EXHIBIT 99.1
Hecla Releases Third Quarter Financial Results, Advances Exploration
and Development Projects;
For the Period Ended September 30, 2004
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Nov. 4, 2004--Hecla Mining
Company (NYSE:HL) today reported financial results for the third
quarter and first nine months of 2004. Hecla's President and Chief
Executive Officer, Phillips S. Baker, Jr., said, "We have begun to
make significant investments in our exploration and development
programs and we're very pleased with the progress we're making. These
expenditures reflect an increased emphasis on growing our resources,
and are leading us toward the feasibility stage at projects in Mexico,
Nevada and Idaho, as well as development of a new gold mine in
Venezuela. Hecla's silver and gold operations continue to have some of
the lowest costs in the industry; although, as expected, costs were
higher this quarter."
Income from operations in the third quarter of 2004 was $3.3
million, before a noncash environmental accrual and before
company-wide exploration and pre-development expenditures, compared to
$8.2 million in the same period a year ago. Exploration and
pre-development expenses in the third quarter were over $6 million,
more than double the amount during the same period last year.
Including those expenses, as well as a noncash accrual of $8.4 million
taken for future environmental costs, Hecla reported a third quarter
net loss of $11.3 million, or 10 cents a share. This compares to a net
loss of $17.5 million, or 16 cents a share, in the third quarter of
2003.
Income before the environmental accruals and exploration and
pre-development expenses for the first nine months of 2004 was $19.4
million, compared to $23.3 million in the same period last year.
2004's income reflects expenditures of $13 million on exploration and
pre-development in the first nine months of the year. Including the
noncash environmental accruals and exploration and pre-development
expenses, the net loss for the first nine months of 2004 was $2.4
million, compared to a net loss of $8.2 million during the first nine
months of 2003.
Baker said, "For 2004, we now expect to produce more than 200,000
ounces of gold at cash costs below $185 per ounce and about 7.7
million ounces of silver at cash costs below $2 per ounce. This year,
and particularly this quarter, we are in lower-grade areas of our
underground mines which, as expected, has resulted in somewhat lower
production and higher costs than last year. This will ebb and flow
from year to year, due to the nature of our underground mines. We
continue to be in excellent financial and operational shape as the
lowest-cost primary silver producer and one of the lower-cost gold
producers. We are also debt-free, with more than $93 million in cash
and short-term investments on the balance sheet." Baker continued,
"Our emphasis now is on expanding our resource and reserve base, which
we expect to grow significantly over the next two to three years,
leading to increased production in future years."
Regarding the company's exploration program, Baker said, "While
this level of exploration reduces current earnings, it provides the
investment needed to grow our reserves and resources in the future.
I'm very pleased with the land positions we have in these great mining
districts. The next new mine or deposit could be on any of our
properties in the U.S., Mexico or Venezuela - they all have that
potential. Meanwhile, our current operations continue to produce gold
and silver at our expected production rates and at very low overall
costs."
FIRST NINE MONTHS 2004 HIGHLIGHTS
-- 5.7 million ounces of silver produced at an average total cash
cost of $1.81 per ounce
-- 154,124 ounces of gold produced, with 102,422 ounces produced
from the La Camorra unit at an average total cash cost per
ounce of $165
-- $13 million in exploration and pre-development expenditures in
the first nine months
-- Extended deposit strike length at the Lucky Friday silver mine
by more than 10%
-- In Mexico, Hugh Zone exploration has been advanced to a scoping
study
-- Successful advancement of the Noche Buena project in Mexico
-- Development of the new, high-grade gold mine in Venezuela is
underway
-- Commencement of an exploration decline at the Hollister
Development Block gold project in Nevada
-- Noncash environmental accruals of $8.8 million
-- Debt-free, with $93 million in cash and short-term investments
GOLD OPERATIONS & EXPLORATION
In the first nine months of 2004, Hecla produced 154,124 ounces of
gold. 102,422 ounces came from the La Camorra unit in Venezuela, at an
average total cash cost of $165 per ounce. During the third quarter,
the La Camorra unit produced 28,290 ounces of gold at a total average
cash cost per ounce of $211. Costs are expected to decrease during the
fourth quarter. Low costs relative to the industry have been
maintained despite the increasing depth of the ramp and rising
material costs, particularly steel. To maintain low costs at the La
Camorra mine in the longer term, a shaft is being constructed at the
property to eliminate the long haul times. The pilot hole for the
shaft is complete, and development of the underground levels is
underway. The hoist is in place on the surface, and the headframe will
be erected during the fourth quarter and into the first quarter of
next year. The project is 65% complete, with approximately $5.5
million remaining to be spent. The shaft is expected to be operational
in the second quarter of 2005.
