Exhibit 99.1
Hecla Reports First Quarter 2005 Results;
On Track to Achieve Full Year Production Targets;
For The Period Ended March 31, 2005
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--May 4, 2005--Hecla Mining
Company (NYSE:HL) today reported a net loss of $3.3 million for the
first quarter of 2005, compared to net income of $6.2 million for the
first quarter of 2004. This loss is a result of more exploration,
lower ore grades at the gold operations, the ongoing strike at the San
Sebastian mill, and the construction of the underground exploration
ramp that will provide access to the Hollister Development Block
deposit. The company is investing more in exploration and
pre-development for substantial and sustainable long-term growth of
its reserves and resources and silver and gold production. This
strategic move impacts Hecla's income, as anticipated, during this
period of emphasis on exploration. Hecla's balance sheet remains
healthy, with cash available to complete all currently planned capital
and exploration projects.
Lower gold ore grades led to decreased production and increased
costs at Hecla's operations, resulting in lower sales and gross profit
compared to a year ago. Sales declined from $36.7 million to $24.4
million and gross profit went from $13.4 million to $5.5 million.
Operating income fell from $6.9 million to an operating loss of $3.3
million.
Hecla's President and Chief Executive Officer, Phillips S. Baker,
Jr., said, "Hecla is currently in a period of transition, and this
impacts current production and earnings growth in order to invest in
our future. At La Camorra, our Venezuelan gold mine, we are continuing
construction of a production shaft that is anticipated to lower our
costs of production. We expect it to be in service, on schedule, by
the end of the second quarter. At the Lucky Friday silver mine in
Idaho, we anticipate the development of the 5900 level to be completed
by early 2006. This investment is expected to yield several benefits,
including doubling production to about 4 million ounces in 2006,
lowering the operating costs, and extending the mine life at least
into the next decade."
Baker said Hecla also anticipates spending more than $23 million
this year in exploration and pre-development expenses, with capital
expenditures estimated to range between $40 million to $47 million. He
said, "Hecla has several, very exciting exploration opportunities that
we are actively pursuing in our five world-class mining districts. The
capital expenditures represent sustaining capital at our existing
operations and expansion capital for shaft construction at La Camorra,
equipment and development at Mina Isidora and development at Lucky
Friday. I'm confident that this paves the way for future growth in
low-cost production of silver and gold and improved operating and
financial results, as our current investments in time and money begin
to return their anticipated benefits. We are on track to achieve our
estimated 6 million to 7 million ounces of silver production and
approximately 190,000 ounces of gold production this year, both at
costs well below the industry average."
FIRST QUARTER 2005 HIGHLIGHTS
-- Construction of a new shaft at La Camorra continued on
schedule and is expected to be in service by the end of the
second quarter of 2005
-- Development of the Mina Isidora gold mine continued on
schedule and is expected to be fully operational in 2006
-- Expansion of Lucky Friday continued on schedule, and is
anticipated to double silver production to 4 million ounces
annually in 2006, with lower production costs
-- Underground ramp excavation has advanced approximately 1,000
feet at the Hollister Development Block
-- 4% increase in the average price of silver and 13% increase in
the realized price of gold compared to the first quarter of
2004
-- Strong balance sheet with cash, cash equivalents and
investments totaling $63.4 million and no debt at March 31,
2005
-- Increased silver production at Lucky Friday and Greens Creek
compared to the same period last year
-- $4.9 million spent on exploration and pre-development expense
compared to $2.7 million in the comparable quarter a year ago
OPERATIONS
SILVER
In the first quarter, Hecla produced 1.4 million ounces of silver,
compared to 2.1 million ounces in the first quarter last year, at an
average total cash cost per ounce of $2.60, compared to an average
total cash cost per ounce a year ago of $1.43. Increased costs and
decreased production of silver, compared to the first quarter of 2004,
primarily resulted from the strike at the mill in Velardena, Mexico,
which processes the ore from Hecla's San Sebastian mine in the State
of Durango. In an illegal action, union members who are not employees
of the company have blocked access to the San Sebastian mine,
preventing miners from continuing their work. Mine workers at San
Sebastian are not unionized. The State of Durango has filed criminal
charges against several of the union leaders. As a result of the
strike, there was no ore processed at San Sebastian during the first
quarter of 2005, compared to almost 40,000 tons milled containing
857,000 ounces of silver and 11,000 ounces of gold during the first
quarter of 2004.
