Hecla CEO: Bright future for Greens Creek
Prospects are strong at the Greens Creek silver mine near Juneau, according to senior leadership at the mine’s operating company.
Hecla Mining Co. President and CEO Phil Baker said in a May 22 interview with the Journal that the 2013 drill results at the mine are some of the best he’s seen in his 13 years with the company.
“We have a mine plan that’s 10 years but we fully expect that it will go well past that,” Baker said.
A 24-year-old underground silver, zinc, lead and gold operation, Greens Creek is the largest silver mine in the United States and among a handful of the largest in the world, Baker said.
The mine has been run on a seven to 12-year plan for most of its life. Baker said if a new tailings facility — currently in the final stages of state and federal permitting — can be constructed, it could push Greens Creek’s future out 15 years or more.
Baker made his comments after Coeur d’Alene, Idaho-based Hecla’s shareholder meeting held May 22 in Anchorage.
Further longevity at Greens Creek would mean steady, but not significantly increased production because of footprint limitations, he said.
The total Greens Creek property is 27 square miles. It’s location near the center of Admiralty Island, southwest of Juneau, surrounded by Tongass National Forest and Admiralty Island National Monument-Kootznoowoo Wilderness land makes expanding difficult, community relations manager for Hecla Mike Satre said.
Hecla purchased Greens Creek in 2008 from Kennecott, a subsidiary of industry giant Rio Tinto. The company is also the longtime operator of the Lucky Friday silver mine in Idaho and the Casa Berardi gold mine in Quebec, which it purchased last year.
Baker said Greens Creek has driven the company’s revenue since the purchase, contributing nearly 75 percent of Hecla’s $800 million of overall cash flow in the past four years.
“Greens Creek is one of the few mines that have the sort of cash flow generation that it does in the world,” he said. “There are dozens of them, but it’s one of those dozens.”
As Baker noted, first quarter silver production at Greens Creek was nearly identical to 2013 at 1.78 million ounces — up less than half a percent year-over-year. The Southeast mine accounted for 72 percent of Hecla’s total first quarter silver production.
For the year, the company expects to produce between 6.5 million and 7 million ounces of silver and about 55,000 ounces of gold at Greens Creek, according to its quarterly report.
The mine mill processed an average of 2,252 tons of ore per day during the quarter.
Recent drilling in Greens Creek’s Deep 200 South mineralization area intersected a 28-foot area with 27.3 ounces per ton of silver; 0.46 ounces per ton of gold; 13.7 percent zinc; and 6.7 percent lead. Additionally, a five-foot intersection in the same area was found to contain 52.1 ounces per ton of silver.
Baker said the collection of metals at Greens Creek are “extraordinarily important” to its strong economics.
As of the beginning of the year, Greens Creek had proven and probable reserves of 92.5 million ounces of silver at 11.9 ounces per ton; 713,000 ounces of gold at 0.09 ounces per ton; 678,000 tons of zinc and 256,000 tons of lead.
Current silver prices at about $20 per ounce are off more than 30 percent from 2011 when the precious metal went for nearly $30 per ounce, but are still much improved over a decade ago when silver went for less than $4 per ounce.
“Long-term the (silver) outlook is extraordinary,” Baker said.
New technological applications have doubled global demand for silver over the past 30 years to about 1 billion ounces per year and he said that market could double again in the next 30 years as Asian economies grow.
“As people get wealthier, they consume more of those things that have silver in them,” he said.
While silver markets track closely with gold currently, Baker said he thinks a divergence between the two is likely as silver demand grows. Low silver prices in prior decades limited exploration and has led to few new mines, he added, a factor that could tighten the market and mean strong silver prices long-term.
To do its part in meeting projected silver demand with Greens Creek, Hecla has started a list of programs to get Southeast’s youth thinking about careers in mining, part of an emphasis the company has to hire locally, according to Baker.
He said mines offer career opportunities for a wider range of skill sets than some might recognize.
“There’s 400 employees (at Greens Creek) and you’ve got engineers and chemists and accountants and miners and mechanics and nurses and janitors — you’ve got everything,” he said.
Two diesel mechanics that were hired in May became the first Greens Creek employees who visited the mine as eighth graders on class tours that began in 2008, went through the company’s Pathways to Mining Careers high school partnership program with the University of Alaska, and began work at the mine.
“I’m convinced that over the course of the next 10 years we will have class after class of new employees that are from Juneau — that’s where they want to live,” Baker said.
Most Juneau residents that work at Greens Creek commute by boat, but to retain and attract workers from other regions of Alaska and Outside, new camp and housing facilities were built at the mine in the last two years.
Elwood Brehmer can be reached at [email protected].