EXHIBIT 99
Hecla Reports Second Quarter & First Half 2004 Earnings;
Cash Flow and Gross Profit Increase
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Aug. 3, 2004--Hecla Mining
Company (NYSE:HL) (NYSE:HL-PrB) today reported net income of $2.7
million, or 2 cents per share, for the second quarter of 2004,
compared to net income of $2.5 million, or 2 cents per share, for the
second quarter of last year. Cash flow from operations was the highest
in 10 years, increasing 44% from the second quarter of last year.
Gross profit was $10 million, up slightly from the second quarter of
2003.
In the first half of 2004, Hecla reported net income of $8.9
million, compared to $9.3 million in the same period of 2003. The
first half of 2003 benefited from a one-time gain of $4 million as the
result of a litigation settlement with Zemex Corporation and a $1.1
million positive cumulative effect of a change in accounting
principle. Excluding these items, Hecla's net income increased
significantly from the 2003 period. As a result of the company's plan
to grow its ore reserves and resources for the future, Hecla's first
half 2004 results included an expanded exploration program in which
expenditures increased approximately $1 million compared to the same
period last year. Gross profit increased by 41% and cash flow from
operations increased 29% for the first half of the year compared to
the same period last year.
Hecla President and Chief Executive Officer Phillips S. Baker,
Jr., said, "This is a continuation of the excellent operating
performance Hecla's assets are able to deliver. We have very low costs
of production in both silver and gold, and plan to keep using our cash
flow to fund the expanded exploration program and look for potential
acquisitions. Our exploration projects are in excellent mining
districts and our results continue to be encouraging. We are in the
best position ever for long-term growth."
2004 FIRST HALF HIGHLIGHTS
-- Net income of $8.9 million; 41% increase in gross profit and
29% increase in cash flow from operations compared to first
half of 2003
-- 109,197 ounces of gold produced, with 74,131 ounces of gold
from La Camorra, at a total average cash cost per ounce of
$152
-- 3.9 million ounces of silver produced at a total average cash
cost per ounce of $1.57
-- $108 million of cash and short-term investments on hand, with
just $2.8 million in long-term debt
-- 2004 silver production estimated at approximately 8 million
ounces
-- Recovery of gold withheld for administrative review in
Venezuela
-- Favorable ruling in Independence Lead Mines lawsuit
GOLD OPERATIONS & EXPLORATION
Hecla produced 109,197 ounces of gold in the first half of 2004,
at a total average cash cost per ounce of $152. Hecla is on track to
produce approximately 215,000 ounces of gold for the year, as
previously estimated, at costs in the lowest quartile in the industry.
The Venezuelan gold operation produced 74,131 ounces in the first
half of 2004, with 36,584 ounces of gold coming in the second quarter.
Higher cash costs compared to the same period a year ago are primarily
due to a 25% increase in labor costs, which is in line with the
inflationary adjustment done annually. La Camorra recently
successfully completed and signed a 28-month labor contract.
The ore grade in the first six months of the year improved by 8%,
to 0.81 ounce of gold per ton at this underground gold mine. La
Camorra exploration continues to be positive. A series of deep
exploration intercepts on the Main Zone vein at La Camorra show assays
indicating ore grade mineralization as far as 1,000 feet below the
current development levels.
Excavation of the shaft at La Camorra is approximately 60%
complete and foundations for the hoist are being poured. The shaft,
which has been re-engineered to include upgrades to the hoisting
system and additional ventilation improvements, is expected to cost
about $15 million, and will be just under 2,000 feet deep. The haul
times to the surface by truck get longer as the decline ramp gets
deeper, so shaft access to the ore body will help keep costs down. The
shaft is scheduled to be fully operational in the first quarter of
2005.
About 5,000 ounces of gold previously withheld from export in
Venezuela due to an administrative review have been released and
exported from the country. Hecla fully cooperated with Venezuelan
authorities throughout the administrative process and the outcome was
as expected, with Hecla judged in compliance with all export and
regulatory requirements.
