Higher Gold Production At Hecla’s Nevada Operations

COEUR D'ALENE, ID - Hecla Mining Company reported that the Nevada operations have continued operating during the pandemic as an essential business in Nevada. There has been limited impact to activities at the mine.

Higher gold production was due to higher grades, partially offset by lower mill throughput. The cost of sales decreased $4 million due to the suspension of production activities at Hollister, the Midas mine and Aurora mill which are reclassified as suspension costs. Cash cost, after by-product credits, per gold ounce, decreased as a result of the higher gold production. The AISC, after by-product credits, per gold ounce, was substantially lower than the prior year period, due to higher gold production and almost no sustaining capital. Approximately 7,000 ounces of gold was held as inventory on loaded carbon at the end of the quarter. The mill, which is being operated on a batch basis, processed at an average of 190 tpd in the first quarter, a 59% decrease over the prior year period.

The Company reached agreement with Nevada Gold Mines to process a 30,000-ton bulk sample of Fire Creek ore at one or more of their refractory ore processing facilities. The agreement makes it possible for the Company to move forward with a program to test larger scale long-hole stoping of Fire Creek’s Type 2 ore (refractory ore) and is expected to help establish recovery rates in their process. Mining of the bulk sample is planned over the rest of 2020 with processing of the ore continuing into early 2021. The test is a staged, low-risk way to investigate opportunities to lower Fire Creek’s cost structure in an effort to realize value from the existing approximately 543,000 ton inferred resource (0.512 oz/ton gold; 0.543 oz/ton silver). The bulk sample is expected to be self-funding.

In addition, the Company advanced studies in support of continuing production at Fire Creek. Results from the recently completed hydrology study suggest that the existing water rights, water related permits, and water treatment infrastructure may be adequate to support a conceptual mine plan being developed for the resource. Results from the bulk mining and processing test will be used to refine the conceptual mine plan and economic analysis in 2021.

Alternate carbon processing arrangements allowed the Company to idle the Aurora mill during the quarter. The Midas mill is expected to conclude operations in the third quarter as the developed oxide ore from Fire Creek is depleted.

The Company is affirming its production estimates of 24 to 29 thousand gold ounces this year. The cost of sales is now estimated to be $39 million, cash cost, after by-product credits. The 2020 estimates do not include the potential benefits from the bulk sample project.