Exhibit 99.1
Hecla Reports Second Quarter 2005 Results,
Updates Exploration Progress; For the Period Ended June 30, 2005
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Aug. 3, 2005--Hecla Mining
Company (NYSE:HL) today reported a loss applicable to common
shareholders of $6.4 million, or 5 cents per share, for the second
quarter of 2005. Second quarter results include exploration and
pre-development expenditures of $6.7 million. Hecla President and
Chief Executive Officer Phillips S. Baker, Jr., said, "We continued
our increased spending on exploration in the second quarter because
Hecla's new and intense focus on exploration is aimed at growing our
reserve and resource base, with an eye toward future production
increases. We have a suite of very promising exploration properties,
both for silver and gold, and the talent and financial resources to
make new discoveries. Exploration programs are long-term efforts, and
I fully expect to see improvements in Hecla's reserve and resource
outlook over the next few years." Exploration expenditures during the
first six months of 2005 totaled $11.6 million, compared to $6.8
million spent in the same period last year.
The loss of $6.4 million for the quarter compares to income of
$2.6 million, or 2 cents per share, during the second quarter of 2004.
For the first six months of 2005, Hecla recorded a loss applicable to
common shareholders of $9.8 million, or 8 cents per share, compared to
a loss of $2.4 million, or 2 cents per share, in the first six months
of 2004. The Lucky Friday and Greens Creek units both saw increased
silver production during the first half of the year. However, Hecla's
2005 results were negatively impacted by a strike at the Mexican
operations during the entire first quarter and all but two weeks of
the second quarter, resulting in no sales revenue being recorded from
San Sebastian for the first six months of the year. Decreased gold
production and increased costs due to lower ore grades and longer haul
time at the La Camorra unit in Venezuela also impacted 2005 second
quarter and first half results. The recently commissioned shaft at the
La Camorra mine, which impeded operations somewhat during its
construction, is expected to result in decreased costs in the future.
"While production was lower and costs were higher than last year, it
has not been unexpected. We knew that with the shaft construction,
lower grades and labor issues, we would produce less at higher costs
than we wanted. We expect to see improving production and costs in the
second half of the year," said Baker.
Hecla's balance sheet remains strong, with cash and short-term
investments on hand of $52.4 million and no debt at the end of the
second quarter. In addition to exploration and pre-development
expenditures of $11.6 million in the first half of 2005, Hecla spent
$24 million in capital, primarily to advance three major projects: the
Lucky Friday expansion, development of Mina Isidora and shaft
construction at La Camorra.
2005 2nd QUARTER HIGHLIGHTS
-- Exploration focused on all fronts: Block B and La
Camorra in Venezuela, continued drilling on the Hugh
zone at San Sebastian, Noche Buena feasibility,
underground drilling near the Gallagher fault at
Greens Creek and underground drilling at Lucky Friday
-- Strike resolved at the Mexican operations, which is
expected to improve operating results in the third
quarter
-- The new La Camorra shaft was commissioned in July,
with expectations of higher production and lower costs
in the future
-- Entry into a definitive agreement will give Hecla
access to mineral rights on concessions in the
Guariche gold district in Venezuela
-- Continued progress on the Lucky Friday 5900
development project, the development of Mina Isidora
gold mine in Venezuela and the ramp development at the
Hollister Development Block gold exploration project
in Nevada
-- Declaration of payment of dividends in arrears on
preferred stock
-- Silver production of 1.4 million ounces at an average
total cash cost of $2.59 per ounce
-- Gold production of 34,172 ounces at an average total
cash cost of $317 per ounce
-- Revised 2005 gold production estimate and unchanged
silver production estimate
OPERATIONS
Baker said, "The second quarter is a continuation of a transition
for Hecla that began in 2003, when we made a decision to invest
significant capital in order to assure low-cost operations. So we are
investing in three major projects that transition Hecla's operations:
the shaft at La Camorra; Mina Isidora, which will be operated as part
of the La Camorra unit; and the Lucky Friday 5900 development. By the
end of the year, we will begin to see operational benefits from all of
these projects."
