Keno Hill

Yukon Territory, Canada

The Keno Hill Silver District in Canada’s Yukon Territory is a large, high-grade silver property in a top 10 rated jurisdiction by the Fraser Institute. It has the potential to become the largest Canadian silver producer.

Underground

Mine Type

100%

Ownership

621.6 Koz

Silver

2.4 Ktons

Lead

.8 Ktons

Zinc

***All metals reflect 2021 production 

Description & History

Hecla acquired Alexco Resource Corp. on July 5. 2022 and the deal was finalized on September 7, 2022.

The Company owns 100% of the Keno Hill Silver Project which is located within the Keno Hill Silver District in Canada’s Yukon Territory. Keno Hill, one of the highest-grade silver districts in the world, is situated 350 kilometres north of Whitehorse, and lies within the traditional territory of the First Nation of Na-Cho Nyak Dun. It comprises 242 square kilometres (km2) with numerous mineral deposits and more than 35 historical past-producing mine sites.

Community Partner

Business and JV Contracting Agreements are in place with First Nation of Na-Cho Nyak Dun Development (FNNND) Corporation

Keno Hill produces silver, lead and zinc concentrates and includes five deposits–Bellekeno, Lucky Queen, Flame & Moth, Onek, and Bermingham. This is a fully permitted property with infrastructure that includes a 400 tonne per day mill, on-site camp facility, all-season highway access from Whitehorse, and connection to the Yukon Energy hydropower grid.

Reserves & Resources

(Conversion to Imperial Units from original Alexco SI Unit sources)

Keno Hill – Mineral Reserves (1)
(As of December 31, 2021 unless otherwise noted)
Tons
(000)
Silver
(oz/ton)
Gold
(oz/ton)
Lead
(%)
Zinc
(%)
Silver
(000 oz)
Gold
(000 oz)
Lead
(Tons)
Zinc
(Tons)
Proven Reserves (1)
Bellekeno 

Bellekeno Surface Stockpile

Lucky Queen 

Flame & Moth 

Bermingham 

Total 

Tons
(000)
Silver
(oz/ton)
Gold
(oz/ton)
Lead
(%)
Zinc
(%)
Silver
(000 oz) 
Gold
(000 oz)
Lead
(Tons)
Zinc
(Tons)
Probable Reserves (2)
Bellekeno 
14
27.3
13.0
7.3
385
1,836
1,031
Bellekeno Surface Stockpile 
4
33.5
21.7
4.5
126
813
169
Lucky Queen 
78
37.0
0.004
2.7
1.6
2,883
2,110
1,215
Flame & Moth 
795
19.6
0.014
2.7
6.2
15,590
11
21,389
49,377
Bermingham 
695
26.2
0.004
2.3
1.3
18,209
3
15,699
9.030
Total 
1,585
23.5
0.009
2.6
3.8
37,193
14
41,857
60,321
Tons
(000)
Silver
(oz/ton)
Gold
(oz/ton)
Lead
(%)
Zinc
(%)
Silver
(000 oz)
Gold
(000 oz)
Lead
(Tons)
Zinc
(Tons)
Proven and Probable Reserves
Bellekeno 
14
27.3
13.0
7.3
385
1,836
1,031
Bellekeno Surface Stockpile
4
33.5
21.7
4.5
126
813
169
Lucky Queen 
78
37.0
0.004
2.7
1.6
2,883
2,110
1,215
Flame & Moth 
795
19.6
0.014
2.7
6.2
15,590
11
21,389
49,377
Bermingham 
695
26.2
0.004
2.3
1.3
18,209
3
15,699
9,030
Total 
1,585
23.5
0.009
2.6
3.8
37,193
14
41,857
60,821

(1)  The term “reserve” means an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted. The term “proven reserves” means the economically mineable part of a measured mineral resource and can only result from conversion of a measured mineral resource.  See footnotes 7 and 8 below.                                                                                                                                                                             

(2)  The term “probable reserves” means the economically mineable part of an indicated and, in some cases, a measured mineral resource.  See footnotes 8 and 9 below.                                                                                                                                                                                                                  

Mineral Reserves reported are dated May 26, 2021 and do not include depletion since that time.    