The company is nearing the end of the known resources at the San
Sebastian mine. Mining was suspended at the end of the first quarter
on the Francine vein, as planned, and the company had anticipated
suspension of mining on the Don Sergio vein in mid-2005, until a new
deposit is identified and developed. With the ore stockpiled on the
surface, San Sebastian should produce approximately 600,000 ounces of
silver and 20,000 ounces of gold this year, when the strike is
resolved. There is no estimate as to when this will occur.
During the first quarter of 2005, the Lucky Friday mine in
northern Idaho, operated by Hecla since 1958, produced 521,392 ounces
of silver compared with 483,418 ounces a year ago. The average total
cash costs per silver ounce produced during the first quarter of 2005
decreased to $5.26, compared to $5.44 per ounce a year ago, primarily
due to strong by-product credits from increased lead and zinc prices.
Costs have risen as mining depths have increased and will remain more
costly until the new access is completed on the 5900 level. By
mid-year, miners should be drifting on the new vein with full
production from the 5900 level by early 2006, at which time cash costs
are expected to decrease by as much as $1 per ounce. Lucky Friday's
total silver production for 2005 is forecasted to be approximately 3
million ounces.
The Greens Creek mine, located near Juneau, Alaska, produced
896,871 ounces of silver and approximately 6,200 ounces of gold for
Hecla's account during the first quarter of 2005, compared to 744,967
ounces of silver and 6,743 ounces of gold during the first quarter of
last year. Silver production increased as a result of higher silver
ore grades. The average total cash cost in the first quarter of 2005
was $1.05 per ounce of silver, higher than the $0.98 per ounce in the
first quarter of 2004, partially due to the impact of higher diesel
costs. Hecla holds an approximate 30% interest in the operation, a
joint venture with Kennecott Greens Creek Mining Company, a subsidiary
of Rio Tinto. During 2005, Hecla's share of production is expected to
total approximately 3 million ounces of silver and 25,000 ounces of
gold.
GOLD
Hecla produced 28,122 ounces of primary and by-product gold in the
first quarter of 2005, compared with 55,817 ounces of gold produced in
the comparable quarter a year ago. Of the total produced this year,
21,860 ounces were mined from the La Camorra unit in eastern Venezuela
at an average total cash cost of $294 per ounce. Production declined
and costs rose primarily due to a 47% decline in the gold ore grade,
which fell from 0.84 ounce of gold per ton a year ago to 0.45 ounce of
gold per ton in the first quarter of this year. Ore grades are
anticipated to increase later in the year, as higher-grade areas of
the mine are developed. The ore at the underground La Camorra mine is
accessed through a decline ramp, and as mining depths have increased,
so have haul times and production costs. To offset these higher costs
associated with the deepening of the mine, Hecla began construction of
a 2,000-foot production and ventilation shaft in 2004, which should
reduce costs in the second half of the year. In addition to the
production from the La Camorra mine, production is anticipated from
Mina Isidora later this year, with total gold production from the La
Camorra unit estimated at approximately 140,000 ounces in 2005.
Mina Isidora, a new gold operation within the La Camorra unit that
Hecla is developing in the El Callao gold district about 70 miles
north of the La Camorra mine, is on schedule to reach full production
in 2006, although there is some production expected in the second half
of this year. Mina Isidora contains approximately 350,000 ounces of
proven and probable gold reserves with an average grade of one ounce
per ton. The deposit remains open at depth.
