1
EX-13.1
[HECLA MINING COMPANY LOGO]
THIRD QUARTER REPORT TO SHAREHOLDERS
FOR THE QUARTER ENDING SEPTEMBER 30, 1994
FOR RELEASE: NOVEMBER 3, 1994
COEUR D'ALENE, Idaho -- Hecla Mining Company today reported
net income for the third quarter ended Sept. 30, 1994, of $0.8 million on
revenue of $36 million prior to payment of preferred dividends. After a $2
million dividend to preferred shareholders, the company recorded a net loss
for the quarter of $1.2 million, or 3 cents per common share.
For the first nine months of 1994, Hecla lost $10.1 million,
or 24 cents per common share, on revenue of $103.8 million after a $6
million dividend to preferred shareholders. This compares with a loss of
$12 million, or 32 cents per common share, on revenue of $74.4 million for
the same period in 1993. Preferred shares were issued on June 22, 1993.
Preferred dividends of $2 million were paid in the first nine months of
1993, compared with $6 million in the first nine months of 1994.
During the quarter, Hecla's flagship silver operation, the
Lucky Friday Unit, celebrated the production milestone of 100 million
ounces. "This landmark in the history of the Lucky Friday is especially
significant in light of our decision to proceed with the development of the
Lucky Friday-Gold Hunter deposit," said Arthur Brown, Hecla's chairman and
chief executive officer. Production from Gold Hunter could more than
double Lucky Friday's silver output, returning the mine to historic
production levels in the range of 5 million ounces annually.
Unfortunately, operations at the Lucky Friday have been on temporary
suspension since Aug. 30, 1994, when a hoisting accident caused an
ore-conveyance unit to fall to the bottom of the Lucky Friday Silver Shaft.
No one was injured, and repairs are under way. The mine is scheduled to
resume production in early December. The majority of the costs associated
with the incident are covered by the company's insurance.
Turning to Hecla's gold operations, the new La Choya Unit in
Mexico processed a higher-grade ore zone during the quarter, producing
19,000 ounces at a cash cost of $157 per ounce.
The company's other new gold mine, Grouse Creek in central
Idaho, began a phased start-up in late October. Mining of the underground
high-grade zone and the Sunbeam pit has been under way since midyear. The
mill commenced operation on October 25, and Grouse Creek's first gold pour
is expected in November. Current estimates call for 25,000 to 30,000
ounces of gold production prior to year end. Hecla owns 80 percent of
Grouse Creek, and Great Lakes Minerals Inc. of Toronto owns 20 percent.
The company's 47 percent-owned American Girl joint venture in
California has been working a lower-grade deposit, which has adversely
impacted results. The operating partner, MK Gold of Boise, Idaho, is in
the process of permitting an adjacent higher- grade deposit that would
improve profitability and extend the mine's life.
Mining costs at Republic also were higher as the mine moves
toward depletion of the ore body and ultimate closure scheduled for early
1995. "Closure of the Republic Unit is being done with great regret,
particularly in view of the many contributions by every member of the work
force over the years," Brown said. Recent drilling in the Republic
District has shown encouraging results, and the company intends to continue
exploration efforts there. However, even if an economic ore body is found,
it could take up to two years before production could be resumed.
The industrial minerals segment of the company continued to
report exceptional performance with third quarter sales of $15.3 million,
up 43 percent compared to the same period last year. The company's latest
acquisition in this segment, Mountain West Products Inc. of Rexburg, Idaho,
was not represented in last year's figures and has exceeded sales
expectations. Additionally, feldspar operations in North Carolina continue
to run near total milling capacity.
Hecla is a 103-year-old mining company with operations
principally in the United States and Mexico. The company is a well-known
silver producer with a growing gold profile and a major supplier of ball
clay, kaolin and feldspar. The common and preferred shares of Hecla are
traded on the New York Stock Exchange under the symbols HL and HL-B,
respectively.
