Exhibit 99
Hecla Had Record Silver Production at Record Low Costs in 2003;
Generates 90% Increase in Income before Environmental Accruals;
For the Period Ended December 31, 2003
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Feb. 12, 2004--Hecla Mining
Company (NYSE:HL) (NYSE:HL-PrB) today reported 2003 year-end income
before environmental accruals of $17.1 million and a 48% increase in
gross profit compared to 2002. This compares to income before
environmental accruals in 2002 of $9 million, a 90% increase
year-on-year. Gross profit was $35 million in 2003 compared to $23.7
million in 2002, with 62% of 2003's gross profit coming from Hecla's
silver properties. Hecla's cash flow provided by operating activities
increased 28% in 2003, to $26 million. In the third quarter of 2003,
Hecla recorded a noncash accrual for estimated future environmental
costs of $23.1 million. Primarily because of this accrual, Hecla's net
loss for 2003 was $6 million compared to net income in 2002 of $8.6
million.
Hecla's President and Chief Executive Officer, Phillips S. Baker,
Jr., said, "Hecla has had a phenomenal two years. The true measures of
our company's performance -- income before environmental accruals,
gross profit, cash flow and balance sheet -- all continue to improve.
Our properties are low cost, and our exploration opportunities are the
most exceptional in the history of the company. Our financial
stability has given us the flexibility to significantly increase our
exploration expenditures for future increases in reserves and
resources. Hecla is extremely healthy on all fronts, both financially
and operationally."
Fourth quarter 2003 net income was $2.2 million, compared to net
income in the same period of 2002 of $1.9 million. Gross profit
increased 41% quarter-on-quarter, from $5.7 million in the fourth
quarter of 2002 to $8 million in the fourth quarter of 2003. Operating
cash flow also significantly increased, from $5.6 million in the last
quarter of 2002 to $8.4 million in the fourth quarter of 2003.
2003 HIGHLIGHTS
-- Record silver production of 9.8 million ounces at a record
average total cash cost of $1.43 per ounce
-- Gold production of more than 204,000 ounces at an average
total cash cost of $154 per ounce
-- Income before environmental accruals of $17.1 million
-- Noncash environmental accrual recorded for $23.1 million
-- 2003 exploration expenditures increased to $9.6 million
-- 48% increase in gross profit, 28% increase in cash flow
-- Excellent exploration and prefeasibility results achieved at
Mina Isidora in Venezuela
-- Development and production from the Don Sergio vein in Mexico
-- Decision to develop the next level at Lucky Friday to access
another 28 million ounces of silver reserve and resource
-- Reduction in long-term debt to $4.7 million, with $123 million
of cash and short-term investments on hand
OPERATIONS
Hecla produced a record amount of silver at its lowest cost ever
in the company's 113-year-history of operations. In 2003, Hecla
produced 9.8 million ounces of silver at a record low average total
cash cost of $1.43 per ounce. Baker said, "The fact that after a
hundred-plus years of operation we are producing more silver at lower
costs than at any time in our history points to the quality of the
mining districts in which we're located. We expect these districts to
continue to allow us to generate growing production at the lowest
costs in the industry, while generating excellent returns on
investment. Our gold operations also had a good year, but not compared
to an amazing year for the silver operations. The silver operations'
performance is even more remarkable when you consider the silver price
averaged $4.91 for the year."
Hecla produced more than 204,000 ounces of gold during 2003 at an
average total cash cost of $154 per ounce, making it one of the
lowest-cost gold miners. Baker says the company continues to focus on
gold growth, with a goal of doubling production within the next five
years.
The company estimates that production in 2004 will be
approximately 215,000 ounces of gold and 9 million ounces of silver.
Hecla expects to maintain its low-cost profile, anticipating average
total cash costs in 2004 in the range of $185 per ounce of gold and
less than $1.75 per ounce of silver.
Hecla's San Sebastian Unit in central Mexico continued to outshine
expectations by producing a total of 4.1 million ounces of silver in
2003, a 19% increase over 2002's production. These ounces were mined
at the incredibly low average total cash cost of negative 25 cents per
ounce of silver. San Sebastian's outstanding performance is due to
excellent management and cost controls, as well as the increased gold
price. Gold is a by-product at the San Sebastian mine, and as such,
revenue from gold is applied toward lowering the cost per ounce of
silver production. The 17% increase in the yearly average price of
gold from $310 in 2002 to $364 in 2003 was instrumental in lowering
San Sebastian's silver production costs. In addition to silver, the
mine produced 47,721 ounces of gold in 2003. The Don Sergio vein, an
adjunct to the Francine vein, was successfully designed, permitted and
developed during the year, and reached expected production rates in
December. Capital expenses in 2003 at San Sebastian were approximately
$3.9 million and included mining equipment and facilities for the
conversion to owner mining, development of the Don Sergio vein,
expansion of tailings capacity, a secondary mill water supply and a
leach circuit expansion.