In Venezuela, regulations continue to be developed on foreign
currency requirements. Hecla is monitoring and evaluating the impact
of these changes.
EXPLORATION
Hecla spent $4.9 million on exploration and pre-development in the
first quarter of the year, an 82% percent increase over the same
period a year ago, and is targeting total exploration and
pre-development spending for 2005 of approximately $23 million, a 15%
increase over the full year 2004.
VENEZUELA EXPLORATION
In the first quarter of 2005, exploration drilling in Venezuela
focused on expanding the reserve at Mina Isidora and testing the Chile
East zone - all on the Block B property near El Callao - and testing
the resource limits at depth at the La Camorra mine and the Isbelia
structure.
At Mina Isidora, during the first quarter of 2005, a surface
in-fill drilling program of the S vein was started with the objective
of reducing the spacing between drill holes to upgrade inferred
resources to indicated resources. A total of 17 holes has been
completed. The definition drilling on the S vein is showing that tight
drill spacing will be required to define the mineralization. The
high-grade results of 1,217 grams per tonne (35.5 ounces per ton) over
0.76 meter returned from a hole which was drilled in an area of
marginal mineralization demonstrate that there is still potential to
outline additional reserves with further drilling.
To the east of Mina Isidora, drilling commenced on the Chile East
prospect to follow up on a number of ore-grade intercepts obtained
from a drill program in 2004, which returned values of up to 15 grams
of gold per tonne over 6.71 meters from a potential ore shoot under
the old Chile mine. Four holes have been completed and all encountered
the structure, with two of the four intercepts having significant
quartz, carbonate, sericite and pyrite that are generally indicative
of economic ore grade. One hole has returned assays of 11.9 grams per
tonne of gold over 2.3 meters, and assays are pending for the other
hole.
The Twin Conductora structure is a newly identified shear zone
within the Block B exploration property, which was discovered by
drilling in the second quarter of 2004. The Twin/Conductora structure
is host to a large mineralized zone with a minimum strike length of
1,700 meters and a minimum vertical extent of 400 meters, with values
ranging from 3 grams per tonne to over 42 grams per tonne and widths
from 1 meter to over 20 meters. Detailed geological work continued in
January that has identified three styles of gold mineralization within
the Twin Conductora mineralized zone. Further drilling is planned for
the second quarter to further expand the mineralized structure, which
is open down dip and down plunge to the east. Generative work
continues on Block B with the aim of outlining additional priority
targets that will be drill tested later this year.
At the La Camorra mine, the deep directional drilling program
continued in the first quarter 2005. Results from three holes
completed along strike immediately to the east of the Main zone were
not encouraging. However, the deep directional drilling program is
continuing with additional drilling planned to test the down dip
extension of both the Main zone and Betzy zone at the 800- and
1000-meter elevations, to follow up on ore-grade drill intercepts of
11 grams per tonne of gold over two meters obtained in two previous
holes.
The Isbelia structure lies 700 meters to the north of the La
Camorra Main zone. During the first quarter of 2005, data were
compiled and a drill program started in April to test the Isbelia
structure and adjacent parallel structures, which lie between the
Isbelia vein and the Main zone.
MEXICO EXPLORATION
In Mexico, drilling continued during the first quarter of 2005 to
expand a new silver resource deeper on the Francine vein, referred to
as the Hugh zone, with the completion of eight additional holes. The
drilling indicates that the Hugh zone resource is growing in the
western resource block area and is open along strike and dip.
Hecla acquired the La Roca concession in January 2005, giving the
company the mineral rights to a historic mining district lying
northeast of San Sebastian with potential for both silver and gold.
This important acquisition completes Hecla's land position in the area
as the La Roca concession is surrounded by other Hecla concessions in
the area. Soil sampling was completed during the first quarter, and
the soil geochemistry results will be used to define the targets for
trenching and drilling later this year.