During the second quarter, Hecla announced a development decision
at the Mina Isidora gold mine on the Block B lease in eastern
Venezuela. Site preparation work has been completed and Hecla is in
the process of starting the underground decline ramp. Full commercial
production of between 75,000 and 115,000 ounces of gold annually at
cash costs of $150 to $180 per ounce is expected to be achieved by the
second quarter of 2006. Relatively little capital is needed to develop
the mine, because construction of a processing mill will not be
necessary. The ore will be trucked about 70 miles south to Hecla's La
Camorra mill. The development budget is approximately $30 million.
Additional exploration on other Block B targets is showing good
results on drilling less than 1,000 meters to the northeast of Mina
Isidora. Baker said, "We have an excellent land position in this
historically rich gold mining district. I expect over time to see an
expansion of Mina Isidora and the development of other projects in
this area."
At the Hollister Development Block gold exploration project in
northern Nevada, Hecla continues to await an acceptable arrangement
for property access and work authorization in order to begin the
underground exploration ramp construction. The project is an earn-in
to a joint venture with Great Basin Gold. The project has received all
necessary state and federal permits.
SILVER OPERATIONS & EXPLORATION
Hecla produced 3.9 million ounces of silver during the first half
of 2004, with 1.8 million ounces mined in the second quarter. Hecla
has some of the lowest-cost silver production in the world,
contributing to the very low average total cash cost during the first
half of the year of $1.57 per ounce, which is even lower than in 2003.
Hecla expects to maintain a similar level of production in the second
half, resulting in a total of approximately 8 million ounces of silver
production for 2004.
Despite lower ore grades resulting in decreased production, San
Sebastian maintained its position as one of the lowest-cost primary
silver mines in the world. As the currently known productive life of
the Francine and Don Sergio veins reaches its end in 2005, Hecla
expects production to decline and costs to increase until the next ore
body is put into production.
Exploration aimed at finding the next rich deposit on Hecla's
extensive Mexican property to replace San Sebastian's production
continues to be encouraging. Out of 20 holes drilled directly below
the Francine vein into another, deeper deposit, six have indicated ore
grade material. Another 15 to 30 deep holes are planned in order to
further identify the system and potential deposit.
Other areas in Hecla's nearly 200-square-mile property position in
Mexico are targeted for exploration as well. A drilling program has
begun in the Cerro Blanco area, with a trenching program to follow up
on geochemical and geophysical anomalies underway just to the west of
the Francine vein.
Baker said, "Our 2004 exploration program of $5 million on our
Mexican property is in full swing, and we've turned up a number of
good results in multiple areas. The property is so large and the
geology is so good, it's just a matter of time before we'll be able to
find another deposit to replace the Francine and Don Sergio veins.
Meanwhile, increased production at the Lucky Friday mine in Idaho will
come on line in late 2005 to help make up for any temporary decrease
in silver production in Mexico."
Progress on the 5900-level development at the Lucky Friday silver
mine in northern Idaho is slightly ahead of schedule. The drift has
advanced 2,100 feet as of August 1. The mile-long drift, which is more
than a mile under the surface, will allow Hecla to access an
additional 28 million ounces of silver over the next seven years,
doubling annual production from approximately 2 million ounces of
silver to 4 million ounces.
Meanwhile, production continues from the 4900-level at the Lucky
Friday mine, where costs have risen somewhat because of a decision to
mine lower grade material, which is still profitable at today's
prices. In the first six months of this year, Lucky Friday has
produced more than 1 million ounces of silver at an average total cash
cost of $5.14 per ounce. Once mining begins from the 5900-level, cash
costs are expected to be under $4.50 per ounce of silver.
The Greens Creek silver mine in Alaska, in which Hecla holds an
approximate 30% interest, contributed 1.4 million ounces of silver to
Hecla's account during the first six months of 2004, at a very low
average total cash cost per ounce of 77 cents. Compared to the same
period last year, Greens Creek silver production decreased due to a
lower silver ore grade. The area currently being mined is higher in
base metal content and lower in silver grade. Sales of products in the
second quarter at Greens Creek decreased from $7.9 million in 2003 to
$4.3 million in 2004, due primarily to timing of concentrate
shipments.