Development of a new gold mine on Hecla's Block B property in the
El Callao gold district of Venezuela is on schedule. Mina Isidora is
on track to go into full operation starting in 2006. To date, the
decline has been advanced about 135 meters. Temporary surface
facilities, the power line and the road access have been completed.
Although the main access to the mine will be via a ramp, an old shaft
at the Mina Isidora site is undergoing rehabilitation to accelerate
mine development, provide some test mining, and allow limited
commercial production as early as next year. Once in full operation,
the current life-of-mine plan has production ranging from 70,000 to
120,000 ounces of gold per year. Ore from Mina Isidora will be trucked
to the mill at the La Camorra mine for processing, eliminating the
need to build a new mill on site.
Hecla spent approximately $1.8 million on exploration in Venezuela
in the third quarter of this year, with about 8,000 meters of core
drilling completed. On Block B, the primary exploration drilling
target is the Twin Shears, where preliminary drilling has been very
encouraging, with several holes assaying at ore grade material over
widths of more than five meters and one intercept of 14.2 grams per
tonne (0.4 ounce of gold per ton) over a 12.29-meter interval.
Drilling is continuing to evaluate continuity of the mineralization
and to test the mineralized zone laterally and at depth.
In Nevada, Hecla began surface and underground construction at the
Hollister Development Block gold exploration project. Only a small
amount of pre-development expense was recorded for the third quarter,
but the company expects to spend approximately $3 million advancing
the project during the fourth quarter of this year.
SILVER OPERATIONS & EXPLORATION
Hecla produced 5.7 million ounces of silver in the first nine
months of 2004, at an average total cash cost of $1.81 per ounce.
Production in the third quarter of the year was 1.7 million ounces at
an average total cash cost of $2.32 per ounce. Compared to earlier in
the year, costs in the third quarter at the silver operations were
impacted by lower ore grades and higher diesel and steel costs.
At the Lucky Friday mine in Idaho, cash costs per ounce were
significantly lower in the third quarter of 2004 than in the same
period a year ago, partially due to higher by-product metals prices.
The average total cash cost per ounce in the third quarter of this
year was $4.53 per ounce, even though the ore grade was lower compared
to the same period a year ago. Lucky Friday produced more than 1.5
million ounces of silver in the first three quarters of the year, at a
year-to-date average total cash cost per ounce of $4.98.
Lucky Friday's new development drift on the 5900 level has
advanced approximately 3,700 feet, or about two-thirds of the way to
the ore body. When production starts on the new level, cash costs are
anticipated to decrease to as low as $4 per ounce. Full production on
the new level is expected to begin in early 2006, and annual
production is expected to double to about 4 million ounces of silver a
year.
Exploration drilling to the east of the identified reserve
envelope at the Lucky Friday has been excellent, extending the strike
length of the vein on the 5900 level by almost 250 feet. Drilling to
test the westerly strike extension of the deposit is now underway.
Hecla anticipates adding additional reserves to the mine next year.
Hecla is currently evaluating metallurgical improvements in the mill
at the Lucky Friday unit. Preliminary results indicate excellent
potential to improve metal recovery and concentrate grades, as well as
some potential for additional capacity. Work will commence in the
first quarter of next year to evaluate the ability of the current
infrastructure to support an increased level of production above
current peak capacity. The mine has been in operation for nearly 50
years and still has more reserves and resources than at most times in
its history.
