1
[HECLA LOGO]
EXHIBIT A
HECLA REPORTS FOURTH QUARTER AND YEAR-END RESULTS
FOR THE PERIOD ENDING DECEMBER 31, 1994
FOR RELEASE: FEBRUARY 2, 1995
COEUR D'ALENE, Idaho -- Hecla Mining Company (HL & HL-B:NYSE)
today reported a net loss for the fourth quarter ended Dec. 31, 1994, of $22.5
million, or 47 cents per common share, on revenue of $30.2 million after a $2.0
million quarterly dividend to preferred shareholders.
As announced on November 11, 1994, the loss includes nonrecurring
asset write-downs and reclamation adjustments of $18.0 million taken in the
fourth quarter of 1994. Of this amount, $14.5 million is associated with the
write-down and closure of Hecla's Republic Unit in northeast Washington State.
An additional $3.5 million in asset write-downs and reclamation adjustments
relates to six other Hecla properties.
For the year, Hecla lost $32.7 million, or 74 cents per common
share, on revenue of $134.0 million after an $8.0 million dividend paid to
preferred shareholders. This compares with a loss of $21.9 million, or 58
cents per common share, on revenue of $96.1 million for 1993. Preferred
dividends of $4.0 million were declared in 1993.
Hecla's chairman, president and chief executive officer, Arthur
Brown, said, "Gold production, revenues and operating profits were
substantially improved in 1994 compared with 1993. However, nonrecurring
write-downs, reclamation adjustments and continued weak silver prices adversely
impacted earnings." Brown added that the merger with Equinox Resources Ltd.
early in 1994 resulted in Hecla experiencing higher general and administrative
expenses which should return to normal levels in 1995.
Hecla's new Grouse Creek gold and silver mine in the historic
Yankee Fork Mining District of central Idaho held its first gold pour in
December 1994 signaling the start of an important and long-term operation for
the company. While mining began on schedule midyear, construction delays at
the mill and the rigors of commencing operations in sub-zero winter weather
resulted in lower-than-expected production in 1994 and early 1995. However,
the mill is now ramping up toward full production expected toward the end of
the first quarter. Early mill testing indicated the facility will ultimately
be able to operate at levels above the rated capacity of 6,000 tons per day.
The costs per ounce at Grouse Creek will decline as full production levels are
reached.
In January, a U.S. District judge in Hawaii ordered the U.S.
Forest Service to close all mining, logging, grazing and road construction in
six Idaho national forests to protect salmon habitat. He specifically excluded
operations like Grouse Creek, and Hecla does not believe the court order will
have a material effect on its operation.
At other metals operations, the new La Choya gold mine in Mexico
performed well, and the Lucky Friday Unit in Mullan, Idaho, resumed operations
on December 5 after being closed following an ore-conveyance accident on August
30. Mining costs per ton at the Lucky Friday will decline as full production
levels are reached in the first quarter of 1995. At Republic, Hecla began
phasing out its mining operations on January 2, 1995, as ore reserves were
depleted. Shutdown will be complete by mid-February, although an exploration
program will continue in the Republic Mining District.
Hecla's industrial minerals subsidiaries turned in an exceptional
performance for 1994 generating $7.3 million in operating profits and $10.4
million in positive cash flow. Sales were up 41.6 percent to $63.6 million,
reflecting start-up of a new facility in Mexico, strong feldspar sales and a
full year of production results from Mountain West Products Inc. acquired in
December 1993.
The recent decline of the Mexican peso has not significantly
impacted results at La Choya as both funding for operations and gold sales are
denominated in dollars. However, at our clay slurry plant in Monterrey, sales
are denominated in pesos. At Dec. 31, 1994, Hecla has recorded a foreign
currency translation adjustment totaling $797,000.
Jorge E. Ordonez, a board member of several Mexican mining, steel
and industrial companies, has been elected to Hecla's board of directors. A
mining engineer, Ordonez was educated in geology and economics at Stanford
University in California. Brown also thanked Paul A. Redmond for his years of
service at his retirement from the board in December.