OTHER
Hecla has recently received a favorable decision in Idaho District
Court relating to a lawsuit brought against the company by
Independence Lead Mines Company. Independence had alleged a breach of
contract in a 1968 agreement between the companies, which gave Hecla
the sole right and responsibility to operate the expansion area of the
Lucky Friday mine (also known as the Gold Hunter area). Independence
has an 18.52% net profits interest in the property. The matter went to
trial in March. On July 19, the judge ruled that Hecla had operated
the mine in a prudent and responsible manner and denied all of
Independence's claims.
Hecla is pleased to announce the appointment of Russell D. Alley
as the new General Manager of Minera Hecla. He will be responsible for
operating the San Sebastian mine and the Velardena mill, as well as
supervising exploration efforts on Hecla's Mexican property position.
After a transition period, the former General Manager, Scott Hartman,
returns to the Hecla corporate headquarters in Coeur d'Alene, Idaho,
where he will be Co-General Manager of Technical Services. Hartman was
the General Manager of the Mexican operations for three and a half
years. Alley was most recently the Chief Executive Officer for Konkola
Copper Mines (Zambia) and formerly held positions as General Manager,
Vice President and President of mines in Chile and Peru. He holds a
metallurgical engineering degree from the University of Arizona and an
M.S., Management, from Troy State University, Alabama.
Hecla's balance sheet remains strong, with $108 million in cash
and short-term investments and just $2.8 million dollars in debt.
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.
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.
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," 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.
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)
Second Quarter Ended Six Months Ended
---------------------- ----------------------
HIGHLIGHTS June 30, June 30, June 30, June 30,
2004 2003 2004 2003
FINANCIAL DATA
- --------------
Sales of products $ 31,712 $ 30,203 $ 68,362 $ 56,643
Gross profit 10,071 9,646 23,480 16,600
Income from operations 3,650 3,034 10,507 9,535
Net income 2,748 2,540 8,928 9,273
Basic and diluted
income per common share (1) 0.02 0.02 (0.02) 0.07
Cash flow provided by
operating activities 11,855 8,240 16,765 12,990
SALE OF PRODUCTS BY SEGMENT
- ---------------------------
Silver operations (2) $ 18,197 $ 19,480 $ 43,163 $ 36,732
Gold operations 13,500 10,723 25,254 19,911
Other 15 - - (55) - -
----------- ----------- ----------- -----------
Total sales $ 31,712 $ 30,203 $ 68,362 $ 56,643
GROSS PROFIT (LOSS) BY SEGMENT
- ------------------------------
Silver operations (2) $ 5,430 4,736 $ 15,076 8,896
Gold operations 4,626 4,936 8,459 7,725
Other 15 (26) (55) (21)
----------- ----------- ----------- -----------
Total gross profit $ 10,071 $ 9,646 $ 23,480 $ 16,600
PRODUCTION SUMMARY - TOTALS
- ---------------------------
Silver - Ounces 1,815,236 2,444,109 3,900,721 4,842,308
Gold - Ounces 53,433 51,780 109,197 105,192
Lead - Tons 5,188 5,407 9,748 11,034
Zinc - Tons 6,371 7,320 12,443 14,005
Average cost per ounce
of silver produced (2):
Cash operating costs
($/oz.) 1.67 1.46 1.41 1.52
Total cash costs
($/oz.) (3) 1.72 1.58 1.57 1.62
Total production
costs ($/oz.) 3.38 2.84 3.14 2.83
Average cost per ounce
of gold produced:
Cash operating costs
($/oz.) 158 139 150 138
Total cash costs
($/oz.) (3) 162 139 152 138
Total production
costs ($/oz.) 251 206 242 206
AVERAGE METAL PRICES
- --------------------
Silver - Handy &
Harman ($/oz.) 6.28 4.62 6.50 4.66
Gold - Realized ($/oz.) 368 326 373 329
Gold - London Final ($/oz.) 394 347 401 349
Lead - LME Cash
(cents/pound) 36.8 20.7 37.5 20.7
Zinc - LME Cash
(cents/pound) 46.6 35.2 47.6 35.4
(1) For the quarters and six months ended June 30, 2004 and 2003,
respectively, preferred stock dividends of $0.1 million and $0.7
million, respectively, and $11.3 million and $1.3 million,
respectively, were not declared or paid. The preferred dividends
are not included in the determination of net income; however, they
are included in determining income applicable to common
shareholders and earnings per share. Including the effects of
preferred stock dividends, income applicable to common
shareholders totaled $2.6 million and $1.9 million, respectively,
for the three months ended June 30, 2004 and 2003, and $(2.4)
million and $8.0 million, respectively, for the six months ended
June 30, 2004 and 2003.
