San Sebastian Durango, Mexico

San Sebastian is Hecla’s newest silver and gold mine, and began mining ore in December 2015. 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.

Last year, San Sebastian produced 3.3 million ounces of silver at a cash cost, after by-product credits, per silver ounce of negative $3.36  (a non GAAP measure) and 25,177 ounces of gold. (1). The mill operated at an average of 395 tpd for the year. Silver production in 2018 is expected to be 2.0 to 2.5 million silver ounces  at a cash cost, after by-product credits of $8.50 an ounce (1) and gold production is expected to be 13,000 to 17,000 ounces.

Aviso de Privacidad PDF

Map - San Sebastian

Overview & History

The East Francine, Andrea, Middle and North veins now define nearly five miles of mineralized strike length and are open along strike and at depth. In addition, near-surface portions of the East Francine, North and Middle veins contain mineralization that are suitable to open pit mining. San Sebastian contains 5.6 million ounces of proven and probable silver reserves. San Sebastian also contains 8.3 million ounces of measured and indicated silver resources and 15.4 million ounces of inferred silver resources. In addition, there are 37,000 ounces of proven and probable gold reserves and 114,000 ounces of measured and indicated gold resources as well as 89,000 ounces of inferred gold resources.

The high-grade mine is expected to operate for 18 months to two years. Capital investment is minimized by renting of a nearby, third-party mill and using contract miners. The project is expected to have an IRR of about 400%.

Hecla operated the underground San Sebastian mine on this property from 2001-2005. During that time, the mine produced 545,476 tons of ore containing 177,541 ounces of gold and 11.6 million ounces of silver from the Francine Vein with an average grade of 0.32 oz/ton gold and 22.5 oz/ton silver, 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.

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.

The Hugh Zone was discovered in 2005 and is the high-grade down dip extension of the past-producing Francine vein. The Hugh Zone in combination with recent new discoveries in the district is currently the focus of a pre-feasibility study that will analyze the potential for re-initiating production at the project. The Hugh Zone resource contains 9.2 million ounces of silver; 14,300 ounces of gold; 23,540 tons of copper; 33,020 tons of lead; and 49,930 tons of zinc. The new study will consider operational synergies with the nearby East Francine, Middle and North veins, where numerous high-grade drill intercepts were reported from 2012 to the present.

Geology & Mining

Mineralization in the district is structurally controlled and hosted in sedimentary rocks.

The mining technique focuses on shallow, near-surface pits on the East Francine, Middle and North veins, targeting high-grade material. The pits are expected to be small, extending to a maximum of about 270 feet in depth. Near-surface material is weathered, and should be easily excavated. Drill and blast techniques are contemplated for deeper material.

The Company is using a contractor for mining operations.

Hecla has secured the use of a Merrill-Crowe processing plant near Velardeña in the State of Durango, Mexico, as announced on July 15, 2015. Under the terms of the agreement, Hecla has exclusive use of the mill for 18 months, with the potential to increase for up to another 12 months. 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 has been updated to meet the standard Hecla uses for environmental protection and best practices in milling standards.

PEA Summary

A Preliminary Economic Assessment (PEA) of the San Sebastian project was recently completed and shows this is a robust project and a potential significant cash contributor for Hecla in 2016 and 2017. Notably, the PEA does not include results of the recent exploration and in-fill drilling programs described in the Exploration section below that have expanded the resource and improved the confidence of the resource in the open pit areas. Hecla has filed in Canada a National Instrument 43-101 technical report for the San Sebastian project entitled “Technical Report for the San Sebastian Ag-Au Property, Durango, Mexico” dated effective September 8, 2015. The report has been filed under the Company’s profile on SEDAR at, the website maintained by the Canadian Securities Administrators.

The following is a summary of the high-level life of mine economic assumptions of surface mining operations, as outlined in the PEA. (1) (2)

Unit Value
Total Projected Mill Feed tons 273,352
Mill Throughput tons per day 440
Gold Grade oz/ton 0.14
Silver Grade oz/ton 23.9
Gold Recovery % 90.8%
Silver Recovery % 85.5%
Gold Produced (recovered) ounces 35,959
Silver Produced (recovered) ounces 5,585,098
Silver Equivalent Production ounces 8,138,740
Capital (mining and milling) $ million 5.8
Cash cost, after by-product credits, per silver ounce (3) $/ounce 5.49
Total After Tax Cash Flow (5% discount) $ million 43.0
IRR % 404


(1) The PEA is preliminary in nature, and is based on a mineral resource estimate that includes inferred mineral resources (approximately 10% of projected production) that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
(2) Results in this table assume $1,103/oz gold and $15.53/oz silver prices and a 12.5 Peso/Dollar exchange rate.
(3) Cash cost, after by-product credits, per silver ounce represents a non-GAAP measurement, and the most comparable GAAP measures are cost of sales and other direct production costs and depreciation, depletion and amortization.


