1
[HECLA LOGO] Exhibit 13.1
HECLA REPORTS THIRD QUARTER FINANCIAL RESULTS
For the Period Ended September 30, 1995
For release: November 10, 1995
COEUR D'ALENE, IDAHO -- Hecla Mining Company (HL & HL-PrB:NYSE)
today reported a net loss for the third quarter of 1995 of $104.7 million,
or $2.17 per share. The third quarter loss includes a nonrecurring asset
write-down of $97 million associated with the Grouse Creek gold mine in
central Idaho. The loss also includes $5.1 million in accruals and write-
downs for environmental remediation at other properties and certain common
stock investments. Before write-downs and accruals, the company had a loss
for the third quarter of $2.6 million, or 5 cents per share, on revenue of
$45.4 million after a $2 million quarterly dividend payment to preferred
shareholders. Third quarter results also include a $3.2 million gain on
the sale of the Apex processing facility in southern Utah. For the first
nine months of the year, Hecla showed a net loss applicable to common
shareholders of $109 million, or $2.26 per common share, on revenue of
$125.6 million.
GROUSE CREEK UNIT
As reported on October 25, mining operations at Grouse Creek have
encountered significant shortfalls of both ore tonnage and gold grade.
Hecla is currently reevaluating the ore body and developing a revised mine
plan to optimize the project. The new ore reserve estimate and mine plan
will be completed in the first quarter of 1996. However, current
information indicates the Grouse Creek Unit will not return its investment
to Hecla due to significantly shorter mine life and fewer ounces recovered
at current metals prices. Based on this information, and applicable
accounting guidelines, Hecla's Board of Directors today determined to write
down the entire $97 million carrying value of the company's 80% interest in
the Grouse Creek Unit.
Hecla's Chief Executive Officer, Arthur Brown, said, "We will make
every attempt to keep the Grouse Creek Unit operating. We intend to cut
costs and capital expenditures, and are now looking at the most efficient
way to mine the remaining ore. On the positive side, cash costs have come
down below $300 per ounce, the mill is operating above design capacity and
Grouse Creek was recently singled out to receive two important
environmental awards by the state of Idaho. Our people have done a good
job on-site at Grouse Creek, both in terms of operating efficiency and
environmental stewardship."
OTHER OPERATIONS
Hecla's La Choya gold mine in Mexico performed above expectations
in the third quarter, producing nearly 22,000 ounces of gold at a cash cost
of $187 per ounce. The industrial minerals division had record sales in
the first nine months of 1995 of nearly $58 million, generating
$6.5 million in gross profits. At the American Girl gold mine in southern
California, a permitting delay has resulted in temporarily higher costs as
mining continued in a low grade deposit until a new ore body can be
accessed. Hecla has a 47% interest in the mine, where 1996 operating
results are expected to improve when mining commences in the new higher-
grade Oro Cruz deposit.
(more)
Contact Bill Booth, vice president-investor and public affairs, or Vicki
Veltkamp, manager-corporate communications
6500 Mineral Drive * Coeur d'Alene, Idaho 83814-8788 * 208/769-4100 * FAX
208/769-4159
2
NEW DEVELOPMENTS
Redevelopment of the Greens Creek silver/gold/zinc/lead mine near
Juneau, Alaska, is on schedule, with projected start-up in early 1997.
Hecla owns a 29.7% interest in the mine, which is expected to produce more
than 3 million ounces of silver for Hecla's account in 1997 at a cash cost
of under $3.00 per ounce.
Work is continuing on delineating the deposit at Hecla's Golden
Eagle gold project in northeast Washington State. In August, Hecla signed
an earn-in agreement with Santa Fe Pacific Gold Corporation to explore and
develop the deposit. The project has identified mineral inventory of
11.3 million tons of material at an average grade of 0.1 ounce of gold per
ton. Santa Fe Pacific Gold can earn a 70% interest in the project by
spending $7.5 million over a three-year period and completing a feasibility
study.
Another promising prospect is Hecla's Rosebud gold project in
northern Nevada, where reported proven and probable reserves are 1.64
million tons of ore at an average grade of 0.356 ounce per ton, or nearly
600,000 ounces of contained gold. Brown said, "The good news at Rosebud is
that we now have all environmental permits in hand necessary to start
construction once a development decision is made and financing is
arranged."
At the Lucky Friday silver mine in North Idaho, crews continue to
work three shifts daily in the effort to reach the promising Gold Hunter
silver/lead deposit adjacent to the Lucky Friday workings. The effort is
on schedule to reach the Gold Hunter deposit and make a development
decision before the end of 1996.
