1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to ______________________
Commission file number 1-8491
HECLA MINING COMPANY
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 82-0126240
- - - ---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
- - - ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
208-769-4100
- - - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for at least the past 90 days. Yes XX . No .
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding October 31, 1994
- - - ------------------------------------- -----------------------------------
Common stock, par value 25 cents per share 48,081,919 shares
2
HECLA MINING COMPANY and SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1994
I N D E X
Page
----
PART I. - Financial Information
Item 1 - Consolidated Balance Sheets - September 30, 1994
and December 31, 1993 3
- Consolidated Statements of Operations - Three
Months and Nine Months Ended September 30, 1994
and 1993 4
- Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1994 and 1993 5
- Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. - Other Information
Item 1 - Legal Proceedings 21
Item 6 - Exhibits and Reports on Form 8-K 21
-2-
3
PART I - FINANCIAL INFORMATION
HECLA MINING COMPANY and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(dollars in thousands)
September 30, December 31,
1994 1993
------------- ------------
(Note 2)
ASSETS
------
Current assets:
Cash and cash equivalents $ 20,522 $ 40,031
Short-term investments 84 27,636
Accounts and notes receivable 26,023 18,841
Income tax refund receivable 785 - -
Inventories 14,720 15,020
Other current assets 2,148 2,003
--------- ----------
Total current assets 64,282 103,531
Investments 5,274 6,565
Funds held in escrow 13,497 - -
Properties, plants and equipment, net 261,743 229,055
Other noncurrent assets 5,310 7,002
--------- ----------
Total assets $ 350,106 $ 346,153
========= ==========
LIABILITIES
-----------
Current liabilities:
Accounts payable and accrued expenses $ 16,956 $ 17,312
Accrued payroll and related benefits 2,604 2,056
Preferred stock dividends payable 2,012 2,012
Accrued taxes 1,247 928
--------- ----------
Total current liabilities 22,819 22,308
Deferred income taxes 359 359
Long-term debt 1,821 50,009
Accrued reclamation costs 21,932 24,947
Other noncurrent liabilities 3,641 3,858
--------- ----------
Total liabilities 50,572 101,481
--------- ----------
SHAREHOLDERS' EQUITY
--------------------
Preferred stock, 25 cents par value,
authorized 5,000,000 shares, issued
and outstanding - 2,300,000
liquidation preference $117,012 575 575
Common stock, 25 cents par value,
authorized 100,000,000 shares;
issued 1994 - 48,138,774;
issued 1993 - 39,640,083 12,035 10,080
Capital surplus 328,957 265,687
Retained deficit (40,954) (30,774)
Foreign currency translation adjustment (182) - -
Net unrealized loss on marketable
equity securities (8) (8)
Less common stock reacquired at cost;
1994 - 62,355 shares, 1993 - 63,858 shares (889) (888)
--------- ----------
Total shareholders' equity 299,534 244,672
--------- ----------
Total liabilities and shareholders' equity $ 350,106 $ 346,153
========= ==========
The accompanying notes are an integral part of the financial statements.
-3-
4
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars and shares in thousands, except for per-share amounts)
Three Months Ended Nine Months Ended
---------------------------------- ----------------------------------
Sept. 30, 1994 Sept. 30, 1993 Sept. 30, 1994 Sept. 30, 1993
-------------- -------------- -------------- --------------
(Note 2) (Note 2)
Sales of products $ 35,279 $ 22,605 $ 99,666 $ 72,406
--------- --------- --------- ----------
Cost of sales and other direct
production costs 25,216 18,775 80,257 62,121
Depreciation, depletion and
amortization 4,217 3,031 10,493 10,366
--------- --------- --------- ----------
29,433 21,806 90,750 72,487
--------- --------- --------- ----------
Gross profit (loss) 5,846 799 8,916 (81)
--------- --------- --------- ----------
Other operating expenses:
General and administrative 2,611 1,783 8,950 5,318
Exploration 2,403 1,477 6,502 3,331
Depreciation and amortization 81 196 443 501
Provision for closed operations and
environmental matters 449 464 1,073 912
--------- --------- --------- ----------
5,544 3,920 16,968 10,062
--------- --------- --------- ----------
Income (loss) from operations 302 (3,121) (8,052) (10,143)
--------- --------- --------- ----------
Other income (expense):
Interest and other income 793 1,346 4,113 1,965
Miscellaneous income (expense) - - 169 - - 152
Gain (loss) on investments 38 27 1,129 (162)
Minority interest in net loss of
consolidated subsidiary - - - - - - 43
Interest expense:
Total interest cost (476) (1,070) (2,523) (3,990)
Less amount capitalized - - 855 1,751 2,226
--------- --------- --------- ----------
355 1,327 4,470 234
--------- --------- --------- ----------
Income (loss) before income taxes
and extraordinary loss 657 (1,794) (3,582) (9,909)
Income tax (provision) benefit 159 122 272 (34)
--------- --------- --------- ----------
Net income (loss) before extraordinary loss 816 (1,672) (3,310) (9,943)
Extraordinary loss on early retirement
of long-term debt (10) - - (833) - -
--------- --------- --------- ----------
Net income (loss) 806 (1,672) (4,143) (9,943)
Preferred dividends (2,013) (2,057) (6,038) (2,057)
--------- --------- --------- ----------
Net loss applicable to common
shareholders $ (1,207) $ (3,729) $ (10,181) $ (12,000)
========= ========= ========= ==========
Net income (loss) per common share:
Loss applicable to common shareholders
before extraordinary loss $ (0.03) $ (0.09) $ (0.22) $ (0.32)
Extraordinary loss on early retirement
of long-term debt - - - - (0.02) - -
--------- --------- --------- ----------
Net income (loss) per common share $ (0.03) $ (0.09) $ (0.24) $ (0.32)
========= ========= ========= ==========
Cash dividends per common share $ - - $ - - $ - - $ - -
========= ========= ========= ==========
Weighted average number of common
shares outstanding 48,075 39,576 42,957 37,471
========= ========= ========= ==========
The accompanying notes are an integral part of the financial statements.
