1
Exhibit 13
[HECLA LOGO] 97-05
HECLA REPORTS FIRST QUARTER RESULTS
For the Period Ended March 31, 1997
For release: April 30, 1997
COEUR D'ALENE, IDAHO -- Hecla Mining Company (HL & HL-PrB:NYSE) today
reported a loss of $1.5 million, or 3 cents per common share, for the first
quarter of 1997 after the payment of a quarterly dividend of $2 million to
holders of preferred stock. This compares to a loss of $0.5 million, or 1 cent
per common share, in the first quarter of 1996. The first quarter loss in 1997
is primarily attributable to decreased gold, silver and lead prices, as well as
increased exploration expenditures compared to the first quarter of last year.
Hecla Chairman, President and Chief Executive Officer Arthur Brown said,
"Our performance for the first quarter of this year, while still unfortunately a
loss, was well within our projections. We are looking forward to improved
earnings through the remainder of the year as the Greens Creek silver mine and
Rosebud gold mine ramp up to full production."
METALS PRICES
Compared to the same period last year, the average gold price for the
first quarter of this year decreased 12%, from $400 per ounce in the first
quarter of 1996 to $351 per ounce in 1997. Silver followed suit, decreasing
from an average price of $5.54 per ounce in the first quarter of last year to
$5.02 in the first quarter of 1997. The average price per pound of lead in the
first quarter of last year was 35 cents, compared to 31 cents in the same period
this year.
PRODUCTION
Silver production more than doubled from the first quarter of 1996 to
1,244,198 ounces in the first quarter of this year because of added production
from the newly opened Greens Creek mine and slightly increased silver production
at the Lucky Friday Unit.
The American Girl gold mine closed late last year, which lowered Hecla's
gold production slightly in the first quarter of 1997 compared to last year's
first quarter. However, gross profit for the gold segment improved in the first
quarter of this year because the American Girl mine was a high cost operation.
Hecla produced 43,904 ounces of gold in the first quarter of the year.
Tons shipped from the industrial minerals operations decreased slightly,
from about 255,000 tons in the first quarter of last year to about 247,000 tons
in the same period this year. Hecla's industrial minerals subsidiaries
traditionally ship fewer tons during the first and fourth quarters because of
the seasonality of this business segment.
STAR PHOENIX LAWSUIT
On April 2, 1997, the Idaho State Supreme Court ruled in Hecla's favor in
the Star Phoenix Mining Company lawsuit by reversing the Idaho district court
judgement against Hecla issued in 1994. Star Phoenix had challenged Hecla's
right to terminate Star Phoenix's lease of the Star-Morning mine in North Idaho
in 1990. The Supreme Court held that Hecla had acted properly and reversed the
district court judgement against Hecla of $20 million in compensatory and
punitive damages. The Court also awarded Hecla costs and attorneys' fees. The
ruling will release $10 million in cash being held in escrow. In the first
quarter financial statements, the $10 million is still reflected as restricted
cash pending actual release of the money. In late April, Star Phoenix requested
the State Supreme Court to reconsider its
(cont.)
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
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HECLA REPORTS FIRST QUARTER RESULTS Page 2
ruling. It is management's strong belief the decision in Hecla's favor will be
upheld. Star Phoenix's request for reconsideration does not affect the release
of the $10 million in escrow.
ROSEBUD
The Rosebud gold property in northern Nevada successfully commenced
commercial production during April. The operation is located 58 miles west of
Winnemucca and is operated by a 50/50 limited liability company with Santa Fe
Pacific Gold Corporation. Mining started in February, and design production
capacity of 750 tons per day was achieved in the second half of March -- about
two months ahead of schedule and approximately $3 million under budget. Ore
processing through Santa Fe's Twin Creeks Mine Pinon Mill began in mid-April,
and preliminary results indicate the mill is performing as projected. At this
early stage, cash production costs appear to be lower than the project estimates
of about $180 per ounce of gold. The Rosebud mine's total production is
expected to average approximately 100,000 ounces of gold (50,000 ounces to
Hecla's account) annually for five years, and there is good potential for
expanding reserves.