-HL-
Contact Bill Booth, vice president-investor and public affairs,
or Mike Callahan, investor relations assistant
6500 Mineral Drive * Coeur d'Alene, Idaho 83814-8788 *
208/769-4100 * FAX 208/769-4159
2
HECLA MINING COMPANY
(dollars in thousands, except per-share amounts)
(unaudited)
Third Quarter Nine Months Ended
--------------------------- -------------------------------
SEPT. 30, Sept. 30, SEPT. 30, Sept. 30,
HIGHLIGHTS 1994 1993 (1) 1994 1993 (1)
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FINANCIAL DATA
- - - ----------------------------------------------------------------------------------------------------------------------
Total revenue $ 36,072 $ 23,951 $ 103,779 $ 74,371
Gross profit (loss) 5,846 799 8,916 (81)
Net income (loss) 806 (1,672) (4,143) (9,943)
Loss applicable to common shareholders (1,207) (3,729) (10,181) (12,000)
Loss per common share (0.03) (0.09) (0.24) (0.32)
Cash flow from operating properties (2) 11,607 1,664 14,382 10,504
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SALE OF PRODUCTS BY SEGMENT
- - - ----------------------------------------------------------------------------------------------------------------------
Gold operations $ 16,655 $ 9,261 $ 37,689 $ 25,454
Silver operations 2,488 2,163 8,633 11,097
Industrial minerals 15,302 10,707 50,514 34,288
Specialty metals 834 474 2,830 1,567
---------- ---------- ----------- -------------
Total sales $ 35,279 $ 22,605 $ 99,666 $ 72,406
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GROSS PROFIT (LOSS) BY SEGMENT
- - - ----------------------------------------------------------------------------------------------------------------------
Gold operations $ 4,522 $ 1,945 $ 5,728 $ 3,598
Silver operations (658) (2,198) (3,494) (7,534)
Industrial minerals 2,176 1,192 6,820 4,149
Specialty metals (194) (140) (138) (294)
----------- ---------- ------------ -------------
Total gross profit (loss) $ 5,846 $ 799 $ 8,916 $ (81)
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PRODUCTION SUMMARY - TOTALS
- - - ----------------------------------------------------------------------------------------------------------------------
Gold - Ounces 40,780 23,908 91,052 74,055
Silver - Ounces 413,439 540,760 1,512,564 2,438,103
Lead - Tons 3,012 4,296 12,734 17,163
Zinc - Tons 490 810 2,335 6,980
Average cost per ounce of gold produced:
Cash production costs $213 $233 $270 $235
Full costs $279 $299 $331 $302
Average cost per ounce of silver produced:
Cash production costs $4.50 $6.69 $5.73 $5.21
Full costs $5.84 $8.03 $7.00 $6.64
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AVERAGE METAL PRICES
- - - ----------------------------------------------------------------------------------------------------------------------
Gold - Realized ($/oz.) 389 375 387 357
Gold - London Final ($/oz.) 386 375 384 355
Silver - Handy & Harman ($/oz.) 5.34 4.67 5.33 4.20
Lead - LME Cash (c./pound) 26.7 17.4 23.3 18.3
Zinc - LME Cash (c./pound) 43.9 40.6 43.6 44.0
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HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Nine Months Ended
-----------------------------
SEPT. 30, Sept. 30,
1994 1993 (1)
- - - --------------------------------------------------------------------------------------------------------------------
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
Loss (gain) on early retirement of long-term debt 833 (323)
Accretion of interest on production notes and long-term debt 2,000 3,403
Provision for reclamation and closure costs 905 (455)
Minority interest in net loss of consolidated subsidiary - - 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 liabilities (356) 176
Dividends 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
----------- -----------
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INVESTING ACTIVITIES
- - - --------------------------------------------------------------------------------------------------------------------
Additions to properties, plants and equipment (57,511) (22,203)
Proceeds from disposition of properties, plants and equipment 13,406 234
Proceeds from sale of investments 30,769 - -
Purchase of restricted investments (13,497) - -
Purchase of investments and increase in cash surrender value of
life insurance (1,926) (539)
Other, net (2,795) (3,786)
----------- -----------
NET CASH APPLIED TO INVESTING ACTIVITIES (31,554) (26,294)
----------- -----------
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FINANCING ACTIVITIES
- - - ---------------------------------------------------------------------------------------------------------------------
Common stock issued under stock option plans 1,726 853
Issuance of common stock 63,499 6,975
Early retirement of long-term debt (50,169) - -
Dividends on preferred stock (6,038) (2,057)
Issuance of preferred stock - - 110,360
Decrease in deferred revenue (36) - -
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,982 116,131
----------- -----------
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
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HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars in thousands)
SEPT. 30, Dec. 31,
1994 1993 (1)
(UNAUDITED)
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ASSETS
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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
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Total current assets 64,282 103,531