Work is on schedule to complete a feasibility study in the third
quarter of 2005 on the potential surface heap leach gold operation at
Noche Buena in northern Mexico where the current resource has been
estimated at 9.3 million tons at a grade of 0.03 ounce of gold per
ton.
UNITED STATES EXPLORATION
At the Lucky Friday silver mine, the 2005 exploration diamond
drilling program began in early March to test the easterly projection
of the deposit, where exploration drilling last year led to a 12.5%
increase in the strike length of the silver deposit on the mine's 5900
level. Two holes have been completed, both of which have intersected a
mineralized zone 800 feet and 1,350 feet to the east of the deposit.
No mineable veins were identified; however, spot assays reached as
high as 18.9 ounces of silver per ton over a core length of 0.2 feet
with local lead assays of over 10% for a 0.3-foot core interval. The
best composite interval was 10.9 feet of core length averaging 3
ounces per ton of silver, 3.4% lead and 0.8% zinc. These results are
very encouraging, indicating that the mineralized system continues for
some distance to the east. Additional drilling is planned to test the
potential easterly extension of the deposit and to test the deposit at
depth, as well as other targets on the property.
At Greens Creek, underground drilling continued in the first
quarter to the west of the Gallagher fault. Drilling in 2003 revealed
the existence of prospective argillite/phyllite contacts as well as
massive sulfide mineralization on the west side across the Gallagher
fault. Additional drilling was carried out in 2004 and early 2005. To
date, 51 exploration drill holes have been completed through the
Gallagher fault, with 27 of those holes intercepting various amounts
of white baritic, white carbonate and massive sulfide lithologies
similar to ore currently mined at Greens Creek. Current drilling
indicates the presence of at least two mineralized zones dipping
shallowly to the southwest. However, true thicknesses of the
mineralization are still unknown, and the zones are still open to the
west and south. The most significant mineralized intercepts to date
include 90 feet of continuous massive sulfide mineralization in one
hole, with composite grades of 0.15 ounce per ton of gold, 4.8 ounces
per ton of silver, 6.8% lead, and 20.5% zinc; 108.8 feet of continuous
massive sulfide, white carbonate and white baritic mineralization in
another hole, with composite grades of 0.26 ounce per ton of gold, 3.2
ounces per ton of silver, 4.6% lead, and 11.5% zinc. Other significant
intercepts include 52 feet of massive sulfide and white carbonate
mineralization in a third hole, with composite grades of 0.2 ounce per
ton of gold, 10.3 ounces per ton of silver, 5% lead, and 11.3% zinc;
and 12.7 feet of massive sulfide and mineralized argillite
mineralization in a fourth hole, with composite grades of 0.05 ounce
per ton of gold, 41.7 ounces per ton of silver, 3.9% lead, and 7.6%
zinc. All composites are length-weighted, and intercept lengths
indicate apparent thickness only.
At the Hollister Development Block project in northern Nevada,
Hecla continues advancing the exploration decline ramp. Current
advance is estimated at approximately 1,000 feet, with another 2,000
feet to go before exploration drilling can begin. A total of 5,600
feet of exploration development is planned for phase one of the
project. Although Hecla has asked for a court opinion clarifying
certain items in the earn-in agreement with its project participant,
Great Basin Gold, Hecla is moving full speed ahead with the
development and exploration of the Hollister property.
Baker said, "Overall, our exploration results so far from these
many properties are very successful. We are particularly pleased with
progress on Block B in Venezuela, where we are encountering gold
mineralization on multiple fronts. This type of program takes time and
investment, but the eventual returns can be great. Because all of our
exploration properties are at or near existing operations, our chances
for success are very high."
OTHER
In the first quarter, Hecla declared a dividend of $0.875 per
share on the outstanding Series B Cumulative Convertible Preferred
stock. The cash dividend, totaling approximately $138,000, was paid on
April 1, 2005. There are 157,816 shares of the Preferred B stock
outstanding.