(2) Includes gold produced at silver operations, 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.
HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars and shares in thousands,
except per share amounts - unaudited)
Second Quarter Ended Six Months Ended
-------------------- ------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Sales of products $ 31,712 $ 30,203 $ 68,362 $ 56,643
--------- --------- --------- ---------
Cost of sales and other direct
production costs 15,556 15,335 32,404 29,919
Depreciation, depletion and
amortization 6,085 5,222 12,478 10,124
--------- --------- --------- ---------
21,641 20,557 44,882 40,043
--------- --------- --------- ---------
Gross profit 10,071 9,646 23,480 16,600
--------- --------- --------- ---------
Other operating expenses:
General and administrative 2,319 2,222 4,098 4,261
Exploration 3,405 3,035 5,819 4,817
Pre-development 728 603 1,024 954
Depreciation and amortization 74 171 149 200
Other operating expense (income) (783) 458 427 (3,370)
Provision for closed operations
and environmental matters 678 123 1,456 203
--------- --------- --------- ---------
6,421 6,612 12,973 7,065
--------- --------- --------- ---------
Income from operations 3,650 3,034 10,507 9,535
--------- --------- --------- ---------
Other income (expense):
Interest and other income 379 686 766 964
Interest expense (179) (323) (377) (682)
--------- --------- --------- ---------
200 363 389 282
--------- --------- --------- ---------
Income from operations before
income taxes and cumulative
effect of change in accounting
principle 3,850 3,397 10,896 9,817
Income tax provision (1,102) (857) (1,968) (1,616)
--------- --------- --------- ---------
Income from continuing
operations before cumulative
effect of change in
accounting principle 2,748 2,540 8,928 8,201
Cumulative effect of change in
accounting principle, net of
income tax - - - - - - 1,072
--------- --------- --------- ---------
Net income $ 2,748 $ 2,540 $ 8,928 $ 9,273
========= ========= ========= =========
Basic and diluted income
(loss) per common share:
Income from operations after
preferred stock dividends $ 0.02 $ 0.02 $ (0.02) $ 0.06
Cumulative effect of change
in accounting principle - - - - - - 0.01
Loss from discontinued
operations - - - - - - - -
--------- --------- --------- ---------
Basic and diluted income per
common share (1) $ 0.02 $ 0.02 $ (0.02) $ 0.07
========= ========= ========= =========
Basic weighted average number
of common shares outstanding 118,262 109,427 117,790 109,374
========= ========= ========= =========
Diluted weighted average
number of common shares
outstanding 118,698 110,052 117,790 110,173
========= ========= ========= =========
(1) For the quarters and six months ended June 30, 2004 and 2003,
respectively, preferred stock dividends of $0.1 million and $0.7
million, respectively, and $11.3 million and $1.3 million,
respectively, were not declared or paid. The preferred dividends
are not included in the determination of net income; however, they
are included in determining income applicable to common
shareholders and earnings per share. Including the effects of
preferred stock dividends, income applicable to common
shareholders totaled $2.6 million and $1.9 million, respectively,
for the three months ended June 30, 2004 and 2003, and $(2.4)
million and $8.0 million, respectively, for the six months ended
June 30, 2004 and 2003.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