Hecla owns an approximate 30% interest in the Greens Creek
underground silver mine in Alaska, a joint venture that is operated by
Greens Creek Kennecott Mining Company, a subsidiary of Rio Tinto. In
2003, Greens Creek contributed 3.5 million ounces of silver to Hecla's
account, at the very low average total cash cost of $1.18 per ounce of
silver. By-product gold, zinc and lead credits were instrumental in
decreasing Greens Creek's average total cash costs by 35% from $1.81
per ounce of silver in 2002. In addition to silver, Greens Creek
produced 29,564 ounces of gold for Hecla's account in 2003.
During the fourth quarter of 2003, Hecla made the decision to
drive a 5,500-foot drift on the 5900 level of the Lucky Friday silver
mine in northern Idaho. The development drift is expected to cost
approximately $8 million, and should give Hecla access to an
additional 28 million ounces of silver reserve and resource. It should
also allow the mine to double production to 4 million ounces of silver
annually, at an anticipated cash cost of production of under $4.50 per
ounce. In 2003, Lucky Friday produced 2.3 million ounces of silver at
an average total cash cost of $4.86 per ounce, an improvement over
2002's average total cash cost of $4.97 per ounce.
Hecla's gold operations in Venezuela yielded 126,567 ounces of
gold at an average total cash cost of $154 per ounce. This includes
123,549 ounces of gold from the La Camorra mine, as well as ore
processed through the La Camorra mill purchased from small miners in
the area. Hecla has started a program whereby small miners can sell
their ore to Hecla for processing in an environmentally safe manner
with favorable economic controls, something that has not been widely
available to them in the past. La Camorra's cash costs per ounce of
gold increased in the fourth quarter compared to the same period a
year earlier, due to higher production taxes based on a higher gold
price and costs of integrating operations from a property acquired
adjacent to Mina Isidora. La Camorra produced about 44,000 fewer
ounces of gold in 2003 compared to 2002's record-breaking production,
primarily due to an anticipated decrease in ore grade. The gold ore
grade at La Camorra was nearly 0.9 ounce of gold per ton in 2002,
while 2003's average ore grade was approximately 0.68 ounce of gold
per ton, which is closer to the reserve grade of 0.67 ounce of gold
per ton. Hecla's gold operation in Venezuela continues to be extremely
profitable, yielding more than $13.5 million in gross profit for the
year. Capital additions in Venezuela totaled nearly $14 million during
2003, and included improvements to the tailings impoundment and
underground ventilation, La Camorra mine development, engineering and
start-up construction on the new shaft at La Camorra, acquisition of a
pre-existing lease in the Block B concession and construction of a
plant to sample ore brought in by small miners.
EXPLORATION/DEVELOPMENT/RESERVES
In 2003, Hecla spent $9.6 million on exploration, a significant
increase from the previous year. Baker said, "Hecla now has the best
and most prolific exploration prospects in the history of the company.
We're in the early stages of exploration on a majority of our land
position, which is located in mining districts with a historically
high probability of discovery." Hecla's major area of exploration
focus in 2004 will be Venezuela and Mexico, with two-thirds of the
budget targeted for those countries. Exploration expenditures in 2004
are expected to be between $12 million and $15 million.
In November, Hecla announced drilling results at Mina Isidora in
Venezuela, located about 60 miles from La Camorra, where a 115-hole
program including 36,000 meters of drilling resulted in the discovery
of the deposit. Approximately 327,000 ounces of gold have been added
to the proven and probable reserve category at Mina Isidora, which is
now considered part of the La Camorra Unit. A prefeasibility study
indicates the ore can be mined at a cash cost in the range of $170 per
ounce of gold, after a $25 million capital investment to develop the
property. A $325 gold price would give the project a 50% return on
investment. Work is continuing on the mine plan, and Hecla's Board of
Directors is likely to be asked to approve a final development plan in
the next six months. Baker said, "Mina Isidora has tremendous
potential to contribute to Hecla's goal of doubling gold production by
the end of 2008. We are very excited about the discoveries made here
and the high grade of ore in the deposit."
