14.9 million ounces of measured and indicated silver resources and 17.2 million ounces of inferred silver resources. In addition, there are 148,700 ounces of measured and indicated gold resources as well as 132,700 ounces of inferred gold resources.

Mineralization in the district is structurally controlled and hosted in sedimentary rocks. Historical production from the Francine vein (2001 to 2005) was from a high-grade silver vein with significant gold mineralization. Production from the Don Sergio vein was from a near-surface, high-grade gold vein with known silver mineralization.

Geology & Mining

Mineralization in the district is structurally controlled and hosted in sedimentary rocks. Production to date has been from high-grade vein systems focusing on shallow, near-surface open pit and underground mining methods. The Company used a contractor for open-pit and underground mining operations and secured the use of a Merrill-Crowe processing plant near Velardeña, Durango for the most recent mining phase.  Located within 100 miles of San Sebastian, the mill was previously used by Hecla to process ore when it mined on the property from 2001 to 2005. The mill was updated to meet the standard Hecla uses for environmental protection and best practices in milling standards.

(year ended December 31)
2016 2017  2018 2019 2020
Silver (ounces) 4,294,123 3,257,738 2,037,072 1,868,884 954,772
Gold (ounces) 34,042 25,177 14,979 15,673 7,223
(historical, years ended December 31)
2001 2002 2003 2004 2005
Silver (ounces) 950,002 3,432,394 4,085,038 2,042,173 717,860
Gold (ounces) 15,983 41,510 47,721 33,563 17,160

Information with respect to measured, indicated and inferred resources is set forth below.

Mineral Resources
(As of December 31, 2021 unless otherwise noted)
 Tons Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper
Oxide (000) (oz/ton) (oz/ton) (%) (%) (%) (000 oz) (000 oz) (Tons) (Tons) (Tons)
Measured Resources (1)
Indicated Resources (1) 1,453 6.5 0.09 9,430 135
M&I Resources (1) 1,453 6.5 0.09 9,430 135
Inferred Resources (1) 3,490 6.4 0.05 22,353 182
Measured Resources (1)
Indicated Resources (1) 1,187 5.5 0.01 1.9 2.9 1.2 6,579 16 22,420 34,100 14,650
M&I Resources (1) 1,187 5.5 0.01 1.9 2.9 1.2 6,579 16 22,420 34,100 14,650
Inferred Resources (1) 385 4.2 0.01 1.6 2.3 0.9 1,606 5 6,070 8,830 3,330
Note: All estimates are in-situ. Resources are exclusive of reserves. Totals may not represent the sum of parts due to rounding.

(1) Indicated resources for most zones at San Sebastian based on $1500/oz gold, $21/oz silver, $1.15/lb lead, $1.35/lb zinc and $3.00/lb copper using a cut-off grade of $90.72/ton ($100/tonne); $1700/oz gold used for Toro, Bronco, and Tigre zones. Metallurgical recoveries based on grade dependent recovery curves: recoveries at the mean resource grade average 89% silver and 84% gold for oxide material and 85% silver, 83% gold, 81% lead, 86% zinc, and 83% for copper for sulfide material. Resources reported at a minimum mining width of 8.2 feet (2.5m) for Middle Vein, North Vein, and East Francine, 6.5ft (1.98m) for El Toro, El Bronco, and El Tigre, and 4.9 feet (1.5 m) for Hugh Zone and Andrea.

Reporting requirements in the United States for disclosure of mineral properties as of December 31, 2020 and earlier are governed by 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). Effective January 1, 2021, the SEC has issued new rules rescinding Guide 7. Mining companies are not required to comply with the new rules until the first fiscal year beginning on or after January 1, 2021. Thus, the Company will be required to comply with the new rules when filing its Form 10-K for the fiscal year ended December 31, 2021. 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 included herein 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 compared to the new SEC rules (Item 1300 of Regulation S-K under the Securities and Exchange Act of 1934) and the requirements in Canada under NI 43-101 standards are substantially different. This document contains a summary of certain estimates of the Company, not only of Proven and Probable reserves within the meaning of Guide 7, but also of mineral resource and mineral reserve estimates estimated in accordance with the new SEC rules and definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. Under Guide 7, 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.  The terms “Measured resources”, “Indicated resources,” and “Inferred resources” are mining terms as defined in accordance with the new SEC rules and NI 43-101. These terms are not defined under Guide 7 and prior to January 1, 2021, were 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.

2021 Reserves & Resources PDF


In 2021, exploration at San Sebastian included deeper drill testing in both the El Bronco and El Toro vein systems in addition to drill testing of four Short Vertical Reverse Circulation (SVRC) anomalies and geologic studies.  Assay results from the deeper drilling confirm vein continuity at depth at both El Bronco and El Tigre and intersected a new hanging wall vein at El Tigre.

In 2022, San Sebastian represents 8% of the $45 million planned exploration spend, focusing on evaluating both near surface and deeper precious metal mineralization. Core drilling is planned to target deeper mineralization in the Middle, North, Francine, El Toro, El Tigre, and El Bronco vein systems. Core drilling will also target deeper high-grade mineralization in the La Roca district which represents a fully preserved epithermal system with strong acid sulfate alteration at the surface.  In addition, a Short Vertical Reverse Circulation (SVRC) drilling program north of the San Sebastian Mine area and into the southern portion of the La Roca district will focus on defining new near-surface targets under cover.

Future Plans

The Company continues to explore this highly prospective land package and will evaluate further mining based on these exploration results.