In the first half of 2005, Hecla mined 2.9 million ounces of
silver at an average total cash cost of $2.59 per ounce, and 62,295
ounces of gold at an average total cash cost of $307. Silver costs
were impacted by limited production due to the previously reported
strike at the San Sebastian unit in Mexico, now resolved. Gold costs
were impacted by decreased production at La Camorra due to lower ore
grades, fewer tons and longer haul times associated with mining at
greater depths. Gold production was also affected by the construction
of the new shaft at La Camorra. Due to these factors, Hecla is
revising its estimate of annual gold production for 2005 to
approximately 170,000 ounces of gold at an average total cash cost of
approximately $240 per ounce. Silver production estimates for 2005 are
unchanged, with the company anticipating production of 6.5 million to
7 million ounces of silver at an average total cash cost in the range
of $2.50 per ounce.
The Lucky Friday silver mine in northern Idaho experienced a 37%
increase in tons milled during the second quarter of 2005 compared to
the same period a year ago, producing approximately 623,000 ounces of
silver, including approximately 55,000 ounces of silver from the
development ore on the 5900 level. The Lucky Friday unit's average
total cash cost per ounce of $4.69 in the second quarter of 2005 was a
4% improvement over last year's costs during the same period. Costs
are expected to continue to improve upon completion of the new access
on the 5900 level of the expansion area. Full production of
approximately 4 million ounces of silver is anticipated from the Lucky
Friday mine in 2006.
The Greens Creek unit in Alaska, in which Hecla holds an
approximate 30% interest, contributed about 760,000 ounces of silver
to Hecla's account for the second quarter of 2005, a 13% improvement
over a year ago, primarily due to improved ore grade. The average
total cash cost per ounce of silver at Greens Creek during the second
quarter was a low $1.11, partially due to by-product credits from
gold, zinc and lead.
The San Sebastian unit in Mexico showed no silver or gold sales in
the second quarter, as a strike at its Velardena mill concluded just
two weeks prior to the end of the quarter. Production reported in the
second quarter totaled 55,747 ounces of silver at an average total
cash cost of $1.49 per ounce. During the majority of the strike, which
began in October 2004, the mine continued to operate at a normal rate,
stockpiling ore in preparation for future processing. That ore will be
processed by the end of the year with mining ceasing in the third
quarter.
The La Camorra gold mine in Venezuela commissioned its new,
2,000-foot shaft in July. Once in full operation, the shaft is
expected to return the mine to lower operating costs, as well as
providing additional access to primary exploration target areas. La
Camorra produced 27,020 ounces of gold during the second quarter of
2005, compared to 36,584 ounces in the same period a year ago.
However, second quarter production increased 24% from the first
quarter of this year. The average total cash cost per ounce of gold
during the second quarter of 2005 was $317. The decrease in production
from last year was caused by lower ore grades from limited access to
higher-grade stopes during shaft construction and generally declining
grades. Production was also impacted by longer haul times as mining
progressed deeper. With the shaft and Mina Isidora operational, the La
Camorra unit is expected to have steady production and lower costs by
year end.
EXPLORATION
"For the first time in our history, Hecla has advanced exploration
programs in five worldclass mining districts which all have the
ability to significantly increase reserves, resources and production
in the future," said Baker.
SILVER EXPLORATION
Mexico - The first phase of drilling in the Hugh zone was
completed during the second quarter. This promising exploration
prospect is located on Hecla's 200-square-mile property position in
central Mexico. The Hugh zone is directly below the mined out workings
of the Francine vein at the San Sebastian mine. Assays for eight of
the nine holes completed have been received, with results ranging from
8 to 150 grams of silver per tonne, zero to 1.19 grams of gold per
tonne, and up to 1.7% copper, 5.98% zinc and 1.24% lead. Drilling
shows that Hugh zone mineralization is open to the west and to the
east at depth. Based on results from this phase of drilling of the
Hugh zone, additional drilling will be carried out in the third
quarter to identify sufficient tonnage to proceed into an underground
definition exploration program.
Elsewhere on Hecla's Mexican concessions, drill testing of five
high-priority soil geochemical anomalies to the west of San Sebastian
was started. Eleven holes have been completed and have intercepted
vein material, which may represent westerly extensions of the Profesor
and Francine veins. Assays are pending.
Other targets that underwent geologic mapping, soil sampling and
evaluation of soil results included El Gato and La Roca, with drill
testing planned later in the third quarter. In addition, Hecla is
evaluating regional generative exploration opportunities in the
district.
