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[Hecla Logo] Exhibit 13
98-09
HECLA REPORTS THIRD QUARTER RESULTS:
LOW GOLD, ZINC AND LEAD PRICES IMPACT BOTTOM LINE
For the Period Ended September 30, 1998
For release: November 3, 1998
COEUR D'ALENE, IDAHO - Hecla Mining Company (HL & HL-PrB:NYSE) today
reported a third quarter 1998 loss applicable to common shareholders of $2.7
million, or 5 cents per common share, after the payment of a quarterly dividend
of $2 million to holders of preferred stock. This compares to a loss of
$1.1 million, or 2 cents per common share, for the third quarter of 1997. Third
quarter 1998 results as compared to the same period in 1997 were affected by a
lower gold price, decreased gold production and sharply decreased zinc and lead
prices.
In the first nine months of 1998, Hecla reported a loss of $0.8 million, or
2 cents per common share, compared to a loss of $1.5 million, or 3 cents per
common share, in the first nine months of 1997.
Hecla's silver production increased 38% compared to the first nine months
of 1997, and Hecla is on track to mine more than 7 million ounces of silver this
year. Per ounce costs of production at the Lucky Friday mine in northern Idaho
have decreased from the same period a year ago, thanks to this year's successful
underground expansion and the resulting increased ore grade.
Arthur Brown, Hecla's chairman and chief executive officer, said, "Our
operations are holding the line on costs of production against such challenges
as low gold and by-product prices. Our gold operations are still some of the
lowest cost mines in North America, even though our production is declining as
operations at the La Choya mine reach their final stages. I'm pleased with the
performance of our silver operations, although I am disappointed that the prices
of silver, lead and zinc have not fulfilled the expectations we held for them
early this year. A bright spot has been our industrial minerals operations,
which have shown an increase in both sales and gross profit during the first
nine months of this year compared to last year."
METALS PRICES
The gold price remained depressed during the third quarter of 1998,
averaging $289 per ounce, compared to $324 per ounce in the same period a year
ago, an 11% decrease. The silver price improved 15%, averaging $5.22 per ounce
in the third quarter of 1998, compared to $4.53 in the third quarter of 1997.
Most significantly, lead and zinc, which are important by-products of Hecla's
silver mines, are at much lower prices than a year ago. The zinc price decreased
37%, from an average of 73 cents per pound in the third quarter of 1997 to 46
cents per pound during the third quarter of 1998. During the third quarter of
this year, the lead price decreased 14%, averaging 24 cents per pound compared
to 28 cents per pound in the third quarter of 1997.
SILVER
Hecla's silver operations have produced approximately 5.4 million ounces of
silver during the first nine months of 1998, and are expected to meet or exceed
the anticipated 7 million ounces of silver production for the year. The Lucky
Friday mine successfully completed a major expansion in 1998 and is expected to
double its production to about 4 million ounces of silver this year. The
expansion project met or exceeded all the original feasibility operating
parameters, including budget, schedule, ore grade and production expectations.
Along with the increased production, the mine has lowered total per ounce cash
costs to an average of $4.50 in the third
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quarter of 1998, more than $1.00 per ounce less than 1997's third quarter total
cash cost average of $5.58 per ounce. These lower costs were achieved despite
significantly lower lead by-product revenue due to the lead price decline. The
silver grade was 73% higher during the third quarter of 1998 compared to the
same period a year ago, as a result of mining in the expansion area. The mine
produced an average head grade of more than 17 ounces of silver per ton during
the third quarter of 1998.
At the Greens Creek silver mine in Alaska, in which Hecla holds a 29.7%
joint-venture interest with Kennecott Greens Creek Mining Company, mining and
milling costs per ton have decreased this year compared to the first nine months
of last year. The silver ore grade mined was slightly lower than the same
period last year. Costs per ounce at Greens Creek are higher than the same
period a year ago, principally due to lower prices for zinc, gold and lead by-
products in the 1998 period.
GOLD
Hecla's gold operations produced 95,403 ounces of gold during the first
nine months of 1998, at a total cash cost of $185 per ounce. The Rosebud mine in
northern Nevada produced 18,259 ounces of gold for Hecla's account in the third
quarter, at an average total cash cost of $178 per ounce. For the first nine
months, Rosebud has produced 50,550 ounces of gold for Hecla's account. Costs
of production at Rosebud have increased slightly since last year. Milling costs
were higher in the third quarter compared to the same period last year due to
increased costs incurred at Newmont's Pinon Mill at the Twin Creeks complex.