OTHER MATTERS
In other business, Hecla's directors approved a $2 million
dividend payment to preferred shareholders of record on December 12, 1995,
payable January 1, 1996.
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, is
one of the United States' best-known silver producers. The company's
operations are principally in the U.S. and Mexico. Hecla also produces
gold and is a major supplier of ball clay, kaolin and other industrial
minerals.
-HL-
Contact Bill Booth, vice president-investor and public affairs, or Vicki
Veltkamp, manager-corporate communications
6500 Mineral Drive * Coeur d'Alene, Idaho 83814-8788 * 208/769-4100 * FAX
208/769-4159
3
HECLA MINING COMPANY
(dollars in thousands, except per-share amounts - unaudited)
Third Quarter Ended Nine Months Ended
------------------------- -------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
HIGHLIGHTS 1995 1994 1995 1994
----------------------------------------------------------------------------------------------------------
FINANCIAL DATA
----------------------------------------------------------------------------------------------------------
Total revenue $ 45,387 $ 36,072 $ 125,630 $ 103,779
Gross profit 1,775 5,846 2,621 8,916
Net income (loss) (102,723) 806 (102,945) (4,143)
Net loss applicable to
common shareholders (104,736) (1,207) (108,983) (10,181)
Net loss per common share (2.17) (0.03) (2.26) (0.24)
Cash flow from operating activities 4,553 6,794 4,222 3,063
----------------------------------------------------------------------------------------------------------
SALE OF PRODUCTS BY SEGMENT
----------------------------------------------------------------------------------------------------------
Gold operations $ 17,795 $ 16,655 $ 47,902 $ 37,689
Silver operations 3,170 2,488 8,902 8,633
Industrial minerals 18,291 15,302 57,936 50,514
Specialty metals 1,947 834 4,414 2,830
---------- ---------- --------- ----------
Total sales $ 41,203 $ 35,279 $ 119,154 $ 99,666
----------------------------------------------------------------------------------------------------------
GROSS PROFIT (LOSS) BY SEGMENT
----------------------------------------------------------------------------------------------------------
Gold operations $ (282) $ 4,522 $ (4,652) $ 5,728
Silver operations (204) (658) 487 (3,494)
Industrial minerals 1,995 2,176 6,492 6,820
Specialty metals 266 (194) 294 (138)
---------- ----------- ---------- ----------
Total gross profit $ 1,775 $ 5,846 $ 2,621 $ 8,916
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PRODUCTION SUMMARY - TOTALS
----------------------------------------------------------------------------------------------------------
Gold - Ounces 44,209 40,780 119,839 91,052
Silver - Ounces 604,988 413,439 1,623,661 1,512,564
Lead - Tons 4,241 3,012 12,492 12,734
Zinc - Tons 722 490 2,118 2,335
Average cost per ounce of gold produced:
Cash production costs ($/oz.) 263 213 306 270
Full costs ($/oz.) 383 279 423 331
Average cost per ounce of silver produced:
Cash production costs ($/oz.) 4.57 4.50 4.73 5.73
Full costs ($/oz.) 5.71 5.84 5.95 7.00
----------------------------------------------------------------------------------------------------------
AVERAGE METAL PRICES
----------------------------------------------------------------------------------------------------------
Gold - Realized ($/oz.) 388 389 388 387
Gold - London Final ($/oz.) 384 386 384 384
Silver - Handy & Harman ($/oz.) 5.33 5.34 5.17 5.33
Lead - LME Cash (cents/pound) 27.8 26.7 27.6 23.3
Zinc - LME Cash (cents/pound) 45.8 43.9 47.1 43.6
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HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(In thousands - unaudited)
Nine Months Ended
--------------------------
Sept. 30, Sept. 30,
1995 1994
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OPERATING ACTIVITIES
-----------------------------------------------------------------------------------------------------------
Net loss $(102,945) $ (4,143)
Noncash elements included in net loss:
Depreciation, depletion and amortization 18,845 10,936
(Gain) loss on disposition of properties, plants and equipment (3,484) 14
Gain on investments (2,842) - -
Extraordinary loss on early retirement of long-term debt - - 833
Accretion of interest on long-term debt - - 2,000
Reduction in carrying value of mining properties 97,387 - -
Provision for reclamation and closure costs 3,707 905
Change in:
Accounts and notes receivable (7,224) (7,182)
Income tax refund receivable (3) (785)
Inventories 571 300
Other current assets (732) (145)
Accounts payable and accrued expenses 388 (356)