LUCKY FRIDAY
Work continues on defining the new ore body adjacent to the underground
workings of the Lucky Friday mine. Engineering is under way on a mining plan
that will double silver production from Lucky Friday by the end of 1998. Proven
and probable reserves at the mine tripled at the end of 1996 compared to a year
earlier, primarily because of the addition of about 12 million ounces of silver
reserves defined in the expansion area. A final decision on how to proceed with
development and production at the site is expected in early May.
Mining and milling costs per ton at Lucky Friday decreased about 14%
during the first quarter of 1997 compared to the same period last year.
However, a 4 cent decline in the average lead price affected the by-product
credits applied to the cost per ounce of silver, resulting in higher per-ounce
costs compared to a year ago. Increased production is anticipated later in the
year from the higher-grade expansion area, which should improve both the cash
and total production costs per ounce of silver at Lucky Friday.
GREENS CREEK
The Greens Creek mine in Alaska, in which Hecla owns a 29.7% interest,
produced about 701,000 ounces of silver for Hecla's account in the first quarter
at a cash cost per ounce of $2.36 and a total production cost of $5.03. The
average ore grade of the material milled in the first quarter was 24.55 ounces
of silver per ton. As the year progresses, a higher percentage of production
will come from the higher-grade southwest ore zone. Brown said, "Silver
production at Greens Creek is still ramping up to full operation. As this
happens, we expect cash costs to decline even further and depreciation costs to
fall to the range of $2.00 - $2.25 per ounce, which would decrease the gap
between cash and total costs." In addition, exploration efforts are under way
to further expand the mine's estimated 17-year life.
LA CHOYA
The La Choya gold mine in northern Mexico produced about 20,000 ounces of
gold for Hecla in the first quarter. Mining at the site will continue at least
through 1997, when the known reserve is depleted. The mine continues to produce
gold at a very low cost, and is Hecla's most profitable operation.
(cont.)
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 REPORTS FIRST QUARTER RESULTS Page 3
GROUSE CREEK
Mining has been suspended at the Grouse Creek gold mine in central Idaho,
as planned. The mill will be decommissioned by the end of June, after which the
facility will be placed on care-and-maintenance status, with some limited
reclamation activities commencing at the site this fall.
EXPLORATION
A major focus at Hecla in 1997 will be to increase gold reserves. In
addition to a major exploration project at the Rosebud mine, drilling is
currently taking place on several gold projects in Mexico. One project is the
La Jojoba gold property in northern Mexico. Hecla has an arrangement with
Aquiline Resources Inc. for an option to acquire 60% of the project by spending
about $4 million on property payments and exploration costs. The 1997 drilling
program on the property includes six diamond drill holes and about 50 reverse
circulation holes.
INDUSTRIAL MINERALS
During the first quarter of 1997, Mountain West Products and Colorado
Aggregate Company were combined into MWCA to utilize administrative and
marketing staffs most efficiently. The new company is headquartered in Rexburg,
Idaho, and produces landscape bark and volcanic scoria used in landscaping. The
scoria, or lava rock, is also used as briquettes in gas-fired barbecues.
COMMON STOCK OFFERING
In February 1997, Hecla completed the sale of 3.95 million shares of its
common stock to European institutional investors, which provided Hecla with net
proceeds of $23.4 million. The proceeds will facilitate funding the company's
capital expenditures required in connection with the Lucky Friday mine expansion
project and the Rosebud gold mine.
CONCLUSION
Brown said Hecla made some positive steps in the first quarter. "We've
cleaned up our balance sheet and reduced our bank debt with a successful equity
offering. We lowered our overall costs of production for both gold and silver,
and we prevailed in the Star Phoenix lawsuit." Brown concluded, "I'm pleased
with our progress so far this year and am looking forward to the results of
Rosebud production beginning in the second quarter."