-4-
5
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(dollars in thousands)
Nine Months Ended
------------------------------------
Sept. 30, 1994 Sept. 30, 1993
-------------- --------------
(Note 2)
Operating activities:
Net loss $ (4,143) $ (9,943)
Noncash elements included in net loss:
Depreciation, depletion and amortization 10,936 10,867
Loss on disposition of properties, plants
and equipment 14 28
Gain on exchange of LYONs - - (323)
Extraordinary loss on early retirement of
long-term debt 833 - -
Accretion of interest on long-term debt 2,000 3,403
Provision for reclamation and closure costs 905 (455)
Minority interest in net loss of subsidiaries - - 43
Change in:
Accounts and notes receivable (7,182) 812
Income tax refund receivable (785) 390
Inventories 300 1,967
Other current assets (145) 145
Accounts payable and accrued expenses (356) 176
Dividend payable - - 2,057
Accrued payroll and related benefits 548 (192)
Accrued taxes 319 391
Noncurrent liabilities (181) (2,297)
--------- ---------
Net cash provided by operating activities 3,063 7,069
--------- ---------
Investing activities:
Additions to properties, plants and equipment (57,511) (22,203)
Proceeds from disposition of properties,
plants and equipment 13,406 234
Purchase of investments and increase in cash
surrender value of life insurance (1,926) (539)
Change in funds held in escrow (13,497) - -
Proceeds from maturity of short-term investments
and sale of investments 30,769 - -
Other, net (2,795) (3,786)
--------- ---------
Net cash applied to investing activities (31,554) (26,294)
--------- ---------
Financing activities:
Common stock issued under stock option plans 1,726 853
Dividends on preferred stock (6,038) (2,057)
Issuance of common stock 63,499 6,975
Early retirement of long-term debt (50,169) - -
Issuance of preferred stock - - 110,360
Decrease in deferred revenue (36) - -
--------- ---------
Net cash provided by financing activities 8,982 116,131
--------- ---------
Change in cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents (19,509) 96,906
Cash and cash equivalents at beginning of period 40,031 3,967
--------- ---------
Cash and cash equivalents at end of period $ 20,522 $ 100,873
========= =========
Supplemental disclosure of cash flow information:
Cash paid during period for:
Interest (net of amount capitalized) $ 16,497 $ 296
Income tax payments, (net of refunds) $ 397 $ (9)
The accompanying notes are an integral part of the financial statements.
-5-
6
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The notes to the Company's 1993 historical financial statements
included in its Form 10-K filing with the Securities and Exchange
Commission and the notes to the Company's 1993 supplemental
consolidated financial statements, which reflect the pooling of
interests transaction between the Company and Equinox Resources
Ltd. ("Equinox"), as set forth in the Company's Amendment No. 3
to Form S-3 Registration Statement filed with the Securities and
Exchange Commission on May 4, 1994, substantially apply to the
interim consolidated financial statements for the three and nine
months ended September 30, 1994, and are not repeated here.
Note 2. The financial information given in the accompanying unaudited
interim consolidated financial statements reflects all
adjustments which are, in the opinion of management, necessary to
a fair statement of the results for the interim periods reported.
All such adjustments are of a normal recurring nature. All
financial statements presented herein are unaudited. However,
the balance sheet as of December 31, 1993, was derived from the
audited supplemental consolidated balance sheet described in Note
1 above. The balance sheet as of December 31, 1993, the
statements of operations for the three and nine months ended
September 30, 1993, and statement of cash flows for the nine
months ended September 30, 1993, as previously reported, have
been restated to give retroactive effect to the acquisition by
the Company of Equinox on March 11, 1994, which has been treated
as a pooling of interests for financial reporting and accounting
purposes.
Separate operating results of the combining entities for the
three- and nine-month periods ended September 30, 1993 are as
follows (in thousands):
Three months Nine months
ended ended
Sept 30, Sept 30,
1993 1993
------------ -----------
Sale of products:
Hecla $ 19,542 $ 63,496
Equinox 3,063 8,910
-------- --------
$ 22,605 $ 72,406
======== ========
Net loss applicable to
common shareholders:
Hecla $ 3,191 $ 9,974
Equinox 538 2,026
-------- --------
$ 3,729 $ 12,000
======== ========
-6-
7
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Note 3. The components of the income tax provision (benefit) for the nine
months ended September 30, 1994 and 1993 are as follows (in
thousands):
1994 1993
------- -------
Current:
State income taxes $ 208 $ 34
Federal income tax benefit (480) - -
------- -------
Total current provision (benefit) (272) 34
Deferred provision - - - -
------- -------
Total $ (272) $ 34
======= =======
The Company's income tax provision (benefit) for the nine months
of 1994 and 1993 varies from the amount that would have been
provided by applying the statutory rate to the income before
income taxes primarily due to the utilization of net operating
losses.
Note 4. Inventories consist of the following (in thousands):
Sept 30, December 31,
1994 1993
-------- ------------
Concentrates and metals in transit
and other products $ 3,496 $ 2,615
Industrial mineral products 4,314 5,260
Materials and supplies 6,910 7,145
-------- --------
$ 14,720 $ 15,020
======== ========
Note 5 The Company has received notices from the United States
Environmental Protection Agency ("EPA") that it and numerous
other parties are potentially responsible to remediate alleged
hazardous substance releases at several sites under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended ("CERCLA" or "Superfund"). In addition,
in the mid-1980s, the Company was named as a defendant in two
separate actions brought in Federal District Court in Colorado
asserting liability of the Company under CERCLA for response
costs and natural resource damages associated with a superfund
site located near Leadville, Colorado ("Leadville Site"). These
legal proceedings were consolidated by the Federal District Court
into a single legal proceeding. On January 6, 1993, the Colorado
Federal District Court entered a Partial Consent Decree between
the United States and the Company which resolves all issues
concerning the Company's alleged liability to the United States
for response costs at the Leadville Site, except for response
costs related to certain mill tailings impoundments located at
the Leadville Site. The Company paid the United States $450,000
under the decree. In February 1994, the Company entered into a
second partial consent decree with the federal government
providing for the payment by the Company of $516,000 to cover a
portion of EPA's past costs at the site and a portion of the
costs of the selected response action for the tailings
impoundments. The consent decree has been signed by all parties,
and on August 17, 1994 approved and entered by the Colorado
Federal District Court. The approval of the consent decree by
the
-7-
8
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Court and the Company's payment of $516,000 to the U.S.