Accrued payroll and related benefits (163) 548
Accrued taxes 661 319
Noncurrent liabilities 56 (181)
--------- ---------
Net cash provided by operating activities 4,222 3,063
--------- ---------
-----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
-----------------------------------------------------------------------------------------------------------
Additions to properties, plants and equipment (33,083) (57,511)
Proceeds from disposition of properties, plants and equipment 3,069 13,406
Proceeds from the sales of investments 4,685 3,217
Change in funds held in escrow - - (13,497)
Proceeds from maturity of short-term investments - - 27,552
Purchase of restricted investments (1,439) - -
Purchase of investments and increase in cash surrender value of life insurance (822) (1,926)
Other, net (1,249) (2,795)
--------- ---------
Net cash applied to investing activities (28,839) (31,554)
--------- ---------
-----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
-----------------------------------------------------------------------------------------------------------
Proceeds from exercise of stock warrants 1,239 - -
Common stock issued under stock option plans 91 1,726
Issuance of common stock - - 63,499
Early retirement of long-term debt - - (50,169)
Dividends on preferred stock (6,038) (6,038)
Borrowing on long-term debt 41,000 - -
Repayment on long-term debt (11,796) - -
Decrease in deferred revenue - - (36)
--------- ---------
Net cash provided by financing activities 24,496 8,982
--------- ---------
Net decrease in cash and cash equivalents (121) (19,509)
Cash and cash equivalents at beginning of period 7,278 40,031
--------- ---------
Cash and cash equivalents at end of period $ 7,157 $ 20,522
========= =========
5
HECLA MINING COMPANY
Consolidated Balance Sheets
(In thousands - unaudited)
Sept. 30, Dec. 31,
1995 1994
-----------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 7,157 $ 7,278
Accounts and notes receivable 31,946 23,516
Income tax refund receivable 250 247
Inventories 18,045 18,616
Other current assets 2,329 1,597
--------- ---------
Total current assets 59,727 51,254
Investments 2,395 6,476
Restricted investments 14,992 13,553
Properties, plants and equipment, net 170,953 257,908
Other noncurrent assets 7,889 5,391
--------- ---------
Total assets $ 255,956 $ 334,582
========= =========
-----------------------------------------------------------------------
LIABILITIES
-----------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 13,958 $ 13,570
Accrued payroll and related benefits 2,561 2,724
Preferred stock dividends payable 2,012 2,012
Accrued taxes 1,586 925
Accrued reclamation costs 2,259 4,254
--------- ---------
Total current liabilities 22,376 23,485
Deferred income taxes 359 359
Long-term debt 31,164 1,960
Accrued reclamation costs 32,206 27,162
Other noncurrent liabilities 4,812 4,098
--------- ---------
Total liabilities 90,917 57,064
--------- ---------
-----------------------------------------------------------------------
SHAREHOLDERS' EQUITY
-----------------------------------------------------------------------
Preferred stock 575 575
Common stock 12,077 12,036
Capital surplus 330,258 328,995
Retained deficit (172,420) (63,437)
Net unrealized gain (loss) on investments 336 3,396
Foreign currency translation adjustment (4,898) (3,158)
Treasury stock (889) (889)
--------- ---------
Total shareholders' equity 165,039 277,518
Total liabilities and shareholders' equity $ 255,956 $ 334,582
========= =========
Common shares outstanding at end of period 48,245 48,082
========= =========
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HECLA MINING COMPANY
Consolidated Statements of Operations
(In thousands, except per-share amounts - unaudited)
Third Quarter Ended Nine Months Ended
------------------------- -----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
--------- --------- --------- ---------
Sales of products $ 41,203 $ 35,279 $ 119,154 $ 99,666
Cost of sales and other direct production costs 32,413 25,216 97,953 80,257
Depreciation, depletion and amortization 7,015 4,217 18,580 10,493
--------- --------- --------- ---------
39,428 29,433 116,533 90,750
--------- --------- --------- ---------
Gross profit 1,775 5,846 2,621 8,916
Other operating expenses:
General and administrative 3,106 2,611 7,570 8,950
Exploration 2,671 2,403 4,879 6,502
Depreciation and amortization 97 81 265 443
Provision for closed operations and
environmental matters 4,069 449 4,296 1,073
Reduction in carrying value of mining
properties 97,387 - - 97,387 - -
--------- --------- --------- ---------
