澳门澳门贵宾厅’s 100%-owned and operated Greens Creek mine in southeast Alaska is one of the largest and lowest-cost primary silver mines in the world, and is the cash generating engine of the 澳门澳门贵宾厅. Last year, Greens Creek produced 9.9 million ounces of silver at a cash cost, after by-product credits, per silver ounce of $1.97 (a non GAAP measure), and 56,625 ounces of gold (1). Production in 2020 is expected to be 8.9 – 9.3 million silver ounces at a cash cost, after by-product credits, of $4.25 – $5.00 an ounce (1).
(1) Cash cost, after of by-product credits, per silver ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the legal page of this website.
澳门澳门贵宾厅’s various subsidiaries own 100% of the Greens Creek mine located in Southeast Alaska. The Greens Creek orebody contains silver, zinc, gold and lead, and lies within the Admiralty Island National Monument, an environmentally sensitive area. The Greens Creek property includes 17 patented lode claims and one patented mill site claim, in addition to property leased from the U.S. Forest Service. Greens Creek also has title to mineral rights on approximately 7,500 acres of federal land adjacent to the properties. Total property package encompasses 23-square miles. The entire project is accessed by boat and served by 13 miles of road, and consists of the mine, an ore concentrating mill, a dry stacked tailings facility, a ship-loading facility, camp facilities, and a ferry dock.
The Greens Creek deposit is a polymetallic, stratiform, massive sulfide deposit. The host rock consists of predominantly marine sedimentary, and mafic to ultramafic volcanic and plutonic rocks, which have been subjected to multiple periods of deformation. These deformational episodes have imposed multiple folding of the orebodies to create a complex geometry. Mineralization occurs discontinuously along the contact between a structural hanging wall of quartz mica carbonate phyllites, and a structural footwall of graphitic and calcareous argillite.
Ore lithologies fall into two broad groups: massive ores with over 50% sulfides and white ores with less than 50% sulfides. The massive ores are further subdivided as either being base-metal or pyrite dominant. Massive ores vary greatly in precious-metal grade from uneconomic to bonanza Au (>.5 opt) and Ag (>100 opt). White ores are subdivided into three groups by the dominant gangue mineralogy; white carbonate, white siliceous, and white baritic ore. These ores tend to be base-metal poor and precious-metal rich. Major sulfide minerals are pyrite, sphalerite, galena, and tetrahedrite/tennanite.
Greens Creek is an underground mine which produces approximately 2,100 to 2,300 tons of ore per day. The primary mining methods are cut and fill and longhole stoping.
The Greens Creek unit has historically been powered completely by diesel generators located on site. However, an agreement was reached during 2005 to purchase excess hydroelectric power from the local power company, Alaska Electric Light and Power 澳门澳门贵宾厅 (“AEL&P”). Installation of the necessary infrastructure was completed in 2006, and use of hydroelectric power commenced during the third quarter of 2006. This project has reduced production costs at Greens Creek to the extent power has been available. Low lake levels and increased demand in the Juneau area combined to restrict the amount of power available to Greens Creek prior to 2009. In 2009 and 2010, the mine received an increased proportion of its power needs from AEL&P. Hydroelectric power was also available during 2011, but to a lesser extent compared to the previous two years due to lower precipitation. During 2012, the mine again received an increased proportion of its power needs from AEL&P. When weather conditions are not favorable to maintain lake water levels, the mine relies on diesel-generated power. In the past three years, most of the power has come from AEL&P.
There are three main phases to the mining process: development, production, and backfilling.
Development – the tunneling or accessing phase
Using plans from the geology and engineering departments, miners drive tunnels 15ft high by 15ft wide to access the various ore zones to be mined.
Production – the extraction phase
The method of extraction depends upon the geological nature of the orebody involved. Some of the smaller, more contorted orebodies are extracted using the same tunneling procedure as the development phase. In other more massive orebodies, larger scale extraction methods are used, sometimes producing voids of up to 150ft long, 25ft wide and 120ft deep.
Backfilling – the replacement phase
The voids created during the production phase are filled up with a combination of mill waste (tailings) and cement. This “backfilling” process stabilizes the production voids and allows extraction of the ore beside, above, and even below the backfilled area.
|(years ended December 31)|
|Cash cost per ounce of silver, after by-product credits, ($/oz) (1)||$3.91||$3.84||$0.71||$(1.13)||$1.97|
- (footnotes)(1) Cash cost, after by-product credits, per silver or gold ounce is a non-GAAP measurement. A reconciliation of cash cost, after by-product credits, per silver or gold ounce to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the legal page of this website.
The mine holds current proven and probable silver reserves of 130.9 million ounces, 932,000 ounces of proven and probable gold reserves, as well as 305,190 tons of lead and 778,410 tons of zinc in proven and probable reserves.
There are an additional 101.1 million ounces of silver measured and indicated resource and 25.4 million ounces of silver inferred resources. Measured and indicated gold resources measure 835,000 ounces and inferred gold resources measured 159,000 ounces.