(year ended December 31)
2015 2016 2017 
Silver (ounces) 81,677 4,294,123 3,257,738
Gold (ounces) 870 34,042 25,177
Cash cost per silver ounce, after by-product credits, ($/oz) (1) $6.71 $(3.35) $(3.36)
(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
(1) Cash cost, after by-product credits, per silver or gold ounce is a non-GAAP measurement. A reconciliation of cash cost, after by-product credits, per silver or gold ounce to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the legal page of this website.
Year-End Production PDF

Reserves & Resources

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

(As of December 31, 2017 unless otherwise noted)
 Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Copper
(000) (oz/ton) (oz/ton) (%) (%) (000 oz) (000 oz) (Tons) (Tons) (Tons)
Proven Reserves (1.2) 31 23.3 0.19 - - 712 6 - - -
Probable Reserves (1,2) 368 13.1 0.10 - - 4,809 37 - - -
Proven and Probable Reserves (1,2) 398 13.9 0.11 - - 5,520 43 - - -
Measured Resources (3,4)
Indicated Resources (3,4) 1,506 5.8 0.07 8,796 103 15,520 20,350 9,020
M&I Resources (3,4) 1,506 5.8 0.07 8,796 103 15,520 20,350 9,020
Inferred Resources (3,5) 2,915 5.5 0.03 15,978 95 23,660 33,770 19,520
Note: All estimates are in-situ. Resources are exclusive of reserves. Totals may not represent the sum of parts due to rounding.

(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) Mineral resources are based on $1,350 gold, $21 silver, $0.95 lead, $1.10 zinc and $3.00 copper, unless otherwise stated.
(4) Indicated resources reported at a minimum mining width of 6.6 feet (2 m) for Hugh Zone and 4.9 feet (1.5 m) for Andrea Vein, Middle Vein, and North Vein. East Francine resources reported at actual vein width.
San Sebastian lead, zinc and copper grades are for 531,900 tons of indicated resource with the Middle Vein and the Hugh Zone of the Francine Vein.
(5) Inferred resources reported at a minimum mining width of 6.6 feet (2 m) for Hugh Zone and 4.9 feet (1.5 m) for Andrea Vein, Middle Vein, and North Vein. East Francine resources reported at actual vein width.
San Sebastian lead, zinc and copper grades are for 1,338,300 tons of inferred resource with the Middle Vein and the Hugh Zone of the Francine Vein.

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.

2017 Reserves & Resources PDF


In 2004, mineralization was discovered approximately 150 meters (480 feet) below the previously mined portion of the Francine vein. This deeper zone, known as the Hugh Zone has not been mined and has a polymetallic (Ag-Au-Cu-Pb-Zn) resource of 488,030 tons containing approximately 3.4 million silver ounces, 12,500 gold ounces, 18,900 tons zinc, 14,538 tons of lead and 8,817 tons of copper of indicated resources and 1.2 million tons containing approximately 6.4 million ounces of silver ounces, 6,000 ounces gold, 31,900 tons zinc, 22,433 tons of lead and 18,790 tons of copper of inferred resource. Scoping work continues to optimize mining the Hugh Zone in conjunction with newly discovered resources in the district.

The newly discovered East Francine Vein is the faulted extension of the past-producing, high-grade Francine Vein. This vein has currently been traced for over 1,300 feet along strike and to 650 feet of depth and primarily consists of supergene and oxide mineralization. Drilling of systematic near-surface step-out holes to the southeast of the San Ricardo Fault was conducted during the first quarter. In-fill drilling of a shallow gap between the previous drilling and drilling on the periphery has expanded the area of near-surface, supergene enrichment. Recent deeper drilling east of the San Ricardo Fault has also intersected some strong mineralization that is in close proximity to the past underground workings of the San Sebastian mine. Drill intersections include 1.54 oz/ton gold and 288.6 oz/ton silver over 10.5 feet, 0.30 oz/ton gold and 17.3 oz/ton silver over 13.4 feet, and 0.56 oz/ton gold and 9.8 oz/ton silver over 5.2 feet.