June 30, Dec. 31,
2004 2003
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 80,418 $ 105,387
Short-term investments 27,937 18,003
Accounts and notes receivable 15,278 16,318
Inventories 19,984 16,936
Deferred income taxes 654 1,427
Other current assets 7,673 3,174
------------- -------------
Total current assets 151,944 161,245
Investments 1,539 722
Restricted cash and investments 19,509 6,447
Properties, plants and equipment, net 99,887 95,315
Deferred incomes taxes - - 896
Other noncurrent assets 13,343 13,570
------------- -------------
Total assets $ 286,222 $ 278,195
============= =============
LIABILITIES
- -----------
Current liabilities:
Accounts payable and accrued expenses $ 14,888 $ 13,847
Accrued payroll and related benefits 7,902 7,307
Current portion of debt 990 2,332
Accrued taxes 2,781 3,193
Current portion of accrued reclamation
and closure costs 8,500 7,400
------------- -------------
Total current liabilities 35,061 34,079
Long-term debt 1,764 2,341
Accrued reclamation and closure costs 60,567 63,232
Other noncurrent liabilities 6,370 7,114
------------- -------------
Total liabilities 103,762 106,766
------------- -------------
SHAREHOLDERS' EQUITY
- --------------------
Preferred stock 39 116
Common stock 29,570 28,886
Capital surplus 505,868 504,858
Accumulated deficit (352,632) (361,560)
Accumulated other comprehensive income
(loss) (267) (753)
Treasury stock (118) (118)
------------- -------------
Total shareholders' equity 182,460 171,429
------------- -------------
Total liabilities and shareholders' equity $ 286,222 $ 278,195
============= =============
Common shares outstanding at end of period 118,280 115,544
============= =============
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Six Months Ended
------------------
June 30, June 30,
2004 2003
OPERATING ACTIVITIES
- --------------------
Net income $ 8,928 $ 9,273
Noncash elements included in net income:
Depreciation, depletion and amortization 12,881 10,324
Cumulative effect of change in accounting
principle - - (1,072)
(Gain) loss on disposition of properties, plants
and equipment (82) (296)
Provision for reclamation and closure costs 891 132
Deferred income taxes 1,669 1,350
Change in assets and liabilities:
Accounts and notes receivable 1,041 (3,010)
Inventories (3,049) (408)
Other current and noncurrent assets (4,271) (577)
Accounts payable and accrued expenses 1,550 (402)
Accrued payroll and related benefits 898 (554)
Accrued taxes (412) 729
Accrued reclamation and closure costs and other
noncurrent liabilities (3,279) (2,499)
--------- ---------
Net cash provided by operating activities 16,765 12,990
--------- ---------
INVESTING ACTIVITIES
- --------------------
Purchase of held-to-maturity securities (21,304) - -
Maturities of short-term investments 11,370 - -
Additions to properties, plants and equipment (17,495) (6,804)
Proceeds from disposition of properties, plants
and equipment 93 486
Increase in restricted investments (13,409) (27)
Other, net (468) 78
--------- ---------
Net cash used by investing activities (41,213) (6,267)
--------- ---------
FINANCING ACTIVITIES
- --------------------
Common stock issued under warrants and stock
option plans 1,398 248
Common stock issued, net of offering costs - - 91,270
Borrowing on debt 2,430 1,350
Repayment on debt (4,349) (5,753)
--------- ---------
Net cash used by financing activities (521) 87,115
--------- ---------