Former U.S. Congressman, George R. Nethercutt, Jr., was named to
Hecla's board of directors on February 25, 2005, replacing Joe Coors,
Jr., who retired from the board in February. Nethercutt was a member
of the U.S. House of Representatives from 1995 to 2005, from the State
of Washington. He is currently a principal with the strategic planning
and consulting firm of Lundquist, Nethercutt & Griles, LLC in
Washington, D.C.
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines
and processes silver and gold in the United States, Venezuela and
Mexico. A 114-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)
First Quarter Ended
HIGHLIGHTS Mar. 31, Mar. 31,
2005 2004
FINANCIAL DATA
- ----------------------------------------------------------------------
Sales of products $ 24,434 $ 36,650
Gross profit 5,465 13,409
Income (loss) from operations (3,275) 6,857
Net income (loss) (3,296) 6,180
Loss applicable to common shareholders (3,434) (5,008)
Basic loss per common share (0.03) (0.04)
Cash flow provided by (used in) operating
activities (7,123) 4,909
SALES OF PRODUCTS
- ----------------------------------------------------------------------
Silver operations (1) $ 14,744 $ 24,895
Gold operations 9,690 11,755
---------- ----------
Total sales $ 24,434 $ 36,650
GROSS PROFIT
- ----------------------------------------------------------------------
Silver operations (1) $ 3,162 $ 9,575
Gold operations 2,303 3,834
---------- ----------
Total gross profit $ 5,465 $ 13,409
PRODUCTION SUMMARY - TOTALS
- ----------------------------------------------------------------------
Silver - Ounces 1,418,263 2,085,485
Gold - Ounces 28,122 55,817
Lead - Tons 4,896 4,560
Zinc - Tons 5,946 6,072
Average cost per ounce of silver produced (1):
Cash operating costs ($/oz.) 2.49 1.19
Total cash costs ($/oz.) (2) 2.60 1.43
Total production costs ($/oz.) 4.12 2.93
Average cost per ounce of gold produced (3):
Cash operating costs ($/oz.) 285 141
Total cash costs ($/oz.) (2) 294 141
Total production costs ($/oz.) 358 233
AVERAGE METAL PRICES
- ----------------------------------------------------------------------
Silver - Handy & Harman ($/oz.) 7.00 6.71
Gold - Realized ($/oz.) 429 379
Gold - London Final ($/oz.) 427 408
Lead - LME Cash (cents/pound) 44.4 38.3
Zinc - LME Cash (cents/pound) 59.7 48.5
(1) Includes gold produced at silver properties, which is treated as a
by-product credit in the calculation of silver costs per ounce.
(2) 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 (1) on the cash costs per ounce
reconciliation section.
(3) For the quarter ended March 31, 2005, this 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)
First Quarter
Ended
Mar. 31, Mar. 31,
2005 2004
--------- ---------
Sales of products $ 24,434 $ 36,650
-------- --------
Cost of sales and other direct production costs 15,143 16,848
Depreciation, depletion and amortization 3,826 6,393
-------- --------
18,969 23,241
-------- --------
Gross profit 5,465 13,409
-------- --------
Other operating expenses:
General and administrative 2,642 1,779
Exploration 2,792 2,414
Pre-development expenses 2,134 296
Depreciation and amortization 146 75
Other operating expenses 692 1,210
Provision for closed operations and
environmental matters 334 778
-------- --------
8,740 6,552
-------- --------
Income (loss) from operations (3,275) 6,857
-------- --------
Other income (expense):
Interest income 430 387
Interest expense (33) (198)
-------- --------
397 189
-------- --------
Income (loss) from operations, before income taxes (2,878) 7,046
Income tax provision (418) (866)
-------- --------
Net income (loss) (3,296) 6,180
Preferred stock dividends (1) (138) (11,188)
-------- --------
Loss applicable to common shareholders $ (3,434) $ (5,008)
======== ========
Basic and diluted loss per common share after
preferred stock dividends (2) $ (0.03) $ (0.04)
======== ========
Basic and diluted weighted average number of
common shares outstanding (2) 118,381 117,318
======== ========
(1) The 2004 preferred stock dividend amount includes a noncash
dividend of approximately $10.9 million related to exchanges of
preferred stock for common stock.