Mineral reserves are based on $21.35/oz silver, $1603/oz gold, $0.92/lb lead, $1.08/lb zinc and US$:CA$ of 0.775.    

Mineral Reserves are reported herein based on an NSR cutoff value using estimated metallurgical recoveries, assumed metal prices and smelter terms, which include payable factors, treatment charges, penalties, and refining charges. 

The Bellekeno, Lucky Queen, Flame & Moth and Bermingham deposits are incorporated into the current mine plan supported by disclosure in the news release dated May 26, 2021 entitled “Alexco Announces 22% Increase to Silver Reserves; Updated Technical Report Demonstrates Robust Economics at Keno Hill”.   

Reserves are reported based on NSR cutoff of CA$/tonne of $365 for Bellekeno, $460 for Lucky Queen, $350 for Bermingham and Flame and Moth.   

Totals may not represent the sume of parts due to rounding.                                                                                                                                                                                                                                                      

 

                                                                                             

                                                                                                                                                                          

Keno Hill – Mineral Resources (3)
(As of December 31, 2021 unless otherwise noted)
Tons
(000)
Silver
(oz/ton)
Gold
(oz/ton)
Lead
(%)
Zinc
(%)
Silver
(000 oz)
Gold
(000 oz)
Lead
(Tons)
Zinc
(Tons)
Measured Resources (4)
Bellekeno 

Lucky Queen 

Flame & Moth 

Onek 

Bermingham 

Total 

Indicated Resources (5)-
Inclusive of Reserve
(as reported by Alexco)
Tons 
(000)
Silver
(oz/ton)
Gold
(oz/ton)
Lead
(%)
Zinc
(%)
Silver
(000 oz) 
Gold
(000 oz)
Lead
(Tons)
Zinc
(Tons)

 
 
 
 
 
 
 
Bellekeno 
235
18.1
5.5
5.5
4,246
12,984
12,960
Lucky Queen 
146
34.0
0.005
2.4
1.6
4,964
1
3,544
2,377
Flame & Moth 
1,851
14.5
0.012
1.9
5.3
26,883
23
34,239
98,646
Onek 
772
5.6
0.018
1.2
11.9
4,300
14
9,571
91,462
Bermingham 
1,723
27.4
0.004
2.6
1.7
47,210
8
44,787
29,284
Total 
4,726
18.5
0.009
2.2
5.0
87,603
41
103,967
236,289
Indicated Resources (5) –
Exclusive of Reserve –
PRELIMINARY (simple
subtraction of Reserve
tonnage and metal from
Indicated Resources)
Tons
(000)
Silver
(oz/ton)
Gold
(oz/ton)
Lead
(%)
Zinc
(%)
Silver
(000 oz)
Gold
(000 oz)
Lead
(Tons)
Zinc
(Tons)
 
 
 
 
 
 
 
 
Bellekeno 
221
17.5
5.1
5.4
3,861
11,148
11,930
Lucky Queen 
68
30.6
0.010
2.1
1.7
2,081
1
1,433
1,162
Flame & Moth 
1,056
10.7
0.011
1.2
4.7
11,293
12
12,851
49,269
Onek 
772
5.6
0.018
1.2
11.9
4,300
14
9,571
91,462
Bermingham 
1,028
28.2
0.004
2.8
2.0
29,001
5
29,088
20,253
Total 
3,144
16.1
0.010
2.0
5.5
50,536
30
64,091
174,076
Tons
(000)
Silver
(oz/ton)
Gold
(oz/ton)
Lead
(%)
Zinc
(%)
Silver
(000 oz)
Gold
(000 oz)
Lead
(Tons)
Zinc
(Tons)
Inferred Resources (6) 
Bellekeno 
333
10.5
2.5
5.4
3,486
8,189
18,076
Lucky Queen 
284
13.8
0.003
1.0
0.8
3,922
1
2,843
2,274
Flame & Moth 
403
10.4
0.008
0.5
4.3
4,180
3
1,892
17,109
Onek 
314
3.4
0.012
1.2
8.3
1,082
4
3,614
25,958
Bermingham 
930
21.4
0.004
2.0
1.3
19,930
4
18,594
12,086
Total 
2,264
14.4
0.006
1.6
3.3
32,600
13
36,219
74,702

Note: All estimates are in-situ.  Mineral resources are reported inclusive and exclusive of reserves.