The Greens Creek mine in Alaska, in which Hecla holds an
approximate 30% interest, produced 2.2 million ounces of silver for
Hecla's account in the first nine months of 2004, at a low average
total cash cost of $1.04 per ounce. In the third quarter alone,
Hecla's share of Greens Creek production was about 767,000 ounces of
silver, at an average total cash cost of $1.55 per ounce. Exploration
drilling and drifting continues to evaluate targets to the west of the
known ore bodies on the west side of the Gallagher fault. Drift access
to this area is being developed and should be completed early next
year, which will establish a new exploration platform to test the
significant new target area. Additional surface exploration is also
continuing to define and test targets in this under-explored,
world-class mining district.
The San Sebastian silver mine in Mexico continues to produce
silver at a very low cost, with nearly 2 million ounces of silver
mined in the first nine months of the year at a total average cash
cost of just 22 cents per ounce. San Sebastian also produced 31,850
ounces of gold as a by-product in the first three quarters. In the
third quarter of 2004, the mine produced about 471,809 ounces of
silver and 10,305 ounces of gold, at a total average cash cost per
ounce of silver of $1.20. As expected, the ore grade has been
decreasing as the operation reaches the last year of its reserve life.
Toward the end of October, mill employees went on strike after
presenting a list of what the company believes are unfounded
grievances relating to the labor agreement. The strike is expected to
be relatively short-lived with a favorable outcome to the company, and
is not expected to affect the company's long-term production or cost
targets. Depending upon the length of the strike, fourth quarter 2004
production could be impacted. The mine is stockpiling ore until the
strike is resolved.
Exploration efforts are in full swing on the prospective Mexican
property in the Saladillo Valley, where the San Sebastian mine is
located. The focus is primarily in the Francine and Don Sergio areas,
where nearly 12,000 meters of reverse circulation and core drilling
were completed in the third quarter. Deep drilling below the current
workings on the Francine vein, known as the Hugh Zone, has been
encouraging and is now being evaluated in terms of metallurgy,
hydrology and resource potential. Assuming results from the current
scoping study remain positive, Hecla anticipates commencement of a
full underground feasibility study in 2005. In addition, work on the
Don Sergio deposit has indicated the potential for another
Francine-type deposit at depth. Follow-up drilling is in progress to
test this target.
Generative exploration work on the Saladillo concessions has
outlined a number of large, consistent, multi-element geochemical
anomalies to the west and north of the Francine vein at San Sebastian.
Hecla will be systematically drill testing the targets beginning in
the fourth quarter.
Also in Mexico, but in the state of Sonora, a drilling program on
the Noche Buena gold property has been completed, with encouraging
results. This program was intended to confirm the currently known
resource at the area and provide additional geological, metallurgical
and hydrogeological data for a feasibility study, which is now
underway. A decision on whether to mine the deposit could be made as
early as next summer.
ENVIRONMENTAL
In the third quarter of 2004, Hecla recorded a noncash accrual of
$8.4 million as a provision for closed operations and future
environmental matters. Periodically, the company reviews environmental
matters to determine whether the accrual for future environmental
issues is adequate. Most of these estimated expenditures are expected
to take place over a long period of time, and are not expected to
change Hecla's operations or plans. The bulk of the accrual relates to
issues concerning historic mining activities in northern Idaho's Coeur
d'Alene Basin. In the third quarter, $5.6 million was accrued for past
response costs that are claimed by the federal government for its
litigation and related costs, although there is not likely to be a
final determination of those costs for some time. Hecla has estimated
a range of liability for the past response cost component in the range
of $5.6 million to $13.6 million, with $5.6 million being accrued in
accordance with accounting principles that require that if no amount
within the range of estimate is more likely than other amounts, the
lower end of the range shall be accrued. The majority of the remainder
of the accrual in the third quarter, about $2.9 million, was allotted
to the Grouse Creek mine in central Idaho, which is currently
undergoing reclamation and closure.
FINANCIAL
In addition to the environmental accrual and increased exploration
expenditures, Hecla's financial results for the first nine months of
2004 were impacted by a noncash dividend of approximately $11 million
taken in the first quarter of the year. The charge was a result of
Hecla exchanging common shares for preferred shares. Hecla has reduced
preferred shares outstanding to approximately 160,000.