107,330 5,544 114,397 16,968
--------- --------- --------- ---------
Income (loss) from operations (105,555) 302 (111,776) (8,052)
--------- --------- --------- ---------
Other income (expense):
Interest and other income 4,185 793 6,476 4,113
Foreign exchange gain (loss) (12) - - 150 - -
Gain (loss) on investments (1,051) 38 2,842 1,129
Interest expense:
Total interest cost (650) (476) (1,236) (2,523)
Less amount capitalized 474 - - 850 1,751
--------- --------- --------- ---------
2,946 355 9,082 4,470
--------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary item (102,609) 657 (102,694) (3,582)
Income tax (provision) benefit (114) 159 (251) 272
--------- --------- --------- ---------
Income (loss) before extraordinary item (102,723) 816 (102,945) (3,310)
Extraordinary loss on retirement of
long-term debt - - (10) - - (833)
--------- --------- --------- ---------
Net income (loss) (102,723) 806 (102,945) (4,143)
Preferred stock dividends (2,013) (2,013) (6,038) (6,038)
--------- --------- --------- ---------
Net loss applicable to common shareholders $(104,736) $ (1,207) $(108,983) $ (10,181)
========= ========= ========= =========
Net loss per common share $ (2.17) $ (0.03) $ (2.26) $ (0.24)
========= ========= ========= =========
Weighted average number of common shares outstanding 48,237 48,075 48,178 42,957
========= ========= ========= =========
Common shares outstanding at end of period 48,245 48,076
========= =========
7
HECLA MINING COMPANY
Production Data
Third Quarter Ended Nine Months Ended
----------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
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LA CHOYA UNIT
---------------------------------------------------------------------------------------------------------------------------
Tons of ore mined 1,310,417 575,444 2,781,845 1,547,944
Ore grade mined - Gold (oz./ton) 0.029 0.055 0.028 0.054
Gold produced (oz.) 21,799 19,074 45,480 31,992
Silver produced (oz.) 2,273 2,169 4,699 3,926
Average cost per ounce of gold produced:
Cash production costs $187 $157 $222 $255
Full cost $285 $254 $311 $353
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REPUBLIC UNIT (1)
---------------------------------------------------------------------------------------------------------------------------
Tons of ore milled 30,517 10,269 86,741
Gold recovered grade (oz./ton) 0.43 0.13 0.39
Gold produced (oz.) 12,064 2,910 30,475
Silver produced (oz.) 77,324 15,058 212,957
Average cost per ounce of gold produced:
Cash production costs $198 $194 $234
Full cost $249 $194 $294
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AMERICAN GIRL UNIT (Reflects Hecla's 47% share)
---------------------------------------------------------------------------------------------------------------------------
Tons of ore milled 17,709 30,807 40,943 90,261
Tons of ore to heap 155,684 168,449 615,296 408,172
Ore grade milled - Gold (oz./ton) 0.191 0.162 0.191 0.170
Ore grade to heap - Gold (oz./ton) 0.029 0.024 0.029 0.025
Gold produced (oz.) 5,436 7,644 15,985 22,496
Silver produced (oz.) 3,063 4,279 10,331 12,234
Average cost per ounce of gold produced:
Cash production costs $461 $375 $430 $344
Full cost $523 $402 $468 $368
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GROUSE CREEK (Reflects Hecla's 80% share)
---------------------------------------------------------------------------------------------------------------------------
Tons of ore milled 476,992 1,120,461
Ore grade milled - Gold (oz./ton) 0.036 0.046
Ore grade milled - Silver (oz./ton) 0.61 0.64
Gold produced (oz.) 15,336 50,534
Silver produced (oz.) 149,314 390,273
Average cost per ounce of gold produced:
Cash production costs $293 $352
Full cost $479 $536
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LUCKY FRIDAY UNIT
---------------------------------------------------------------------------------------------------------------------------
Tons of ore milled 43,004 30,839 117,022 119,398
Silver recovered grade (oz./ton) 10.72 10.20 10.73 10.88
Silver produced (oz.) 449,791 325,148 1,201,266 1,268,364
Lead produced (short tons) 4,241 3,012 12,492 12,734
Average cost per ounce of silver produced:
Cash production costs $4.57 $4.50 $4.73 $5.73
Full cost $5.71 $5.84 $5.95 $7.00
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OTHER
---------------------------------------------------------------------------------------------------------------------------
Gold produced (oz.) 1,638 1,998 4,930 6,089
Silver produced (oz.) 547 4,519 2,034 15,083
(1)Republic Unit ceased operations March 31, 1995.