Hecla Plans To Open New North Idaho Silver Project Company Plans To Spend $16 Million To Develop Ore Body That Adjoins Lucky Friday Mine At Mullan

The head of Hecla Mining Co. said Friday that the company will spend $16 million to bring a huge, silver-rich deposit into full production next year in North Idaho.

The project, said chairman and chief executive officer Arthur Brown, will employ 50 workers, many of whom already are at work on the ore body that adjoins Hecla’s Lucky Friday mine at Mullan, Idaho.

The eight-member board of directors of the 106-year-old silver, gold and industrial mining company approved plans to mine the Gold Hunter deposit prior to the company’s annual meeting of shareholders. About 100 people gathered at corporate headquarters in Coeur d’Alene.

“It looks like this company is about to explode,” said David Lien, a Hecla stockholder attending the meeting who also owns Compusoft Publishing Co. in Vancouver, Wash.

Tom Wobker, director of business development at Pennaluna & Co. securities firm in Coeur d’Alene, agreed. He said that the drive into Gold Hunter is important to Hecla and North Idaho’s economy because it will provide another source of low-cost silver that should keep miners employed for years.

“The costs of mining silver seems to be one of the primary forces behind the mini-rebound we’re seeing in the Silver Valley,” Wobker said. “The costs that Hecla is projecting are very competitive.”

The clock has begun to tick, however, on Hecla’s race to boost its gold reserves. Despite the opening last month of the Rosebud Gold Mine in Nevada, of which Hecla controls half interest, the company’s proven and probable gold reserves will run out in six years unless it discovers new deposits.

Brown said Hecla is aggressively searching for viable projects in North America and Mexico. He said he was confident that additional gold deposits would be located.

“We’re a three-legged stool of gold, silver and industrial minerals,” Brown said in a later interview. “The gold leg is short right now.”

After absorbing seven consecutive years of losses, including $35.7 million in 1996, Hecla shareholders were upbeat after Brown’s forecast for the future. Although the 30-year veteran of Hecla stopped short of promising an immediate return to profitability, he stressed that Hecla’s operating costs are declining while the amount of gold and silver produced is accelerating.

“At today’s prices, it’s tough to make money,” said Brown, whose company employs 1,250 people, including 240 in North Idaho. “But if we get $400 (per ounce) gold and $5.50 (per ounce) silver, we’d be profitable right away.”

Friday’s spot price for silver was $4.84 per ounce; gold was $348.30.

The move toward low-cost mining operations will lower Hecla’s cash costs of producing an ounce of gold from $276 in 1996 to $185 per ounce in 1998, Brown said. Silver costs will drop from $4.24 per ounce to $3.

The Gold Hunter deposit is located about one mile underground and a mile from the Lucky Friday. The company is drifting a tunnel into the Gold Hunter and plans to rail the ore to the Lucky Friday’s elevator shaft. The system will spare the expense of sinking a separate ore shaft and building another above-ground mill.

Brown said the Gold Hunter’s average ore grade is 18 ounces of silver per ton, or twice the Lucky Friday’s concentration. Some veins have up to 46 ounces of silver per ton.

The deposit will be the catalyst for nearly tripling silver production from 3 million ounces in 1996 to 8 million in 1998, he said.

, DataTimes