United States - At the Lucky Friday silver mine, exploration
diamond drilling continued through the second quarter, testing the
down dip projection of the Gold Hunter mineralization on the 5900,
6200 and 6400 levels. Some mining is currently occurring on the 5900
level, although the majority of Lucky Friday production year-to-date
has been from the 4900 level. Four holes tested the projection of the
primary vein at the 6200 level and all returned good results with
ore-grade intercepts, with assays ranging up to 18.9 ounces of silver
per ton, 14.3% lead and 8.8% zinc. Numerous other veins were also
encountered with grade ranges both below and above an economic mining
cutoff. More holes are planned to test the 6400 level.
At the Greens Creek silver mine, the underground exploration drift
successfully crossed the Gallagher Fault zone during the second
quarter, and exploration and definition platforms for exploring the
new Gallagher zone are being opened up. The planned completion date of
the exploration platform is during the third quarter. Once the drift
is completed, two diamond drills will be mobilized to commence
underground exploration and definition drilling in the Gallagher zone.
Results from drilling into the Gallagher zone prior to driving the
drift reported last quarter are very encouraging.
GOLD EXPLORATION
Venezuela - Hecla entered into a definitive agreement with Triumph
Gold Corporation in July 2005, that will give Hecla access to mineral
rights on concessions in the Guariche gold district in Venezuela's
Bolivar State. The closing is expected to take place this quarter.
Baker said, "The completion of this agreement gives us some of the
best gold targets in three separate gold districts in Venezuela." The
Guariche project has many of the same high-grade vein characteristics
as the other two prolific gold districts where Hecla has operations.
In the second quarter, the deep directional drilling program at La
Camorra continued to test continuity at depth. Three holes were
completed, with one intercepting 38.53 grams of gold per tonne (over a
2-meter mining width) 75 meters deeper than any previous ore-grade
intercept. No significant mineralized zones were encountered in the
other two holes, although assay results are pending. A fourth hole is
currently underway and additional drilling is planned to test the area
to the west of the current intercepts at approximately the
minus-900-meter elevation.
Drilling during the second quarter also took place on the Isbelia
structure, located within the El Dorado Block of concessions. Seven
holes were completed and although the Isbelia structure was
intersected in all holes, only a short strike length of about 150
meters contained any appreciable mineralization. A total of 43 holes
have now tested the Isbelia structure to a depth of 350 meters,
indicating little potential for a mineralized shoot that could be
developed by Hecla. However, the small miners will continue to exploit
the ore body.
Elsewhere on the El Dorado property, generative work was conducted
on three concessions in the northern part of the land package. A
number of targets have been defined that will be drill tested as soon
as the necessary permits are obtained.
On Hecla's Block B property in Venezuela, drilling on Mina
Isidora--which has mineralization on two separate veins--has confirmed
the presence of a significant mineralized zone in the upper
northeastern part of the S vein. The zone is generally narrow but has
numerous high-grade intercepts in an area that was thought to be only
moderately mineralized, returning assays up to 1,217 grams of gold per
tonne over 0.76 meter. The veining shows significant pinch and swell
varying from 0.27 meter at 100.72 grams of gold per tonne to 2.54
meters at 6.25 grams of gold per tonne. Drilling to the west and down
dip on the S vein appears to be defining the limits of the S vein.
On Hecla's Block B property in El Callao, drilling along the
projected eastern extension of the Twin/Conductora Shear has been
successful. The shear was intersected in all three holes and hosts
quartz-vein-style mineralization. The structure is still present,
quite strong and contains gold mineralization, with the best intercept
being 7.83 grams of gold per tonne over 4.39 meters. There still
remains about one kilometer of untested strike to the eastern boundary
of Block B. In addition, drilling is continuing in the central part of
the zone to delineate the down plunge extension of the main
mineralized zone. Elsewhere on Block B, five main geochemical trends
have been identified by the soil geochemical program, which covered
the entire concession. Additional sampling and mapping is in progress
to prioritize targets for drilling later this year.
United States - Total project advance on the decline at the
Hollister Development Block gold exploration project, an earn-in to a
joint venture with Great Basin Gold, stood at 2,200 feet at the end of
July. Ground conditions have improved slightly, but continue to be
soft and extremely clay-rich, requiring extensive shotcreting.