The East Francine Vein has an inaugural silver equivalent indicated resource of 4.5 million ounces at an average grade of 0.22 oz/ton gold and 64.1 oz/ton silver and inferred resource of 2.6 million ounces at an average grade of 0.20 oz/ton gold and 18.5 oz/ton silver. All of this resource is within 100 meters of surface.

In 2012, re-examination of near mine exploration potential in the district led to the discovery of new mineralization within the Middle Vein, located approximately 250 meters north of the Francine Vein.

The Middle Vein has been traced for nearly 6,500 feet along strike and to a depth of over 1,000 feet. Recent drilling of the Middle Vein is defining a new zone of near-surface mineralization to the southeast of the San Ricardo Fault. Drill results in the first quarter include 0.29 oz/ton gold and 6.7 oz/ton silver over 8.9 feet, and 0.21 oz/ton gold and 7.6 oz/ton silver over 7.8 feet.

The Middle Vein has a new silver equivalent indicated resource of 13.9 million ounces at an average grade of 0.06 oz/ton gold and 13.1 oz/ton silver and inferred resource of 0.5 million ounces at an average grade of 0.01 oz/ton gold and 6.2 oz/ton silver, an increase of 13% in indicated material and a nearly 5-fold increase in inferred material over 12/31/13 levels. Most of this resource is within 250 meters of surface and portions of this may be suitable for open pit mining.

The North Vein has a mineralized trend that extends over 3,450 feet along strike and 650 feet to depth and remains open along strike in both directions and at depth. Recent intersections of the North Vein east of the San Ricardo Fault include 0.40 oz/ton gold and 4.2 oz/ton silver over 7.8 feet, 0.02 oz/ton gold and 18.3 oz/ton silver over 6.4 feet and 0.10 oz/ton gold and 18.4 oz/ton silver over 3.6 feet. The North Vein has an inaugural silver equivalent indicated resource of 4.9 million ounces at an average grade of 0.10 oz/ton gold and 4.5 oz/ton silver and inferred resource of 1.2 million ounces at an average grade of 0.09 oz/ton gold and 4.2 oz/ton silver. All of this resource is within 150 meters of surface.

The Andrea Vein is a silver and gold-rich resource located about six kilometers south of the East Francine Vein. Drilling in 2011-2012 at the Andrea Vein more than tripled the strike length of this structure to over 2.4 kilometers (1.5 miles) and defined two higher-grade gold and silver zones within this vein, including the shallower northwest zone and the deeper southeast zone. The gold dominant northwest zone outcrops at surface, is oxidized for the first 75 meters, and can be traced for 800 meters. The veins range from 0.5 to 4.5 meters in width with grades ranging from 0.5 to 4.5 grams per ton gold and 20.4 to 378.4 grams per ton silver. The Andrea Vein resource calculated in 2013 has 3.0 million tons containing 8.0 million ounces of silver and 158,000 ounces of gold of inferred resources.

Further out from the mine area, a program of Rotary Air Blast (RAB) drilling in conjunction with conventional trenching was executed in order to evaluate a large highly prospective soil covered area to the northwest and southeast of the mine area. RAB drilling has intersected precious metal-rich vein material within a mile along trend both to the northwest and southeast Middle Veins of the main veins. Several gold and silver anomalies were also generated from this program and a potential blind epithermal vein system was discovered under thick soil cover in this area. This area along with a number of other highly prospective exploration targets within Hecla’s large land package is still in the early stage evaluation.

Due to significant drilling success over the past four years, near-surface, high-grade zones of the East Francine, Middle and North veins are being open pit mined. In the fourth quarter, four drills were active, and with recent drilling success nearly six miles of mineralized strike length has been defined. New high-grade reserves have been defined in the West Middle Vein and preparations have begun on the development of underground mining. As San Sebastian moves toward underground mine production, exploration activities in the fourth quarter were focused on defining new underground mineable resources.