Government provided for in the decree releases the Company from
liability to the federal government for all response costs under
Superfund for the entire Leadville Site.
In October 1989, and again in February 1990, the Company was
notified by the EPA that the EPA considered the Company a
Potentially Responsible Party ("PRP") at the Bunker Hill
Superfund Site located at Kellogg, Idaho ("Bunker Hill Site").
The EPA has also notified a number of other companies involved in
mining or smelting activities in the site area that the EPA has
determined are also PRPs at the Bunker Hill Site. In February
1994, the Company and three other mining company PRPs entered
into a Consent Decree with EPA and the State of Idaho pursuant to
which the Company and two of the three companies signing the
decree agreed to implement remediation work at a portion of the
Bunker Hill Site. The remediation will primarily involve the
removal and replacement of lead-contaminated soils in residential
yards within the site and is estimated to be completed by the
participating mining companies over the period of the next five
to seven years. The Consent Decree also provides for the mining
companies to reimburse EPA for a portion of the government's past
costs incurred at the Bunker Hill Site. The Consent Decree has
been signed by all PRPs, the EPA, and the State of Idaho, has
received public comment, and is pending approval by the Federal
District Court in Idaho. The Consent Decree, when entered by the
court, will settle the Company's response-cost liability under
Superfund at the Bunker Hill Site.
The Records of Decision with respect to both the populated and
nonpopulated areas for the Bunker Hill Site indicate that future
remediation costs total approximately $93.0 million.
Additionally, the federal government has asserted that it has
incurred approximately $17.0 million in past costs at the site.
Because CERCLA assigns joint and several liability among the
PRPs, any one of the PRPs, including the Company, could be
assessed the entire cost of remediation. However, based upon the
terms of the consent decree and related agreements for the Bunker
Hill Site, as described above, the Company has accrued an amount
for the Company's share of such remediation and other costs that
management presently believes is the most likely amount that the
Company will be required to fund. The total allowance for
liability for remedial activity costs at the Bunker Hill Site is
$9.8 million as of September 30, 1994. Other than consulting
work necessary for the implementation of the Company's allocated
portion of the remedial activity at this site, the Company's
accruals do not include any future legal or consulting costs.
The Company does not believe that these costs will be material.
In addition, the Company has not included any amounts for
unasserted claims at these or any other sites because the
Company's potential liability has not been asserted or
established and amounts, if any, of potential liability are
impossible to determine.
In July 1991, the Coeur d'Alene Indian Tribe (the "Tribe")
brought a lawsuit, under CERCLA, in Idaho Federal District Court
against the
-8-
9
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Company and a number of other mining companies asserting claims
for damages to natural resources located downstream from the
Bunker Hill Site over which the Tribe alleges some ownership or
control. The Company has answered the Tribe's complaint denying
liability for natural resource damages and asserted a number of
defenses to the Tribe's claims, including a defense that the
Tribe has no ownership or control over the natural resources they
assert have been damaged. In July 1992, the Idaho Federal
District Court, in a separate action, determined that the Tribe
does not own the beds, banks and waters of Lake Coeur d'Alene and
the lower portion of its tributaries, the ownership of which is
the primary basis for the natural resource damage claims asserted
by the Tribe against the Company. Based upon the Tribe's appeal
of the July 1992 district court ownership decision to the 9th
Circuit U.S. Court of Appeals, the court in the natural resource
damage litigation issued an order on October 30, 1992, staying
the court proceedings in the natural resource damage litigation
until a final decision is handed down on the question of the
Tribe's title.
In 1991, the Company initiated litigation in the Idaho State
District Court in Kootenai County, Idaho, against a number of
insurance carriers which provided comprehensive general liability
insurance coverage to the Company and its predecessors. The
Company believes that the insurance companies have a duty to
defend and indemnify the Company under their policies of
insurance relating to claims asserted against the Company by the
EPA and the Tribe. In two separate decisions issued in August
1992 and March 1993, the court ruled that the primary insurance
companies had a duty to defend the Company in the Tribe's
lawsuit, but that no carrier had a duty to defend the Company in
the EPA proceeding. The Company has not reduced its
environmental accrual to reflect any anticipated insurance
proceeds.
In December 1993, Industrial Constructors Corp. ("ICC") served
the Company with a complaint in Federal District Court for the
District of Idaho alleging that the Company failed to comply with
the terms of the contract between the Company and ICC relating to
the earth moving work contracted to ICC at the Company's Grouse
Creek gold project. ICC has alleged that the Company owes ICC in
excess of $5.0 million not previously paid, including an
approximate $1.0 million retention currently held by the Company
under the terms of the contract. The Company terminated ICC's
work at the Grouse Creek project effective November 26, 1993,
pursuant to its rights under the contract and has contracted
the second season of work originally contracted to ICC to a
different earth moving contractor. The Company has answered
the complaint denying the allegations of ICC and has filed a
counterclaim against ICC in excess of $2.0 million for damages
incurred by the Company as a result of ICC's failure to comply
with the terms of the contract.
