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Hecla Announces High-Grade, Near-Surface Resources at San Sebastian, Mexico

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Hecla Mining Company (NYSE:HL) announced that a very successful 2014 exploration drilling program with strong drill intersections has resulted in significantly increased resources at its San Sebastian property in Durango, Mexico. A 2015 exploration program has been designed to further advance the project and expand the resource.

Highlights

  • Total silver equivalent indicated resources increased 46% to 37.7 million ounces and inferred resources increased 18% to 34.9 million ounces, over 12/31/13 levels.1
  • Surface material to 100 meters depth (328 feet) contains silver equivalent indicated resources of 16.2 million ounces, at an average grade of 0.11 oz/ton gold and 11.3 oz/ton silver.
  • Near-surface mineralization appears amenable to cyanide leaching; additional testing underway.
  • The nearly six kilometers (3.7 miles) of mineralized strike length is still open along strike and at depth.
  • A Preliminary Economic Assessment (PEA) is underway with AMC Consultants and M3 Engineering and Technology Corp.

“This year’s discovery of the East Francine Vein, with indicated resources grading 81 oz/ton AgEq, when combined with the North and Middle Veins, provides San Sebastian with near-surface, high-quality resources,” said Phillips S. Baker, Jr., Hecla’s President and CEO. “We believe we are still in the early stages of discovery with most veins open along strike and at depth, and are focusing on further exploration and engineering to quickly return San Sebastian to production.”

(1) 2014 silver equivalent calculation based on the following prices: $1300/oz Au, $20/oz Ag, $0.95/lb Pb, $0.9/lb Zn, $3.0/lb Cu.

Resource

San Sebastian Property, Durango, Mexico – Resource Tabulation 12/31/2014

(Imperial units – rounded)

Indicated
Resources

Tons

Au Ag Pb Zn Cu AgEq Au Ag Pb Zn Cu AgEq
T opt opt

%

% % opt oz oz tons tons tons Oz
E. Francine 55,700 0.220 64.08 81.15 12,300 3,569,400 4,520,400
Middle Vein 783,100 0.061 13.11 17.70 47,600 10,263,800 13,860,500
North Vein 392,900 0.105 4.47 12.55 41,100 1,756,500 4,930,800
Andrea 692,600 0.083 1.30 7.79 57,500 901,000 5,396,400
Hugh Zone 492,700 0.025 6.79 2.96 3.85 1.70 18.34 12,500 3,347,600 14,570 18,980 8,400 9,036,400
Total Indicated 2,417,000 0.071 8.21 - - - 15.62 171,000 19,838,300 - - - 37,744,500

Inferred
Resources

Tons Au Ag Pb Zn Cu AgEq Au Ag Pb Zn Cu AgEq
T opt opt % % % opt oz oz tons tons tons Oz
E. Francine 75,900 0.198 18.55 34.03 15,000 1,408,700 2,583,400
Middle Vein 80,300 0.008 6.20

6.67

700 497,700 535,300
North Vein 108,500 0.093 4.18 11.40 10,100 453,900 1,236,500
Andrea 2,201,400 0.044 3.16 6.52 97,700 6,958,200 14,358,400
Hugh Zone 1,255,100 0.005 5.12 1.80 2.55 1.50 12.89 5,700 6,425,800 22,550 32,070 18,860 16,180,700
Total Inferred 3,721,200 0.035 4.23 - - - 9.38 129,200 15,744,300 - - - 34,894,300
  • Cut-off grades: Hugh Zone: $100 NSR; Andrea: $50 NSR; Middle Vein: $100 NSR; North Vein: $100 NSR; East Francine: $100 NSR
  • Resources reported at a minimum horizontal width of 2.0 meters for Hugh Zone and 1.5 meters for Andrea Vein, Middle Vein, and North Vein.
  • East Francine is reported at true vein width.
  • Tonnages rounded to nearest 100; contained metal in ounces (Au, Ag) rounded to nearest 100; contained metal in tons (Pb, Zn, Cu) rounded to nearest 10. Totals may not agree due to rounding.
  • 2014 silver equivalent calculation based on the following prices: $1300/oz Au, $20/oz Ag, $0.95/lb Pb, $0.9/lb Zn, $3.0/lb Cu
  • Ag Equivalent Factor calculated as follows (example for Au): [(($Price Au) – ($Refining Au)) / (($Price Ag) – ($Refining Ag))] x [(%Recovery Au) / (%Recovery Ag)] x [(%Payable Au) / (%Payable Ag)] = AgEq Factor. Equivalence factors are calculated for each metal based on this formula.