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, is one of the
United States' best-known silver producers. The company also produces gold and
is a major supplier of ball clay, kaolin and other industrial minerals. Hecla's
operations are principally in the U.S. and Mexico.
Statements made which are not historical facts, such as anticipated
production, sales or discussions of goals are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
involve a number of risks and uncertainties that could cause actual results to
differ materially from those projected. These risks and uncertainties include,
but are not limited to, metal prices volatility, volatility of metals production
and project development risks. Refer to the company's Form 10-Q and 10-K
reports for a more detailed discussion of factors that may impact expected
future results.
Hecla Mining Company news releases can be accessed on the Internet at:
http://www.hecla-mining.com
You can also request a free fax of this entire news release
from BusinessWire NewsOnDemand at 800-344-7826
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
4
HECLA MINING COMPANY
(dollars in thousands, except per share, per ounce and per pound amounts - unaudited)
First Quarter Ended
--------------------------------
HIGHLIGHTS Mar. 31, 1997 Mar. 31, 1996
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FINANCIAL DATA
- --------------------------------------------------------------------------------------------------------------
Total revenue $ 43,607 $ 43,641
Gross profit 4,178 3,935
Net income 518 1,475
Loss applicable to common shareholders (1,494) (537)
Loss per common share (0.03) (0.01)
Cash flow used by operating activities (7,722) (365)
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SALE OF PRODUCTS BY SEGMENT
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Gold operations $ 15,375 $ 19,015
Silver operations 8,676 4,476
Industrial minerals 18,405 19,456
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Total sales $ 42,456 $ 42,947
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GROSS PROFIT (LOSS) BY SEGMENT
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Gold operations $ 3,030 $ 2,189
Silver operations (640) 108
Industrial minerals 1,788 1,638
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Total gross profit $ 4,178 $ 3,935
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PRODUCTION SUMMARY - TOTALS
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Gold - Ounces 43,904 47,272
Silver - Ounces 1,244,198 536,000
Lead - Tons 6,582 5,577
Zinc - Tons 4,208 1,006
Industrial minerals - Tons shipped 247,210 255,038
Average cost per ounce of gold produced:
Cash operating costs ($/oz.) 204 260
Total cash costs ($/oz.) 205 260
Total production costs ($/oz.) 246 353
Average cost per ounce of silver produced:
Cash operating costs ($/oz.) 3.33 4.66
Total cash costs ($/oz.) 3.33 4.66
Total production costs ($/oz.) 5.47 5.89
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AVERAGE METAL PRICES
- --------------------------------------------------------------------------------------------------------------
Gold - Realized ($/oz.) 375 401
Gold - London Final ($/oz.) 351 400
Silver - Handy & Harman ($/oz.) 5.02 5.54
Lead - LME Cash ( cents/pound) 30.9 34.7
Zinc - LME Cash ( cents/pound) 53.2 47.2
5
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Mar. 31, 1997 Dec. 31, 1996
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ASSETS
- --------------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 8,031 $ 8,256
Accounts and notes receivable 32,534 24,168
Income tax refund receivable 1,252 1,262
Inventories 23,228 22,879
Other current assets 1,566 2,284
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Total current assets 66,611 58,849
Investments 2,619 1,723
Restricted investments 17,566 20,674
Properties, plants and equipment, net 177,798 177,755
Other noncurrent assets 10,198 9,392
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Total assets $ 274,792 $ 268,393
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LIABILITIES
- --------------------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 13,425 $ 17,377
Accrued payroll and related benefits 3,126 3,232
Preferred stock dividends payable 2,012 2,012
Accrued taxes 1,683 1,427
Accrued reclamation and closure costs 9,032 8,664
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Total current liabilities 29,278 32,712
Deferred income taxes 359 359
Long-term debt 27,146 38,208
Accrued reclamation and closure costs 43,428 45,953
Other noncurrent liabilities 6,997 5,653