At the La Camorra gold mine, deep drilling results have been
disappointing; however, higher definitional drilling indicates the ore
shoot may rake more eastwardly than previously thought. And at the
Canaima gold deposit, just 6 miles east of La Camorra, a
prefeasibility study is underway based on hydrological, geotechnical
and resource definition work completed earlier in 2003.
Several permits are now in hand for the Hollister Development
Block gold exploration project in Nevada, and final permitting is
expected to be achieved within the next few months. Construction of
surface support facilities is slated once permits and authorizations
are acquired, followed immediately by excavation of the underground
exploration decline. Hecla has been diligently pursuing the permitting
process, which has taken longer than the original schedule primarily
because of the unforeseen extent of groundwater and cultural artifact
surveys and the length of time the government agencies have taken to
review and consult on these issues.
In Mexico, several early stage targets have been identified on the
100-square-mile property position surrounding the Francine vein.
Geomagnetic studies, mapping and geochemical work is in full swing
with the aim of targeting those areas most likely to yield positive
drilling results. Work also continues in the Cerro Pedernalillo area
on the Andrea vein, where the most recent discovery was the Don Sergio
vein, which went into production ahead of schedule.
Overall, Hecla was able to significantly expand its proven and
probable silver reserves to more than 45 million ounces, while more
than replacing the proven and probable gold reserves mined in 2003.
Hecla's mines are underground operations, resulting in a smaller
proven and probable reserve base. Because of the expense of proving up
deep underground, narrow vein reserves, it is the nature of
underground mining to develop additional mine levels and replace
reserves as they are mined. Hecla has a track record more than a
century long of steadily moving precious metals resources into the
reserve category as they are mined.
ESTIMATED ORE RESERVES
Proven and Probable
- ----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) Tons (oz/ton) (oz/ton) (%) (%)
- ----------------------------------------------------------------------
Lucky Friday Unit, USA 659,380 15.4 8.4 2.4
Greens Creek (29.73%), USA 2,226,361 0.12 14.1 4.0 10.7
San Sebastian Unit, Mexico 170,711 0.26 22.3 - -
La Camorra Unit, Venezuela 818,655 0.67 - - -
- ----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) (ounces) (ounces) (tons) (tons)
- ----------------------------------------------------------------------
Lucky Friday Unit, USA - 10,154,299 55,192 15,715
Greens Creek (29.73%), USA 256,726 31,386,366 89,422 237,202
San Sebastian Unit, Mexico 43,731 3,812,503 - -
La Camorra Unit, Venezuela 547,855 - - -
TOTAL 848,312 45,353,167 144,614 252,917
- ----------------------------------------------------------------------
Mineralized Material (4)
- ----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) Tons (oz/ton) (oz/ton) (%) (%)
- ----------------------------------------------------------------------
San Sebastian Unit (1) 76,373 0.61 5.3 - -
La Camorra Unit (2) 547,172 0.38 - - -
Lucky Friday Unit (3) 3,445,110 - 9.8 5.9 3.0
- ----------------------------------------------------------------------
(1) In situ San Ricardo vein and south portion of Don Sergio vein,
diluted to assumed mining width and adjusted for expected mining
recovery.
(2) In situ resources, Canaima Lower and Middle veins, diluted and
factored for mining recovery (90%).
(3) In situ Measured and Indicated resources from Gold Hunter and
Lucky Friday vein systems, diluted and factored for expected mining
recovery.
(4) Securities and Exchange Commission guidelines do not allow the
company to complete the calculation of tons multiplied by grade to
equal contained ounces in the "mineralized material" and "other
resources" categories.
Other Resources (5)
- ----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) Tons (oz/ton) (oz/ton) (%) (%)
- ----------------------------------------------------------------------
San Sebastian Unit 22,163 0.18 5.4 - -
Lucky Friday Unit (1) 5,024,590 - 10.3 5.4 2.8
Greens Creek (29.73%) (2) 605,697 0.14 14.4 4.2 11.7
La Camorra Unit (3) 512,705 0.40 - - -
Noche Buena (4) 11,741,820 0.03 - - -
Golden Eagle (25%) 3,028,750 0.08 0.3 - -
- ----------------------------------------------------------------------
(1) Inferred resources, diluted to assumed mining width and adjusted
for mining recovery.
(2) Inferred resources, West, SW, NWW, '9A', and 200S orebodies,
factored for dilution and mining recovery.
(3) Inferred resource, diluted (15%) and factored (95%) for mining
recovery.
(4) Indicated and Inferred resources inside planned pit limit.
(5) Securities and Exchange Commission guidelines do not allow the
company to complete the calculation of tons multiplied by grade to
equal contained ounces in the "mineralized material" and "other
resources" categories.