Depending upon underground conditions, the decline should be completed
in the second or third quarter of 2006. Meanwhile, the first
underground diamond drill is expected to be mobilized in the third
quarter of this year. Construction of facilities within the confines
of the East Pit is essentially completed, despite the inclement spring
weather in northern Nevada.
Mexico - Feasibility work continues on the Noche Buena gold
deposit in Mexico's Sonora State, and completion of the feasibility
study is expected in the third quarter. However, the project is not a
high priority at this time compared to better prospects available for
Hecla's exploration dollars.
PERSONNEL
Hecla says goodbye to Thomas F. Fudge, Jr., Vice President -
Operations, who left his position August 1 to pursue other personal
and career interests. Fudge also completed his expected two-year term
as President of Minera Hecla Venezolana. Baker said, "Tom has helped
the company grow significantly with its acquisition of Block B in
Venezuela and greatly improved our relationships with the Venezuelan
government and communities where we operate. We wish him the best of
luck in his future endeavors." Operating activities in Venezuela will
continue to be managed by Russell Alley, Executive Vice President -
Venezuelan Operations, and Dave Howe, Vice President - Venezuelan
Operations.
CORPORATE MATTERS
During the second quarter, the Board of Directors authorized
payment of outstanding Series B Cumulative Convertible Preferred Stock
dividends in arrears, which have now been paid, amounting to a total
of approximately $2.3 million. There are approximately 157,000 shares
of the preferred stock still outstanding.
At its annual meeting in May, Hecla's Board of Directors appointed
Anthony P. Taylor and David J. Christensen to fill positions on the
board for common shareholders. Both Taylor and Christensen were
directors previously elected by the Series B preferred stockholders
during the period when the dividends were in arrears.
On July 1, 2005, Hecla announced it had filed a shelf registration
statement with the Securities and Exchange Commission (SEC), allowing
Hecla to sell up to $275 million of its common stock, debt securities,
preferred stock and/or warrants. The registration statement has been
declared effective by the SEC. The shelf registration statement
provides Hecla with the flexibility of raising capital in a short time
frame when opportunities become available.
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 and 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 and costs,
exploration risks and results, labor issues, 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)
Second Quarter Ended Six Months Ended
HIGHLIGHTS June 30, June 30, June 30, June 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
FINANCIAL DATA
Sales:
Silver operations (1) $ 15,598 $ 18,212 $ 30,342 $ 43,108
Gold operations 9,657 13,500 19,347 25,254
---------- ---------- ---------- ----------
Total sales $ 25,255 $ 31,712 $ 49,689 $ 68,362
========== ========== ========== ==========
Gross Profit:
Silver operations (1) $ 2,163 $ 5,445 $ 5,325 $ 15,021
Gold operations 1,317 4,626 3,620 8,459
---------- ---------- ---------- ----------
Total gross profit $ 3,480 $ 10,071 $ 8,945 $ 23,480
========== ========== ========== ==========
Income (loss) from
operations $ (6,455) $ 3,650 $ (9,729) $ 10,507
Net income (loss) (6,245) 2,748 (9,541) 8,928
Income (loss)
applicable to
common shareholders (6,383) 2,610 (9,817) (2,398)
Basic income (loss)
per common share (0.05) 0.02 (0.08) (0.02)
Cash flow provided by
(used in) operating
activities 823 11,855 (6,300) 16,498
PRODUCTION SUMMARY -
TOTALS
Silver - Ounces 1,438,806 1,815,236 2,857,069 3,900,721
Gold - Ounces 34,172 53,433 62,295 109,197
Lead - Tons 5,584 5,188 10,480 9,748
Zinc - Tons 6,557 6,371 12,503 12,443
Average cost per ounce
of silver produced (1):
Cash operating costs
($/oz.) 2.45 1.67 2.46 1.41
Total cash costs
($/oz.) (2) 2.59 1.72 2.59 1.57
Total production
costs ($/oz.) 4.22 3.38 4.15 3.14
Average cost per ounce
of gold produced (3):
Cash operating costs
($/oz.) 310 158 299 150
Total cash costs
($/oz.) (2) 317 162 307 152
Total production
costs ($/oz.) 373 251 366 242
AVERAGE METAL PRICES
Silver - London Fix ($/oz.) 7.15 6.25 7.06 6.46
Gold - Realized ($/oz.) 432 368 430 373
Gold - London Final ($/oz.) 427 394 427 401
Lead - LME Cash
(cents/pound) 44.7 36.8 44.6 37.5
Zinc - LME Cash
(cents/pound) 57.7 46.6 58.7 47.6
(1) Includes gold produced at silver operations, which is treated
as a by-product credit and included 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 and depreciation, depletion and amortization (GAAP)
can be found in the cash costs per ounce reconciliation section of
this news release. For additional information, see note (1) in the
cash costs per ounce reconciliation section.