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Total liabilities 107,208 122,885
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SHAREHOLDERS' EQUITY
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Preferred stock 575 575
Common stock 13,787 12,800
Capital surplus 373,973 351,559
Accumulated deficit (215,104) (213,610)
Net unrealized gain (loss) on investments 137 (32)
Foreign currency translation adjustment (4,898) (4,898)
Treasury stock (886) (886)
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Total shareholders' equity 167,584 145,508
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Total liabilities and shareholders' equity $ 274,792 $ 268,393
============= =============
Common shares outstanding at end of period 55,087 51,137
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HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars and shares in thousands, except per share amounts - unaudited)
First Quarter Ended
-------------------------------
Mar. 31, 1997 Mar. 31, 1996
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Sales of products $ 42,456 $ 42,947
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Cost of sales and other direct production costs 33,926 33,553
Depreciation, depletion and amortization 4,352 5,459
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38,278 39,012
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Gross profit 4,178 3,935
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Other operating expenses:
General and administrative 2,560 2,271
Exploration 1,354 803
Depreciation and amortization 79 89
Provision for closed operations and environmental matters 189 (183)
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4,182 2,980
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Income (loss) from operations (4) 955
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Other income (expense):
Interest and other income 1,151 694
Miscellaneous expense (30) (14)
Gain on investments - - 20
Interest expense:
Total interest cost (835) (621)
Less amount capitalized 361 477
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647 556
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Income before income taxes 643 1,511
Income tax provision (125) (36)
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Net income 518 1,475
Preferred stock dividends (2,012) (2,012)
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Loss applicable to common shareholders $ (1,494) $ (537)
============= =============
Loss per common share $ (0.03) $ (0.01)
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Weighted average number of common shares outstanding 53,112 51,130
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HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(in thousands - unaudited)
First Quarter Ended
---------------------------------------
Mar. 31, 1997 Mar. 31, 1996
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OPERATING ACTIVITIES
- --------------------------------------------------------------------------------------------------------------
Net income $ 518 $ 1,475
Noncash elements included in net loss:
Depreciation, depletion and amortization 4,431 5,548
Loss (gain) on disposition of properties, plants and equipment (70) 59
Gain on investments - - (20)
Provision for reclamation and closure costs 220 1,199
Change in:
Accounts and notes receivable (8,366) (9,127)
Income tax refund receivable 10 (25)
Inventories (349) (389)
Other current assets 718 (424)
Accounts payable and accrued expenses (3,952) 1,532
Accrued payroll and related benefits (106) (651)
Accrued taxes 256 261
Accrued reclamation and other noncurrent liabilities (1,032) 197
-------------- --------------
Net cash used by operating activities (7,722) (365)
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INVESTING ACTIVITIES
- --------------------------------------------------------------------------------------------------------------
Additions to properties, plants and equipment (4,542) (7,739)
Proceeds from disposition of properties, plants and equipment 178 74
Proceeds from sale of investments - - 20
Decrease (increase) in restricted investments 3,108 (104)
Purchase of investments and change in cash surrender
value of life insurance, net (827) (146)
Other, net (847) (502)
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Net cash used by investing activities (2,930) (8,397)
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FINANCING ACTIVITIES
- --------------------------------------------------------------------------------------------------------------
Issuance of common stock, net of offering costs 23,401 21,973