Newmont Gold Company is Hecla's 50/50 joint-venture partner in the operation and
is responsible for processing Rosebud ore. The Rosebud mine ore grade was lower
in the third quarter of this year compared to the same quarter of 1997, as the
higher-grade ore was mined early on.
In Mexico, operations at the La Choya mine are in the process of winding
down. Mining will be completed by the end of the year, although heap leach gold
recovery will continue at least through 1999. La Choya will exceed production
expectations for 1998, due to an additional pit extension during the year. The
mine produced 28,673 ounces of gold through the first nine months of the year at
an average total cash cost of $205 per ounce.
INDUSTRIAL MINERALS
Hecla's industrial minerals division continues to make a strong
contribution, providing cash flow from operations of $8.5 million in the first
nine months of the year, compared to $7 million in the same period last year,
from Kentucky-Tennessee Clay Company, a ball clay, kaolin and feldspar
subsidiary, and MWCA Inc., a landscaping subsidiary. Both sales and gross
profit have increased during the first nine months of 1998 compared to a year
ago. K-T Clay Company has completed the expansion of a ball clay processing
facility in Tennessee to fulfill a large customer contract acquired earlier this
year.
PROJECTS
Hecla continues to evaluate advanced properties, operating mines or
companies that would create value for Hecla's shareholders. Mr. Brown said, "At
our current rate of production, we already have at least 20 years of high-
quality silver reserves and resources at our operating mines, so our main focus
has been on expanding our gold reserves. In addition to exploring the area
around the Rosebud mine in Nevada, we have extended our exploration effort to
Mexico and South America."
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At the Noche Buena property, near the La Choya mine in Sonora, Mexico,
Hecla has increased the geologic resource to more than 250,000 ounces of gold,
and the property remains open to further exploration. During the third quarter,
Hecla initiated in-fill and condemnation drilling, as well as metallurgical
testing, with favorable results so far. This work is expected to be finished
during the fourth quarter of 1998. The data currently being collected will be
used in a feasibility study that is anticipated to be completed by the second
quarter of 1999. Mine permitting activities have also commenced. Hecla now
holds a 100% interest in the property after acquiring an additional 30% interest
in October 1998. Because it is located near Hecla's La Choya mine, Noche Buena
could have the advantage of being able to use the existing infrastructure and
equipment currently in use at La Choya.
In Peru, Hecla is conducting exploration efforts at the Alto Dorado gold
property, which consists of 14,800 hectares. Five mineralized zones have been
identified, with some encouraging gold-bearing intervals. A preliminary
drilling program has encountered gold mineralization, and the exploration
program will continue.
The Cacique gold project in Chile is another Hecla exploration project. A
previous drilling program in the late 1980s revealed several multi-gram drill
intercepts. Hecla has initiated a new program of trenching, mapping and
sampling, and a reverse circulation drilling program is scheduled for the first
quarter of 1999.
OTHER
Long-term debt for the company at the end of the third quarter was $36
million. Proceeds from borrowings during the year have been used principally
for capital expenditures relating to the expansion at Lucky Friday and the new
ball clay processing facilities that will supply raw material to a major
customer.
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, exploration project uncertainties, 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 undertakes no obligation to
publicly update or revise any forward-looking statements.
