Excellon Resources Inc. said Feb. 26 that it signed an agreement that will allow toll milling of sulfide ore from Hecla Mining Co.'s San Sebastian silver mine in Mexico at the processing facility at Excellon's Miguel Auza silver project.
The processing facility is 42 kilometers from the San Sebastian mine, and the five-year agreement will officially start in 2019 after a bulk sample program in the third quarter of this year. Hecla will have an option to extend the arrangement for an additional two years.
Under the bulk sample and initial period of the deal, the Miguel Auza facility will produce a copper-lead concentrate and a zinc concentrate from San Sebastian ore. The formal milling arrangement will see the installation of a dedicated copper flotation circuit at the facility for producing copper, lead and zinc concentrates.
According to Excellon, Miguel Auza's milling facility has a capacity of 800 tonnes per day. The companies are reviewing the facility's existing flotation capacity, but Excellon expects the current setup to be sufficient for the bulk sample program, with any upgrades needed for the initial period to be of marginal cost.
Planning is also underway for the copper circuit upgrade required for the formal milling arrangement, under which 400 tonnes per day, or 12,000 tonnes per month, are expected to be processed. The arrangement remains subject to due diligence, a successful bulk sample program and certain approvals.
Excellon expects the deal to increase its cash flow and reduce milling costs for production at its Platosa silver mine, also processed through the Miguel Auza facility. Hecla said it sees the arrangement as an important step in extending the life of its San Sebastian mine.