(3) 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)
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Sales of products $ 25,255 $ 31,712 $ 49,689 $ 68,362
-------- -------- -------- --------
Cost of sales and other direct
production costs 17,896 15,556 33,039 32,404
Depreciation, depletion and
amortization 3,879 6,085 7,705 12,478
-------- -------- -------- --------
21,775 21,641 40,744 44,882
-------- -------- -------- --------
Gross profit 3,480 10,071 8,945 23,480
-------- -------- -------- --------
Other operating expenses
General and administrative 2,287 2,319 4,929 4,098
Exploration 4,565 3,405 7,357 5,819
Pre-development expenses 2,100 728 4,234 1,024
Depreciation and
amortization 138 74 283 149
Other operating expenses
(income) 492 (783) 1,184 427
Provision for closed
operations and
environmental matters 353 678 687 1,456
-------- -------- -------- --------
9,935 6,421 18,674 12,973
-------- -------- -------- --------
Income (loss) from operations (6,455) 3,650 (9,729) 10,507
-------- -------- -------- --------
Other income (expense):
Interest and other income 386 379 788 766
Interest expense (3) (179) (8) (377)
-------- -------- -------- --------
383 200 780 389
-------- -------- -------- --------
Income (loss) from operations
before income taxes (6,072) 3,850 (8,949) 10,896
Income tax provision (173) (1,102) (592) (1,968)
-------- -------- -------- --------
Net income (loss) (6,245) 2,748 (9,541) 8,928
Preferred stock dividends (1) (138) (138) (276) (11,326)
-------- -------- -------- --------
Income (loss) applicable to
common shareholders $ (6,383) $ 2,610 $ (9,817) $ (2,398)
======== ======== ======== ========
Basic and diluted income
(loss) per common share
after preferred dividends (2) $ (0.05) $ 0.02 $ (0.08) $ (0.02)
======== ======== ======== ========
Basic weighted average number
of common shares
outstanding (2) 118,429 118,262 118,396 117,790
======== ======== ======== ========
Diluted weighted average
number of common shares
outstanding 118,429 118,813 118,396 117,790
======== ======== ======== ========
(1) During the first quarter of 2004, the company recorded a
noncash dividend of approximately $10.9 million related to exchanges
of preferred stock for common stock and is included in preferred stock
dividends for the six months ended June 30, 2004.
(2) For the quarter and six months ended June 30, 2005 and for the
first six months of 2004, 4,344,599 and 3,061,832 restricted stock
units and various outstanding stock options to purchase shares of
common stock, respectively, were antidilutive and not included in the
calculation of losses per common share. For the quarter ended June 30,
2004, 2,294,050 restricted stock units and various outstanding stock
options were included in the calculation of income per common share.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
June 30, Dec. 31,
ASSETS 2005 2004
Current assets: --------- ---------
Cash and cash equivalents $ 18,315 $ 34,460
Short-term investments and securities held for
sale 34,097 46,328
Accounts and notes receivable 20,626 21,936
Inventories 26,181 20,250
Other current assets 2,999 5,607
--------- ---------
Total current assets 102,218 128,581
Investments 1,870 1,657
Restricted cash and investments 20,046 19,789
Properties, plants and equipment, net 130,435 114,515
Other noncurrent assets 15,691 14,906
--------- ---------
Total assets $ 270,260 $ 279,448
========= =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 15,627 $ 15,904
Dividends payable 2,486 138
Accrued payroll and related benefits 8,638 9,405
Accrued taxes 2,587 2,379
Current portion of accrued reclamation and
closure costs 8,857 9,237
--------- ---------
