1
[Hecla Logo} Exhibit 13
98-03
HECLA REPORTS FIRST QUARTER EARNINGS:
SILVER MINES PROFITABLE; GOLD AT $171 CASH COST PER OUNCE
For the Period Ended March 31, 1998
For release: April 30, 1998
COEUR D'ALENE, IDAHO - Hecla Mining Company (HL & HL-PrB:NYSE)
today reported income applicable to common shareholders of $0.8
million, or 2 cents per common share, for the first quarter of 1998
after the payment of a quarterly dividend of $2 million to holders
of preferred stock. This compares to a loss applicable to common
shareholders of $1.5 million, or 3 cents per share in the first
quarter of 1997.
Improved results are attributable to good performance by the
company's gold, silver and clay operations, an increased silver
price, and a $1.8 million gain from the sale of property near
Hecla's corporate headquarters in Coeur d'Alene, Idaho.
Arthur Brown, Hecla's chairman and chief executive officer,
said, "We are very pleased with our earnings in the first quarter
of this year. All three of our business segments were
profitable. The property sale helped our results, and we expect
operations to pick up the pace in the second quarter as seasonal
industrial minerals activity increases and the Lucky Friday mine
continues to transition to the new, higher-grade area." Brown
continued, "Our gold mines are operating at a low total cash cost
of $171 per ounce and have maintained their profitability even at
the current low gold price. Additionally, increasing silver
production coupled with an improving silver price helped
profitability at our silver mines, despite a significant decrease
in the price of our by-product metals of lead, zinc and gold
compared to a year ago."
METALS PRICES
The average gold price for the first quarter of this year
decreased 16%, from $351 per ounce in the first quarter of 1997
to $294 per ounce in 1998. The average price of lead decreased
21% from 30.9 cents per pound during last year's first quarter to
24.3 cents per pound in the first quarter of 1998. The price of
zinc is also lower than a year ago, having decreased 9% during
the period from 53.2 cents per pound to 48.2 cents per pound.
Increased investor interest in silver due to the recognition of a
worldwide silver supply deficit led to an improvement in the
silver price during the first quarter. The average price per
ounce of silver increased 24% from the same period last year,
from $5.02 to $6.24 per ounce.
GOLD
Hecla's gold operations have performed above expectations,
despite a significant decrease in the price of gold. The average
total cash cost per ounce of gold was $171 during the first
quarter of 1998, a 17% decrease in costs compared to the same
period last year. Hecla produced 35,554 ounces of gold during
the first quarter of 1998.
A 22,000-ounce increase in gold reserves at the La Choya
mine in northern Mexico allows continued operation of the mine
until the fourth quarter of 1998. Heap leaching will continue
through 1999. La Choya produced 13,407 ounces of gold in the
first quarter at a total cash cost of $190 per ounce.
The Rosebud mine in northern Nevada continues to exceed the
company's expectations. Rosebud produced 16,589 ounces of gold
for Hecla's account at an average total cash cost of $155 per
ounce.
Contact Bill Booth, vice president-investor and public affairs,
or Vicki Veltkamp, manager-corporate communications
6500 Mineral Drive Coeur d'Alene, Idaho 83815-8788 208/769-4100
FAX 208/769-4159
2
SILVER
Hecla's silver operations were profitable for the first
quarter of this year. Silver production increased 23% compared
to the first quarter of 1997, and combined mining and milling
costs per ton improved 5% compared to a year ago. The company
produced 1.5 million ounces of silver during the first quarter at
an average total cash cost per ounce of $4.47. The cash costs
per ounce for both the Lucky Friday and Greens Creek mines were
adversely impacted by the lower prices of lead, zinc and gold by-
products during the first quarter.