EXCHANGE OFFER
In January 2004, Hecla announced an exchange offer to holders of
Hecla's Preferred B shares. The company has offered $66 in value of
Hecla common stock, not to exceed 8.25 common shares, in exchange for
each share of Preferred stock. If all outstanding preferred shares
were exchanged for the potential maximum of 8.25 common shares per
preferred share, Hecla would issue approximately 3.8 million common
shares. The exchange offer is currently scheduled to expire on
February 20, 2004, and the exchange ratio is expected to be set by the
volume weighted average price of Hecla common stock on the NYSE for
the five trading days of February 11, 12, 13, 17 and 18. The exchange
ratio is expected to be announced late in the day on February 18.
FINANCIAL
Hecla's cash and short-term investments at the end of 2003 totaled
$123 million, with long-term debt of just $4.7 million. The company's
balance sheet is in excellent condition, with a healthy current ratio
of 4.7:1 at the end of the year. The $23.1 million in noncash
environmental accruals recorded during the third quarter is not
expected to materially affect any of Hecla's current or future
operating, exploration or development plans.
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines
and processes silver and gold in the United States, Venezuela and
Mexico. A 113-year-old company, Hecla has long been well known in the
mining world and financial markets as a quality silver and gold
producer. Hecla's common and preferred shares are traded on the New
York Stock Exchange under the symbols HL and HL-PrB.
Cautionary Note to Investors - The United States Securities and
Exchange Commission permits mining companies, in their filings with
the SEC, to disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms in
this news release, such as "resource," "other resources" and
"mineralized materials" that the SEC guidelines strictly prohibit us
from including in our filing with the SEC. U.S. investors are urged to
consider closely the disclosure in our Form 10-K. You can review and
obtain copies of these filings from the SEC's website at
http://www.sec.gov/edgar.shtml.
Statements made which are not historical facts, such as
anticipated payments, litigation outcome, production, sales of assets,
exploration results and plans, costs, prices 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
price volatility, volatility of metals production, exploration risks
and results, project development risks and ability to raise financing.
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. The
company undertakes no obligation and has no intention of updating
forward-looking statements.
Hecla Mining Company news releases can be accessed on the Internet
at: http://www.hecla-mining.com
HECLA MINING COMPANY
(dollars in thousands, except per share,
per ounce and per pound amounts - unaudited)
Fourth Quarter Ended Year Ended
----------------------- ----------------------
HIGHLIGHTS Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
FINANCIAL DATA
Sales of products $ 31,630 $ 25,864 $ 116,353 $ 105,700
Gross profit 8,045 5,710 35,035 23,715
Income before
environmental
accruals 2,171 1,859 17,091 8,960
Net income (loss) 2,171 1,865 (6,016) 8,639
Basic income (loss)
per common share (1) (0.07) 0.01 (0.16) (0.18)
Cash flow provided by
operating activities 8,369 5,588 25,977 20,235
SALES OF PRODUCTS
Silver operations (2) $ 20,977 $ 13,686 $ 76,658 $ 56,404
Gold operations 10,670 12,178 39,192 49,296
Other (17) -- 503 --
----------- ----------- ----------- -----------
Total sales $ 31,630 $ 25,864 $ 116,353 $ 105,700
GROSS PROFIT
Silver operations (2) $ 5,506 $ 2,897 $ 21,605 $ 7,066
Gold operations 2,552 2,813 13,530 16,649
Other (13) -- (100) --
----------- ----------- ----------- -----------
Total gross profit $ 8,045 $ 5,710 $ 35,035 $ 23,715
PRODUCTION SUMMARY - TOTALS
Silver - Ounces 2,331,587 2,241,415 9,817,324 8,681,293
Gold - Ounces 51,724 52,606 204,091 239,633
Lead - Tons 5,201 4,997 21,224 18,291
Zinc - Tons 6,525 6,606 25,341 26,134
Average cost per
ounce of silver
produced (2):
Cash operating
costs ($/oz.) 1.01 1.96 1.31 2.16
Total cash costs
($/oz.) (3) 1.15 2.05 1.43 2.25
Total production
costs ($/oz.) 2.51 3.38 2.70 3.68
Average cost per
ounce of gold
produced:
Cash operating
costs ($/oz.) 181 165 154 137
Total cash costs
($/oz.) (3) 181 165 154 137
Total production
costs ($/oz.) 250 235 222 206
AVERAGE METAL PRICES
Silver - Handy &
Harman ($/oz.) 5.30 4.54 4.91 4.63
Gold - Realized
($/oz.) 362 305 339 303
Gold - London Final
($/oz.) 392 323 364 310
Lead - LME Cash
(cents/pound) 28.8 19.7 23.4 20.5
Zinc - LME Cash
(cents/pound) 42.2 35.0 37.5 35.3
(1) For the quarters and years ended December 31, 2003 and 2002,
preferred stock dividends of $10.2 million and $0.7 million,
respectively, and $12.2 million and $23.3 million, respectively,
were not declared. The preferred dividends are not included in the
determination of net income (loss); however, they are included in
determining loss applicable to common shareholders and loss per
share. Both the 2003 and 2002 amounts include noncash dividends of
approximately $9.6 million and $17.6 million, respectively,
related to exchanges of preferred stock for common stock.
