HECLA MINING CO. AGREES TO SELL A MINORITY INTEREST IN GROUSE CREEK GOLD PROJECT TO GREAT LAKES MINERALS INC.
COEUR D'ALENE, Idaho, Oct. 18 /PRNewswire/ -- Hecla Mining Co. (NYSE: HL) announced today it has reached an agreement in principle to sell a minimum 20 percent undivided interest in its Grouse Creek gold project to Great Lakes Minerals Inc. (Toronto: GKM) of Toronto, Canada. The purchase price of $6.8 million (U.S.) represents 20 percent of the amount spent by Hecla on acquisition, exploration and development through June 30, 1993, including a fixed premium of $1.25 million (U.S.). In addition, Great Lakes will fund its pro rata share of the total construction cost which is estimated at $85 million (U.S.), and has the option to increase its ownership to a maximum of 30 percent by contributing additional funds on a proportional basis. Grouse Creek, near Challis, Idaho, currently has proven and probable reserves of 831,000 contained ounces of gold and 17.5 million contained ounces of silver. Plans for the property include open-pit mining of two surface deposits, supplemented by underground mining of a deeper, high-grade ore zone discovered in late 1992. Hecla has nearly doubled the quantity of gold equivalent mineral reserves through exploration since Jan. 1, 1991. According to Hecla officials, the area has excellent potential for discovery of additional ore, and plans call for continued exploration to further expand the reserve base. Current proven and probable reserves support an estimated eight-year mine life. Hecla is estimating the life-of-mine cash production cost to be in the range of $155 (U.S.) per ounce, ranking it among the world's lower-cost producers. The sale is conditional upon Great Lakes arranging equity financing. Great Lakes has retained Wood Gundy, a leading Canadian investment banking firm, as its financial advisor. A syndicate led by Wood Gundy is being formed for a public offering of Great Lakes common shares to raise the required funds. Great Lakes intends to file a preliminary prospectus with the Canadian securities commissions. Hecla has committed to purchase $1.25 million (U.S.) of Great Lakes' shares in this proposed offering. "Much progress has been made in bringing the site toward production," said Arthur Brown, Hecla's chairman, president and chief executive officer. "Earthworks are under way, concrete for the mill foundation has been poured and the grinding mills are being installed." Start-up is scheduled for late 1994. Brown added that Hecla will remain the operator of the project. "This provides us with an excellent opportunity to enter the ranks of producing gold companies at a relatively low cost and low risk because of Hecla's experience as a senior operator," said John McBride, chairman and chief executive officer of Great Lakes. In addition to the purchase price, Hecla will receive a first right of refusal to joint venture the Great Lakes Minerals Lluvia de Oro gold project in Sonora, Mexico. Located 125 miles south of Tuscon, Ariz., Lluvia de Oro hosts an open-pittable, oxidized gold deposit which would be amenable to heap leaching. Field work will begin later this month. Hecla Mining Co. is headquartered in Coeur d'Alene. During its 102-year history, Hecla has been a leading U.S. producer of silver and lead, and more recently a significant supplier of gold and industrial minerals. Great Lakes Minerals Inc. is headquartered in Toronto. It is a mining exploration and development company active in the search for gold and base metals in North America. -0- 10/18/93 /CONTACT: April Robertson, director, Public Relations, of Hecla Mining, 208-769-4100; or Keri Downs, Corporate Relations, of Great Lakes Minerals, 416-864-0856/ (HL GKM.)
CO: Hecla Mining Co.; Great Lakes Minerals Inc.; Wood Gundy ST: Idaho, Ontario IN: MNG SU:
RB-IC -- SE014 -- 3652 10/18/93 18:52 EDT
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|Date:||Oct 18, 1993|
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