(3) The term “mineral resources” means a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.

(4)  The term “measured resources” means that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.

(5)  The term “indicated resources” means that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may only be converted to a probable mineral reserve.

(6) The term “inferred resources” means that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a mineral reserve.

Totals may not represent the sum of parts due to rounding.

Indicated Mineral Resources originally reported by Alexco are inclusive of Probable Mineral Reserves estimates; a preliminary estimate of Indicated Mineral Resources exclusive of Mineral Reserves is also included.

The Mineral Resource estimate for the Bellekeno deposit is based on an internal Mineral Resource estimate completed by Alexco Resource Corp. and externally audited by SRK Consulting Inc., having an effective date of January 01, 2021. This Mineral Resource estimate has been depleted to reflect all mine production from Bellekeno to the end of December 2020 and does not reflect any depletion from production that occurred in 2021.

Mineral resources are reported at a cut-off value of CA$185/tonne based on metal prices of US$22.09/oz for silver, US$0.92/lb for lead, US$1.10/lb for zinc and recoveries of 96% for silver, 97% for lead, and 88% for zinc.                                                                      e Mineral Resource estimates comprising Lucky Queen and Flame & Moth, Onek and Bermingham are supported by disclosure in news release dated May 26, 2021 entitled “Alexco Announces 22% Increase to Silver Reserves,; Updated Technical Report Demonstrates Robust Economics at Keno Hill” and the Technical Report filed on SEDAR dated May 26, 2021 with an effective date of April 1, 2021.

The Mineral Resource estimate for the Lucky Queen, Flame & Moth and Onek deposits have an effective date of January 3, 2017.

Mineral resources are reported at a cut-off value of CA$185/tonne based on metal prices of US$22.09/oz for silver, US$0.92/lb for lead, US$1.10/lb for zinc, US$1300/oz for gold and recoveries of 96% for silver, 97% for lead, and 88% for zinc, and 77% for gold.

The Mineral Resource estimate for the Bermingham deposit is based on Mineral Resource estimates having an effective date of November 30, 2021

Mineral resources are reported at a cut-off value of CA$185/tonne based on metal prices of US$22.11/oz for silver, US$0.92/lb for lead, US$1.10/lb for zinc, US$1694/oz for gold and recoveries of 95.6% for silver, 92.2% for lead, and 82% for zinc, and 49% for gold.

Note: All estimates are in-situ except for the proven reserves at Greens Creek which are in surface stockpiles. Mineral resources are exclusive of reserves. Totals may not represent the sum of parts due to rounding.

(1) Mineral reserves are based on $17/oz silver, $1600/oz gold, $0.90/lb lead, $1.15/lb zinc, unless otherwise stated.

(2) The reserve NSR cut-off grades for Greens Creek are $215/ton for all zones at Greens Creek except the Gallagher Zone at $220/ton; metallurgical recoveries (actual 2021): 81.26% silver, 72.34% gold, 82.29% lead, 89.58% zinc.

(3) Mineral resources are based on $1700/oz gold, $21/oz silver, $1.15/lb lead, $1.35/lb zinc and $3.00/lb copper, unless otherwise stated.

(4) The resource NSR cut-off grades for Greens Creek are $215/ton for all zones at Greens Creek except the Gallagher Zone at $220/ton; metallurgical recoveries (actual 2021): 81.26% silver, 72.34% gold, 82.29% lead, 89.58% zinc.

Reporting requirements in the United States for disclosure of mineral properties as of December 31, 2020 and earlier are governed by the SEC’s Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (Guide 7). Effective January 1, 2021, the SEC has issued new rules rescinding Guide 7. Mining companies are not required to comply with the new rules until the first fiscal year beginning on or after January 1, 2021. Thus, the Company will be required to comply with the new rules when filing its Form 10-K for the fiscal year ended December 31, 2021. The Company is also a “reporting issuer” under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (NI 43-101). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is included herein to satisfy the Company’s “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.