Net increase (decrease) in cash and cash
equivalents (24,969) 93,838
Cash and cash equivalents at beginning of period 105,387 19,542
--------- ---------
Cash and cash equivalents at end of period $ 80,418 $113,380
========= =========
HECLA MINING COMPANY
Production Data
Second Quarter Six Months Ended
Ended
------------------- ---------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
LA CAMORRA UNIT
- ---------------
Tons of ore processed 51,330 48,886 97,070 93,653
Days of operation 91 82 173 162
Mining cost per ton $47.91 $32.32 $44.09 $34.50
Milling cost per ton $13.50 $14.88 $12.60 $14.27
Ore grade milled - Gold
(oz./ton) 0.773 0.684 0.812 0.751
Gold produced (oz.) 36,584 32,109 74,131 67,053
Average cost per ounce of
gold produced:
Cash operating costs $158 $139 $150 $138
Total cash costs (1) $162 $139 $152 $138
Total production costs $251 $206 $242 $206
Capital additions $8,024 $2,640 $13,560 $3,459
SAN SEBASTIAN UNIT
- ------------------
Tons of ore processed 40,850 38,375 80,618 70,975
Days of operation 91 85 182 159
Mining cost per ton $38.29 $27.44 $39.46 $30.26
Milling cost per ton $34.36 $35.36 $33.42 $36.52
Ore grade milled - Silver
(oz./ton) 16.44 27.92 20.61 30.00
Ore grade milled - Gold
(oz./ton) 0.273 0.322 0.295 0.353
Silver produced (oz.) 626,929 1,009,542 1,484,029 2,031,629
Gold produced (oz.) 10,071 11,505 21,545 23,059
Average cost per ounce of
silver produced (2):
Cash operating costs $0.10 $0.00 $(0.38) $(0.14)
Total cash costs (1) $0.39 $0.20 $(0.09) $0.07
Total production costs $1.96 $1.06 $1.47 $0.87
Capital additions $898 $1,797 $931 $2,673
GREENS CREEK UNIT (Reflects
Hecla's 29.73% share)
- ----------------------------
Tons of ore milled 57,886 57,713 117,641 113,874
Days of operation 91 91 182 181
Mining cost per ton $26.90 $28.48 $27.41 $28.08
Milling cost per ton $18.32 $16.22 $17.76 $16.26
Ore grade milled - Silver
(oz./ton) 16.33 19.11 16.51 18.37
Silver produced (oz.) 670,173 832,705 1,415,140 1,573,365
Gold produced (oz.) 6,778 8,107 13,521 14,955
Lead produced (tons) 2,013 2,124 3,738 4,111
Zinc produced (tons) 5,697 6,736 11,134 12,818
Average cost per ounce of
silver produced (2):
Cash operating costs $0.67 $0.92 $0.65 $1.27
Total cash costs (1) $0.54 $1.00 $0.77 $1.31
Total production costs $3.55 $3.66 $3.47 $4.00
Capital additions $661 $293 $1,625 $568
LUCKY FRIDAY UNIT
- -----------------
Tons of ore milled 40,493 38,381 79,590 80,693
Days of operation 91 91 182 181
Mining cost per ton $52.70 $48.30 $54.32 $46.37
Milling cost per ton $7.76 $6.62 $7.22 $6.47
Ore grade milled - Silver
(oz./ton) 13.79 16.68 13.56 16.28
Silver produced (oz.) 518,134 601,862 1,001,552 1,237,314
Lead produced (tons) 3,175 3,283 6,010 6,923
Zinc produced (tons) 674 584 1,309 1,187
Average cost per ounce of
silver produced (2):
Cash operating costs $4.87 $4.68 $5.13 $4.57
Total cash costs (1) $4.87 $4.68 $5.14 $4.57
Total production costs $4.89 $4.69 $5.16 $4.58
Capital additions $1,133 $- - $1,739 $- -
(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 cost 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 June 30, 2004
Sold forward: 22,660 gold ounces @ average price of $288
(through December 31, 2004)
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 Six Months Ended
Ended
----------------- -----------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
LA CAMORRA UNIT (1)
- -------------------
Total cash costs $ 5,914 $ 4,455 $11,258 $ 9,240
Divided by gold ounces produced 37 32 74 67
