Commodities Buzz: Greens Creek Mine Produces 1.9 million Ounces of Silver

Greens Creek mine, 1.9 million ounces of silver and 13,118 ounces of gold were produced in the first quarter, compared to 1.9 million ounces and 14,022 ounces, respectively, in the first quarter of 2017. The impact of lower grades than the first quarter of 2017 was largely offset by increased ore throughput. The mill operated at an average of 2,349 tons per day (tpd) in the first quarter compared to 2,190 the first quarter of 2017.

The cost of sales for the first quarter was $ 41.9 million, and the cash cost, after by-product credits, per silver ounce, was $ (4.99), compared to $ 44.0 million and $ 0.65, respectively, for the first quarter of 2017.4 The AISC, after by-product credits, was $ 0.59 per silver ounce for the first quarter compared to $ 3.86 in the first quarter of 2017.5 The per ounce silver costs were lower primarily due to higher by-product metals prices and production.

Silver production of 99,780 ounces decreased 85% over the prior year period mainly due to the strike by the union workers that began March 13, 2017. Cost of sales for the first quarter was $ 4.1 million compared to $ 14.5 million, with the decrease also due to the strike.

Last week Hecla announced that it has reached an agreement with the National Labor Relations Board in settling the unfair labor practice charge brought by the United Steelworkers in March 2017. The two sides have met more than 20 times since March 2017, but have had only two negotiating sessions since Hecla presented a Revised Final Offer (RFO) on December 15, 2017, but those meetings resulted in no progress in reaching a new Agreement. On May 4, 2018, Hecla notified the Union that the parties are at impasse, and that portions of the RFO were being implemented, effective immediately.

Limited production and capital improvements continue to be performed by salaried staff, and preparations continue for the arrival of the remote vein miner (RVM), expected late in 2019, which has the potential to revolutionize how the Lucky Friday is mined.

Casa Berardi Mine – Quebec

At the Casa Berardi mine, 40,177 ounces of gold were produced in the first quarter, including 10,655 ounces from the East Mine Crown Pillar (EMCP) pit, compared to 35,807 ounces in the prior year period, primarily due to higher throughput. The mill operated at an average of 3,873 tpd in the first quarter, an increase of 19% over the first quarter of 2017, and the highest quarterly throughput ever recorded at the mine. The Company continues to study the optimal mill throughput rate.

The cost of sales was $ 49.2 million for the first quarter and the cash cost, after by-product credits, per gold ounce was $ 827, compared to $ 42.5 million and $ 886, respectively, in the prior year period.4,6 The decrease in cash cost, after by-product credits, per gold ounce is partly due to higher gold production and reduced stripping costs at the EMCP pit. The same factors, along with lower capital spending, resulted in lower AISC, after by-product credits, of $ 1,086 per gold ounce for the first quarter compared to $ 1,256 in the first quarter of 2017.5

The automated 985 drift project is working well, and the delivery of a second 40-ton Sandvik autonomous haul truck is expected later this year. This is expected to result in operating savings of several million dollars a year an Sebastian – Mexico.

At the San Sebastian mine, 512,192 ounces of silver and 4,513 ounces of gold were produced in the first quarter, compared to 750,803 silver ounces and 6,284 gold ounces in the prior year period. Although silver and gold production were lower as compared to the first quarter of 2017, both still exceeded our estimates for the quarter due to the amount of higher-grade stockpile material processed. The mill operated at an average of 382 tpd in the first quarter, a 6% decrease over the first quarter of 2017.

The cost of sales was $ 5.8 million for the first quarter and the cash cost, after by-product credits, was $ 2.81 per silver ounce, compared to $ 6.6 million and $ (3.27), respectively, in the first quarter of 2017.4 The cash cost, after by-product credits, increased, as expected, due to lower silver production and higher mining costs resulting from the transition of production from the high grade, shallow open pits to underground. The AISC, after by-product credits, was $ 8.37 per silver ounce for the first quarter compared to $ 0.43 in the first quarter of 2017, principally due to the same factors along with higher exploration spending, partially offset by lower capital costs. The Company continues to plan on collecting a bulk sample of the Hugh Zone material from the Francine Vein this year and process it through Excellons mill to determine suitability for a longer term agreement.

Exploration (including Corporate Development) expenses were $ 7.4 million in the first quarter of 2018, an increase of $ 2.8 million compared to the first quarter 2017. Full year exploration (including Corporate Development) expenses for our current projects are expected to be $ 30-$ 37 million, up from $ 23.5 million in 2017, in part reflecting more aggressive exploration programs at San Sebastian, Casa Berardi and Greens Creek and continued exploration at the Kinskuch, Little Baldy and Opinaca-Wildcat projects.