In June 1994, a judgment was entered against the Company in Idaho
State District Court in the amount of $10.0 million in
compensatory damages and $10.0 million in punitive damages based
on a jury verdict rendered in late May 1994 with respect to a
lawsuit previously filed
-9-
10
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
against the Company by Star Phoenix Mining Company ("Star
Phoenix"), a former lessee of the Star Morning Mine over a
dispute between the Company and Star Phoenix concerning the
Company's November 1990 termination of the Star Phoenix lease of
the Star Morning Mine property. A number of other claims by Star
Phoenix and certain principals of the Star Phoenix against the
Company in the lawsuit were dismissed by the State District
Court. The Company's post-trial motions were denied by the State
District Court, and the Company has appealed the District Court
judgment to the Idaho State Supreme Court. Post-judgment
interest will accrue during the appeal period; the current
interest rate is 10.5%. In order to stay the ability of Star
Phoenix to collect on the judgment during the pending of the
appeal, the Company has posted an appeal bond in the amount of
$27.2 million representing 136% of the District Court judgment.
The Company pledged cash and cash equivalents totaling $10.0
million as collateral for the $27.2 million appeal bond.
Although the ultimate outcome of the appeal of the judgment is
subject to the inherent uncertainties of any legal proceeding,
based upon the Company's analysis of the factual and legal issues
associated with the proceeding before the Idaho District Court
and based on the opinions of outside counsel, as of the date
hereof, it is management's belief that the Company should
ultimately prevail in this matter, although there can be no
assurance.
On September 15, 1994, the Company intervened in a lawsuit
brought in the U.S. District Court in Idaho by two environmental
groups against the United States Forest Service seeking to enjoin
current and prospective logging, road building and mining
operations within six national forests located in Idaho. The
lawsuit alleges that the Forest Service failed to comply with
certain obligations with respect to agency consultation under
the Endangered Species Act in the planning process for these
national forests. The Company's Grouse Creek project is located
within one of the national forests identified in the lawsuit
and could be subject to the relief requested. Recent
communications betwen the applicable federal agencies regarding
activities at the project indicate that additional consultation
under the Endangered Species Act will be necessary for certain
aspects of the Company's Grouse Creek project. Although the
ultimate impact on the Grouse Creek project of any consultation
under the Endangered Species Act and the pending lawsuit can not
be predicted at the present time, based on the comprehensive
environmental assessment completed with respect to developing
the Company's Grouse Creek project and the fact that the project
has recently been placed in operation, the Company's management
currently does not anticipate that these matters will have a
material adverse affect on the Company or its financial
condition.
The Company is subject to other legal proceedings and claims
which have arisen in the ordinary course of its business and have
not been finally adjudicated. Although the ultimate disposition
of these matters and various other pending legal actions and
claims is not presently determinable, it is the opinion of the
Company's management, based upon the information available at
this time, that the outcome of these other suits and proceedings
will not have a material adverse effect on the results of
operations and financial condition of the Company and its
subsidiaries.
Note 6. On May 11, 1994, the Company completed a public offering of
7,475,000 shares of its common stock for a price to the public
of $9.125 per share and called for redemption of $109,950,000
principal amount at maturity of its outstanding Liquid Yield
Option Notes ("LYONs") due 2004. After underwriting discount
totaling $4,111,250 or $0.55 per
-10-
11
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
share, the net proceeds to the Company totaled $63,499,000. On
June 13, 1994, the Company used approximately $50.2 million of
the net proceeds to redeem Hecla's outstanding LYONs. The
Company recorded an extraordinary loss on early retirement of
debt totaling approximately $0.8 million for the nine-month
period ended September 30, 1994, which related principally to the
write-off of the unamortized balance of deferred issuance costs.
The Company currently intends to use the remaining proceeds from
the public offering for certain development projects and other
corporate purposes.
Note 7. On November 10, 1994, the Company's board of directors approved a
fourth quarter adjustment to earnings for asset write-downs
totaling approximately $8.3 million. The write-downs relate
principally to property, plant and equipment valuation
adjustments at the Republic Unit ($7.3 million) and the Zenda
property ($0.3 million), as well as, supplies inventory valuation
adjustments at the Republic Unit ($0.7 million). Recent
exploration efforts at the Republic Unit have been unsuccessful
in extending the mine's ore reserves. Although the Company
expects to continue exploration efforts there through 1995, the
mine is scheduled to discontinue operations in early 1995.
At the same meeting, the Company's board of directors also
approved increasing the reclamation and closure cost accrual by a
fourth quarter adjustment to earnings totaling $9.8 million. The
adjustment relates primarily to estimated reclamation and closure
costs at the Republic Unit ($7.4 million), the Coeur d'Alene
Mining District ($1.1 million), and other miscellaneous idle
properties ($1.3 million).
Note 8. On August 30, 1994, the Company entered into an unsecured
revolving and term loan facility, under the terms of which the
Company can borrow up to $40.0 million. Amounts may be borrowed
on a revolving credit basis through July 31, 1997, and are
repayable in eight quarterly installments beginning on October
31, 1998. Borrowings bear interest at floating rates depending
on the type of advance. During the commitment period, the
Company is obligated to pay an annual fee of $130,000. The
agreement contains restrictive covenants, among others,
concerning the current ratio, fixed charge coverage ratio and
limitations on the issuance of additional indebtedness. Amounts
available under the facility are based on a debt to cash flow
calculation. At September 30, 1994, there were no borrowings
outstanding under the facility.
-11-
12
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
The Company is primarily involved in the exploration,
development, mining and processing of gold, silver, lead, zinc
and industrial minerals. As such, the Company's revenues and
profitability are strongly influenced by world prices of gold,
silver, lead and zinc, which fluctuate widely and are affected by
numerous factors beyond the Company's control, including
inflation and worldwide forces of supply and demand. The
aggregate effect of these factors is not possible to accurately
predict. In the instances following the Company's description of
changes that are attributable to more than one factor, the
Company presents each attribute describing the change in
descending order relative to the attribute's importance to the
overall change.