The East Francine Vein has an inaugural silver equivalent indicated resource of 4.5 million ounces at an average grade of 0.22 oz/ton gold and 64.1 oz/ton silver and inferred resource of 2.6 million ounces at an average grade of 0.20 oz/ton gold and 18.5 oz/ton silver. All of this resource is within 100 meters of surface.

The North Vein has an inaugural silver equivalent indicated resource of 4.9 million ounces at an average grade of 0.10 oz/ton gold and 4.5 oz/ton silver and inferred resource of 1.2 million ounces at an average grade of 0.09 oz/ton gold and 4.2 oz/ton silver. All of this resource is within 150 meters of surface.

The Middle Vein has a new silver equivalent indicated resource of 13.9 million ounces at an average grade of 0.06 oz/ton gold and 13.1 oz/ton silver and inferred resource of 0.5 million ounces at an average grade of 0.01 oz/ton gold and 6.2 oz/ton silver, an increase of 13% in indicated material and a nearly 5-fold increase in inferred material over 12/31/13 levels. Most of this resource is within 250 meters of surface.

Background

The San Sebastian property is located in the state of Durango in the heart of the Mexican silver belt and contains a series of precious and base metal-bearing epithermal veins. From 2001 to 2005, Hecla produced 545,476 tons of ore containing 177,541 ounces of gold and 11.6 Moz of silver from the Francine Vein with an average grade of 0.32 oz/ton gold and 22.5 oz/ton silver, making it one of the highest-grade producers in Mexico.

During 2004 and 2005, a deeper zone, known as the Hugh Zone, was discovered below the previously mined portion of the Francine Vein. This zone hosts a high-grade, polymetallic (silver-gold-copper-lead-zinc) resource which is vertically separated by a barren zone from the near-surface precious metal-rich Francine. During 2011 and 2012, a precious metal-rich resource was defined at the Andrea Vein, and during 2012 and 2013 a resource was defined at the Middle Vein. In 2014 additional drilling was completed at the Middle Vein, but most drilling was concentrated on the newly defined East Francine and North Veins.

Drilling Program Update

The focus of drilling over the past 18 months has been near-surface targets at the Middle and North Veins and the newly discovered East Francine Vein. The three veins are parallel and located about 140 meters (460 feet) apart from each other, although due to the flattening of the veins near surface, the Middle and North Veins overlap in places. Please refer to the attached plan view map.

The newly discovered East Francine Vein is the faulted extension of the past-producing, high-grade Francine Vein. The East Francine Vein has been intersected by 38 holes and varies in thickness from 0.5 to 7.5 meters (1.5 to 24.5 feet) and is currently traced for 350 meters (1,200 feet) along strike and to 110 meters (360 feet) of depth. The vein mainly consists of oxide mineralization, and drilling has intersected some of the highest-grade intervals in the last decade at Hecla. Hecla announced some spectacular intersections in the drilling during the third quarter (see Hecla press release dated September 11, 2014). The strong intersections continue in the latest drilling, including 1.54 oz/ton gold and 288.6 oz/ton silver over 10.5 feet, 0.30 oz/ton gold and 17.3 oz/ton silver over 13.4 feet, and 0.56 oz/ton gold and 9.8 oz/ton silver over 5.2 feet. In 2015, the East Francine Vein will be one of the primary exploration targets as the vein is open along strike and at depth. Drill intersections are summarized in Table A at the end of this release.

The North Vein has been intersected by 184 holes, defining a mineralized trend that extends over 1,025 meters (3,360 feet) along strike and 183 meters (600 feet) to depth and remains open along strike in both directions and at depth. North Vein mineralization is typically gold dominant with lesser silver. Recent drilling resulted in several wide and high-grade intercepts including 0.39 oz/ton gold and 4.9 oz/ton silver over 7.8 feet, and 0.40 oz/ton gold and 4.2 oz/ton silver over 7.8 feet. The near-surface portion of the North Vein contains mineralization that may be suitable to open pit mining. Drill intersections are summarized in Table A at the end of this release.

The Middle Vein has been intersected by 197 holes and 38 surface trenches and can be traced for nearly two kilometers (6,560 feet) along strike and to a depth of over 300 meters (984 feet). The upper portion of the Middle Vein contains near-surface, high-grade mineralization that may be suitable to open pit mining. Drill results in the second and third quarters were very impressive and included assay intervals such as 0.40 oz/ton gold and 84.1 oz/ton silver over 9.5 feet, 0.43 oz/ton gold and 79.1 oz/ton silver over 7.4 feet, and 0.32 oz/ton gold and 31.9 oz/ton silver over 14.5 feet (see Hecla releases dated July 31 and September 11, 2014).