In 2017, 144,197 tons were processed at the mill contained 3.45 million ounces of silver and 26,676 ounces of gold.  Gold and silver production was replaced and gold reserves increased by 6,100 ounces (17%) and silver decreased by 80,000 ounces (1%).  Open pit mining ceased by the end of the year and production has shifted to underground mining along the Middle Vein.  At the end of the year there was an ore stockpile containing 711,700 silver ounces and 5,800 ounces of gold.  Indicated mineral resources include 8,795,900 silver ounces and 103,000 gold ounces which are an increase of 6% for silver and a decrease of 10% for gold as there was a conversion to underground mineral reserves at the Middle Vein.  Inferred resources increased 4% for silver and 7% for gold but a substantial portion of the Hugh Zone that was recently drilled was not included in the inferred resource but is expected this year.

An important development at San Sebastian is the identification and expansion of polymetallic mineralization in both the Francine Vein (Hugh Zone) and the West Middle Vein.  The current “polymetallic” or “sulfide” indicated resource is 531,900 tons containing 3.7 million silver ounces, 15,800 ounces of gold, 15,520 tons of lead, 20,350 tons of zinc and 9,020 tons of copper. In addition, there is an inferred resource of 1.3 million tons containing 6.7 million ounces of silver, 7,800 ounces of gold, 23,660 tons of lead, 33,770 tons of zinc and 19,520 tons of copper.   In the last half of 2017, drilling defined significant east and west extensions of the Hugh Zone resource and a new discovery of polymetallic mineralization at the west end of the Middle Vein. Current resources include some of the polymetallic mineralization drilled in the Middle Vein but does not yet include the 300-foot east and west extensions of strong mineralization beyond the current Hugh Zone resource boundaries.

During the fourth quarter of 2017, exploration with three core drills that were directed towards polymetallic mineralization successfully discovered new high-grade zones along the Middle and Francine veins.

Drilling of the 97 Zone along the West Middle Vein was directed toward a new zone of high-grade, polymetallic mineralization with similar mineral characteristics as the previously discovered Hugh Zone on the Francine Vein.  The 97 Zone extends 1,000 feet along strike and 750 feet down-dip and is open to the east and at depth.  This mineralization is located about 100 to 300 feet below the new Middle Vein underground mine ramp and a development drift has begun that will facilitate the collection of a bulk sample of the polymetallic mineralization this year.  Recent assay results from step-out drilling include 10.2 oz/ton silver, 3% copper, 10% lead, and 18% zinc over 4.4 feet and 12.0 oz/ton silver, 4% copper, 6% lead, and 9% zinc over 5.4 feet.  Drilling is planned to the east and at 1,000 feet of depth to evaluate the potential of polymetallic mineralization to extend below the 3,000 feet of strike length of the oxide reserves.

On the Francine Vein, drilling continues to intersect high-grade, polymetallic mineralization extending 600 feet to the west and 800 feet east of the current Hugh Zone resource for a total of over 5,000 feet of strike length.  Recent vein intercepts suggest this polymetallic mineralization is closer to surface to the west.  Recent assay results from drilling on the Francine Vein include 9.2 oz/ton silver, 2% copper, 5% lead, and 5% zinc over 6.3 feet to the east and 12.8 oz/ton silver, 2% copper, 4% lead and 6% zinc over 3.6 feet to the west.

As noted in the last quarter, a drill hole located 2,500 feet to the west of the Hugh Zone resource intersected a polymetallic vein with over six feet of true thickness. Results of step-out drilling in this area include 9.1 oz/ton silver, 3% copper, 3% lead, and 4% zinc over 2.6 feet. The vein is one of the most western intersections along the Francine Vein and is largely open between the most recent drilling west of the Hugh Zone.

Drilling continues to expand resources and evaluate polymetallic targets along the Middle and Francine veins and the plan is to also evaluate near-surface, oxide mineralization at the Provessor, North and Esperanza veins.

Future Plans

Open pit mining concluded in 2017 as planned, and the plant is processing stockpiled and underground ore as the underground mine ramps up in early 2018.

Hecla has entered into a toll milling agreement with Excellon Resources Inc. in which sulphide ore from San Sebastian would be trucked 26 miles to Excellon’s Miguel Auza flotation mill facility, in Zacatecas for processing. Excellon will provide 440 tons per day of milling capacity to Hecla and, in due course, the mill will be upgraded to include a copper flotation circuit. The mine will take a bulk sample in the third quarter and if it is positive, mining sulphide ore could begin in 2019. San Sebastian sulphides have the potential for five years of mine life and considerable upside with the recent exploration discoveries.

125 Years of Mining (Spanish)