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, political risks, 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)
Third Quarter Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
HIGHLIGHTS 2004 2003 2004 2003
FINANCIAL DATA
Sales of products $ 33,718 $ 28,079 $ 102,080 $ 84,723
Gross profit 6,905 10,390 30,384 26,990
Net loss (11,292) (17,460) (2,364) (8,187)
Basic loss per common
share (1) (0.10) (0.16) (0.12) (0.09)
Cash flow provided by
operating activities
before exploration
and pre-development
expenses (2) 6,691 7,180 30,299 25,941
Cash flow provided by
operating activities 517 4,618 17,282 17,608
SALE OF PRODUCTS
Silver operations (3) $ 22,290 $ 19,485 $ 65,453 $ 55,681
Gold operations 11,476 8,611 36,730 28,522
Other (48) (17) (103) 520
---------- ---------- ---------- ----------
Total sales $ 33,718 $ 28,079 $ 102,080 $ 84,723
GROSS PROFIT (LOSS)
Silver operations (3) $ 5,099 $ 7,202 $ 20,176 $ 16,099
Gold operations 1,854 3,236 10,311 10,961
Other (48) (48) (103) (70)
---------- ---------- ---------- ----------
Total gross profit $ 6,905 $ 10,390 $ 30,384 $ 26,990
PRODUCTION SUMMARY -
TOTALS
Silver - Ounces 1,749,681 2,643,429 5,650,402 7,485,737
Gold - Ounces 44,814 47,176 154,124 152,367
Lead - Tons 5,040 4,989 14,789 16,023
Zinc - Tons 6,425 4,811 18,868 18,815
Average cost per ounce
of silver produced (3):
Cash operating costs
($/oz.) 2.16 1.20 1.66 1.41
Total cash costs
($/oz.) (4) 2.32 1.33 1.81 1.52
Total production
costs ($/oz.) 3.89 2.64 3.39 2.76
Average cost per ounce
of gold produced (5):
Cash operating costs
($/oz.) 204 161 162 145
Total cash costs
($/oz.) (4) 211 161 165 145
Total production
costs ($/oz.) 310 228 259 212
AVERAGE METAL PRICES
Silver - Handy &
Harman ($/oz.) 6.50 5.03 6.50 4.78
Gold - Realized
($/oz.) 378 337 375 332
Gold - London Final
($/oz.) 401 363 401 354
Lead - LME Cash
(cents/pound) 42.3 23.2 39.1 21.6
Zinc - LME Cash
(cents/pound) 44.4 37.2 46.5 36.0
(1) For the quarters and nine months ended September 30, 2004 and
2003, preferred stock dividends for $0.1 million and $11.5
million, respectively, and $0.7 million and $2.0 million,
respectively, were not declared. The preferred dividends are
not included in the determination of net loss; however, they
are included in determining loss applicable to common
shareholders and loss per share. Including the effects of
preferred stock dividends, losses applicable to common
shareholders totaled $11.4 million and $13.8 million,
respectively, for the quarter and nine months ended September
30, 2004, compared to losses applicable to common shareholders
of $18.1 million and $10.2 million, respectively, during the
comparable periods in 2003.
(2) Cash flow provided by operating activities before exploration
and pre-development expenses of $6.7 million and $30.3
million, respectively, for the third quarter and first nine
months of 2004, and $7.2 million and $25.9 million,
respectively, for the third quarter and first nine months of
2003, represent non-U.S. generally accepted accounting
principles (GAAP) measurements. The following table presents a
reconciliation between cash flow provided by operating
activities to non-GAAP cash flow provided by operating
activities before exploration and pre-development expenses for
the three and nine months ended September 30, 2004 and 2003:
Cash flow provided by operating
activities $ 517 $4,618 $17,282 $17,608
Add exploration 5,656 2,468 11,476 7,285
Add pre-development 518 94 1,541 1,048
------ ------ ------- -------
Cash flow provided by operating
activities before exploration
and pre-development expenses $6,691 $7,180 $30,299 $25,941
======= ======= ======= =======
(3) Includes gold produced at silver operations, which is treated
as a by-product credit and included in the calculation of
silver costs per ounce.
(4) 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.
(5) Includes gold produced from third-party mining operations
located near the La Camorra mine, which is treated as a
by-product credit and included in the calculation of gold
costs per ounce.
HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars and shares in thousands,
except per share amounts - unaudited)
Third Quarter Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
Sales of products $ 33,718 $ 28,079 $102,080 $ 84,723
Cost of sales and other
direct production costs 21,552 12,528 53,957 42,448
Depreciation, depletion and
amortization 5,261 5,161 17,739 15,285
-------- -------- -------- --------
26,813 17,689 71,696 57,733
-------- -------- -------- --------
Gross profit 6,905 10,390 30,384 26,990
-------- -------- -------- --------
Other operating expenses
General and administrative 2,071 1,841 6,169 6,103
Exploration 5,656 2,468 11,476 7,285
Pre-development 518 94 1,541 1,048
Depreciation and
amortization 89 69 238 268
Other operating expense
(income) 1,290 818 1,716 (2,552)
Provision for closed
operations and
environmental matters 8,515 23,284 9,970 23,488
-------- -------- -------- --------
18,139 28,574 31,110 35,640
-------- -------- -------- --------
Loss from operations (11,234) (18,184) (726) (8,650)
-------- -------- -------- --------
Other income (expense):
Interest income 446 1,263 1,212 2,227
Interest expense (80) (233) (457) (914)
-------- -------- -------- --------
366 1,030 755 1,313
-------- -------- -------- --------
Income (loss) from operations
before income taxes and
cumulative effect of change
in accounting principle (10,868) (17,154) 29 (7,337)
Income tax provision (424) (306) (2,393) (1,922)
-------- -------- -------- --------
Loss from operations before
cumulative effect of change
in accounting principle (11,292) (17,460) (2,364) (9,259)
Cumulative effect of change in
accounting principle, net of
income tax - - - - - - 1,072
-------- -------- -------- --------
Net loss (1) $(11,292) $(17,460) $ (2,364) $ (8,187)
======== ======== ======== ========
Basic income (loss) per common
share:
Loss from operations after
preferred stock dividends $ (0.10) $ (0.16) $ (0.12) $ (0.10)
Cumulative effect of change
in accounting principle - - - - - - 0.01
-------- -------- -------- --------
Basic loss per common share
(2) $ (0.10) $ (0.16) $ (0.12) $ (0.09)
======== ======== ======== ========
Basic weighted average number
of common shares outstanding 118,285 110,221 117,955 109,656
======== ======== ======== ========
(1) As reported on page one of this release, income before
environmental accruals and exploration and pre-development
expenses of $3.3 million and $19.4 million, respectively, for
the third quarter and first nine months of 2004, and income
before environmental accruals and exploration and
pre-development expenses of $8.2 million and $23.3 million,
respectively, for the third quarter and first nine months of
2003, represent non-U.S. generally accepted accounting
principles (GAAP) measurements. The following table presents a
reconciliation between net loss to non-GAAP income before
environmental accruals and exploration and pre-development
expenses for the three and nine months ended September 30,
2004 and 2003:
Net loss $(11,292) $(17,460) $(2,364) $(8,187)
Add non-cash adjustment to
provision for closed operations
and environmental matters 8,379 23,107 8,756 23,107
Add exploration 5,656 2,468 11,476 7,285
Add pre-development 518 94 1,541 1,048
-------- -------- -------- --------
Income before environmental
accruals and exploration and
pre-development expenses $ 3,261 $ 8,209 $19,409 $23,253
======== ======== ======== ========
(2) For the quarters and nine months ended September 30, 2004 and
2003, preferred stock dividends for $0.1 million and $11.5
million, respectively, and $0.7 million and $2.0 million,
respectively, were not declared. The preferred dividends are
