Hecla says to try an increase Silver Production by 50% over current production levels at the Lucky Friday Mine.
Lucky Friday
At the Lucky Friday mine in Idaho, silver production was 0.8 million ounces at a total cash cost of $3.38 per ounce compared to 0.9 million ounces at a total cash cost of $3.42 per ounce in the same quarter in 2009. For the first nine months of 2010, Lucky Friday produced 2.5 million ounces of silver at a total cash cost of $3.67 per ounce, compared to 2.7 million ounces of silver at a total cash cost of $5.89 in the same period the prior year.
The third quarter total cash cost decrease of $0.04 per ounce of silver compared to the same period in the prior year, was mainly due to higher lead and zinc by-product credits resulting from increased average market prices for those metals and partially offset by higher price-sensitive production costs and taxes. For the nine months ended September 30, 2010, the $2.22 decrease in total cash cost per ounce of silver compared to the same period in 2009, is attributable to higher by-product credits and partially offset by costs that are sensitive to metals price increases.
The #4 Shaft Project is progressing and Hecla believes it could increase the mines annual silver production by approximately 50% from current levels and could extend the mine life beyond 2030. Total estimated capital expenditures would range between $150 and $200 million, for an internal shaft descending from the 4900 level to the 7800 level. Approximately $50 million of the total capital expenditures will be spent by year end. Engineering is underway to determine the feasibility of constructing the shaft to an ultimate depth of 8800 feet. Hecla management currently expects to make a final technical and commercial feasibility determination and seek final approval by the Board of Directors for completion of the #4 Shaft Project no later than the middle of 2011. When approved, Hecla estimates that the project would be completed by the end of 2014. Hecla believes that our current capital resources will allow us to proceed with the #4 Shaft Project.
PRODUCTION AND CASH COST OUTLOOK
Hecla is on track and reiterates its full-year 2010 production guidance of between 10 and 11 million ounces of silver. Given the strong metals price environment, the company now expects total cash cost per ounce of silver to be approximately negative $0.50. This estimate is based on prices for the fourth quarter averaging $1,110 per ounce of gold and $0.80 per pound of lead and zinc.