At the Lucky Friday silver mine in North Idaho, development
into the new expansion area continues on schedule. The mine is
expected to produce about 4 million ounces of silver this year,
doubling last year's production. Production is already coming
from the new mining area, and as expected, the silver ore grade
is higher. The first quarter average grade was 15.33 ounces of
silver per ton, compared to last year's first quarter average
grade of 10.03 ounces per ton. Lucky Friday produced 836,130
ounces of silver during the first quarter of 1998, at a total
cash cost of $5.17 per ounce. The increased cash cost compared
to a year ago is mainly attributable to the 21% decrease in the
price of lead, an important by-product at this mine.
The Greens Creek mine in Alaska produced 630,510 ounces of
silver for Hecla's account in the first quarter at a cash cost of
$3.55 per ounce. The increased costs compared to a year ago are
due to lower by-product metals prices and a 70,000-ounce decrease
in production due to a lower-grade of ore mined.
INDUSTRIAL MINERALS
Hecla's industrial minerals segment increased its gross
profit to $2.1 million in the first quarter of 1998, a 20%
improvement over the first quarter of last year. Hecla's
industrial minerals subsidiary, Kentucky-Tennessee Clay Company,
received the benefit of sales postponed from the fourth quarter
of 1997 into the first part of 1998. Increased profit from the
clay division was somewhat offset by higher-than-expected costs
from the landscaping division.
OTHER
Hecla's long-term debt at the end of the first quarter was
$36 million, compared to $22 million at the end of 1997. Bank
debt commonly peaks during the first quarter of the year as
increased seasonal working capital requirements for the
industrial minerals division are met. In addition, development
capital has been required for the Lucky Friday expansion during
the first quarter. Bank debt is expected to decline over the
remainder of the year.
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, costs or sales performance are "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and involve a number of risks and
uncertainties that could cause actual results to differ
materially from those projected, anticipated, expected or
implied. These risks and uncertainties include, but are not
limited to, metals prices volatility, volatility of metals
production, industrial minerals market conditions 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 83815-8788 208/769-4100
FAX 208/769-4159
3
HECLA MINING COMPANY
(dollars in thousands, except per share, per ounce and per pound
amounts - unaudited)
First Quarter Ended
--------------------------------
HIGHLIGHTS Mar. 31, 1998 Mar. 31, 1997
- ------------------------------------------------------------------------------------------------
FINANCIAL DATA
- ------------------------------------------------------------------------------------------------
Total revenue $ 42,663 $ 43,607
Gross profit 4,476 4,178
Net income 2,847 518
Income (loss) applicable to common shareholders 835 (1,494)
Basic and diluted income (loss) per common share 0.02 (0.03)
Cash flow used by operating activities (5,900) (7,722)
- ------------------------------------------------------------------------------------------------
SALES OF PRODUCTS BY SEGMENT
- ------------------------------------------------------------------------------------------------
Gold operations $ 9,255 $ 15,375
Silver operations 10,122 8,676
Industrial minerals 20,752 18,405
--------- ---------
Total sales $ 40,129 $ 42,456
- ------------------------------------------------------------------------------------------------
GROSS PROFIT (LOSS) BY SEGMENT
- ------------------------------------------------------------------------------------------------
Gold operations $ 2,005 $ 3,030
Silver operations 333 (640)
Industrial minerals 2,138 1,788
--------- ---------
Total gross profit $ 4,476 $ 4,178
OTHER DATA
- -----------------------------------------------------------------------------------------------
EBITDA BY SEGMENT (1)
- -----------------------------------------------------------------------------------------------
Gold operations $ 3,461 $ 3,746
Silver operations 2,968 1,789
Industrial minerals 3,464 2,995
--------- ---------
Total EBITDA $ 9,893 $ 8,530
- -----------------------------------------------------------------------------------------------
PRODUCTION SUMMARY - TOTALS
- -----------------------------------------------------------------------------------------------
Gold - Ounces 35,554 43,904
Silver - Ounces 1,530,407 1,244,198
Lead - Tons 8,107 6,582
Zinc - Tons 4,255 4,208
Industrial minerals - Tons shipped
282,201 247,210
Average cost per ounce of gold produced:
Cash operating costs ($/oz.) 160 204
Total cash costs ($/oz.) 171 205
Total production costs ($/oz.) 225 246
Average cost per ounce of silver produced:
Cash operating costs ($/oz.) 4.47 3.33
Total cash costs ($/oz.) 4.47 3.33
- -----------------------------------------------------------------------------------------------
AVERAGE METALS PRICES
- -----------------------------------------------------------------------------------------------
Total production costs ($/oz.) 5.98 5.47
Gold - Realized ($/oz.) 299 375
Gold - London Final ($/oz.) 294 351
Silver - Handy & Harman ($/oz.) 6.24 5.02
Lead - LME Cash (cents/pound) 24.3 30.9
Zinc - LME Cash (cents/pound) 48.2 53.2
(1) EBITDA represents earnings before interest, income taxes, depreciation, depletion,
amortization and items classified as other operating expenses not occurring at the operating
site. The company believes EBITDA is helpful in understanding cash flow generated from
operations that is available for taxes, debt service, capital expenditures and other nonsite
operating expenses.