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
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HECLA MINING COMPANY
(dollars in thousands, except per share, per ounce and per pound amounts - unaudited)
Third Quarter Ended Nine Months Ended
- ----------------------------------------------------------------------------------------------------
HIGHLIGHTS Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
- ----------------------------------------------------------------------------------------------------
FINANCIAL DATA
- ----------------------------------------------------------------------------------------------------
Total revenue $ 39,355 $ 41,943 $ 129,076 $ 133,689
Gross profit 3,029 5,438 11,625 16,400
Net income (loss) (641) 935 5,202 4,507
Loss applicable to common shareholders (2,654) (1,078) (836) (1,531)
Basic and diluted loss per common share (0.05) (0.02) (0.02) (0.03)
Cash flow provided by operating activities 2,028 7,476 2,623 5,802
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SALE OF PRODUCTS BY SEGMENT
- ----------------------------------------------------------------------------------------------------
Gold operations $ 7,150 $ 13,938 $ 24,780 $ 43,862
Silver operations 11,454 9,506 31,490 26,422
Industrial minerals 20,007 17,760 68,125 59,445
---------- ---------- ---------- ----------
Total sales $ 38,611 $ 41,204 $ 124,395 $ 129,729
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GROSS PROFIT (LOSS) BY SEGMENT
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Gold operations $ 524 $ 4,032 $ 4,012 $ 11,859
Silver operations 687 (124) 686 (1,689)
Industrial minerals 1,818 1,530 6,927 6,230
Total gross profit $ 3,029 $ 5,438 $ 11,625 $ 16,400
OTHER DATA
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EBITDA BY SEGMENT (1)
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Gold operations $ 2,306 $ 6,268 $ 8,946 $ 16,832
Silver operations 3,348 2,212 7,801 4,923
Industrial minerals 3,049 2,692 10,720 9,781
Total EBITDA $ 8,703 $ 11,172 $ 27,467 $ 31,536
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PRODUCTION SUMMARY - TOTALS
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Gold - Ounces 28,447 41,158 95,403 130,491
Silver - Ounces 2,129,284 1,348,783 5,350,933 3,873,287
Lead - Tons 8,680 5,902 25,335 18,899
Zinc - Tons 5,503 4,121 14,365 12,683
Industrial minerals - Tons shipped 276,747 268,728 869,674 788,191
Average cost per ounce of gold produced:
Cash operating costs ($/oz.) 181 160 173 167
Total cash costs ($/oz.) 195 171 185 175
Total production costs ($/oz.) 273 239 249 237
Average cost per ounce of silver produced:
Cash operating costs ($/oz.) 3.59 3.21 3.88 3.36
Total cash costs ($/oz.) 3.59 3.21 3.88 3.36
Total production costs ($/oz.) 4.93 5.06 5.30 5.23
- ----------------------------------------------------------------------------------------------------
AVERAGE METAL PRICES
- ----------------------------------------------------------------------------------------------------
Gold - Realized ($/oz.) 297 352 301 366
Gold - London Final ($/oz.) 289 324 294 339
Silver - Handy & Harman ($/oz.) 5.22 4.53 5.73 4.77
Lead - LME Cash (cents/pound) 24.2 28.4 24.5 29.2
Zinc - LME Cash (cents/pound) 46.4 72.8 47.5 61.7
(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 income
taxes, debt service, capital expenditures, and other nonsite operating expenses.
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HECLA MINING COMPANY
Consolidated Statements of Operations and Comprehensive Loss
(dollars and shares in thousands, except per share amounts - unaudited)
Third Quarter Ended Nine Months Ended
------------------------------- ------------------------------
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
-------------- -------------- -------------- --------------
Sales of products $ 38,611 $ 41,204 $ 124,395 $ 129,729
--------- --------- --------- ---------
Cost of sales and other direct
production costs 29,904 30,032 96,918 98,192
Depreciation, depletion and
amortization 5,678 5,734 15,852 15,137
--------- --------- --------- ---------
35,582 35,766 112,770 113,329
--------- --------- --------- ---------
Gross profit 3,029 5,438 11,625 16,400
--------- --------- --------- ---------
Other operating expenses:
General and administrative 1,669 1,951 5,946 5,984
Exploration 1,396 1,738 3,348 5,530
Depreciation and amortization 100 76 293 233
Provision for closed operations and
environmental matters 332 91 463 239
--------- --------- --------- ---------
3,497 3,856 10,050 11,986
--------- --------- --------- ---------
Income (loss) from operations (468) 1,582 1,575 4,414
--------- --------- --------- ---------
Other income (expense):
Interest and other income 744 739 4,681 3,960
Miscellaneous expense (536) (383) (1,187) (1,160)
Gain on investments 53 - - 1,294 - -
Interest expense:
Total interest cost (802) (510) (2,407) (1,930)
Less amount capitalized 362 132 950 609
