The U.S.’s biggest silver producer Hecla Mining (NYSE: HL) expects to restart its idled Idaho-based Lucky Friday mine operations early in the New Year after a fire and a groundfall closed the #2 shaft on August 21.
In an update Monday, Hecla said the fire was now contained and is under control.
According to the company, a fire caused a groundfall in an unused station under repair and a critical secondary egress. The incident occurred about 150 metres from the bottom of the active portion of the shaft.
Hecla said it has restored normal ventilation. The company has recalled the workforce to develop a new secondary way out to bypass the damaged section of the shaft. This measure involves extending an existing ramp by about 488 metres and installing an 88-metre-long manway raise, suspending production for the rest of 2023.
On the financial front, Hecla assured investors of substantial damage mitigation and production loss costs, thanks to their property insurance. After accounting for a deductible, this policy covers up to US$50 million for underground incidents, covering property damage and business interruptions.
In 2024, the company maintains a buoyant outlook, with no material alterations anticipated in the consolidated silver production guidance, projected to range between 17.5 and 18.5 million ounces.
Commenting on Hecla’s approach and prospects, Kevin O’Halloran, a mining analyst at BMO Capital Markets, stated, “Hecla anticipates no material impact on the company’s 2024 silver guidance […] We expect a swift return to typical production levels at Lucky Friday once they resume production.”
Nonetheless, in his note to clients, O’Halloran adopts a conservative approach, retaining the existing assumptions of a US$5 million repair cost and no compensation for lost production, pending further details on the insurance compensation.
For the June quarter, Hecla recorded Lucky Friday’s silver output at 1.3 million oz. as the highest since the first quarter of 2000. The company said in its Aug. 8 results report that it expected that with the mine’s new service hoist now operational, the mine was closer to achieving 425,000 ore tons in yearly throughput by year-end.
Hecla previously guided for 2023 Lucky Friday output of 45 – 5 million oz. silver.
Lucky Friday hosts 7.43 million tons grading 7.8 grams silver for 58.13 million oz. of metal in the measured and indicated resource categories.
At US$4.19 per share on Monday, Hecla’s equity is up 4.5% over the past 12 months, touching US$3.41 and US$7.00. It has a market capitalization of US$2.6 billion.
Be the first to comment on "Hecla eyes early 2024 Lucky Friday restart after underground fire"