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BW2133 JUN 10,2002 5:05 PACIFIC 08:05 EASTERN
( BW)(GREAT-BASIN-GOLD/HECLA)(GBGLF)(GBG.CX)(HL) Hecla and Great Basin
to Develop Ivanhoe High-Grade Gold Property on Carlin Trend
Business Editors
VANCOUVER, British Columbia--(BUSINESS WIRE)--June 10, 2002--Mr.
Arthur Brown, Chairman and CEO of Hecla Mining Company ("Hecla")
(NYSE:HL) (NYSE:HL.PRB) and Ronald W. Thiessen, President of Great
Basin Gold Ltd. ("Great Basin") (TSX Venture:GBG) (OTCBB:GBGLF) are
pleased to announce that the companies have entered into an Agreement
concerning exploration, development and production on Great Basin's
Ivanhoe high-grade gold property. Ivanhoe is located on the famous
Carlin Trend of Nevada, one of the world's premier gold mining
districts and host to some of the world's largest and most profitable
gold mines and gold companies. Gold production from the Carlin Trend
totals more than 32 million ounces.
The Ivanhoe property ranks among the largest contiguous mineral
properties on the Trend, and is located between the high-grade
underground Midas gold mine owned by Newmont Mining to the north, and
Barrick Gold's rich Meikle underground operation and giant open pit
gold mines, including Barrick's Goldstrike and Newmont's Carlin
operations, to the south.
One million high-grade gold equivalent ounces have already been
outlined at Ivanhoe by Great Basin at the Clementine, Gwenivere and
South Gwenivere gold-silver vein systems. This is within an inferred
mineral resource of 719,000 tons grading 1.29 oz gold/ton and 7.0 oz
silver/ton, as audited by Behre Dolbear & Company, Ltd. The known
mineralization has been delineated at the relatively shallow depth of
500 to 1500 feet from surface and this mineralization is open to
depth. In addition, there are excellent prospects for the discovery of
numerous additional vein structures hosting high-grade gold
mineralization. Hecla and Great Basin believe that there is
outstanding potential to build substantial further high-grade gold
resources. Commercial production is projected at Ivanhoe to be
approximately 180,000 ounces of gold and 920,000 ounces of silver
annually, at a cash cost of US$114 per ounce of gold equivalent. Due
to the nearby location of several competing processing plants and the
relatively easy access to develop the high-grade veins the projected
capital cost is forecast at a uniquely low US$22 million.
The Clementine-Gwenivere veins systems lie within an area called
the Hollister Development Block ("the Development Block"), which is
the subject of the Great Basin-Hecla Agreement. The Agreement provides
Hecla with an option to earn a 50% working interest in the Development
Block in return for funding a US$21.8 million, two-stage, advanced
exploration and development program leading to commercial production.
Hecla, which has an established track record of being one of the most
efficient underground miners in the world, will operate the
exploration and development programs. The Stage 1 program consists of
underground development to access the eastern extremities of the
high-grade gold veins identified to date, and underground drilling
leading to the establishment of mineral reserves and completion of a
feasibility study. Estimated costs for the completion of Stage 1 are
US$10.3 million. Stage 2 consists of pre-production underground
development leading to commercial operations from the Gwenivere and
Clementine high-grade gold veins and is estimated to cost US$11.5
million. Upon earn-in, Hecla will also operate the mine.
Hecla will vest with a 50% interest in the Development Block after
it completes the two stages of exploration and development, commences
commercial production and issues share purchase warrants as described
below. In the event that the results of the feasibility study
recommend a larger scale project, Hecla can vest its 50% working
interest by paying the amount of the Stage 2 costs (US$11.5 million)
into the Joint Venture to fund development capital and the parties
will proceed on a 50/50 basis.
Under the terms of the Agreement, Hecla will immediately initiate
work that includes engineering and permitting. Upon receipt of the
appropriate permits, Hecla will continue with the Stage 1 expenditures
and complete the program within 12 months. Hecla will indicate its
intention of proceeding to Stage 2 within 45 days of the completion of
Stage 1, and then complete the Stage 2 program within the following 12
months.
In addition to the foregoing, Hecla will pay to Great Basin from
Hecla's share of commercial production a sliding scale Purchase Price
Royalty that is dependent on the cash operating profit per ounce of
gold equivalent production. At current gold prices and the estimated
cost of commercial production, this would amount to US$50 per ounce of
gold production attributable to Hecla. However, this Purchase Price
Royalty will not be payable until Hecla has received back its capital
expenditures for Stage 1 and 2 of the program, plus 15%, from 100% of
pre-production revenues and its 50% share of commercial production.
From recently completed economic assessments, and taking into account
expected pre-production revenues, it is estimated that recovery of the
Stage 1 and 2 program costs plus 15% would occur within 9 months of
commercial production.
The arrangement is subject to signing a definitive agreement
within 45 days. Upon signing the definitive agreement, Great Basin and
Hecla have each agreed to issue a series of warrants to purchase
shares of the other company, at prevailing market prices at the time
of their issuance. Accordingly, Hecla will issue 2 million share
purchase warrants to Great Basin and Great Basin will issue to Hecla 1
million share purchase warrants. Hecla will issue an additional 1
million share purchase warrants to Great Basin upon completion of
Stage 1 and 1 million warrants on completion of Stage 2. Great Basin
will issue 500,000 share purchase warrants to Hecla immediately
following each Hecla issuance.
Hecla's Mr. Brown said, "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. We are looking
forward to working with the Great Basin team, who have proven to be
very successful explorationists."
Great Basin's Mr. Thiessen states, "This Agreement with Hecla is
the start of a period of very exciting exploration, development and
production activity at Ivanhoe. We are very pleased that the Project
attracted one of America's most recognized mining companies for
efficiency in underground mining operations. Great Basin is excited to
work with Hecla to develop one of the world's premier gold mines; the
project has all the ingredients for success; location, grade,
management and gold, the metal of choice."
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines
and processes silver and gold in the United States, Venezuela and
Mexico. A 111-year-old company, Hecla has long been well known in the
mining world and financial markets as a primary silver producer.
Hecla's common and preferred shares are traded on the New York Stock
Exchange under the symbols HL and HL-PrB.
Statements made which are not historical facts, such as
anticipated payments, production, sales of assets, exploration results
and plans, costs, prices or sales performance are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, and involve a number of risks and uncertainties
that could cause actual results to differ materially from those
projected, anticipated, expected or implied. These risks and
uncertainties include, but are not limited to, metals price
volatility, volatility of metals production, project development risks
and ability to raise financing. Refer to the company's Form 10-Q and
10-K reports for a more detailed discussion of factors that may impact
expected future results. The company undertakes no obligation and has
no intention of updating forward-looking statements.
--30--AS/na*
CONTACT: Great Basin Gold Ltd.
604/684-6365 or Toll Free, 800/667-2114
Website: www.hdgold.com
or
Hecla Mining Company
Investor Relations, 208/769-4144
Website: www.hecla-mining.com |