Contact Bill Booth, vice president-investor and public affairs,or
Vicki Veltkamp, manager-corporate communications
6500 Mineral Drive Coeur d'Alene, Idaho 83815-8788 208/769-4100
FAX 208/769-4159
4
HECLA MINING COMPANY
Consolidated Statements of Operations and Comprehensive Income
(dollars and shares in thousands, except per share amounts -
unaudited)
First Quarter Ended
--------------------------------
Mar. 31, 1998 Mar. 31, 1997
------------- -------------
Sales of products $ 40,129 $ 42,456
--------- ---------
Cost of sales and other direct production costs 30,527 33,926
Depreciation, depletion and amortization 5,126 4,352
--------- ---------
35,653 38,278
--------- ---------
Gross profit 4,476 4,178
--------- ---------
Other operating expenses:
General and administrative 2,141 2,121
Exploration 816 1,354
Depreciation and amortization 94 79
Provision for closed operations and environmental matters 59 189
--------- ---------
3,110 3,743
--------- ---------
Income from operations 1,366 435
--------- ---------
Other income (expense):
Interest and other income 2,534 1,151
Miscellaneous expense (557) (469)
Gain on investments 86 - -
Interest expense:
Total interest cost (740) (835)
Less amount capitalized 271 361
--------- ---------
1,594 208
--------- ---------
Income before income taxes 2,960 643
Income tax provision (113) (125)
--------- ---------
Net income 2,847 518
Preferred stock dividends (2,012) (2,012)
--------- ---------
Income (loss) applicable to common shareholders
835 (1,494)
--------- ---------
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) on securities (19) 169
--------- ---------
Other comprehensive income (loss) (19) 169
--------- ---------
Comprehensive income (loss) $ 816 $ (1,325)
========= =========
Basic and diluted income (loss) per common share $ 0.02 $ (0.03)
========= =========
Weighted average number of common shares outstanding 55,095 53,112
========= =========
Contact Bill Booth, vice president-investor and public affairs,or
Vicki Veltkamp, manager-corporate communications
6500 Mineral Drive Coeur d'Alene, Idaho 83815-8788 208/769-4100
FAX 208/769-4159
5
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Mar. 31, 1998 Dec. 31, 1997
- --------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 5,377 $ 3,794
Accounts and notes receivable 36,773 24,445
Income tax refund receivable 570 793
Inventories 23,236 22,116
Other current assets 1,973 1,416
--------- ---------
Total current assets 67,929 52,564
Investments 2,822 2,521
Restricted investments 8,634 7,926
Properties, plants and equipment, net 178,009 180,037
Other noncurrent assets 9,728 7,620
--------- ---------
Total assets $ 267,122 $ 250,668
========= =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 13,054 $ 12,590
Accrued payroll and related benefits 3,110 2,436
Preferred stock dividends payable 2,012 2,012
Accrued taxes 1,397 1,016
Accrued reclamation and closure costs 6,914 6,914
--------- ---------
Total current liabilities 26,487 24,968
Deferred income taxes 300 300
Long-term debt 36,014 22,136
Accrued reclamation and closure costs 33,274 34,406
Other noncurrent liabilities 9,889 8,518
--------- ---------
Total liabilities 105,964 90,328
--------- ---------
- --------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------
Preferred stock 575 575
Common stock 13,789 13,789
Capital surplus 373,968 373,966
Accumulated deficit (221,308) (222,143)
Accumulated other comprehensive loss (4,980) (4,961)
Treasury stock (886) (886)
--------- ---------
Total shareholders' equity 161,158 160,340