Building on the success of this program, the 2015 San Sebastian exploration budget is $3.0 million, and will utilize two or three drills over the year with the goal of expanding the North Vein near-surface resource further to the northwest and southeast and defining a new resource on the southeast extension of the East Francine Vein. A number of parallel veins have been defined by RAB (Rotary Air Blast) drilling and trenching and will be evaluated this year.

Preliminary Economic Assessment (PEA)

A PEA level study of mining options is underway by AMC Consultants of Vancouver, BC. This study is looking into various combinations of shallow open pits and underground mining. In addition, M3 Engineering and Technology Corp. of Tucson, Arizona is reviewing metallurgical options for the project. The Company anticipates completion of the PEA by the second quarter earnings release date.

Table A – Drilling Intersections

ALL Q4 2014 NORTH VEIN INTERCEPTS
QUARTER

DRILL
HOLE

FROM
(m)

TO
(m)

DRILLED
WIDTH (m)

TRUE
WIDTH
(m)

Au
(ppm)

Ag
(ppm)

DRILLED
WIDTH (ft)

TRUE
WIDTH
(ft)

Au
(opt)

Ag
(opt)

AgEq
(opt)

Q4 2014 SS-609 43.36 43.90 0.54 0.47 0.04 1.1 1.8 1.5 0.001 0.03 0.1
SS-612 41.70 43.00 1.30 1.17 10.72 146.8 4.3 3.8 0.313 4.28 24.6
SS-613 32.37 36.00 3.63 3.63 0.07 1.6 11.9 11.9 0.002 0.05 0.2
SS-615 35.77 38.77 3.00 2.91 3.68 106.9 9.8 9.6 0.107 3.12 10.1
SS-617 38.83 40.49 1.66 1.42 0.04 0.5 5.4 4.7 0.001 0.01 0.1
SS-622 96.94 100.44 3.50 3.49 0.71 313.6 11.5 11.5 0.021 9.15 10.5
SS-627 73.94 76.94 3.00 2.99 1.26 88.9 9.8 9.8 0.037 2.59 5.0
SS-629 98.21 100.09 1.88 1.85 0.15 9.7 6.2 6.1 0.004 0.28 0.6
SS-630 99.95 100.90 0.95 0.83 0.08 28.5 3.1 2.7 0.002 0.83 1.0
SS-633 96.63 100.17 3.54 3.33 0.35 108.3 11.6 10.9 0.010 3.16 3.8
SS-634 24.00 25.10 1.10 0.83 0.43 5.7 3.6 2.7 0.013 0.17 1.0
SS-635 22.85 23.42 0.57 0.50 16.30 612.0 1.9 1.7 0.475 17.85 48.8
SS-638 29.48 30.39 0.91 0.86 18.77 142.6 3.0 2.8 0.547 4.16 39.7
SS-640 36.80 42.70 5.90 5.86 0.52 16.7 19.4 19.2 0.015 0.49 1.5
SS-641 24.95 27.76 2.81 2.38 13.74 143.6 9.2 7.8 0.401 4.19 30.2
SS-642 55.74 56.63 0.89 0.89 1.62 131.0 2.9 2.9 0.047 3.82 6.9