-HL-
[HECLA Letter Head]
2
HECLA MINING COMPANY
(dollars in thousands, except per-share amounts)
(Unaudited)
Fourth Quarter Year Ended
-------------------------- -----------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
HIGHLIGHTS 1994 1993(1) 1994 1993(1)
-------- --------- ---------- ----------
FINANCIAL DATA
Total revenue $ 30,195 $ 21,689 $ 133,974 $ 96,060
Gross profit (loss) 915 (698) 9,831 (779)
Reduction in carrying value of mining
properties 7,864 1,649 7,864 2,561
Provision for closed operations and
environmental matters 10,280 2,327 11,353 2,327
Net loss (20,470) (7,839) (24,613) (17,782)
Net loss applicable to common
shareholders (22,483) (9,852) (32,663) (21,852)
Net loss per common share (0.47) (0.25) (0.74) (0.58)
Cash flow from operating properties (2) 4,464 (233) 18,634 10,271
SALE OF PRODUCTS BY SEGMENT
Gold operations $ 14,215 $ 6,962 $ 51,904 $ 32,416
Silver operations 291 2,379 8,924 13,476
Industrial minerals 13,118 10,665 63,634 44,953
Specialty metals 1,457 476 4,285 2,043
-------- -------- ---------- ----------
Total sales $ 29,081 $ 20,482 $ 128,747 $ 92,888
======== ======== ========== ==========
GROSS PROFIT (LOSS) BY SEGMENT
Gold operations $ 1,382 $ 418 $ 7,110 $ 4,016
Silver operations (1,115) (1,795) (4,610) (9,329)
Industrial minerals 510 889 7,329 5,038
Specialty metals 138 (210) 2 (504)
-------- -------- ---------- ----------
Total gross profit (loss) $ 915 $ (698) $ 9,831 $ (779)
======== ======== ========== ==========
PRODUCTION SUMMARY - TOTALS
Gold - Ounces 36,867 21,852 127,878 95,907
Silver - Ounces 134,384 554,396 1,642,913 2,992,499
Lead - Tons 477 3,930 13,214 21,093
Zinc - Tons 103 858 2,431 7,838
Average cost per ounce of gold produced:
Cash production costs $281 $218 $273 $229
Full costs $347 $293 $334 $298
Average cost per ounce of silver produced:
Cash production costs $6.03 $6.63 $5.81 $5.45
Full costs $7.99 $7.88 $7.17 $6.85
AVERAGE METAL PRICES
Gold - Realized ($/oz.) 389 374 387 360
Gold - London Final ($/oz.) 384 374 384 360
Silver - Handy & Harman ($/oz.) 5.14 4.60 5.28 4.30
Lead - LME Cash (cents/pound) 29.4 18.8 24.8 18.1
Zinc - LME Cash (cents/pound) 50.3 42.6 45.3 43.6
[HECLA Letter Head]
3
HECLA MINING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Year Ended
--------------------------------------
Dec. 31, 1994 Dec. 31, 1993(1)
------------- ----------------
OPERATING ACTIVITIES
Net loss $(24,613) $(17,782)
Noncash elements included in net loss:
Depreciation, depletion and amortization 14,757 14,195
Deferred income tax benefit -- (964)
(Gain) loss on disposition of properties, plants and equipment (354) 1,336
Realized (gain) loss on sale of investments (1,053) 64
(Gain) loss on retirement of long-term debt 833 (323)
Accretion of interest on long-term debt 2,495 4,465
Provision for reclamation and closure costs 11,353 1,635
Reduction in carrying value of mining properties 7,864 3,432
Minority interest in net loss of consolidated subsidiary -- 43
Change in:
Accounts and notes receivable (4,675) (2,360)
Income tax refund receivable (247) 390
Inventories (4,086) (669)
Other current assets 406 (554)
Accounts payable and accrued liabilities (4,088) 5,848
Accrued payroll and related benefits 668 (83)
Accrued taxes (3) (343)
Accrued reclamation and noncurrent liabilities (4,608) (3,058)
-------- --------
Net cash provided (used) by operating activities (5,351) 5,272
-------- --------
INVESTING ACTIVITIES
Additions to properties, plants and equipment (66,559) (56,836)
Proceeds from disposition of properties, plants and equipment 13,809 1,511
Proceeds from sales of investments 32,067 273