--------- --------- --------- ---------
(179) (22) 3,331 1,479
--------- --------- --------- ---------
Income (loss) before income taxes (647) 1,560 4,906 5,893
Income tax (provision) benefit 6 (625) 296 (1,386)
--------- --------- --------- ---------
Net income (loss) (641) 935 5,202 4,507
Preferred stock dividends (2,013) (2,013) (6,038) (6,038)
--------- --------- --------- ---------
Loss applicable to common shareholders (2,654) (1,078) (836) (1,531)
--------- --------- --------- ---------
Other comprehensive loss, net of tax:
Unrealized holding losses on securities (139) (147) (97) (265)
Reclassification adjustment for gain
included in net loss (62) - - (62) - -
--------- --------- --------- ---------
Other comprehensive loss (201) (147) (159) (265)
--------- --------- --------- ---------
Comprehensive loss $ (2,855) $ (1,225) $ (995) $ (1,796)
========= ========= ========= =========
Basic and diluted loss per common share $ (0.05) $ (0.02) $ (0.02) $ (0.03)
========= ========= ========= =========
Weighted average number of common
shares outstanding 55,105 55,095 55,100 54,300
========= ========= ========= =========
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HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Sept. 30, 1998 Dec. 31, 1997
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ASSETS
- --------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 4,085 $ 3,794
Accounts and notes receivable 30,664 24,445
Income tax refund receivable 1,087 793
Inventories 23,734 22,116
Other current assets 2,148 1,416
---------- ----------
Total current assets 61,718 52,564
Investments 3,130 2,521
Restricted investments 7,061 7,926
Properties, plants and equipment, net 176,847 180,037
Other noncurrent assets 8,660 7,620
---------- ----------
Total assets $ 257,416 $ 250,668
========== ==========
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LIABILITIES
- --------------------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 12,405 $ 12,590
Accrued payroll and related benefits 3,308 2,436
Preferred stock dividends payable 2,012 2,012
Accrued taxes 1,031 1,016
Accrued reclamation and closure costs 9,160 6,914
---------- ----------
Total current liabilities 27,916 24,968
Deferred income taxes 300 300
Long-term debt 35,958 22,136
Accrued reclamation and closure costs 25,140 34,406
Other noncurrent liabilities 8,703 8,518
---------- ----------
Total liabilities 98,017 90,328
---------- ----------
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SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Preferred stock 575 575
Common stock 13,792 13,789
Capital surplus 374,017 373,966
Accumulated deficit (222,979) (222,143)
Accumulated other comprehensive loss (5,120) (4,961)
Treasury stock (886) (886)
---------- ----------
Total shareholders' equity 159,399 160,340
---------- ----------
Total liabilities and shareholders' equity $ 257,416 $ 250,668
========== ==========
Common shares outstanding at end of period 55,105 55,094
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HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Nine Months Ended
-------------------------------------
Sept. 30, 1998 Sept. 30, 1997
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OPERATING ACTIVITIES
- -------------------------------------------------------------------------------------------------
Net income $ 5,202 $ 4,507
Noncash elements included in net income:
Depreciation, depletion and amortization 16,145 15,370
Gain on disposition of properties, plants and equipment (2,259) (1,125)
Gain on investments (1,294) - -
Provision for reclamation and closure costs 436 776
Change in:
Accounts and notes receivable (6,219) (2,968)
Income tax refund receivable (294) 405
Inventories (1,618) 2,560
Other current assets (732) 538
Accounts payable and accrued expenses (360) (4,639)
Accrued payroll and related benefits 872 (212)
Accrued taxes 15 219
Accrued reclamation and other noncurrent liabilities (7,271) (9,629)
---------- ----------
Net cash provided by operating activities 2,623 5,802
---------- ----------
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INVESTING ACTIVITIES
- ------------------------------------------------------------------------------------------------
Additions to properties, plants and equipment (14,073) (16,792)
Proceeds from disposition of properties, plants and equipment 3,548 1,865
Proceeds from sale of investments 1,294 - -
Decrease in restricted investments 865 13,792
Purchase of investments and increase in cash surrender
value of life insurance, net (768) (1,211)
Other, net (1,211) 1,588
---------- ----------
Net cash used by investing activities (10,345) (758)
---------- ----------
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FINANCING ACTIVITIES
- ------------------------------------------------------------------------------------------------
Common stock issued under stock and stock option plans 54 46