SS-643 33.25 36.72 3.47 3.03 0.41 11.9 11.4 10.0 0.012 0.35 1.1
SS-644 52.93 57.06 4.13 4.05 0.44 80.3 13.5 13.3 0.013 2.34 3.2
SS-645 21.75 24.21 2.46 2.46 2.71 90.3 8.1 8.1 0.079 2.63 7.8
SS-646 34.10 36.73 2.63 2.60 1.74 140.8 8.6 8.5 0.051 4.11 7.4
SS-647 44.81 46.11 1.30 1.13 0.03 2.7 4.3 3.7 0.001 0.08 0.1
SS-648 60.06 65.77 5.71 5.71 1.61 105.7 18.7 18.7 0.047 3.08 6.1
SS-649 86.90 88.52 1.62 1.58 0.14 31.9 5.3 5.2 0.004 0.93 1.2
SS-650 90.25 91.50 1.25 1.24 0.13 43.4 4.1 4.1 0.004 1.26 1.5
SS-651 38.54 42.15 3.61 3.58 0.16 24.0 11.8 11.8 0.005 0.70 1.0
SS-652 35.65 38.30 2.65 2.57 0.08 1.3 8.7 8.4 0.002 0.04 0.2
SS-653 43.03 46.28 3.25 3.25 0.67 87.5 10.7 10.7 0.020 2.55 3.8
SS-654 133.63 135.52 1.89 1.38 0.09 12.5 6.2 4.5 0.003 0.37 0.5
SS-656 28.30 31.81 3.51 3.23 0.79 112.0 11.5 10.6 0.023 3.27 4.8
SS-658 151.02 151.72 0.70 0.62 0.77 171.0 2.3 2.0 0.022 4.99 6.4
SS-659 20.77 21.88 1.11 1.10 0.11 9.3 3.6 3.6 0.003 0.27 0.5
SS-662 36.85 37.85 1.00 0.98 2.71 110.0 3.3 3.2 0.079 3.21 8.3
SS-664 23.30 25.10 1.80 1.75 1.34 25.0 5.9 5.7 0.039 0.73 3.3
SS-669 47.38 51.90 4.52 4.51 0.45 25.4 14.8 14.8 0.013 0.74 1.6
SS-672 19.85 21.05 1.20 1.08 0.07 2.0 3.9 3.5 0.002 0.06 0.2
SS-673 10.93 11.82 0.89 0.89 0.23 15.8 2.9 2.9 0.007 0.46 0.9
SS-675 22.26 24.74 2.48 2.38 13.39 168.2 8.1 7.8 0.391 4.90 30.3
SS-677 35.73 36.55 0.82 0.77 0.03 2.5 2.7 2.5 0.001 0.07 0.1
SS-678 37.05 37.47 0.42 0.40 0.16 0.9 1.4 1.3 0.005 0.03 0.3
SS-681 11.15 11.55 0.40 0.40 0.02 0.2 1.3 1.3 0.001 0.01 0.0
SS-682 16.42 17.24 0.82 0.74 0.01 0.1 2.7 2.4 0.000 0.00 0.0
SS-683 16.47 17.12 0.65 0.60 0.04 0.3 2.1 2.0 0.001 0.01 0.1
SS-684 81.63 83.92 2.29 2.29 0.82 140.5 7.5 7.5 0.024 4.10 5.7
SS-686 107.59 107.84 0.25 0.25 0.19 16.6 0.8 0.8 0.006 0.48 0.8
SS-689 90.37 92.92 2.55 2.50 0.29 5.6 8.4 8.2 0.008 0.16 0.7
SS-691 112.98 117.20 4.22 3.50 0.05 13.1 13.8 11.5 0.001 0.38 0.5
SS-692 59.20 61.22 2.02 2.00 8.76 34.5 6.6 6.6 0.256 1.01 17.6
SS-693 44.90 45.12 0.22 0.21 5.24 149.0 0.7 0.7 0.153 4.35 14.3
SS-701 86.80 87.01 0.21 0.21 0.15 6.3 0.7 0.7 0.004 0.18 0.5
SS-703 97.06 97.58 0.52 0.52 0.29 42.1 1.7 1.7 0.008 1.23 1.8
ALL Q4 2014 EAST FRANCINE VEIN INTERCEPTS
QUARTER

