Providing coverage of Alaska and Northwest Canada's mineral industry
January 2016

Vol. 21, No. 3 Week of January 17, 2016

Mining News: Exceeding expectations

Southeast Alaska mines boast increased precious metal output for 2015

Shane Lasley

Mining News

Higher grades, increased milling rates and improved recoveries add up to a banner year for both the Kensington and Greens Creek mines in Southeast Alaska.

Kensington, the youngest of the two mines located near Alaska’s capital city of Juneau, got off to a slow start when owner Coeur Mining Inc. was finally able to begin operations in 2010. In recent years, however, the mine has steadily increased its gold output while reducing the costs to mine the precious metal – improvements that are expected to continue in coming years.

Greens Creek, which has established itself as a model of excellence when it comes to being a low-cost and environmentally-sound silver mine, is the cornerstone operation for Hecla Mining Co.

“Greens Creek continues to drive Hecla’s strong, consistent production performance,” said Hecla President and CEO Phillips Baker, Jr.

Raising the bar

Kensington, located some 45 miles north of Juneau, produced 126,266 ounces of gold in 2015, far exceeding the expectations of Chicago-based Coeur Mining.

Going into the year, Coeur anticipated annual gold production at Kensington to total between 110,000 oz. and 115,000 oz. However, as 2015 wore on, it became clear that gold output at the high-grade underground mine was going to top the high end of the forecast, prompting the company to increase its guidance to 115,000 oz. to 125,000 oz. for the year. When the final tally was taken, the gold recovered from Kensington outweighed even these heightened expectations.

During the fourth quarter, the mine produced 33,714 oz. of gold, a 17 percent increase from the 28,799 ounces produced during the third quarter. This increase is primarily due to an average gold grade of 0.22 oz. per short ton gold grade during the final three months of 2015, which is about 16 percent higher than the 0.19 oz/t grade during the previous quarter.

Coeur is executing a plan to tap into much higher grade ore in the historic Jualin Mine, which is situated about 8,250 feet from the current mining area at Kensington.

“Currently, Jualin is estimated to contain approximately 289,000 tons of inferred resources with an average grade of 0.62 ounces per ton, which is over triple Kensington’s average reserve grade,” Coeur Mining CEO Mitchel Krebs explained.

Coeur has advanced the decline about 1,500 feet towards this high-grade deposit since underground development work began in August.

“Once we gain better access from underground, we will begin to more efficiently drill Jualin to better define and hopefully expand this new high-grade discovery before mining begins in 2017,” Krebs added.

Coeur anticipates this underground infill and expansion drilling to begin in the coming weeks.

The higher grade Jualin resources that are currently anticipated to be mined are expected to boost Kensington’s yearly gold production to 149,000 oz. in 2018.

Coeur Mining produced 4 million oz. of silver and 91,551 oz. of gold across all of its operations during the fourth quarter of 2015. For the full year, the company’s five operations produced 15.9 million oz. of silver and 327,908 oz. of gold. In 2016, Coeur expects to produce 14.6 million-16 million oz. of silver and 320,000-347,000 oz. of gold.

Between 115,000 and 125,000 ounces of Coeur’s 2016 gold is expected to be produced at Kensington.

Record silver

Greens Creek, meanwhile, produced 8.5 million oz. of silver in 2015, the highest annual output since Hecla Mining purchased 100 percent ownership of the mine in 2008.

Greens Creek’s robust production helped propel Hecla’s companywide silver production to a record 11.6 million oz., well above the 10.5 million to 11 million oz. that the company anticipated.

The silver recovered at Greens Creek in 2015 topped the previous year’s production by roughly 600,000 oz. This increased output more than made up for a 211,000 oz. drop in silver production at Hecla’s Lucky Friday operation in Idaho. The net gain also set a new annual silver production record for the Idaho-based miner.

“Despite a difficult metals market, Hecla’s production continues to grow, setting the second consecutive annual silver production record,” CEO Baker said.

This roughly 7.6 percent jump was not simply the result of feeding more ore through the mill. In fact, the tonnage milled in 2015 was down about 11 percent compared to 2014.

The grade of the ore milled in 2015 was 13 percent higher, which accounts for some of the increased silver production. Improved recoveries, however, gets the credit for the bulk of the added silver in 2015.

Improvements to silver recoveries at Greens Creek began late in 2014, when Hecla modified the flotation circuit to scalp more of the lead concentrate. In April, the company further enhanced efficiencies of the flotation circuit through the use of carbon dioxide to control PH levels in the lead concentrate. All told, these upgrades resulted in an eight percent jump in silver recoveries by the middle of 2015.

“For a mine producing over seven million ounces of silver a year, an eight percent increase in silver recovery is a significant value driver, especially when coupled with the higher grades,” Baker said at the time.

Greens Creek also recovered 60,566 oz. of gold in 2015, a 3.1 percent increase over the 58,754 oz. produced the year before. This helped push Hecla’s companywide gold production to 189,162 oz. for the year, exceeding the 185,000 oz. the longtime precious metal miner was anticipating.

Casa Berardi, Hecla’s only mine that primarily produces gold, reported output of 127,891 oz. of the yellow metal in 2015, a slight drop from the 128,244 oz. that the Quebec operation produced a year earlier. On the bright side, the 42,282 oz. recovered at Casa Berardi during the final three months of 2015 is the highest quarterly production since Hecla acquired the mine in mid-2013.

On Dec. 10, the San Sebastian Mine in Mexico began processing ore and produced 75,552 oz. of silver and 705 oz. of gold before the year came to a close.

With a fourth operating mine in its portfolio, Hecla is looking to have another banner year in 2016.

“All three mines exceeded guidance and San Sebastian has begun production,” said Baker. “We are continuing to see results from our strategy of investing in production growth, causing our silver-equivalent production to be the most in our 125-year history. This growth, along with cost controls and focused investment, puts Hecla in a good position now and when metals prices rebound.”

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