The Company incurred net losses applicable to common shareholders
in the third quarter of 1994 and 1993 totaling $1.2 million and
$3.7 million, respectively. If the current market prices of
gold, silver and lead do not increase, and as a result of the
Company's preferred stock dividend payment requirements, the
Company expects to continue to experience net losses applicable
to common shareholders, even with the start-up of the Grouse
Creek project in November 1994. However, the Company's operating
cash flows are expected to increase subsequent to the
commencement of commercial production at this project even if
metals prices remain at current levels. At present metals prices
for 1994, the Company currently forecasts a net loss applicable
to common shareholders in the range of $25.0 million to $30.0
million after the expected dividends to preferred shareholders
totaling approximately $8.0 million for the year ending December
31, 1994. The anticipated 1994 loss includes the estimated
fourth quarter adjustments to earnings for asset write-downs and
reclamation and closure costs totaling $8.3 million and $9.8
million, respectively, as further described under "Financial
Condition and Liquidity" and Note 7 of Notes to Consolidated
Financial Statements. Due to the volatility of metals prices and
the significant impact metals price changes have on the Company's
operations, there can be no assurance that the actual results of
operations for theyear ending December 31, 1994 will be as
forecasted.
The variability of metals prices requires that the Company, in
assessing the impact of prices on recoverability of its assets,
exercise judgment as to whether price changes are temporary or
are likely to persist. The Company performs a comprehensive
evaluation of the recoverability of its assets on a periodic
basis. The evaluation includes a review of future cash flows
against the carrying value of the assets. Moreover, a review is
made on a quarterly basis to assess the impact of significant
changes in market conditions and other factors. Asset
write-downs may occur if the Company determines that
-12-
13
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
the carrying values attributed to individual assets are not
recoverable given reasonable expectations for future market
conditions.
In 1994, the Company expects to produce approximately 128,000
ounces of gold, including 52,000 ounces from the La Choya mine,
39,000 ounces from the Republic mine, 30,000 ounces from the
American Girl mine and an additional 7,000 ounces from other
sources. Assuming planned production level is attained with
the start-up of the Grouse Creek project in November 1994, the
Company's 1994 total gold production could increase by 31,000
ounces to 159,000 ounces, based upon its 80% interest in the
project. The Company's expected gold production increase in
1994 includes a full year of production at the La Choya project
and the start-up of production at the Grouse Creek project in
November of 1994, which offsets the decrease in gold production
at the Republic mine planned to close in early 1995. The
Company's actual level of gold production for 1994 will depend,
in significant part, upon the timely commencement of production
at the Grouse Creek project.
The Company's share of silver production for 1994 is expected to
be 1.8 million ounces compared to actual 1993 silver production
of 3.0 million ounces. The expected decrease in silver
production is primarily due to the suspension of operations at
the Greens Creek mine in April 1993 by the mine manager as well
as the Lucky Friday Silver Shaft accident on August 30, 1994,
which halted production there until repairs can be completed.
Production at the Lucky Friday mine is expected to resume no
earlier than mid-December 1994.
The Company's production of industrial minerals is expected to
increase in 1994 to 982,000 tons, principally due to increased
shipments of feldspar, ball clay and kaolin. Additionally, the
Company expects to ship 647,000 cubic yards of landscape material
from its recently acquired subsidiary, Mountain West Products,
acquired in late 1993.
RESULTS OF OPERATIONS
FIRST NINE MONTHS 1994 COMPARED TO FIRST NINE MONTHS 1993
The Company incurred a net loss of approximately $4.2 million
($0.10 per common share) in the first nine months of 1994
compared to a net loss of approximately $9.9 million ($0.27 per
common share) in the same period of 1993. After $6.0 million in
dividends to shareholders of the Company's Series B Cumulative
Preferred Stock, the Company's net loss applicable to common
shareholders for the first nine months of 1994 was approximately
$10.2 million, or $0.24 per common share. This loss was due to a
variety of factors, the most significant of which are discussed
below in descending order of magnitude.
Sales of the Company's products increased by approximately $27.3
million, or 37.6%, in the first nine months of 1994 as compared
to the same period in 1993, principally the result of (1)
increased product sales totaling $31.2 million, most notably from
the La Choya gold mine
-13-
14
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
in Mexico, which commenced production in February 1994, and
Mountain West Products, which was acquired in December 1993; and
(2) increases in the average prices of silver, gold and lead.
These two factors were partially offset by decreased sales in the
Company's metals segment, the impact of which is approximately
$6.4 million, attributable to (1) the suspension of operations at
the Greens Creek mine in April 1993; and (2) decreased gold
production in the 1994 period at the Republic gold mine due to
lower-grade ore being mined and processed.
Comparing the average metal prices for the nine months of 1993
with the comparable 1994 period, gold increased by 8% from $355
per ounce to $384 per ounce, silver increased by 27% from $4.20
per ounce to $5.33 per ounce, lead increased by 28% from $0.18
per pound to $0.23 per pound.
Cost of sales and other direct production costs increased
approximately $18.1 million, or 29%, in the first nine months of
1994 compared to the same period in 1993, primarily a result of
(1) production costs incurred during the 1994 period at Mountain
West Products (acquired in December 1993) totaling approximately
$9.4 million; (2) production costs at the La Choya mine during
the 1994 period totaling approximately $8.2 million, due to the
commencement of operations in early 1994; (3) increased operating
costs at the American Girl Joint Venture totaling $2.4 million;
and (4) increases in operating costs at various other operations
totaling approximately $5.5 million. These increases in cost of
sales and other direct production costs were partially offset by
decreases in operating costs at other operations totaling
approximately $6.8 million, the most notable of which is the
Greens Creek mine, where decreased operating costs are the result
of the suspension of operations there in April 1993.
Cost of sales and other direct production costs as a percentage
of sales from products decreased from 86% in the first nine
months of 1993 to 81% in the comparable 1994 period, primarily
due to increases in production and average metals prices realized
in the metals division, as well as improved sales within the
industrial minerals segment during the 1994 period.