DRILL
HOLE

FROM
(m)

TO
(m)

DRILLED
WIDTH (m)

TRUE
WIDTH
(m)

Au
(ppm)

Ag
(ppm)

DRILLED
WIDTH (ft)

TRUE
WIDTH
(ft)

Au
(opt)

Ag
(opt)

AgEq
(opt)

SS-616 15.76 19.10 3.34 3.21 52.79 9,896.0 11.0 10.5 1.540 288.64 388.7
SS-623 36.24 40.82 4.58 4.54 4.48 139.3 15.0 14.9 0.131 4.06 12.6
SS-624 34.88 36.11 1.23 1.09 0.18 14.6 4.0 3.6 0.005 0.43 0.8
SS-626 61.47 65.53 4.06 4.04 0.33 35.2 13.3 13.3 0.010 1.03 1.7
SS-628 67.51 68.91 1.40 1.36 0.30 49.1 4.6 4.5 0.009 1.43 2.0
SS-631 59.82 63.26 3.44 3.35 0.37 52.0 11.3 11.0 0.011 1.52 2.2
SS-632 61.85 62.25 0.40 0.39 0.07 72.1 1.3 1.3 0.002 2.10 2.2
SS-636 9.15 11.19 2.04 1.96 7.52 635.6 6.7 6.4 0.219 18.54 32.8
SS-637 10.34 15.68 5.34 5.13 4.74 86.6 17.5 16.8 0.138 2.53 11.5
SS-639 35.44 35.82 0.38 0.34 0.09 1.9 1.2 1.1 0.003 0.06 0.2
SS-655 71.32 73.96 2.64 2.57 0.66 45.4 8.7 8.4 0.019 1.32 2.6
SS-657 71.61 71.96 0.35 0.32 0.04 22.7 1.1 1.0 0.001 0.66 0.7
SS-660 27.62 33.37 5.75 5.64 0.33 62.1 18.9 18.5 0.010 1.81 2.4
SS-661 79.67 87.22 7.55 6.95 0.17 63.1 24.8 22.8 0.005 1.84 2.2
SS-663 21.68 24.30 2.62 2.62 0.30 26.1 8.6 8.6 0.009 0.76 1.3
SS-665 9.55 11.58 2.03 1.93 0.19 47.5 6.7 6.3 0.006 1.39 1.7
SS-667 12.32 19.24 6.92 6.54 0.08 16.4 22.7 21.5 0.002 0.48 0.6
SS-671 24.40 30.94 6.54 6.53 0.19 35.7 21.5 21.4 0.006 1.04 1.4
SS-674 66.85 70.26 3.41 3.35 0.17 12.0 11.2 11.0 0.005 0.35 0.7
SS-676 49.56 51.20 1.64 1.59 19.33 335.2 5.4 5.2 0.564 9.78 46.4
SS-679 40.04 41.40 1.36 1.29 4.47 221.2 4.5 4.2 0.130 6.45 14.9
SS-680 78.64 84.59 5.95 5.72 0.12 26.3 19.5 18.8 0.004 0.77 1.0
SS-685 60.20 63.36 3.16 3.14 0.12 30.0 10.4 10.3 0.004 0.88 1.1
SS-688 60.19 61.46 1.27 1.24 0.20 0.7 4.2 4.1 0.006 0.02 0.4
SS-690 88.55 92.37 3.82 3.78 0.79 114.6 12.5 12.4 0.023 3.34 4.8
SS-694 29.21 33.05 3.84 3.74 0.37 45.7 12.6 12.3 0.011 1.33 2.0
SS-695 6.74 12.06 5.32 5.28 2.02 210.1 17.5 17.3 0.059 6.13 10.0
SS-696 2.89 3.80 0.91 0.91 0.01 1.1 3.0 3.0 0.000 0.03 0.1
SS-697 7.32 11.40 4.08 4.07 10.30 593.7 13.4 13.4 0.300 17.32 36.8
SS-700 39.17 42.14 2.97 2.93 1.47 41.3 9.7 9.6 0.043 1.20 4.0
SS-702 97.88 99.88 2.00 1.83 0.53 15.4 6.6 6.0 0.015 0.45 1.5
SS-704 28.70 29.15 0.45 0.43 0.07 0.5 1.5 1.4 0.002 0.01 0.1
SS-705 8.00 9.97 1.97 1.97 2.36 277.3 6.5 6.5 0.069 8.09 12.6

About Hecla

Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska and Idaho, and is a growing gold producer with an operating mine in Quebec, Canada. The Company also has exploration and pre-development properties in five world-class silver and gold mining districts in the U.S., Canada, and Mexico, and an exploration office and investments in early-stage silver exploration projects in Canada.

Qualified Person (QP) Pursuant to Canadian National Instrument 43-101

Dean McDonald, PhD. P.Geo., Senior Vice President – Exploration of Hecla Mining Company, who serves as a Qualified Person under National Instrument 43-101 (“NI 43-101″), supervised the preparation of the scientific and technical information concerning Hecla’s mineral projects in this news release.

Cautionary Note Regarding Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian securities laws. Such forward-looking statements may include, without limitation: (i) expectations regarding the development, growth and exploration potential of the Company’s San Sebastian project; (ii) the possibility for open pit mining in the future at San Sebastian, including at the North and Middle Veins; (iii) the expectation that the 2015 exploration program will further advance the San Sebastian project or expand its resources; (iv) the possibility that San Sebastian will return to production; (v) the possibility of a preliminary economic assessment being completed by the early third quarter of 2015; and (vi) the possibility of San Sebastian generating a significant return for Hecla shareholders. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political/regulatory developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain price assumptions for gold, silver, lead and zinc; (v) prices for key supplies being approximately consistent with current levels; (vi) the accuracy of our current mineral reserve and mineral resource estimates; and (vii) the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements.” Such risks include, but are not limited to gold, silver and other metals price volatility, operating risks, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, community relations, conflict resolution and outcome of projects or oppositions, litigation, political, regulatory, labor and environmental risks, and exploration risks and results, including that mineral resources are not mineral reserves, they do not have demonstrated economic viability and there is no certainty that they can be upgraded to mineral reserves through continued exploration. For a more detailed discussion of such risks and other factors, see the Company’s 2013 Form 10-K, filed on February 19, 2014 with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.

Cautionary Statements to Investors on Reserves and Resources

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 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 being included here 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 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, 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 “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.

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