Dividends on preferred stock (2,012) (2,012)
Borrowings against cash surrender value of life insurance 100 200
Borrowing on long-term debt 20,500 11,500
Repayment on long-term debt (31,562) (21,905)
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Net cash provided by financing activities 10,427 9,756
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Net increase (decrease) in cash and cash equivalents (225) 994
Cash and cash equivalents at beginning of period 8,256 4,024
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Cash and cash equivalents at end of period $ 8,031 $ 5,018
============== ==============
8
HECLA MINING COMPANY
Production Data
First Quarter Ended
-------------------------------
Mar. 31, 1997 Mar. 31, 1996
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LA CHOYA UNIT
- --------------------------------------------------------------------------------------------------------------
Tons of ore processed 751,955 1,043,070
Days of operation 90 91
Mining cost per ton $2.97 $2.35
Ore grade - Gold (oz./ton) 0.034 0.019
Gold produced (oz.) 20,355 21,036
Silver produced (oz.) 1,935 2,352
Average cost per ounce of gold produced:
Cash operating costs $204 $175
Total cash costs $205 $175
Total production costs $246 $287
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GROUSE CREEK (1)(2) (Reflects Hecla's share)
- --------------------------------------------------------------------------------------------------------------
Tons of ore milled 463,720 440,883
Days of operation 74 80
Surface mining cost per ton $7.17 $4.66
Milling cost per ton $6.71 $6.31
Ore grade milled - Gold (oz./ton) 0.044 0.043
Ore grade milled - Silver (oz./ton) 0.34 0.41
Gold produced (oz.) 17,534 18,339
Silver produced (oz.) 80,292 101,220
Average cost per ounce of gold produced:
Cash operating costs (2) - - $296
Total cash costs (2) - - $296
Total production costs (2) - - $376
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LUCKY FRIDAY UNIT
- --------------------------------------------------------------------------------------------------------------
Tons of ore milled 47,357 42,729
Days of operation 63 64
Mining cost per ton $46.50 $54.79
Milling cost per ton $6.99 $7.33
Ore grade milled - Silver (oz./ton) 10.03 10.25
Silver produced (oz.) 459,547 428,620
Lead produced (tons) 5,104 5,577
Zinc produced (tons) 919 1,006
Average cost per ounce of silver produced:
Cash operating costs $4.81 $4.66
Total cash costs $4.81 $4.66
Total production costs $6.14 $5.89
(cont.)
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HECLA MINING COMPANY
Production Data (cont.)
First Quarter Ended
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Mar. 31, 1997 Mar. 31, 1996
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GREENS CREEK (3) (Reflects Hecla's 29.73% share)
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Tons of ore milled 36,780 - -
Days of operation 90 - -
Mining cost per ton $35.47 - -
Milling cost per ton $21.12 - -
Ore grade milled - Silver (oz./ton) 24.55 - -
Silver produced (oz.) 700,837 - -
Gold produced (oz.) 3,922 - -
Lead produced (tons) 1,478 - -
Zinc produced (tons) 3,289 - -
Average cost per ounce of silver produced:
Cash operating costs (3) $2.36 - -
Total cash costs (3) $2.36 - -
Total production costs (3) $5.03 - -
- --------------------------------------------------------------------------------------------------------------
OTHER
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Gold produced (oz.) 2,093 7,897
Silver produced (oz.) 1,587 3,808
(1)The ownership percentage of the Grouse Creek mine has increased to 100% as of February 1, 1997, as compared to 80.00% at
March 31, 1996.
(2)Operations at the Grouse Creek mine are anticipated to be completed in May 1997; as such no cost per ounce amounts are reported
for the 1997 period.
(3)The Greens Creek mine recommenced operations on July 29, 1996, on a start-up basis. Full production was reached in January
1997.
CAPITAL EXPENDITURES
(dollars in thousands) Mar. 31, 1997 Mar. 31, 1996
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Rosebud $ 2,241 $ 478
Lucky Friday 1,092 775
Greens Creek (29.73%*) 180 3,788
American Girl - - 1,164
Grouse Creek - - 709
Industrial minerals 587 254
Capitalized interest 361 477
Other 81 94
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Total Capitalized $ 4,542 $ 7,739
============= ============
*Hecla's share
HEDGED GOLD POSITION
As of March 31, 1997
Min-Max options: 25,830 ounces @ Average Min. $396, Average Max. $461
Spot deferred contracts: 8,400 ounces @ $386
Total 34,230 ounces hedged