(2) For the quarters ended March 31, 2005 and 2004, 3,061,423 and
378,306 restricted stock units and various outstanding stock
options to purchase shares of common stock, respectively, were
antidilutive and are therefore not included in the calculation of
loss per share.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Mar. 31, Dec. 31,
2005 2004
ASSETS
- ----------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 15,594 $ 34,460
Short-term investments and securities held for
sale 47,822 46,328
Accounts and notes receivable 22,555 21,936
Inventories 23,945 20,250
Other current assets 6,839 5,607
--------- ---------
Total current assets 116,755 128,581
Investments 2,107 1,657
Restricted cash and investments 19,922 19,789
Properties, plants and equipment, net 120,285 114,515
Other noncurrent assets 15,293 14,906
--------- ---------
Total assets $ 274,362 $ 279,448
========= =========
LIABILITIES
- ----------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 15,047 $ 16,042
Accrued payroll and related benefits 9,017 9,405
Accrued taxes 2,355 2,379
Current portion of accrued reclamation and
closure costs 8,721 9,237
--------- ---------
Total current liabilities 35,140 37,063
Accrued reclamation and closure costs 65,792 65,951
Other noncurrent liabilities 7,578 7,107
--------- ---------
Total liabilities 108,510 110,121
--------- ---------
SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------
Preferred stock 39 39
Common stock 29,600 29,588
Capital surplus 506,758 506,630
Accumulated deficit (371,266) (367,832)
Accumulated other comprehensive income 839 1,020
Treasury stock (118) (118)
--------- ---------
Total shareholders' equity 165,852 169,327
--------- ---------
Total liabilities and shareholders' equity $ 274,362 $ 279,448
========= =========
Common shares outstanding at end of period 118,402 118,351
========= =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
First Quarter
Ended
Mar. 31, Mar. 31,
2005 2004
OPERATING ACTIVITIES
- ----------------------------------------------------------------------
Net income (loss) $ (3,296)$ 6,180
Noncash elements included in net income (loss):
Depreciation, depletion and amortization 3,972 6,468
(Gain) loss on disposition of properties, plants
and equipment 14 (24)
Gain on sale of royalty interests (550) - -
Provision for reclamation and closure costs 253 568
Deferred incomes taxes - - 718
Stock compensation 161 767
Change in assets and liabilities:
Accounts and notes receivable (619) (3,273)
Inventories (3,695) (1,156)
Other current and noncurrent assets (1,614) (2,465)
Accounts payable and accrued expenses (736) (1,405)
Accrued payroll and related benefits (575) (344)
Accrued taxes (24) (439)
Accrued reclamation and closure costs and other
noncurrent liabilities (414) (686)
-------- --------
Net cash provided by (used in) operating activities (7,123) 4,909
-------- --------
INVESTING ACTIVITIES
- ----------------------------------------------------------------------
Additions to properties, plants and equipment (9,815) (6,796)
Proceeds from disposition of properties, plants and
equipment 17 55
Purchase of short-term investments (44,694) (71,577)
Maturities of short-term investments 42,721 63,450
Increase in restricted investments (133) (3,666)
-------- --------