Total current liabilities 38,195 37,063
Accrued reclamation and closure costs 63,571 65,951
Other noncurrent liabilities 8,272 7,107
--------- ---------
Total liabilities 110,038 110,121
--------- ---------
SHAREHOLDERS' EQUITY
Preferred stock 39 39
Common stock 29,613 29,588
Capital surplus 507,338 506,630
Accumulated deficit (379,996) (367,832)
Accumulated other comprehensive income 3,346 1,020
Treasury stock (118) (118)
--------- ---------
Total shareholders' equity 160,222 169,327
--------- ---------
Total liabilities and shareholders' equity $ 270,260 $ 279,448
========= =========
Common shares outstanding at end of period 118,452 118,351
========= =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Six Months Ended
June 30, June 30,
2005 2004
-------- --------
OPERATING ACTIVITIES
Net income (loss) $ (9,541) $ 8,928
Noncash elements included in net income (loss):
Depreciation, depletion and amortization 7,988 12,881
Gain on disposition of properties, plants and
equipment (20) (82)
Gain on sale of royalty interests (550) - -
Provision for reclamation and closure costs 335 891
Deferred income taxes - - 1,669
Stock compensation 832 (267)
Change in assets and liabilities:
Accounts and notes receivable 1,310 1,041
Inventories (5,931) (3,049)
Other current and noncurrent assets 1,823 (4,271)
Accounts payable and accrued expenses 211 1,550
Accrued payroll and related benefits (1,120) 898
Accrued taxes 208 (412)
Accrued reclamation and closure costs and other
noncurrent liabilities (1,845) (3,279)
-------- --------
Net cash provided by (used in) operating
activities (6,300) 16,498
-------- --------
INVESTING ACTIVITIES
Additions to properties, plants and equipment (23,994) (17,495)
Proceeds from disposition of properties, plants
and equipment 18 93
Purchase of short-term investments (56,694) (67,379)
Maturities of short-term investments 70,826 58,295
Increase in restricted investments (257) (13,409)
Other, net - - (201)
-------- --------
Net cash used in investing activities (10,101) (40,096)
-------- --------
FINANCING ACTIVITIES
Common stock issued under stock option plans 256 1,398
Borrowings on debt - - 2,430
Repayments of debt - - (4,349)
-------- --------
Net cash provided (used) by financing activities 256 (521)
-------- --------
Net decrease in cash and cash equivalents (16,145) (24,119)
Cash and cash equivalents at beginning of period 34,460 73,662
-------- --------
Cash and cash equivalents at end of period $ 18,315 $ 49,543
======== ========
HECLA MINING COMPANY
Production Data
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
LA CAMORRA UNIT -------- -------- ---------- ----------
Tons of ore processed 49,269 51,330 99,601 97,070
Days of operation 80 85 163 167
Mining cost per ton $ 68.23 $ 47.91 $ 56.19 $ 44.09
Milling cost per ton $ 14.76 $ 13.50 $ 13.49 $ 12.60
Ore grade milled - Gold
(oz./ton) 0.581 0.773 0.514 0.812
Gold produced (oz.) 27,020 36,584 48,881 74,131
Average cost per ounce of
gold produced:
Cash operating costs $ 310 $ 158 $ 299 $ 150
Total cash costs (1) $ 317 $ 162 $ 307 $ 152
Total production costs $ 373 $ 251 $ 366 $ 242
Capital additions (in
thousands) $ 10,961 $ 8,024 $ 18,299 $ 13,560
SAN SEBASTIAN UNIT (2)
Tons of ore processed 6,820 40,850 6,820 80,618
Days of operation 19 83 19 159
Mining cost per ton $ 28.81 $ 38.29 $ 28.81 $ 39.46
Milling cost per ton $ 45.01 $ 34.36 $ 45.01 $ 33.42
Ore grade milled - Silver
(oz./ton) 16.73 16.44 16.73 20.61
Ore grade milled - Gold
(oz./ton) 0.340 0.273 0.340 0.295
Silver produced (oz.) 55,747 626,929 55,747 1,484,029
Gold produced (oz.) 1,125 10,071 1,125 21,545
Average cost per ounce of
silver produced (3):
Cash operating costs $ 1.12 $ 0.10 $ 1.12 $ (0.38)