--------- ---------
Total liabilities and shareholders' equity $ 267,122 $ 250,668
========= =========
Common shares outstanding at end of period 55,095 55,094
========= =========
Contact Bill Booth, vice president-investor and public affairs,or
Vicki Veltkamp, manager-corporate communications
6500 Mineral Drive Coeur d'Alene, Idaho 83815-8788 208/769-4100
FAX 208/769-4159
6
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
First Quarter Ended
--------------------------------
Mar. 31, 1998 Mar. 31, 1997
- -----------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
- -----------------------------------------------------------------------------------------------
Net income $ 2,847 $ 518
Noncash elements included in net income:
Depreciation, depletion and amortization 5,220 4,431
Gain on disposition of properties, plants and equipment (1,737) (70)
Gain on investments (86) - -
Provision for reclamation and closure costs 133 220
Change in:
Accounts and notes receivable (12,328) (8,366)
Income tax refund receivable 223 10
Inventories (1,120) (349)
Other current assets (557) 718
Accounts payable and accrued expenses 344 (3,952)
Accrued payroll and related benefits 674 (106)
Accrued taxes 381 256
Accrued reclamation and other noncurrent liabilities 106 (1,032)
--------- ---------
Net cash used by operating activities (5,900) (7,722)
--------- ---------
- -----------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
- -----------------------------------------------------------------------------------------------
Additions to properties, plants and equipment (4,080) (4,542)
Proceeds from disposition of properties, plants and equipment 2,676 178
Proceeds from sale of investments 86 - -
Decrease (increase) in restricted investments (708) 3,094
Purchase of investments and increase in cash surrender
value of life insurance (221) (827)
Other, net (2,159) (847)
--------- ---------
Net cash used by investing activities (4,406) (2,944)
--------- ---------
- -----------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
- -----------------------------------------------------------------------------------------------
Issuance of common stock, net of offering costs 2 23,401
Dividends on preferred stock (2,012) (2,012)
Borrowings, net of repayments, against cash
surrender value of life insurance (99) 100
Borrowing on long-term debt 19,500 20,500
Repayment on long-term debt (5,502) (31,562)
--------- ---------
Net cash provided by financing activities 11,889 10,427
--------- ---------
Net increase (decrease) in cash and cash equivalents 1,583 (239)
Cash and cash equivalents at beginning of period 3,794 7,159
--------- ---------
Cash and cash equivalents at end of period $ 5,377 $ 6,920
========= =========
Contact Bill Booth, vice president-investor and public affairs,or
Vicki Veltkamp, manager-corporate communications
6500 Mineral Drive Coeur d'Alene, Idaho 83815-8788 208/769-4100
FAX 208/769-4159
7
HECLA MINING COMPANY
Production Data
First Quarter Ended
--------------------------------
Mar. 31, 1998 Mar. 31, 1997
- ---------------------------------------------------------------------------------------------
LA CHOYA UNIT
- ---------------------------------------------------------------------------------------------
Tons of ore processed 732,243 751,955
Days of operation 90 90
Mining cost per ton $1.78 $2.97
Ore grade crushed - Gold (oz./ton) 0.018 0.034
Gold produced (oz.) 13,407 20,355
Silver produced (oz.) 1,508 1,935
Average cost per ounce of gold produced:
Cash operating costs $189 $204