Net cash used in investing activities (11,904) (18,534)
-------- --------
FINANCING ACTIVITIES
- ----------------------------------------------------------------------
Common stock issued under stock option plans 161 1,312
Borrowings on debt - - 2,396
Repayments of debt - - (1,714)
-------- --------
Net cash provided by financing activities 161 1,994
-------- --------
Net decrease in cash and cash equivalents (18,866) (11,631)
Cash and cash equivalents at beginning of period 34,460 73,662
-------- --------
Cash and cash equivalents at end of period $ 15,594 $ 62,031
======== ========
HECLA MINING COMPANY
Production Data
First Quarter Ended
-------------------
Mar. 31, Mar. 31,
2005 2004
LA CAMORRA UNIT
- ----------------------------------------------------------------------
Tons of ore processed 50,332 44,967
Days of operation 83 82
Mining cost per ton $ 44.52 $ 35.18
Milling cost per ton $ 12.24 $ 11.79
Ore grade milled - Gold (oz./ton) 0.448 0.842
Gold produced (oz.) 21,860 37,547
Average cost per ounce of gold produced:
Cash operating costs $ 285 $ 141
Total cash costs (1) $ 294 $ 141
Total production costs $ 358 $ 233
Capital additions (in thousands) $ 7,338 $ 4,969
SAN SEBASTIAN UNIT (2)
- ----------------------------------------------------------------------
Tons of ore processed - - 39,768
Days of operation - - 76
Mining cost per ton - - $ 40.66
Milling cost per ton - - $ 32.46
Ore grade milled - Silver (oz./ton) - - 24.89
Ore grade milled - Gold (oz./ton) - - 0.318
Silver produced (oz.) - - 857,100
Gold produced (oz.) - - 11,474
Average cost per ounce of silver produced (3):
Cash operating costs - - $ (0.72)
Total cash costs (1) - - $ (0.44)
Total production costs - - $ 1.11
Capital additions (in thousands) $ 240 $ 33
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
- ----------------------------------------------------------------------
Tons of ore milled 55,045 59,755
Days of operation 90 91
Mining cost per ton $ 33.38 $ 27.91
Milling cost per ton $ 20.39 $ 17.21
Ore grade milled - Silver (oz./ton) 21.42 16.69
Silver produced (oz.) 896,871 744,967
Gold produced (oz.) 6,200 6,743
Lead produced (tons) 1,847 1,725
Zinc produced (tons) 5,122 5,437
Average cost per ounce of silver produced (3):
Cash operating costs $ 0.87 $ 0.64
Total cash costs (1) $ 1.05 $ 0.98
Total production costs $ 3.35 $ 3.39
Capital additions (in thousands) $ 420 $ 964
LUCKY FRIDAY UNIT
- ----------------------------------------------------------------------
Tons of ore processed 42,795 39,097
Days of operation 89 91
Mining cost per ton $ 66.77 $ 56.01
Milling cost per ton $ 8.21 $ 6.64
Ore grade milled - Silver (oz./ton) 12.99 13.33
Silver produced (oz.) 521,392 483,418
Lead produced (tons) 3,049 2,835
Zinc produced (tons) 824 635
Average cost of silver produced (3):
Cash operating costs $ 5.26 $ 5.41
Total cash costs (1) $ 5.26 $ 5.44
Total production costs $ 5.46 $ 5.46
Capital additions (in thousands) $ 1,811 $ 606
(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) The mill that processes San Sebastian ore was closed due to a
strike by mill workers during the first quarter of 2005, making
first quarter production statistics not meaningful.
(3) Gold produced is treated as a by-product credit in calculating
silver costs per ounce.