Drilling efforts have replaced production and added new reserves. Exploration efforts are ongoing along the trend of numerous orebodies underground and aggressively exploring the highly prospective 23-square-mile land package on surface.
Information with respect to proven and probable ore reserves, measured, and inferred resources is set forth below, and represents our 100% ownership of Greens Creek after April 16, 2008.
|(As of December 31, 2019 unless otherwise noted)|
|(000)||(oz/ton)||(oz/ton)||(%)||(%)||(000 oz)||(000 oz)||(Tons)||(Tons)|
|Proven Reserves (1,2)||7||14.8||0.08||2.6||5.4||106||1||180||390|
|Probable Reserves (1,2)||10,713||12.2||0.09||2.8||7.3||130,791||932||305,010||778,020|
|Proven and Probable Reserves||10,721||12.2||0.09||2.8||7.3||130,897||932||305,190||778,410|
|Measured Resources (3)||76||12.5||0.09||2.6||9.4||949||7||2,000||7,140|
|Indicated Resources (3)||8,569||11.7||0.10||2.8||8.1||100,187||828||242,010||691,750|
|Inferred Resources (3)||1,848||13.7||0.09||3.1||7.4||1,848||13.7||0.09||3.1|
- (footnotes)Note: All estimates are in-situ except for the proven reserve at Greens Creek which is in a surface stockpile. Resources are exclusive of reserves. Totals may not represent the sum of parts due to rounding.
(1) 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, 澳门澳门贵宾厅 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 澳门澳门贵宾厅’s current mine plans.
(2) Mineral reserves are based on $1,300 gold, $14.50 silver, $0.90 lead, $1.15 zinc, unless otherwise stated. The NSR cut-off grades are $190/ton for Greens Creek.
(3) Mineral resources are based on $1,500 gold, $21.00 silver, $1.15 lead, $1.35 zinc and $3.00 copper, unless otherwise stated. Cut-off grades are as above unless otherwise stated.
Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in 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). However, the 澳门澳门贵宾厅 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 being included here to satisfy the 澳门澳门贵宾厅’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 and the requirements in Canada under NI 43-101 standards are substantially different. This website contains a summary of certain estimates of the 澳门澳门贵宾厅, not only of proven and probable reserves within the meaning of Guide 7, which requires the preparation of a “final” or “bankable” feasibility study demonstrating the economic feasibility of mining and processing the mineralization using the three-year historical average price for any reserve or cash flow analysis to designate reserves and that the primary environmental analysis or report be filed with the appropriate governmental authority, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. The terms “measured resources”, “indicated resources,” and “inferred resources” are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are 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.
At Greens Creek, the 846,076 tons processed at the mill in 2019 contained 12.4 million ounces of silver, 81,223 ounces of gold, 62,863 tons of zinc, and 24,704 tons of lead. Silver, gold and base metal production was replaced, and silver, gold, zinc, and lead reserves increased by 22%, 11%, 10%, and 16%, respectively, over 2018 reserves. The current proven and probable silver and gold reserves are the highest total reserve since 2001.
The current mine plan accesses higher-grade ore in the earlier years of the mine plan from existing workings which reduces the required development investment. In addition, the mine life from only reserves is expected to be to 2031.
At Greens Creek, strong definition drilling assay results received in the fourth quarter have upgraded and expanded the East Ore and 200 South zone resources. In the East Ore Zone, intersections at the north end of the zone, including 56.6 oz/ton silver, 0.13 oz/ton gold, 4.5% zinc and 1.5% lead over 4.3 feet, confirm previously modeled Inferred resource estimates along 150 feet of strike length. In the 200 South Zone, drilling intersections at the northern end of the 200 South Bench over 200 feet of strike length include 16.8 oz/ton silver, 0.24 oz/ton gold, 12.7% zinc and 6.1% lead over 22.4 feet. The focus of the first quarter of 2020 is to further define the East Ore and 200 South zones.
Exploration drilling in the fourth quarter focused on the 200 South Zone and expanded upper bench mineralization 350 feet and lower contact mineralization 800 feet down plunge from the current resource model. Recent intersections from the upper bench mineralization includes 11.5 oz/ton silver, 0.06 oz/ton gold, 6.6% zinc and 3.6% lead over 15.3 feet and 50.5 oz/ton silver, 0.05 oz/ton gold, 1.5% zinc and 0.7 lead over 12.0 feet. Recent intersections from the lower contact mineralization include 4.5 oz/ton silver, 0.05 oz/ton gold, 7.7% zinc and 3.6% lead over 4.0 feet. Drilling in 2020 is planned to continue defining the East, 9A, West, Upper Plate and 200S zones and explore down-plunge of the Gallagher Zone.
Greens Creek is exploring a number of areas on the 23-square-mile land package which could potentially lead to additional reserves and resources, further extending the mine life or even leading us to find another deposit like Greens Creek. There are over 30 miles of mine horizon where mineralization has been identified and projected along surface on our property.