Cash and full production cost per gold ounce increased from $235
and $302 for the first nine months of 1993 to $270 and $331 for
the comparable 1994 period, respectively. The increases in both
the cash and full cost per gold ounce are mainly attributed to
the initial start-up costs at the La Choya gold mine in Mexico
and decreased gold production from the Republic and American Girl
gold mines due to declining ore grades.
Cash and full production cost per silver ounce increased from
$5.21 and $6.64 for the first nine months of 1993 to $5.73 and
$7.00 for the comparable 1994 period, respectively. The
increases in both the cash and full cost per silver ounce are due
primarily to lower silver, lead and zinc production from the
Lucky Friday mine in the 1994 period,
-14-
15
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
resulting from decreased tons of ore milled and decreased ore
grades. These were partially offset by an increase in the
average price of lead in the 1994 period. Lead and zinc are
by-products in the ore processing at the Lucky Friday mine, the
net revenues from which are deducted from production costs in the
calculation of production cost per ounce.
Other operating expenses increased by approximately $7.0 million,
or 69% from the 1993 period to the 1994 period, due principally
to (1) increased general and administrative costs of $3.6 million
attributable primarily to costs totaling approximately $2.2
million incurred in connection with the March 11, 1994
acquisition of Equinox Resources Ltd. ("Equinox"); and (2)
increased exploration expenditures totaling approximately $3.2
million relating principally to the Greens Creek and La Choya
mines, as well as, the Grouse Creek project.
Other income (expense) reported income of approximately $4.5
million in the 1994 period compared to income of $0.2 million in
the 1993 period. The increase in reported income is primarily
due to (1) an increase in royalty income of approximately $2.2
million in the 1994 period; (2) decreased interest expense
totaling $1.6 million in the 1994 period due to the June 1994
retirement of long-term debt; (3) the January 1994 sale of the
Company's investment in Granduc Mines Ltd. resulting in a gain of
$1.3 million; and (4) increased interest income of $0.5 million
in the 1994 period earned on the investment of proceeds from the
Company's June 1993 public offering of the Series B Cumulative
Convertible Preferred Stock and the May 1994 public offering of
the Company's common stock.
During the 1994 period, the Company recorded an extraordinary
loss totaling approximately $0.8 million on the early retirement
of long-term debt as further described in Note 6 of Notes to
Consolidated Financial Statements. The loss relates principally
to the write-off of the unamortized balance of deferred issuance
costs.
THREE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1993
The Company reported net income of approximately $0.8 million
($0.02 per common share) in the third quarter of 1994 compared to
a net loss of approximately $1.7 million ($0.04 per common share)
in the same period of 1993. After $2.0 million in dividends to
shareholders of the Company's Series B Cumulative Preferred Stock
in both periods, the Company's net loss applicable to common
shareholders was $1.2 million ($0.03 per common share) and $3.7
million ($0.09 per common share) for the third quarter of 1994
and 1993, respectively. The loss was due to a variety of
factors, the most significant of which are discussed below in
descending order of magnitude.
Sales of the Company's products increased by approximately $12.7
million, or 56%, in the third quarter of 1994 as compared to the
same period in 1993, principally the result of (1) increased
product sales
-15-
16
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
totaling $12.7 million, most notably from the La Choya gold mine
in Mexico, which commenced production in February 1994, Mountain
West Products, which was acquired in December 1993, and K-T Clay
de Mexico, which commenced operations in early 1994; and (2)
increases in the average prices of lead, silver, and gold, the
impact of which is estimated to be approximately $1.5 million.
These two factors were partially offset by decreased sales in the
metals segment, the impact of which is approximately $1.5
million, attributable principally to (1) the temporary suspension
of operations at the Lucky Friday mine resulting from the Silver
Shaft accident on August 30, 1994; and (2) decreased gold
production in the 1994 period at the Republic gold mine due to
lower-grade ore being mined and processed.
Comparing the average metal prices for the third quarter of 1993
with the comparable 1994 period, gold increased by 3% from $375
per ounce to $385 per ounce, silver increased by 14% from $4.67
per ounce to $5.34 per ounce, lead increased by 59% from $0.17
per pound to $0.27 per pound.
Cost of sales and other direct production costs increased
approximately $6.4 million, or 34%, in the third quarter of 1994
compared to the same period in 1993, primarily a result of (1)
production costs at the La Choya mine during the 1994 period
totaling approximately $3.0 million due to the commencement of
operations in 1994; (2) production costs during the 1994 period
at Mountain West Products (acquired in December 1993) totaling
approximately $2.3 million; and (3) increases in operating costs
at various other operations totaling approximately $2.9 million.
These increases in cost of sales and other direct production
costs were partially offset by decreases in operating costs at
other operations totaling approximately $1.8 million, the most
notable of which is the temporary suspension of operations at the
Lucky Friday mine effective August 30, 1994, noted above.
Cost of sales and other direct production costs as a percentage
of sales from products decreased from 83% in the third quarter of
1993 to 71% in the comparable 1994 period, primarily due to
increases in production and average metals prices realized in the
metals division, as well as, improved sales within the industrial
minerals segment during the 1994 period.
Cash and full production cost per gold ounce decreased from $233
and $299 for the third quarter of 1993 to $213 and $279 for the
comparable 1994 period, respectively. The decreases in both the
cash and full cost per gold ounce are mainly attributed to the
commencement of operations at the La Choya gold mine in Mexico.
Partially offsetting the decrease in the cash cost per gold ounce
is an increased per gold ounce cost at the American Girl gold
mine resulting principally from declining ore grade.
Cash and full production cost per silver ounce decreased from
$6.69 and $8.03 for the third quarter of 1993 to $4.50 and $5.84
for the comparable 1994 period, respectively. The decreases in
both the cash
-16-
17
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
and full cost per silver ounce are due primarily to an increase
in the average price of lead in the 1994 period. Lead and zinc
are by-products in the ore processing at the Lucky Friday mine,
the net revenues from which are deducted from production costs in
the calculation of production cost per ounce.