HEDGED POSITIONS
As of March 31, 2005
Sold forward: 2,025 metric tons of lead @ average price of $0.35 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)
First Quarter
Ended
----------------
Mar. 31, Mar. 31,
2005 2004
GOLD OPERATIONS
- ----------------------------------------------------------------------
Total cash costs $ 6,181 $ 5,235
Divided by gold ounces produced 21 37
------- -------
Total cash cost per ounce produced $ 294 $ 141
======= =======
Reconciliation to GAAP (2):
Total cash costs $ 6,181 $ 5,235
Treatment & freight costs (412) (459)
By-product credits 306 65
Change in product inventory (48) (402)
Reclamation and other costs 31 46
------- -------
Costs of sales and other direct production costs
(GAAP) $ 6,058 $ 4,485
======= =======
SILVER OPERATIONS
- ----------------------------------------------------------------------
Total cash costs (3) $ 3,682 $ 2,982
Divided by silver ounces produced 1,418 2,085
------- -------
Total cash cost per ounce produced $ 2.60 $ 1.43
======= =======
Reconciliation to GAAP:
Total cash costs $ 3,682 $ 2,982
Treatment & freight costs (4,851) (4,695)
By-product credits 10,078 13,508
Change in product inventory (389) 393
Idle facility cost 511 - -
Reclamation and other costs 54 175
------- -------
Costs of sales and other direct production costs
(GAAP) $ 9,085 $12,363
======= =======
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
- ----------------------------------------------------------------------
Total cash costs $ 939 $ 729
Divided by silver ounces produced 897 745
------- -------
Total cash cost per ounce produced $ 1.05 $ 0.98
======= =======
Reconciliation to GAAP:
Total cash costs $ 939 $ 729
Treatment & freight costs (3,442) (3,069)
By-product credits 7,195 6,711
Change in product inventory (61) 932
Reclamation and other costs 41 89
------- -------
Costs of sales and other direct production costs
(GAAP) $ 4,672 $ 5,392
======= =======
SAN SEBASTIAN UNIT
- ----------------------------------------------------------------------
Total cash costs $ - - $ (376)
Divided by silver ounces produced - - 857
------- -------
Total cash cost per ounce produced $ - - $ (0.44)
Reconciliation to GAAP:
Total cash costs $ - - $ (376)
Treatment & freight costs - - (462)
By-product credits - - 4,685
Change in product inventory - - (628)
Idle facility cost 511 - -
Reclamation and other costs - - 75
------- -------
Costs of sales and other direct production costs
(GAAP) $ 511 $ 3,294
======= =======
LUCKY FRIDAY UNIT
- ----------------------------------------------------------------------
Total cash costs $ 2,743 $ 2,629
Divided by silver ounces produced 521 483
------- -------
Total cash cost per ounce produced $ 5.26 $ 5.44
======= =======
Reconciliation to GAAP:
Total cash costs $ 2,743 $ 2,629
Treatment & freight costs (1,409) (1,164)
By-product credits 2,883 2,112
Change in product inventory (328) 89
Reclamation and other costs 13 11
------- -------
Costs of sales and other direct production costs
(GAAP) $ 3,902 $ 3,677
======= =======
(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 cash flow generation at each location
and on a consolidated basis, as well as a meaningful basis to
compare our results to those of other mining companies and other
mining operating properties. Cost of sales and other direct
production costs, which excludes depreciation, depletion, and
amortization, is the most comparable financial measure calculated
in accordance with GAAP to total cash costs. Total cash cost per
ounce provides investors and management with a consistent measure
of cash flows generated by operations, and is in frequent use by
publicly traded precious metals mining companies. "Total cash cost
per ounce" is a measure developed by gold mining companies in
conjunction with the Gold Institute in an effort to provide a
comparable standard, however, there can be no assurance that our
reporting of this non-GAAP measure is similar to that reported by
other mining companies.
(2) Costs per ounce of gold are based on the gold produced by the La
Camorra mine and our Block B concessions only. During the quarters
ended March 31, 2005 and 2004, gold produced from third-party
mining operations located near the La Camorra mine and Block B
concessions was treated as a by-product credit and included in the
calculation of gold costs per ounce.
(3) The mill that processes San Sebastian ore was closed due to a
strike by mill workers during the first quarter of 2005, making
first quarter production statistics not meaningful, including
total cash cost per ounce produced. During the first quarter of
2005, cost of sales and other direct production costs of $511,000
are not included in the determination of total cash costs for
silver operations.
CONTACT: Hecla Mining Company
Vicki Veltkamp, 208-769-4100
Fax: 208-769-7612