Total cash costs $190 $205
Total production costs $190 $246
- ---------------------------------------------------------------------------------------------
ROSEBUD UNIT (Reflects Hecla's 50% share) (1)
- ---------------------------------------------------------------------------------------------
Tons of ore mined 39,495 - -
Tons of ore milled 38,567 - -
Days of operation 90 - -
Mining cost per ton $28.57 - -
Milling cost per ton $10.66 - -
Ore grade milled - Gold (oz./ton) 0.450 - -
Ore grade milled - Silver (oz./ton) 3.34 - -
Gold produced (oz.) 16,589 - -
Silver produced (oz.) 61,937 - -
Average cost per ounce of gold produced:
Cash operating costs $137 - -
Total cash costs $155 - -
Total production costs $253 - -
- ---------------------------------------------------------------------------------------------
LUCKY FRIDAY UNIT
- ---------------------------------------------------------------------------------------------
Tons of ore milled 57,222 47,357
Days of operation 63 63
Mining cost per ton $41.37 $46.50
Milling cost per ton $8.39 $6.99
Ore grade milled - Silver (oz./ton) 15.33 10.03
Silver produced (oz.) 836,130 459,547
Lead produced (tons) 6,695 5,104
Zinc produced (tons) 681 919
Average cost per ounce of silver produced:
Cash operating costs $5.17 $4.81
Total cash costs $5.17 $4.81
Total production costs $6.11 $6.14
(cont.)
Contact Bill Booth, vice president-investor and public affairs,or
Vicki Veltkamp, manager-corporate communications
6500 Mineral Drive Coeur d'Alene, Idaho 83815-8788 208/769-4100
FAX 208/769-4159
8
HECLA MINING COMPANY
Production Data (cont.)
First Quarter Ended
-----------------------------
Mar. 31, 1998 Mar. 31, 1997
- --------------------------------------------------------------------------------------------
GREENS CREEK (Reflects Hecla's 29.73% share)
- --------------------------------------------------------------------------------------------
Tons of ore milled 36,397 36,780
Days of operation 90 90
Mining cost per ton $32.60 $35.47
Milling cost per ton $22.53 $21.12
Ore grade milled - Silver (oz./ton) 22.44 24.55
Silver produced (oz.) 630,510 700,837
Gold produced (oz.) 3,993 3,922
Lead produced (tons) 1,412 1,478
Zinc produced (tons) 3,574 3,289
Average cost per ounce of silver produced:
Cash operating costs $3.55 $2.36
Total cash costs $3.55 $2.36
Total production costs $5.82 $5.03
- --------------------------------------------------------------------------------------------
OTHER (2)
- --------------------------------------------------------------------------------------------
Gold produced (oz.) 1,565 19,627
Silver produced (oz.) 322 81,879
(1) The Rosebud mine commenced operations in April 1997.
(2) Includes the Company's share of production from the Grouse
Creek mine and other sources.
CAPITAL EXPENDITURES
(dollars in thousands)
First Quarter Ended
------------------------------------
Mar. 31, 1998 Mar. 31, 1997
-------------- -------------
Rosebud (50%*) $ 9 $ 2,241
Lucky Friday 2,434 1,092
Greens Creek (29.73%*) 633 180
La Choya 225 - -
Industrial minerals 491 587
Capitalized interest 271 361
Other 17 81
-------- --------
Total capitalized $ 4,080 $ 4,542
======== ========
*Hecla's share
HEDGED POSITIONS
As of March 31, 1998
Silver: 2,005,000 ounces hedged @ average price of $6.01.
Gold: 15,000 ounces hedged @ average price of $354.
Contact Bill Booth, vice president-investor and public affairs,or
Vicki Veltkamp, manager-corporate communications
6500 Mineral Drive Coeur d'Alene, Idaho 83815-8788 208/769-4100
FAX 208/769-4159