Investments 5,274 6,565
Investments - restricted cash 13,497 - -
Properties, plants and equipment, net 261,743 229,055
Other noncurrent assets 5,310 7,002
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TOTAL ASSETS $ 350,106 $ 346,153
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LIABILITIES
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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
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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
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TOTAL LIABILITIES 50,572 101,481
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SHAREHOLDERS' EQUITY
- - - ----------------------------------------------------------------------------------------------------------------------
Preferred stock 575 575
Common stock 12,035 10,080
Capital surplus 328,957 265,687
Retained deficit (40,954) (30,774)
Net unrealized loss on securities (8) (8)
Cumulative translation adjustment (182) - -
Treasury stock (889) (888)
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TOTAL SHAREHOLDERS' EQUITY 299,534 244,672
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 350,106 $ 346,153
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HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Third Quarter Nine Months Ended
------------------------ -----------------------
SEPT. 30, Sept. 30, SEPT. 30, Sept. 30,
1994 1993 (1) 1994 1993 (1)
---------- ---------- --------- ----------
Sales of products $ 35,279 $ 22,605 $ 99,666 $ 72,406
---------- ---------- --------- ----------
Cost of sales and other direct
productions 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
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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 - - 169 - - 152
Gain (loss) on investments 38 27 1,129 (162)
Minority interest - - - - - - 43
Interest expense:
Total interest cost (476) (1,070) (2,523) (3,990)
Less amount capitalized - - 855 1,751 2,226
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355 1,327 4,470 234
---------- ---------- --------- ----------
Income (loss) before income taxes and
extraordinary item 657 (1,794) (3,582) (9,909)
Extraordinary item loss on early retirement of
long-term debt (10) - - (833) - -
Income tax (provision) benefit 159 122 272 (34)
---------- ---------- --------- ----------
Net income (loss) 806 (1,672) (4,143) (9,943)
Preferred stock dividends 2,013 2,057 6,038 2,057
---------- ---------- --------- ----------
Net loss applicable to common shareholders $ (1,207) $ (3,729) $ (10,181) $ (12,000)
========== ========== ========= ==========
Net loss per common share $ (0.03) $ (0.09) $ (0.24) (0.32)
========== ========== ========= ==========
Weighted number of common shares
outstanding 48,075 39,576 42,957 37,471
========== ========== ========= ==========
Common shares outstanding at end of period 48,076 39,576
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HECLA MINING COMPANY
PRODUCTION DATA
Third Quarter Nine Months Ended
------------------------- --------------------------
SEPT. 30, Sept. 30, SEPT. 30, Sept. 30,
1994 1993 (1) 1994 1993 (1)
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LA CHOYA UNIT (3)
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Tons of ore mined 575,444 1,547,944
Ore grade mined - Gold (oz./ton) 0.055 0.054
Gold produced (oz.) 19,074 31,992
Silver produced (oz.) 2,169 3,926
Average cost per ounce of gold produced:
Cash production costs $157 $255
Full cost $254 $353
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REPUBLIC UNIT
- - - ----------------------------------------------------------------------------------------------------------------------
Tons of ore milled 30,517 28,867 86,741 81,370
Ore grade milled - Gold (oz./ton) 0.43 0.48 0.39 0.51
Gold produced (oz.) 12,064 13,739 30,475 38,360
Silver produced (oz.) 77,324 75,065 212,957 206,147
Average cost per ounce of gold produced:
Cash production costs $198 $187 $234 $200
Full cost $249 $236 $294 $253
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AMERICAN GIRL UNIT (REFLECTS HECLA'S 47% SHARE)
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Tons of ore milled 30,807 28,685 90,261 87,967
Tons of ore to heap 168,449 70,442 408,172 231,878
Ore grade milled - Gold (oz./ton) 0.162 0.192 0.170 0.205
Ore grade to heap - Gold (oz./ton) 0.024 0.034 0.025 0.036
Gold produced (oz.) 7,644 7,977 22,496 26,185
Silver produced (oz.) 4,279 3,875 12,234 13,090
Average cost per ounce of gold produced:
Cash production costs $375 $310 $344 $286
Full cost $402 $404 $368 $375
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LUCKY FRIDAY UNIT
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Tons of ore milled 30,839 39,264 119,398 140,152
Ore grade milled - Silver (oz./ton) 10.20 11.69 10.88 11.96
Silver produced (oz.) 325,148 456,106 1,268,364 1,647,933
Lead produced (short tons) 3,012 4,296 12,734 15,865
Average cost per ounce of silver produced:
Cash production costs $4.50 $6.69 $5.73 $5.24
Full cost $5.84 $8.03 $7.00 $6.47
(1)Financial information and production data previously reported have been
restated to reflect the acquisition of Equinox Resources Ltd.,
accounted for as a pooling of interests.
(2)Consists of income (loss) from operating properties plus depreciation,
adjusted for changes in working capital.
(3)Production began during February 1994.