not included in the determination of net loss; however, they
are included in determining loss applicable to common
shareholders and loss per share. Including the effects of
preferred stock dividends, losses applicable to common
shareholders totaled $11.4 million and $13.8 million,
respectively, for the quarter and nine months ended September
30, 2004, compared to losses applicable to common shareholders
of $18.1 million and $10.2 million, respectively, during the
comparable periods in 2003.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Sept. 30, Dec. 31,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $ 71,607 $ 105,387
Short-term investments 21,590 18,003
Accounts and notes receivable 21,748 16,318
Inventories 17,866 16,936
Deferred income taxes 334 1,427
Other current assets 6,371 3,174
--------- ---------
Total current assets 139,516 161,245
Investments 1,745 722
Restricted cash and investments 19,528 6,447
Properties, plants and equipment, net 107,961 95,315
Deferred income taxes - - 896
Other noncurrent assets 14,478 13,570
--------- ---------
Total assets $ 283,228 $ 278,195
========= =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 18,102 $ 13,847
Accrued payroll and related benefits 9,440 7,307
Current portion of debt - - 2,332
Accrued taxes 2,576 3,193
Current portion of accrued reclamation and
closure costs 8,193 7,400
--------- ---------
Total current liabilities 38,311 34,079
Long-term debt - - 2,341
Accrued reclamation and closure costs 66,376 63,232
Other noncurrent liabilities 6,836 7,114
--------- ---------
Total liabilities 111,523 106,766
--------- ---------
SHAREHOLDERS' EQUITY
Preferred stock 39 116
Common stock 29,575 28,886
Capital surplus 506,715 504,858
Accumulated deficit (363,924) (361,560)
Accumulated other comprehensive loss (582) (753)
Treasury stock (118) (118)
--------- ---------
Total shareholders' equity 171,705 171,429
--------- ---------
Total liabilities and shareholders' equity $ 283,228 $ 278,195
========= =========
Common shares outstanding at end of period 118,300 115,544
========= =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Nine Months Ended
Sept. 30, Sept. 30,
2004 2003
OPERATING ACTIVITIES
Net loss $ (2,364) $ (8,187)
Noncash elements included in net loss:
Depreciation, depletion and amortization 17,977 15,553
Cumulative effect of change in accounting
principle - - (1,072)
Gain on disposition of properties, plants and
equipment (105) (306)
Provision for reclamation and closure costs 9,438 23,530
Deferred income taxes 1,989 1,475
Stock compensation 300 - -
Change in assets and liabilities:
Accounts and notes receivable (5,430) (5,462)
Inventories (930) (3,638)
Other current and noncurrent assets (4,219) (1,368)
Accounts payable and accrued expenses 4,242 357
Accrued payroll and related benefits 2,389 (82)
Accrued taxes (617) 1,184
Accrued reclamation and closure costs and other
noncurrent liabilities (5,388) (4,376)
-------- --------
Net cash provided by operating activities 17,282 17,608
-------- --------
INVESTING ACTIVITIES
Purchase of held-to-maturity securities (24,619) (12,258)
Maturities of held-to-maturity securities 21,032 - -
Additions to properties, plants and equipment (30,893) (12,618)
Proceeds from disposition of properties, plants
and equipment 98 486
Increase in restricted investments (13,427) (14)
Other, net - - 50
-------- --------
Net cash used by investing activities (47,809) (24,354)
-------- --------
FINANCING ACTIVITIES
Common stock issued under warrants and stock
option plans 1,420 3,377
Issuance of common stock, net of offering costs - - 91,235
Borrowings on debt 2,430 1,350
Repayment on debt (7,103) (5,938)
-------- --------