Including the effects of preferred stock dividends, we reported a
loss applicable to common shareholders of $8.0 million for the
three months ended December 31, 2003, as compared to income
applicable to common shareholders of $1.2 million during the same
period in 2002. For the years ended December 31, 2003 and 2002,
losses applicable to common shareholders totaled $18.2 million and
$14.6 million, respectively.
(2) Includes gold produced at silver properties, which is treated
as a by-product credit and included in the calculation of silver
costs per ounce.
(3) Total cash costs per ounce of silver and gold represent non-U.S.
generally accepted accounting principles (GAAP) measurements.
A reconciliation of total cash costs to cost of sales and other
direct production costs (GAAP) can be found in the cash costs per
ounce reconciliation section of this news release. For additional
information, see note (2) on the cash costs per ounce
reconciliation section.
HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars and shares in thousands, except per share
amounts - unaudited)
Fourth Quarter Ended Year Ended
------------------ ------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
Continuing operations:
Sales of products $ 31,630 $ 25,864 $116,353 $105,700
-------- -------- -------- --------
Cost of sales and other
direct production costs 18,749 15,201 61,197 59,449
Depreciation, depletion and
amortization 4,836 4,953 20,121 22,536
-------- -------- -------- --------
23,585 20,154 81,318 81,985
-------- -------- -------- --------
Gross profit 8,045 5,710 35,035 23,715
-------- -------- -------- --------
Other operating expenses:
General and administrative 2,304 1,984 8,407 7,121
Exploration 2,323 2,282 9,608 5,172
Pre-development expense 347 556 1,395 653
Depreciation and amortization 73 26 341 116
Other operating expense
(income) 1,113 844 (1,439) 414
Provision for closed
operations and environmental
matters 289 130 23,777 898
-------- -------- -------- --------
6,449 5,822 42,089 14,374
-------- -------- -------- --------
Income (loss) from operations 1,596 (112) (7,054) 9,341
-------- -------- -------- --------
Other income (expense):
Interest income 363 231 2,590 420
Interest expense (493) (442) (1,407) (1,816)
-------- -------- -------- --------
(130) (211) 1,183 (1,396)
-------- -------- -------- --------
Income (loss) from operations
before income taxes and
cumulative effect of change in
accounting principle 1,466 (323) (5,871) 7,945
Income tax benefit (provision) 705 3,086 (1,217) 2,918
-------- -------- -------- --------
Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle 2,171 2,763 (7,088) 10,863
Cumulative effect of change in
accounting principle, net of
income tax -- -- 1,072 --
Discontinued operations, net of
income tax -- (898) -- (2,224)
-------- -------- -------- --------
Net income (loss) (1) $ 2,171 $ 1,865 $ (6,016) $ 8,639
======== ======== ======== ========
Basic income (loss) per common
share:
Income (loss) from continuing
operations after preferred
stock dividends $ (0.07) $ 0.02 $ (0.17) $ (0.15)
Cumulative effect of change
in accounting principle -- -- 0.01 --
Loss from discontinued
operations -- (0.01) -- (0.03)
-------- -------- -------- --------
Basic income (loss) per common
share (2) $ (0.07) $ 0.01 $ (0.16) $ (0.18)
======== ======== ======== ========
Basic weighted average number
of common shares outstanding 113,473 86,116 110,610 80,250
======== ======== ======== ========
(1) Income before environmental accruals of $17.1 million and $9.0
million, respectively, for the years ended December 31, 2003 and
2002, as reported on page one of this release, represent non-U.S.
generally accepted accounting principles (GAAP) measurements. We
believe income before environmental accruals portrays a more
accurate reflection of our operating results and is a better
measure of our company's performance during the last two years.