Purchase of restricted investments (13,553) --
Purchase of investments and change in cash surrender value of
life insurance, net 114 (28,171)
Other, net (325) (2,162)
-------- --------
Net cash applied to investing activities (34,447) (85,385)
-------- --------
FINANCING ACTIVITIES
Common stock issued under stock option plans and warrants 1,765 1,425
Issuance of common stock 63,499 6,464
Retirement of long-term debt (50,169) --
Preferred stock dividends (8,050) (2,058)
Issuance of preferred stock -- 110,346
-------- --------
Net cash provided by financing activities 7,045 116,177
-------- --------
Net increase (decrease) in cash and cash equivalents (32,753) 36,064
Cash and cash equivalents at beginning of period 40,031 3,967
-------- --------
Cash and cash equivalents at end of period $ 7,278 $ 40,031
======== ========
[HECLA Letter Head]
4
HECLA MINING COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
Dec. 31, Dec. 31,
1994 1993(1)
-------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,278 $ 40,031
Short-term investments -- 27,636
Accounts and notes receivable 23,516 18,841
Income tax refund receivable 247 --
Inventories 18,616 15,020
Other current assets 1,597 2,003
-------- --------
Total current assets 51,254 103,531
Investments 6,476 6,565
Restricted investments 13,553 --
Properties, plants and equipment, net 260,269 229,055
Other noncurrent assets 5,391 7,002
-------- --------
Total assets $336,943 $346,153
======== ========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 13,570 $ 17,312
Accrued payroll and related benefits 2,724 2,056
Preferred stock dividends payable 2,012 2,012
Accrued taxes 925 928
Accrued reclamation costs 4,254 --
-------- --------
Total current liabilities 23,485 22,308
Deferred income taxes 359 359
Long-term debt 1,960 50,009
Accrued reclamation costs 27,162 24,947
Other noncurrent liabilities 4,098 3,858
-------- --------
Total liabilities 57,064 101,481
======== ========
SHAREHOLDERS' EQUITY
Preferred stock 575 575
Common stock 12,036 10,080
Capital surplus 328,995 265,687
Retained deficit (63,437) (30,774)
Net unrealized gain (loss) on investments 3,396 (8)
Foreign currency translation adjustment (797) --
Treasury stock (889) (888)
-------- --------
Total shareholders' equity 279,879 244,672
-------- --------
Total liabilities and shareholders' equity $336,943 $346,153
======== ========
[HECLA Letter Head]
5
HECLA MINING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per-share amounts)
(Unaudited)
Fourth Quarter Year Ended
----------------------- -----------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1994 1993(1) 1994 1993(1)
-------- -------- -------- --------
Sales of products $ 29,081 $ 20,482 $128,747 $ 92,888
Cost of sales and other direct -------- -------- -------- --------
productions costs 24,426 18,020 104,683 80,141
Depreciation, depletion and amortization 3,740 3,160 14,233 13,526
-------- -------- -------- --------
28,166 21,180 118,916 93,667
-------- -------- -------- --------
Gross profit (loss) 915 (698) 9,831 (779)
-------- -------- -------- --------
Other operating expenses:
General and administrative 2,182 2,822 11,132 8,140
Exploration 2,071 2,453 8,397 5,656
Research -- 22 -- 150
Depreciation and amortization 81 168 524 669
Provision for closed operations and
environmental matters 10,280 2,327 11,353 2,327
Reduction in carrying value of mining properties 7,864 1,649 7,864 2,561
-------- -------- -------- --------
22,478 9,441 39,270 19,503
-------- -------- -------- --------
Loss from operations (21,563) (10,139) (29,439) (20,282)