Issuance of common stock, net of offering costs - - 23,370
Dividends on preferred stock (6,038) (6,038)
Borrowings on long-term debt 33,000 46,300
Repayment on long-term debt (19,003) (70,571)
---------- ----------
Net cash provided (used) by financing activities 8,013 (6,893)
---------- ----------
Net increase in cash and cash equivalents 291 (1,849)
Cash and cash equivalents at beginning of period 3,794 7,159
---------- ----------
Cash and cash equivalents at end of period $ 4,085 $ 5,310
========== ==========
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HECLA MINING COMPANY
Production Data
Third Quarter Ended Nine Months Ended
------------------------------- --------------------------------
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
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LA CHOYA UNIT
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Tons of ore processed 267,738 718,415 1,101,884 2,051,034
Days of operation 92 92 273 273
Mining cost per ton $0.73 $2.09 $1.46 $2.41
Ore grade crushed - Gold (oz./ton) 0.023 0.028 0.019 0.030
Gold produced (oz.) 5,313 18,704 28,673 57,879
Silver produced (oz.) 650 1,868 3,272 5,957
Average cost per ounce of gold produced:
Cash operating costs $253 $182 $205 $184
Total cash costs $253 $183 $205 $185
Total production costs $260 $224 $207 $224
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ROSEBUD UNIT (Reflects Hecla's 50% share) (1)
- ---------------------------------------------------------------------------------------------------------------
Tons of ore mined 45,889 37,042 129,765 75,222
Tons of ore milled 48,720 31,184 130,131 63,723
Days of operation 92 92 273 183
Mining cost per ton $25.97 $28.22 $26.42 $28.17
Milling cost per ton $21.04 $14.27 $15.65 $12.51
Ore grade milled - Gold (oz./ton) 0.394 0.562 0.405 0.482
Ore grade milled - Silver (oz./ton) 3.34 3.10 3.17 3.03
Gold produced (oz.) 18,259 16,914 50,550 29,141
Silver produced (oz.) 91,812 58,371 213,802 112,605
Average cost per ounce of gold produced:
Cash operating costs $160 $136 $155 $133
Total cash costs $178 $157 $174 $155
Total production costs $277 $257 $273 $262
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LUCKY FRIDAY UNIT
- ---------------------------------------------------------------------------------------------------------------
Tons of ore milled 70,401 51,021 185,377 148,712
Days of operation 64 64 191 191
Mining cost per ton $48.79 $40.29 $46.22 $43.68
Milling cost per ton $6.72 $8.99 $7.75 $7.79
Ore grade milled - Silver (oz./ton) 17.33 10.02 16.88 9.97
Silver produced (oz.) 1,151,914 497,612 2,969,325 1,445,173
Lead produced (tons) 6,947 4,490 20,523 14,625
Zinc produced (tons) 624 661 1,927 2,418
Average cost per ounce of silver produced:
Cash operating costs $4.50 $5.58 $4.60 $5.24
Total cash costs $4.50 $5.58 $4.60 $5.24
Total production costs $5.38 $6.85 $5.48 $6.52
(cont.)
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HECLA MINING COMPANY
Production Data (cont.)
Third Quarter Ended Nine Months Ended
------------------------------ -------------------------------
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
- -----------------------------------------------------------------------------------------------------------
GREENS CREEK (Reflects Hecla's 29.73% share)
- -----------------------------------------------------------------------------------------------------------
Tons of ore milled 40,918 36,193 117,236 109,256
Days of operation 92 92 273 273
Mining cost per ton $30.12 $40.93 $30.54 $38.00
Milling cost per ton $21.80 $23.61 $21.30 $22.26
Ore grade milled - Silver (oz./ton) 27.38 28.61 23.79 25.80
Silver produced (oz.) 884,908 788,871 2,163,426 2,172,664
Gold produced (oz.) 4,648 4,291 13,026 12,131
Lead produced (tons) 1,733 1,412 4,812 4,274
Zinc produced (tons) 4,879 3,460 12,438 10,265
Average cost per ounce of silver produced:
Cash operating costs $2.42 $1.71 $2.90 $2.11
Total cash costs $2.42 $1.71 $2.90 $2.11
Total production costs $4.33 $3.93 $5.05 $4.36
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OTHER (2)
- -----------------------------------------------------------------------------------------------------------
Gold produced (oz.) 227 1,249 3,154 31,340
Silver produced (oz.) - - 2,061 1,108 136,888
(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)
Nine Months Ended
----------------------------------------
Sept. 30, 1998 Sept. 30, 1997
-------------- --------------
Rosebud (50%*) $ 79 $ 5,872
Lucky Friday 5,672 5,830
Greens Creek (29.73%*) 2,138 1,371
Noche Buena 1,061 - -
La Choya 617 127
Industrial minerals 3,488 2,440
Capitalized interest 950 609
Other 68 543
----------- -----------
Total Capitalized $ 14,073 $ 16,792
=========== ===========
*Hecla's share
HEDGED POSITIONS
As of Sept. 30, 1998
Silver: 1,100,000 ounces hedged at average price of $6.18.
Gold: 6,000 ounces hedged at average price of $354.