-------- -------- -------- --------
Total cash cost per ounce
produced $ 162 $ 139 $ 152 $ 138
======== ======== ======== ========
Reconciliation to GAAP (2):
Total cash costs $ 5,914 $ 4,455 $11,258 $ 9,240
Treatment & freight costs (575) (458) (1,034) (805)
Change in product inventory 256 (183) (146) (842)
Reclamation and other costs 37 9 37 61
-------- -------- -------- --------
Costs of sales and other direct
production costs (GAAP) $ 5,632 $ 3,823 $10,115 $ 7,654
======== ======== ======== ========
SAN SEBASTIAN UNIT
- ------------------
Total cash costs $ 244 $ 202 $ (132) $ 134
Divided by silver ounces produced 627 1,010 1,484 2,032
-------- -------- -------- --------
Total cash cost per ounce
produced $ 0.39 $ 0.20 $ (0.09) $ 0.07
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 244 $ 202 $ (132) $ 134
Treatment & freight costs (367) (506) (829) (1,016)
By-product credits 3,956 3,979 8,640 8,036
Change in product inventory 931 (243) 303 (225)
Reclamation and other costs 73 (11) 149 141
-------- -------- -------- --------
Costs of sales and other direct
production costs (GAAP) $ 4,837 $ 3,421 $ 8,131 $ 7,070
======== ======== ======== ========
GREENS CREEK UNIT (Reflects Hecla's
29.73% share)
- -----------------------------------
Total cash costs $ 361 $ 833 $ 1,090 $ 2,068
Divided by silver ounces produced 670 833 1,415 1,573
-------- -------- -------- --------
Total cash cost per ounce
produced $ 0.54 $ 1.00 $ 0.77 $ 1.31
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 361 $ 833 $ 1,090 $ 2,068
Treatment & freight costs (3,209) (3,079) (6,278) (6,068)
By-product credits 6,776 6,170 13,487 11,687
Change in product inventory (2,442) 1,081 (1,511) 789
Reclamation and other costs 89 41 178 113
-------- -------- -------- --------
Costs of sales and other direct
production costs (GAAP) $ 1,575 $ 5,046 $ 6,966 $ 8,589
======== ======== ======== ========
LUCKY FRIDAY UNIT
- -----------------
Total cash costs $ 2,523 $ 2,815 $ 5,153 $ 5,652
Divided by silver ounces produced 518 602 1,002 1,237
-------- -------- -------- --------
Total cash cost per ounce
produced $ 4.87 $ 4.68 $ 5.14 $ 4.57
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 2,523 $ 2,815 $ 5,153 $ 5,652
Treatment & freight costs (1,295) (1,017) (2,458) (2,171)
By-product credits 2,291 1,182 4,403 2,499
Change in product inventory (14) 40 76 64
Reclamation and other costs 10 10 18 19
-------- -------- -------- --------
Costs of sales and other direct
production costs (GAAP) $ 3,515 $ 3,030 $ 7,192 $ 6,063
======== ======== ======== ========
COMBINED SILVER PROPERTIES (3)
- ------------------------------
Total cash costs $ 3,128 $ 3,850 $ 6,111 $ 7,854
Divided by silver ounces produced 1,815 2,444 3,901 4,842
-------- -------- -------- --------
Total cash cost per ounce
produced $ 1.72 $ 1.58 $ 1.57 $ 1.62
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 3,128 $ 3,850 $ 6,111 $ 7,854
Treatment & freight costs (4,871) (4,602) (9,565) (9,255)
By-product credits 13,023 11,331 26,530 22,222
Change in product inventory (1,525) 878 (1,132) 628
Reclamation and other costs 170 40 345 273
-------- -------- -------- --------
Costs of sales and other direct
production costs (GAAP) $ 9,925 $11,497 $22,289 $21,722
======== ======== ======== ========
(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 unit and the Lucky Friday unit.
CONTACT: Hecla Mining Company
Vicki Veltkamp, 208-769-4100
Fax: 208-769-7612