The agreement, which begins next year following a 4,000t bulk sample testing programme at Miguel Auza during the September quarter of this year, will see milled tonnage of about 400t per day (12,000t monthly) under its terms.

There is an option to extend the deal for an additional two years.

The mine’s ore will travel about 42km, or 26mi, to the milling plant, which will be upgraded to a copper flotation circuit in the future. The milling facility currently has a capacity of 800t/d, with a 650t/d ball mill in operation and a second, 150t/d ball mill on standby.

Excellon president and CEO Brendan Cahill said the deal reaps both logistical and financial benefits.

“This arrangement provides opportunities for additional operating cash flow to the company and lower milling cost per tonne and all-in sustaining cost from Platosa,” he said. “Our milling facility's exceptional scalability has made this opportunity possible, with ample capacity remaining to process increased Platosa production and potential new discoveries at either Platosa or Miguel Auza.”

Hecla president and CEO Phillips Baker Jr called the new arrangement a significant step forward in extending the life of the San Sebastian mine.

“We will take a bulk sample in the third quarter, and if it is positive, could begin mining sulphide ore next year,” he said. “San Sebastian sulphides have the potential for five years of mine life and considerable upside with our recent exploration discoveries. Excellon’s Miguel Auza facility is well located for our purposes and expected to be well suited to process our sulphide ore going forward.”