Net cash provided (used) by financing activities (3,253) 90,024
-------- --------
Net increase (decrease) in cash and cash
equivalents (33,780) 83,278
Cash and cash equivalents at beginning of period 105,387 19,542
-------- --------
Cash and cash equivalents at end of period $ 71,607 $102,820
======== ========
HECLA MINING COMPANY
Production Data
Third Quarter Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
LA CAMORRA UNIT
Tons of ore processed 49,937 51,387 147,815 145,040
Days of operation 85 82 258 244
Mining cost per ton $ 41.19 $ 38.96 $ 41.38 $ 36.08
Milling cost per ton $ 13.38 $ 10.81 $ 13.03 $ 13.05
Ore grade milled - Gold
(oz./ton) 0.685 0.576 0.779 0.689
Gold produced (oz.) (1) 28,290 27,732 102,422 94,785
Average cost per ounce
of gold produced (2):
Cash operating costs $ 204 $ 161 $ 162 $ 145
Total cash costs (3) $ 211 $ 161 $ 165 $ 145
Total production costs $ 310 $ 228 $ 259 $ 212
Capital additions (in
thousands) $ 9,867 $ 3,825 $ 23,427 $ 7,284
SAN SEBASTIAN UNIT
Tons of ore processed 40,675 40,422 121,293 111,397
Days of operation 83 82 265 241
Mining cost per ton $ 43.67 $ 27.45 $ 40.87 $ 29.24
Milling cost per ton $ 40.11 $ 34.46 $ 35.66 $ 35.77
Ore grade milled -
Silver (oz./ton) 13.27 29.07 18.15 29.66
Ore grade milled - Gold
(oz./ton) 0.275 0.322 0.288 0.342
Silver produced (oz.) 471,809 1,103,809 1,955,838 3,135,438
Gold produced (oz.) 10,305 11,988 31,850 35,047
Average cost per ounce
of silver produced (4):
Cash operating costs $ 0.83 $ (0.43) $ (0.08) $ (0.24)
Total cash costs (3) $ 1.20 $ (0.22) $ 0.22 $ (0.04)
Total production costs $ 3.63 $ 0.80 $ 1.99 $ 0.84
Capital additions (in
thousands) $ 24 $ 885 $ 955 $ 3,558
GREENS CREEK UNIT
(Reflects Hecla's
29.73% share)
Tons of ore milled 59,796 60,542 177,437 174,416
Days of operation 92 92 274 273
Mining cost per ton $ 28.22 $ 26.06 $ 27.68 $ 27.38
Milling cost per ton $ 17.31 $ 15.76 $ 17.61 $ 16.09
Ore grade milled -
Silver (oz./ton) 18.05 22.29 17.03 19.73
Silver produced (oz.) 766,967 1,046,154 2,182,107 2,619,519
Gold produced (oz.) 6,154 7,401 19,676 22,355
Lead produced (tons) 1,788 2,047 5,527 6,158
Zinc produced (tons) 5,550 4,163 16,684 16,980
Average cost per ounce
of silver produced (4):
Cash operating costs $ 1.40 $ 1.03 $ 0.92 $ 1.18
Total cash costs (3) $ 1.55 $ 1.14 $ 1.04 $ 1.25
Total production costs $ 3.58 $ 3.35 $ 3.51 $ 3.74
Capital additions (in
thousands) $ 1,235 $ 329 $ 2,860 $ 897
LUCKY FRIDAY UNIT
Tons of ore milled 42,580 35,444 122,170 116,137
Days of operation 92 92 274 273
Mining cost per ton $ 55.35 $ 52.67 $ 54.69 $ 48.29
Milling cost per ton $ 8.16 $ 6.83 $ 7.54 $ 6.58
Ore grade milled - Silver
(oz./ton) 12.85 14.89 13.32 15.85
Silver produced (oz.) 510,905 493,466 1,512,457 1,730,780
Lead produced (tons) 3,252 2,942 9,262 9,865
Zinc produced (tons) 875 648 2,184 1,835
Average cost per ounce of
silver produced (4):
Cash operating costs $ 4.53 $ 5.20 $ 4.98 $ 4.75
Total cash costs (3) $ 4.53 $ 5.20 $ 4.98 $ 4.75
Total production costs $ 4.59 $ 5.22 $ 5.02 $ 4.77
Capital additions (in
thousands) $ 1,646 $ - - $ 3,385 $ - -
(1) During the third quarter and first nine months of 2004, a
total of 1,658 ounces and 2,949 ounces, respectively, were
produced from third-party operations located near the La
Camorra mine and included in our total ounces produced for the
La Camorra unit.
(2) Includes gold produced from third-party mining operations
located near the La Camorra mine, which is treated as a
by-product credit and included in the calculation of gold
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.
(4) Gold produced is treated as a by-product credit in calculating
silver costs per ounce.