-------- -------- -------- --------
Other income (expense):
Interest and other income 1,114 1,207 5,227 3,172
Miscellaneous income (expense) (58) (50) (234) 102
Gain (loss) on investments (76) 98 1,053 (64)
Minority interest -- -- -- 43
Interest expense:
Total interest cost (83) (1,234) (2,606) (5,224)
Less amount capitalized -- 1,307 1,751 3,533
-------- -------- -------- --------
897 1,328 5,191 1,562
-------- -------- -------- --------
Loss before extraordinary item and income taxes (20,666) (8,811) (24,248) (18,720)
Income tax benefit 196 972 468 938
-------- -------- -------- --------
Loss before extraordinary item (20,470) (7,839) (23,780) (17,782)
Extraordinary loss on retirement of long-term debt -- -- (833) --
-------- -------- -------- --------
Net loss (20,470) (7,839) (24,613) (17,782)
Preferred stock dividends 2,013 2,013 8,050 4,070
-------- -------- -------- --------
Net loss applicable to common shareholders $(22,483) $ (9,852) $(32,663) $(21,852)
======== ======== ======== ========
Net loss per common share $ (0.47) $ (0.25) $ (0.74) $ (0.58)
======== ======== ======== ========
Weighted average number of common shares
outstanding 48,082 39,692 43,944 37,872
======== ======== ======== ========
Common shares outstanding at end of period 48,082 40,258
======== ========
[HECLA Letter Head]
6
HECLA MINING COMPANY
PRODUCTION DATA
Fourth Quarter Year Ended
------------------------ -----------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1994 1993(1) 1994 1993(1)
-------- -------- -------- --------
LA CHOYA UNIT(3)
Tons of ore mined 516,827 2,026,381
Ore grade mined - Gold (oz./ton) 0.031 0.041
Gold produced (oz.) 15,869 47,861
Silver produced (oz.) 2,093 6,019
Average cost per ounce of gold produced:
Cash production costs $221 $243
Full cost $306 $337
GROUSE CREEK UNIT(4) (REFLECTS HECLA'S 80% SHARE)
Tons of ore milled 34,654 70,912
Ore grade milled - Gold (oz./ton) 0.19 0.10
Gold produced (oz.) 2,093 2,093
Silver produced (oz.) 8,763 8,763
Average cost per ounce of gold produced:
Cash production costs $540 $540
Full cost $730 $730
REPUBLIC UNIT
Tons of ore milled 33,424 29,476 120,165 110,846
Ore grade milled - Gold (oz./ton) 0.28 0.41 0.36 0.48
Gold produced (oz.) 8,610 11,241 39,085 49,601
Silver produced (oz.) 70,369 70,541 283,326 276,688
Average cost per ounce of gold produced:
Cash production costs $285 $248 $250 $207
Full cost $348 $308 $306 $262
AMERICAN GIRL UNIT (REFLECTS HECLA'S 47% SHARE)
Tons of ore milled 28,928 31,830 119,189 119,797
Tons of ore to heap 177,128 81,104 585,300 312,982
Ore grade milled - Gold (oz./ton) 0.162 0.192 0.171 0.211
Ore grade to heap - Gold (oz./ton) 0.024 0.034 0.025 0.036
Gold produced (oz.) 8,128 9,007 30,624 35,192
Silver produced (oz.) 6,132 4,711 18,366 17,801
Average cost per ounce of gold produced:
Cash production costs $351 $175 $344 $257
Full cost $367 $267 $367 $347
LUCKY FRIDAY UNIT(5)
Tons of ore milled 5,588 39,427 124,986 179,579
Ore grade milled - Silver (oz./ton) 7.62 12.30 10.74 12.03
Silver produced (oz.) 42,555 474,805 1,306,884 2,122,738
Lead produced (short tons) 477 3,930 13,214 19,795
Average cost per ounce of silver produced:
Cash production costs $6.03 $6.63 $5.81 $5.54
Full cost $7.99 $7.88 $7.17 $6.77
(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 at the La Choya Unit began during February 1994.
(4) Production at the Grouse Creek Unit began during December 1994.
(5) Lucky Friday Unit resumed operations in December 1994 after a temporary
suspension of operations that resulted from the August 30, 1994,
ore-conveyance accident.
[HECLA Letter Head]