The following table presents a reconciliation between net income
(loss) to non-GAAP income before environmental accruals for the
quarters and years ended December 31, 2003 and 2002:
Net income (loss) $ 2,171 $ 1,865 $ (6,016) $ 8,639
Add noncash adjustment to
provision for closed
operations and environmental
matters -- (6) 23,107 321
-------- -------- -------- --------
Income before environmental
accruals $ 2,171 $ 1,859 $ 17,091 $ 8,960
======== ======== ======== ========
(2) For the quarters and years ended December 31, 2003 and 2002,
preferred stock dividends of $10.2 million and $0.7 million,
respectively, and $12.2 million and $23.3 million, respectively,
were not declared. The preferred dividends are not included in the
determination of net income (loss); however, they are included in
determining loss applicable to common shareholders and loss per
share. Both the 2003 and 2002 amounts include noncash dividends of
approximately $9.6 million and $17.6 million, respectively,
related to exchanges of preferred stock for common stock.
Including the effects of preferred stock dividends, we reported a
loss applicable to common shareholders of $8.0 million for the
three months ended December 31, 2003, as compared to income
applicable to common shareholders of $1.2 million during the same
period in 2002. For the years ended December 31, 2003 and 2002,
losses applicable to common shareholders totaled $18.2 million and
$14.6 million, respectively.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Dec. 31, Dec. 31,
2003 2002
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 105,387 $ 19,542
Short-term investments 18,003 --
Accounts and notes receivable 16,318 10,154
Inventories 16,936 14,758
Deferred income taxes 1,427 2,700
Other current assets 3,174 1,780
---------- ----------
Total current assets 161,245 48,934
Investments 722 76
Restricted cash and investments 6,447 6,428
Properties, plants and equipment, net 90,026 86,725
Mineral interests, net 5,289 5,640
Deferred income taxes 896 300
Other noncurrent assets 13,570 12,038
---------- ----------
Total assets $ 278,195 $ 160,141
========== ==========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 13,847 $ 11,731
Accrued payroll and related benefits 7,307 7,603
Current portion of debt 2,332 7,296
Accrued taxes 3,193 1,572
Current portion of accrued reclamation and
closure costs 7,400 7,005
---------- ----------
Total current liabilities 34,079 35,207
Long-term debt 2,341 4,657
Accrued reclamation and closure costs 63,232 42,718
Other noncurrent liabilities 7,114 5,629
---------- ----------
Total liabilities 106,766 88,211
---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock 116 188
Common stock 28,886 21,547
Capital surplus 504,858 405,959
Accumulated deficit (361,560) (355,544)
Accumulated other comprehensive loss (753) (36)
Stock held by grantor trust -- (66)
Treasury stock (118) (118)
---------- ----------
Total shareholders' equity 171,429 71,930
---------- ----------
Total liabilities and shareholders' equity $ 278,195 $ 160,141
========== ==========
Common shares outstanding at end of year 115,535 86,179
========== ==========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Year Ended
-------------------
Dec. 31, Dec. 31,
2003 2002
OPERATING ACTIVITIES
Net income (loss) $ (6,016) $ 8,639
Noncash elements included in net income (loss):
Depreciation, depletion and amortization 20,462 22,652
Cumulative effect of change in accounting
principle (1,072) --
Gain on disposition of properties, plants and
equipment (350) (329)
Provision for reclamation and closure costs 24,086 1,931
Deferred incomes taxes 677 (3,300)
Change in assets and liabilities:
Accounts and notes receivable (6,164) (3,506)
Inventories (2,178) (3,890)
Other current and noncurrent assets (2,051) 575
Accounts payable and accrued expenses 2,154 1,581
Accrued payroll and related benefits 396 312
Accrued taxes 1,621 395
Accrued reclamation and closure costs and other
noncurrent liabilities (5,588) (4,825)
-------- --------
Net cash provided by operating activities 25,977 20,235
-------- --------
INVESTING ACTIVITIES
Short-term investments, net (18,003) --