HEDGED POSITIONS
As of September 30, 2004
Sold forward: 11,330 gold ounces @ average price of $288
6,075 metric tons of lead @ average price of
$0.364 per pound
HECLA MINING COMPANY
Reconciliation of Cash Costs per Ounce to Generally Accepted
Accounting Principles (GAAP)(1)
(dollars and ounces in thousands, except per ounce - unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
GOLD SEGMENT
Total cash costs $ 5,684 $ 4,496 $ 16,380 $ 13,736
Divided by gold ounces
produced 27 28 99 95
-------- -------- -------- --------
Total cash cost per ounce
produced $ 211 $ 161 $ 165 $ 145
======== ======== ======== ========
Reconciliation to GAAP (2):
Total cash costs $ 5,684 $ 4,496 $ 16,380 $ 13,736
Treatment & freight costs (427) (370) (1,462) (1,175)
By-product credits 652 - - 1,146 - -
Change in product
inventory 1,096 (586) 951 (1,428)
Reclamation and other
costs - - (8) 105 53
-------- -------- -------- --------
Costs of sales and other
direct production costs
(GAAP) $ 7,005 $ 3,532 $ 17,120 $ 11,186
======== ======== ======== ========
SILVER SEGMENT
Total cash costs $ 4,068 $ 3,515 $ 10,249 $ 11,371
Divided by silver ounces
produced 1,750 2,643 5,650 7,486
-------- -------- -------- --------
Total cash cost per ounce
produced $ 2.32 $ 1.33 $ 1.81 $ 1.52
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 4,068 $ 3,515 $ 10,249 $ 11,371
Treatment & freight costs (4,715) (4,498) (14,280) (13,753)
By-product credits 13,291 11,452 39,747 33,674
Change in product
inventory 1,674 (1,640) 544 (1,012)
Reclamation and other
costs 229 143 577 415
-------- -------- -------- --------
Costs of sales and other
direct production costs
(GAAP) $14,547 $ 8,972 $ 36,837 $ 30,695
======== ======== ======== ========
GREENS CREEK UNIT (Reflects
Hecla's 29.73% share)
Total cash costs $ 1,190 $ 1,196 $ 2,280 $ 3,264
Divided by silver ounces
produced 767 1,046 2,182 2,620
-------- -------- -------- --------
Total cash cost per ounce
produced $ 1.55 $ 1.14 $ 1.04 $ 1.25
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 1,190 $ 1,196 $ 2,280 $ 3,264
Treatment & freight costs (3,063) (2,940) (9,341) (9,008)
By-product credits 6,272 5,771 19,759 17,458
Change in product
inventory 1,541 (406) 32 383
Reclamation and other
costs 59 57 237 170
-------- -------- -------- --------
Costs of sales and other
direct production costs
(GAAP) $ 5,999 $ 3,678 $ 12,967 $ 12,267
======== ======== ======== ========
SAN SEBASTIAN UNIT
Total cash costs $ 565 $ (247) $ 432 $ (112)
Divided by silver ounces
produced 472 1,104 1,956 3,135
-------- -------- -------- --------
Total cash cost per ounce
produced $ 1.20 $ (0.22) $ 0.22 $ (0.04)
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 565 $ (247) $ 432 $ (112)
Treatment & freight costs (208) (578) (1,037) (1,594)
By-product credits 4,133 4,347 12,773 12,383
Change in product
inventory 53 (1,067) 356 (1,292)
Reclamation and other
costs 118 75 268 216
-------- -------- -------- --------
Costs of sales and other
direct production costs
(GAAP) $ 4,661 $ 2,530 $ 12,792 $ 9,601
======== ======== ======== ========
LUCKY FRIDAY UNIT
Total cash costs $ 2,313 $ 2,566 $ 7,537 $ 8,219
Divided by silver ounces
produced 511 493 1,512 1,731
-------- -------- -------- --------
Total cash cost per ounce
produced $ 4.53 $ 5.20 $ 4.98 $ 4.75
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 2,313 $ 2,566 $ 7,537 $ 8,219
Treatment & freight costs (1,444) (980) (3,902) (3,151)
By-product credits 2,886 1,334 7,215 3,833
Change in product
inventory 80 (167) 156 (103)
Reclamation and other
costs 52 11 72 29
-------- -------- -------- --------
Costs of sales and other
direct production costs
(GAAP) $ 3,887 $ 2,764 $ 11,078 $ 8,827
======== ======== ======== ========
(1) 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.
(2) Costs per ounce of gold are based on the gold produced by the
La Camorra mine only. Gold produced from third-party mining
operations located near the La Camorra mine is treated as a
by-product credit and included in the calculation of gold
costs per ounce.
CONTACT: Hecla Mining Company, Coeur d'Alene
Vicki Veltkamp, 208-769-4100
Fax: 208-769-7612