Reporting requirements in the United States for disclosure of mineral properties under Guide 7 compared to the new SEC rules (Item 1300 of Regulation S-K under the Securities and Exchange Act of 1934) and the requirements in Canada under NI 43-101 standards are substantially different. This document contains a summary of certain estimates of the Company, not only of Proven and Probable reserves within the meaning of Guide 7, but also of mineral resource and mineral reserve estimates estimated in accordance with the new SEC rules and definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101.  Under Guide 7, the term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term “economically”, as used in the definition of reserve, means that profitable extraction or production has been established or analytically demonstrated to be viable and justifiable under reasonable investment and market assumptions. The term “legally”, as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, Hecla must have a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with Hecla’s current mine plans.  The terms “Measured resources”, “Indicated resources,” and “Inferred resources” are mining terms as defined in accordance with the new SEC rules and NI 43-101. These terms are not defined under Guide 7 and prior to January 1, 2021, were not normally permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. The term “resource” does not equate to the term “reserve”. Under Guide 7, the material described herein as “Indicated resources” and “Measured resources” would be characterized as “mineralized material” and is permitted to be disclosed in tonnage and grade only, not ounces.  The category of “inferred resources” is not recognized by Guide 7.   Investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into Proven or Probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a “resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a “resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.

Operational Highlights–Production

Between 1913 and 1989, Keno Hill produced over 200 Moz of silver with average grades of 44 oz/t, making it the second-largest historical silver producer in Canada. Today, it boasts significant Mineral Resources at grades far higher than most of the world’s primary silver producers.

Exploration

There has been active exploration and development of the Keno Hill Silver District since 2006. During that time, there has been several significant discoveries including the Flame and Moth and Bermingham deposits that form the backbone of Hecla Yukon’s current mining operations. This exploration success at the Bermingham and Flame & Moth deposits demonstrates the potential to continue growing the District’s mineral resource.

Under a unique contractual agreement with the Government of Canada, Hecla can explore, develop, and produce from historic and newly discovered deposits within the District. The Government of Canada indemnifies the potential liabilities associated with the historic operations in the District under the terms and conditions of the commercial agreement subject to the requirement for ERDC to develop, permit and implement the Site Reclamation Plan.

Future Plans

The addition of Alexco Resource increases Hecla’s silver exposure by increasing proven and probable silver reserves 19% to 237 million ounces, measured, and indicated resources 24% to 257 million ounces and inferred resources 7% to 523.7 million ounces.

Geology and Mining

The Keno Hill Silver District is in the central Yukon, which is characterized by subarctic continental climate with cold winters and warm summers. Annual precipitation averages 28 cm and half of this falls as snow, which starts to accumulate in October and remains until May or June. The landscape of the District is characterized by rolling hills and mountains with a relief of up to 1,600 m, the highest of which is Keno Hill at 1,975 m.

Mineralization in the District is of the polymetallic silver-lead-zinc vein type where multiple pulses of hydrothermal fluids or fluid boiling, probably related to repeated reactivation and breccia formation along the host fault structures, have formed a series of vein stages with differing mineral assemblages and textures. Supergene alteration may have further changed the nature of the mineralogy in the veins. Much of the supergene zone may have been removed due to glacial erosion. In general, common gangue minerals include (manganiferous) siderite and, to a lesser extent, quartz, and calcite. Silver predominantly occurs in argentiferous galena and argentiferous tetrahedrite (freibergite).

In some assemblages, silver is also found as native silver, in polybasite, stephanite, and pyrargyrite. Lead occurs in galena and zinc in sphalerite, which can be either an iron-rich or iron-poor variety. Other sulphides include pyrite, pyrrhotite, arsenopyrite, and chalcopyrite. The Keno Hill mining camp has long been recognized as a polymetallic silver-lead-zinc vein district with characteristics similar to other well-known mining districts in the world.

Keno Hill Social
& Economic Benefit

Hecla is the largest private-sector employer and taxpayer in many of the locations where we operate. At Keno Hill, we will continue to prioritize hiring locally while supporting the current business and JV Contracting Agreements in place with First Nation of Na-Cho Nyak Dun Development (FNNND) Corporation. Our Company has always played a critical role in the economic health and social development of our local communities, and we plan to further strengthen our relationships with the communities of Mayo and Keno City.