Proceeds from sale of discontinued operations -- 1,585
Additions to properties, plants and equipment (19,535) (11,219)
Proceeds from disposition of properties, plants
and equipment 486 5,710
Increase in restricted cash and investments (19) (3)
Other, net 7 (285)
-------- --------
Net cash used by investing activities (37,064) (4,212)
-------- --------
FINANCING ACTIVITIES
Common stock issued under warrants and stock
option plans 14,218 2,997
Issuance of common stock, net of offering costs 91,244 --
Borrowings on debt 1,350 3,317
Repayments on debt (9,880) (10,355)
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Net cash provided (used) by financing activities 96,932 (4,041)
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Net increase in cash and cash equivalents 85,845 11,982
Cash and cash equivalents at beginning of year 19,542 7,560
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Cash and cash equivalents at end of year $105,387 $ 19,542
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HECLA MINING COMPANY
Production Data
Fourth Quarter Ended Year Ended
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Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
LA CAMORRA UNIT
Tons of ore processed 52,552 44,461 197,591 194,960
Days of operation 83 75 327 310
Mining cost per ton $ 38.16 $ 39.96 $ 36.63 $ 39.81
Milling cost per ton $ 11.22 $ 15.34 $ 12.56 $ 15.73
Ore grade crushed - Gold
(oz./ton) 0.651 0.774 0.679 0.891
Gold produced (oz.) 31,782 33,486 126,567 167,386
Average cost per ounce of
gold produced:
Cash operating costs $ 181 $ 165 $ 154 $ 137
Total cash costs (1) $ 181 $ 165 $ 154 $ 137
Total production costs $ 250 $ 235 $ 222 $ 206
Capital additions $ 6,583 $ 1,332 $ 13,879 $ 8,564
SAN SEBASTIAN UNIT
Tons of ore processed 39,320 42,218 150,717 156,532
Days of operation 81 79 322 306
Mining cost per ton $ 30.72 $ 33.10 $ 29.62 $ 34.80
Milling cost per ton $ 32.81 $ 33.05 $ 34.99 $ 31.62
Ore grade milled - Silver
(oz./ton) 26.23 24.58 28.77 24.10
Ore grade milled - Gold
(oz./ton) 0.360 0.304 0.347 0.298
Silver produced (oz.) 949,600 960,244 4,085,038 3,432,394
Gold produced (oz.) 12,674 11,582 47,721 41,510
Average cost per ounce of
silver produced (2):
Cash operating costs $ (1.19) $ 0.41 $ (0.46) $ 0.91
Total cash costs (1) $ (0.94) $ 0.58 $ (0.25) $ 1.09
Total production costs $ 0.25 $ 1.53 $ 0.71 $ 2.06
Capital additions $ 306 $ 173 $ 3,863 $ 1,834
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
Tons of ore milled 57,881 55,763 232,297 218,072
Days of operation 92 92 365 365
Mining cost per ton $ 28.76 $ 27.74 $ 27.72 $ 27.87
Milling cost per ton $ 16.84 $ 16.45 $ 16.27 $ 15.58
Ore grade milled - Silver
(oz./ton) 19.58 17.42 19.69 19.73
Silver produced (oz.) 861,281 729,531 3,480,800 3,244,495
Gold produced (oz.) 7,209 7,482 29,564 30,531
Lead produced (tons) 2,131 2,006 8,289 8,200
Zinc produced (tons) 5,828 6,020 22,809 23,875
Average cost per ounce of
silver produced (2):
Cash operating costs $ 0.86 $ 1.93 $ 1.10 $ 1.76
Total cash costs (1) $ 0.98 $ 1.98 $ 1.18 $ 1.81
Total production costs $ 3.33 $ 4.45 $ 3.64 $ 4.28
Capital additions $ 990 $ 538 $ 1,887 $ 2,856
LUCKY FRIDAY UNIT
Tons of ore milled 35,854 43,693 151,991 159,651
Days of operation 92 75 365 304
Mining cost per ton $ 55.11 $ 38.07 $ 49.90 $ 39.51
Milling cost per ton $ 7.34 $ 6.44 $ 6.76 $ 6.70
Ore grade milled -
Silver (oz./ton) 15.45 13.47 15.76 13.33
Silver produced (oz.) 520,706 551,640 2,251,486 2,004,404
Lead produced (tons) 3,070 2,991 12,935 10,091
Zinc produced (tons) 697 586 2,532 2,259
Average cost per ounce
of silver produced (2):
Cash operating costs $ 5.24 $ 4.70 $ 4.86 $ 4.97
Total cash costs (1) $ 5.24 $ 4.70 $ 4.86 $ 4.97
Total production
costs $ 5.26 $ 5.18 $ 4.88 $ 5.49
(1) Total cash costs per ounce of silver and gold represent
non-U.S. generally accepted accounting principles (GAAP) measurements.
A reconciliation of total cash costs to costs of sales and other
direct production costs (GAAP) can be found in the cash costs per
ounce reconciliation section of this news release.
(2) Gold produced is treated as a by-product credit in calculating
silver costs per ounce.
