North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Keeping stride as the largest silver producer in North America, Hecla Mining Company not only reported its second-largest silver reserves in its 130-year history but also added a highly prospective mine that brings it to the Yukon for the first time.

Going into 2022, Hecla's three operating mines – Greens Creek, Lucky Friday (Idaho), and Casa Berardi (Quebec) – hosted a combined 37.3 million tons of reserves containing 200 million ounces of silver, 2.73 million oz of gold, 1.81 billion pounds of zinc, and 1.47 billion lb of lead.

At roughly 14 million oz of silver during 2022, Hecla alone accounts for approximately 40% of the silver mined in the U.S. and with the recent purchase of the Keno Hill Silver District mine project in the Yukon, the Idaho-based miner is poised to also be the largest silver producer in Canada.

"Our production growth makes Hecla the fastest growing established silver producer, further increasing our leadership as the largest silver producer in the U.S. with the potential to be Canada's largest silver producer as well," said Hecla Mining Company President and CEO Phillips Baker, Jr.

Entering the Yukon

Hecla gained ownership of the Keno Hill silver project through the 2022 acquisition of Alexco Resource Corp., which resumed production at the historic mine project but could benefit from Hecla's financial wherewithal and expertise to fully realize the mine's potential.

"As a much larger business, Hecla has the organizational expertise and financial strength to build Keno Hill to the level and capacity required, while being able to continue to invest in exploration across the district, something that we, as Alexco, independently would likely struggle to achieve," Alexco Resource Chairman and CEO Clynton Nauman said upon the July announcement of the buyout.

The 242-square-kilometer (93 square miles) Keno Hill property covers one of the highest-grade silver districts in the world. Between 1913 and 1989, more than 200 million ounces of silver from ore averaging 44 oz per ton, making this Yukon mining district the second-largest historical silver producer in Canada.

According to the most recent calculation, Alexco's Keno Hill property hosts 1.44 million metric tons of probable reserves averaging 804 grams per metric ton (37.19 million oz) silver, 3.84% (122 million lb) zinc, and 2.64% (84 million lb) lead in four deposits – Bellekeno, Lucky Queen, Flame & Moth, and Bermingham.

"At Hecla, we have followed the Keno Hill project closely for a number of years, as it is one of the very few deposits that fit seamlessly into Hecla's strategy of owning and operating high-grade properties in tier one jurisdictions," said Baker.

At the end of 2020, Alexco began to ramp up to commercial production at Keno Hill, but COVID-related staffing issues slowed the restart of operations in the historic district, and in June of last year, the company announced that it was shutting down the mill in order to focus on underground development and to ensure the availability of ore.

With the September closing of the buyout, Hecla had taken over this work and planned to have the Keno Hill mine ramped up to full and consistent production by the end of 2023.

To complete the acquisition of Alexco and its Keno Hill Silver District mine project, Hecla issued 18 million shares worth C$69 million to Alexco shareholders, which received 0.116 of a Hecla share for every Alexco share held.

Concurrent with the acquisition, the silver streaming interest Wheaton Precious Metals Corp. held on Alexco's Keno Hill property was terminated in exchange for 34.8 million Hecla shares worth roughly US$135 million.

As part of the transaction, Hecla also provided Alexco with a US$30 million secured loan facility, of which US$25 million was drawn when the transaction closed.

With the acquisition of Alexco completed, Hecla has now definitively entered into the territory that is practically synonymous with mining, the Yukon.

"The Keno Hill property is in a premier mining jurisdiction where the First Nation of the Na-Cho Nyak Dun and Yukon governments are supportive of mining," said Baker. "Like our other operations where we have had decades of mining and have become an integral part of the communities, we look forward to doing the same in the Yukon."

Always more metal to find

The biggest silver producer in Hecla's portfolio, however, is Greens Creek.

With a consistent output of more than 9 million oz of silver per year, this Southeast Alaska operation singlehandedly accounts for 30% of all the silver produced in the U.S.

And Hecla is investing in the exploration needed to keep up this pace moving forward.

Greens Creek entered 2022 with 11.08 million tons of proven and probable reserves averaging 11.3 oz per ton (125.2 million oz) silver, 0.09 oz/t (946,000 oz) gold, 6.6% (1.45 billion lb) zinc, and 2.5% (564.5 million lb) lead.

This marks a 12% growth in reserves after replacing the 9.2 million oz produced at the Southeast Alaska mine in 2021. Likewise, the new reserves at this operation contain 14% more gold and 11% more zinc and lead than at the beginning of 2021.

In 2022, drilling continued to focus on resource expansion and conversion, which yielded positive results.

Three underground core drills targeted resource conversion in the 200 South and East zones and exploration in the East, 5250, 200 South, and Gallagher Fault Block zones.

In addition, two helicopter-supported drills were focused on drilling extensions to the Upper Plate zone near the mine and the Lil'Sore target area approximately three miles northwest of the mine. These positive results confirm and expand mineral zones; significant highlights include:

• 3.2 meters averaging 74.3 oz/t silver, 0.52 oz/t gold, 5.7% zinc, and 2.9% lead (Southwest Bench).

Alexco Resource Corp.

With its mill running at full capacity, the Keno Hill mine is forecast to produce more than 35.5 million oz of silver over eight years or nearly 4.5 million oz per year.

• 13.6 meters averaging 18.5 oz/t silver, 0.02 oz/t gold, 2.6% zinc, and 1.1% lead (200 South).

• 3.4 meters averaging 51.6 oz/t silver, 0.05 oz/t gold, and 0.1% zinc (East Zone).

• 14.3 meters averaging 37 oz/t silver, 0.26 oz/t gold, 18.3% zinc, and 9.5% lead (West Zone).

These results bode well for continued strong silver production from Greens Creek, and with the addition of Keno Hill, the company is looking for the best silver-producing years in the company's 130-year history.

"With the additional production from Alexco's Keno Hill, and the continued production growth from Greens Creek and Lucky Friday, we expect Hecla to produce 17-20 million ounces per year in the next few years, which is 30 to 55% more than 2021," said Baker.