Depreciation, depletion and amortization increased by
approximately $1.2 million, or 39%, in the third quarter of 1994
as compared to the comparable 1993 period, primarily a result of
the commencement of operations at the La Choya gold mine in 1994
($1.8 million increase in depreciation), partially offset by the
fourth quarter 1993 write-down of the American Girl mine carrying
value, the impact of which reduced depreciation expense in the
1994 period by $0.6 million.
Other operating expenses increased by approximately $1.6 million,
or 41% from the 1993 period to the 1994 period, due principally
to (1) increased general and administrative costs totaling $0.8
million attributable primarily to an increase in the accrual for
nonqualifying stock options and other increases; and (2)
increased exploration expenditures totaling approximately $0.9
million relating principally to the Greens Creek and La Choya
mines, as well as, the Grouse Creek project.
Other income (expense) reported income of approximately $0.4
million in the 1994 period compared to income of $1.3 million in
the 1993 period. The decrease in reported income is primarily
due to (1) a decrease in interest and other income totaling $0.5
million in the 1994 period resulting from declining cash and
short-term investment balances as the Grouse Creek project
required cash for construction; and (2) decreased interest
expense totaling $0.6 million in the 1994 period due to the June
1994 retirement of long-term debt.
FINANCIAL CONDITION AND LIQUIDITY
A substantial portion of the Company's revenue is derived from
the sale of products, the prices of which are affected by
numerous factors beyond the Company's control. Prices may change
dramatically in short periods of time and such changes have a
significant effect on revenues, profits and liquidity of the
Company. The Company is subject to many of the same inflationary
pressures as the U.S. economy in general. The Company continues
to implement cost-cutting measures in an effort to reduce per
unit production costs. Management believes, however, that the
Company may not be able to continue to offset the impact of
inflation over the long term through cost reductions alone.
However, the market prices for products produced by the Company
have a much greater impact than inflation on the Company's
revenues and profitability. Moreover, the discovery, development
and acquisition of mineral properties are in many instances
unpredictable events. Future metals prices, the success of
exploration programs, changes in legal and regulatory
requirements, and other property transactions can have a
significant impact on the need for capital.
-17-
18
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
At September 30, 1994, assets totaled approximately $350.1
million and shareholders' equity totaled approximately $299.5
million. Cash, cash equivalents and short-term investments
decreased by $47.2 million to $20.5 million at September 30, 1994
from $67.7 million at the end of 1993. The major sources of cash
during this perioc were (1) proceeds totaling approximately $63.5
million from the Company's May 1994 public offering of 7,475,000
shares of its common stock as described further in Note 6 of
Notes to Consolidated Financial Statements; (2) the maturity of
short-term investments and sale of other investments totaling
approximately $30.1 million; (3) proceeds totaling approximately
$13.3 million from the sale of a 20% undivided interest in the
Grouse Creek project; and (4) proceeds of $1.7 million from
common stock issued under stock option plans. The primary uses
of cash were (1) approximately $57.5 million expended for
properties, plants and equipment principally for ongoing
development of the Grouse Creek and Rosebud projects totaling
$45.3 million and $4.2 million, respectively, and expenditures at
the clay slurry facility in Mexico totaling $1.3 million; (2)
approximately $50.2 million required to redeem the Company's
outstanding long-term debt (see Note 6 of Notes to Consolidated
Financial Statements); (3) approximately $13.5 million primarily
for the purchase of restricted investments for bonding
requirements in connection with the Star Phoenix judgment as
further described in Note 5 of Notes to Consolidated Financial
Statements; (4) increases in accounts receivable totaling $7.2
million principally relating to the increase at the La Choya
mine, which commenced operations in early 1994, and increases in
accounts receivable at other locations; and (5) preferred
dividend payments totaling approximately $6.0 million.
The Company estimates that remaining capital expenditures to be
incurred in the balance of 1994 will be approximately $11.5
million. These expenditures consist primarily of (1) the
Company's share of further development expenditures at the Grouse
Creek project totaling approximately $7.0 million; and (2)
development expenditures at the Rosebud project totaling
approximately $2.0 million. The Company intends to finance these
capital expenditures through a combination of (1) existing cash
and cash equivalents; and (2) cash flow from operating
activities. In addition, the Company may borrow funds
from its revolving and term credit facility (described below)
which, subject to certain conditions, provides for borrowings up
to a maximum of $40.0 million. The Company's estimate of its
capital expenditure requirements assume, with respect to the
Grouse Creek, Greens Creek and Oro Cruz properties, that the
Company's joint venture partners do not default with respect to
their obligations to contribute their respective portions of
development costs and capital expenditures.
The Company's planned environmental and reclamation expenditures
for the balance of 1994 are expected to be approximately $1.4
million, principally for environmental and reclamation activities
at the Bunker Hill Superfund Site and the Coeur d'Alene River
Basin.
-18-
19
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Exploration expenditures for the balance of 1994 are estimated to
be approximately $1.6 million. The Company's exploration
strategy is to focus further exploration at or in the vicinity of
its currently owned properties. Accordingly, these exploration
expenditures will be incurred principally at Republic, Grouse
Creek, La Choya, and Greens Creek.
As described in Note 7 of Notes to Consolidated Financial
Statements, exploration efforts at the Republic gold mine have
been unsuccessful to date in extending ore reserves. The mine is
now scheduled for shutdown in early 1995. On November 10, 1994,
the Company's board of directors approved a fourth quarter
adjustment to earnings for asset write- downs totaling $8.3
million, of which, $8.0 relates to the Republic gold mine. At
the same meeting, the board of directors approved increasing the
reclamation and closure cost accrual in the fourth quarter by
$9.8 million. The adjustment relates primarily to estimated
reclamation and closure costs at Republic ($7.4 million), the
Coeur d'Alene Mining District ($1.1 million), and other
miscellaneous idle properties ($1.3 million).