HEDGED POSITIONS
As of December 31, 2003
Sold forward: 48,928 gold ounces @ average price of $288
HECLA MINING COMPANY
Reconciliation of Cash Costs per Ounce to Generally Accepted
Accounting Principles (GAAP)
(dollars and ounces in thousands, except per ounce - unaudited)
Three Months Ended Twelve Months Ended
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Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
LA CAMORRA UNIT (1)
Total cash costs $ 5,782 $ 5,445 $ 19,498 $ 22,879
Divided by gold ounces produced 32 33 127 167
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Total cash cost per ounce
produced (2) $ 181 $ 165 $ 154 $ 137
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Reconciliation to GAAP:
Total cash costs $ 5,782 $ 5,445 $ 19,498 $ 22,879
Treatment & freight costs (480) (365) (1,634) (1,840)
Change in product inventory 618 1,953 (810) (53)
Reclamation and other costs 18 77 70 388
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Costs of sales and other
direct production costs
(GAAP) $ 5,938 $ 7,110 $ 17,124 $ 21,374
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SAN SEBASTIAN UNIT
Total cash costs $ (893) $ 555 $ (1,007) $ 3,737
Divided by silver ounces
produced 950 960 4,085 3,432
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Total cash cost per ounce
produced (2) $ (0.94) $ 0.58 $ (0.25) $ 1.09
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Reconciliation to GAAP:
Total cash costs $ (893) $ 555 $ (1,007) $ 3,737
Treatment & freight costs (564) (481) (2,158) (2,224)
By-product credits 4,982 3,726 17,367 12,909
Change in product inventory 1,889 (1,468) 597 (2,089)
Reclamation and other costs 77 95 294 403
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Costs of sales and other
direct production costs
(GAAP) $ 5,491 $ 2,427 $ 15,093 $ 12,736
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GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
Total cash costs $ 844 $ 1,448 $ 4,108 $ 5,872
Divided by silver ounces
produced 861 730 3,481 3,245
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Total cash cost per ounce
produced (2) $ 0.98 $ 1.98 $ 1.18 $ 1.81
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Reconciliation to GAAP:
Total cash costs $ 844 $ 1,448 $ 4,108 $ 5,872
Treatment & freight costs (3,073) (3,011) (12,082) (12,271)
By-product credits 6,526 5,392 23,985 21,367
Change in product inventory (856) (1,016) (472) (690)
Reclamation and other costs 407 156 575 611
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Costs of sales and other
direct production costs
(GAAP) $ 3,848 $ 2,969 $ 16,114 $ 14,889
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LUCKY FRIDAY UNIT
Total cash costs $ 2,730 $ 2,592 $ 10,940 $ 9,960
Divided by silver ounces
produced 521 551 2,251 2,004
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Total cash cost per ounce
produced (2) $ 5.24 $ 4.70 $ 4.86 $ 4.97
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Reconciliation to GAAP:
Total cash costs $ 2,730 $ 2,592 $ 10,940 $ 9,960
Treatment & freight costs (1,167) (958) (4,316) (3,358)
By-product credits 1,889 1,091 5,730 3,661
Change in product inventory 11 (50) (92) 45
Reclamation and other costs 10 28 38 104
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Costs of sales and other
direct production costs
(GAAP) $ 3,473 $ 2,703 $ 12,300 $ 10,412
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COMBINED SILVER PROPERTIES (3)
Total cash costs $ 2,681 $ 4,595 $ 14,041 $ 19,569
Divided by silver ounces
produced 2,332 2,241 9,817 8,681
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Total cash cost per ounce
produced (2) $ 1.15 $ 2.05 $ 1.43 $ 2.25
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Reconciliation to GAAP:
Total cash costs $ 2,681 $ 4,595 $ 14,041 $ 19,569
Treatment & freight costs (4,804) (4,450) (18,556) (17,853)
By-product credits 13,397 10,209 47,082 37,937
Change in product inventory 1,044 (2,534) 33 (2,734)
Reclamation and other costs 494 279 907 1,118
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Costs of sales and other
direct production costs
(GAAP) $12,812 $ 8,099 $ 43,507 $ 38,037
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(1) Costs per ounce of gold are based on the gold produced by the
Venezuela segment only.
(2) Cash costs per ounce of silver or gold represent non-U.S.
generally accepted accounting principles (GAAP) measurements that
management uses to monitor and evaluate the performance of its
mining operations. We believe cash costs per ounce of silver or
gold provide an indicator of profitability at each location and on
a consolidated total, as well as a meaningful basis for which to
compare other mining companies and other mining operating
properties.
(3) Costs per ounce of silver are based on production from both the
Mexico and United States segments. The United States segment
includes both the Greens Creek mine and the Lucky Friday mine.
CONTACT: Hecla Mining Company
Vicki Veltkamp, 208-769-4100
FAX 208-769-7612