Hecla joins Great Basin at Ivanhoe (June 10, 2002)

Vancouver — Coeur d’Alene, Idaho-based Hecla Mining (HL-N) has teamed up with Great Basin Gold (GBG-V) to advance the Ivanhoe property in Nevada’s Carlin trend.

The newly formed partnership will focus on the Clementine-Gwenivere vein system in the Hollister development block portion of the property. Hecla can earn a 50% stake in this section by spending US$21.8 million on a two-staged development program. The first part consists of a US$10.3 million program underground development and drilling program aimed at up grading the resources into reserves. The second US$11.5 million stage marks underground development of the vein systems leading to production.

“We are very pleased that the project attracted one of America’s most recognized companies for efficiency in underground mining operations,” says Great Basin’s president, Ronald Thiessen. “The project has all the ingredients for success; location, grade, management and gold.”

Based on an inferred mineral resource of 719,000 tons grading 1.29 oz gold and 7 oz silver per ton, the Hunter-Dickinson led junior envisions a five year underground operation mining 600 tons per day and treating the ore at a local mill. This scenario would produce 170,000 oz of gold and 920,00 oz of silver annually. Cash costs are estimated to come in at US$114 per oz of gold equivalent with total costs slated at US$134 per oz gold equivalent. The economic model uses 50% mining dilution and carbon-in-leach processing with recoveries of 95% for gold and 90% for silver. Underground mining costs are estimated at US$55.50 per ton of ore and toll-mining charges are put at US$25 per ton. Capital costs for the proposed mine are pegged at US$22 million.

“We’re pleased to have this opportunity to expand our gold and silver production, especially in Nevada, where Hecla has had successful operations in the past,” says Hecla’s chief executive officer, Arthur Brown.

Hecla plans to begin engineering and permitting work right away. Under the terms of the deal, Hecla has one year after receiving the permits to complete stage one of the program. The company then has 45 days to begin phase 2, which has the timetable of another year. Once a final agreement is signed, Hecla will issue 2 million warrants to Great Basin and in return, will receive 1 million warrants in the Hunter Dickinson-led junior. Hecla will also issues 1 million warrants one completion of each work stage and Great Basin will match that with 500,000 of its warrants.

The Ivanhoe property lies midway between two major operations: Newmont Mining’s Ken Snyder and Barrick Gold’s vast Goldstrike property. Over the past couple of years, Great Basin has focused on high-grade, gold-silver veins below and adjacent to the low-grade, disseminated Hollister deposit, which was previously mined as an open pit.

The resource comprises seven veins hosted by Ordovician Valmy Formation rocks thrusted over younger carbonate rocks.