On August 30, 1994, the hoist at the Lucky Friday mine
experienced a mechanical failure and the ore conveyance unit fell
over 6,000 feet to the bottom of the shaft. Since that time the
mine has experienced no production as all hoisting capabilities
have been inoperative. The accident is covered by property
damage and business interruption insurance which is expected to
cover substantially all costs other than certain deductibles
not considered significant. Phased-in production will commence
after repair and rehabilitation is complete, which is expected
no earlier than mid-December 1994.
On August 30, 1994, the Company entered into an unsecured
revolving and term loan facility, under the terms of which the
Company can borrow up to $40.0 million. Amounts may be borrowed
on a revolving credit basis through July 31, 1997, and are
repayable in eight quarterly installments beginning on October
31, 1998. Borrowings bear interest at floating rates depending
on the type of advance. During the commitment period, the
Company is obligated to pay an annual fee of $130,000. The
agreement contains restrictive covenants, among others,
concerning the current ratio, fixed charge coverage ratio and
limitations on the issuance of additional indebtedness. Amounts
available under the facility are based on a debt to cash flow
calculation. At September 30, 1994, there were no borrowings
outstanding under the facility.
As further described in Note 5 of Notes to Consolidated Financial
Statements, the Company has been notified by the EPA that it has
been designated by the EPA as a potentially responsible party
with respect to several Superfund sites. At September 30, 1994,
the Company's allowance for Superfund site remedial action costs
was approximately $8.9 million, which the Company believes is
adequate based on current estimates of aggregate costs.
In addition, as described in Note 5 of Notes to Consolidated
Financial Statements, the Company is a defendant in two other
significant actions. The first action was filed in November 1990
by Star Phoenix
-19-
20
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
and certain principals of Star Phoenix, asserting that the
Company breached the terms of Star Phoenix's lease agreement for
the Company's Star Morning Mine and that the Company interfered
with certain contractual relationships of Star Phoenix relating
to the Company's 1990 termination of such lease agreement. In
June 1994, judgment was entered by the Idaho State District Court
against the Company in the legal proceeding in the amount of
$10.0 million in compensatory damages and $10.0 million in
punitive damages based on a jury verdict rendered in the case in
late May 1994. The Company's post-trial motions were denied by
the District Court, and the Company has appealed the judgment to
the Idaho State Supreme Court. Post-judgment interest will
accrue during the appeal period; the current interest rate is
10.5%. In order to stay the ability of Star Phoenix to collect
on the judgment during the pending of the appeal, the Company
posted an appeal bond in the amount $27.2 million representing
136% of the District Court judgment. The Company pledged cash
and cash equivalents totaling $10.0 million as collateral for the
$27.2 million bond. Although the ultimate outcome of the appeal
of the judgment is subject to the inherent uncertainties of any
legal proceeding, based on the Company's analysis of the factual
and legal issues associated with the proceeding before the
District Court and based upon the opinions of outside counsel, as
of the date hereof, it is management's belief that the Company
should ultimately prevail in this matter, although there can be
no assurance in this regard. The Company's appeal to the Idaho
State Supreme Court of the Star Phoenix judgment is further
described in Note 5 of Notes to Consolidated Financial Statements.
The second action was filed by Industrial Constructors Corp.
("ICC") in December 1993 alleging that the Company failed to
comply with the terms of a contract between the Company and ICC
related to the Company's Grouse Creek gold project. ICC is
claiming damages in excess of $5.0 million including a $1.0
million retention held by the Company under the contract. The
Company has answered the complaint denying ICC's allegations and
has filed a counterclaim against ICC asserting damages in excess
of $2.0 million.
In addition to these two actions, the Company has intervened in a
lawsuit involving the U.S. Forest Service in Idaho, which could
impact the Grouse Creek project (see Note 5 of Notes to
Consolidated Financial Statements).
Although the ultimate disposition of these matters and various
other pending legal actions and claims is not presently
determinable, it is the opinion of the Company's management,
based upon the information available at this time, that the
outcome of these suits and proceedings will not have a material
adverse effect on the results of operations and financial
condition of the Company and its subsidiaries.
-20-
21
PART II - OTHER INFORMATION
HECLA MINING COMPANY and SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Note 5 of Notes to Consolidated Financial
Statements in Part I.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1(a) - Credit Agreement between Hecla Mining
Company and Certain Subsidiaries and
NationsBank of Texas, N.A., as Agent, and
Certain Banks, as lenders, $40,000,000,
dated August 30, 1994
13.1 - Third Quarter Report to Shareholders for the
quarter ending September 30, 1994, for
release dated November 3, 1994
27 - Financial Data Schedule
(b) Reports on Form 8-K
Report on Form 8-K dated July 28, 1994, related to Star
Phoenix litigation and Second Quarter 1994 Report to
Shareholders (Item 5)
Items 2, 3, 4 and 5 of Part II are omitted from this report as inapplicable.
-21-
22
HECLA MINING COMPANY and CONSOLIDATED SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HECLA MINING COMPANY
(Registrant)
Date: November 10, 1994 By /s/ ARTHUR BROWN
--------------------------------
Arthur Brown, Chairman, President
and Chief Executive Officer
Date: November 10, 1994 By /s/ J. T. HEATHERLY
--------------------------------
J. T. Heatherly,
Vice President - Controller
(Chief Accounting Officer)
-22-
23
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
10.1(a) - Credit Agreement between Hecla Mining
Company and Certain Subsidiaries and
NationsBank of Texas, N.A., as Agent, and
Certain Banks, as lenders, $40,000,000,
dated August 30, 1994
13.1 - Third Quarter Report to Shareholders for the
quarter ending September 30, 1994, for
release dated November 3, 1994
27 - Financial Data Schedule