Total cash costs (1) $ 1.49 $ 0.39 $ 1.49 $ (0.09)
Total production costs $ 7.27 $ 1.96 $ 7.27 $ 1.47
Capital additions (in
thousands) $ (18) $ 898 $ 222 $ 931
GREENS CREEK UNIT
(Reflects Hecla's 29.73% share)
Tons of ore processed 58,442 57,886 113,488 117,641
Days of operation 91 91 181 182
Mining cost per ton $ 30.17 $ 26.90 $ 31.73 $ 27.41
Milling cost per ton $ 21.01 $ 18.32 $ 20.71 $ 17.76
Ore grade milled - Silver
(oz./ton) 17.74 16.33 19.53 16.51
Silver produced (oz.) 760,193 670,173 1,657,064 1,415,140
Gold produced (oz.) 5,950 6,778 12,150 13,521
Lead produced (tons) 1,828 2,013 3,675 3,738
Zinc produced (tons) 5,377 5,697 10,499 11,134
Average cost per ounce of
silver produced (3):
Cash operating costs $ 0.87 $ 0.67 $ 0.86 $ 0.65
Total cash costs (1) $ 1.11 $ 0.54 $ 1.07 $ 0.77
Total production costs $ 3.54 $ 3.55 $ 3.43 $ 3.47
Capital additions (in
thousands) $ 894 $ 661 $ 1,314 $ 1,625
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
LUCKY FRIDAY UNIT 2005 2004 2005 2004
-------- -------- ---------- ----------
Tons of ore processed (4) 55,380 40,493 98,565 79,590
Days of operation 91 91 180 182
Mining cost per ton $ 54.52 $ 52.70 $ 60.31 $ 54.32
Milling cost per ton $ 8.00 $ 7.76 $ 8.10 $ 7.22
Ore grade milled - Silver
(oz./ton) 12.09 13.79 12.49 13.56
Silver produced (oz.) (4) 622,866 518,134 1,144,258 1,001,552
Lead produced (tons) 3,756 3,175 6,805 6,010
Zinc produced (tons) 1,180 674 2,004 1,309
Average cost per ounce of
silver produced (3):
Cash operating costs $ 4.69 $ 4.87 $ 4.96 $ 5.13
Total cash costs (1) $ 4.69 $ 4.87 $ 4.96 $ 5.14
Total production costs $ 4.84 $ 4.89 $ 5.13 $ 5.16
Capital additions (in
thousands) $ 2,291 $ 1,133 $ 4,102 $ 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 and depreciation, depletion and amortization (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 most of the first half of 2005, ending
in June 2005.
(3) Gold, lead and zinc produced have been treated as by-product
credits in calculating silver costs per ounce.
(4) Production results include approximately 7,600 tons and 55,000
ounces of silver, respectively, for the second quarter of 2005, and
approximately 8,000 tons and 58,000 ounces of silver, respectively,
for the first six months of 2005, that was mined from the 5900 level
development project.
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 Six Months Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
------- ------- -------- --------
GOLD OPERATIONS
Total cash costs $ 8,234 $ 5,982 $ 14,416 $ 11,217
Divided by gold ounces produced 26 37 47 74
------- ------- -------- --------
Total cash cost per ounce
produced $ 317 $ 162 $ 307 $ 152
======= ======= ======== ========
Reconciliation to GAAP (2):
Total cash costs $ 8,234 $ 5,982 $ 14,416 $ 11,217
Depreciation, depletion and
amortization 1,449 3,246 2,777 6,681
Treatment & freight costs (515) (575) (927) (1,034)
By-product credits 437 51 743 116
Change in product inventory (1,265) 256 (1,313) (146)
Reclamation and other costs - - (85) 31 (39)
------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 8,340 $ 8,875 $ 15,727 $ 16,795
======= ======= ======== ========
SILVER OPERATIONS
Total cash costs (3) $ 3,587 $ 3,128 $ 7,252 $ 6,111
Divided by silver ounces
produced 1,384 1,815 2,800 3,901
------- ------- -------- --------
Total cash cost per ounce
produced $ 2.59 $ 1.72 $ 2.59 $ 1.57
======= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ 3,587 $ 3,128 $ 7,252 $ 6,111
Depreciation, depletion and
amortization 2,430 2,839 4,928 5,797
Treatment & freight costs (5,896) (5,742) (11,907) (11,413)
By-product credits 11,862 13,894 23,118 28,378
Strike-related costs 865 - - 1,376 - -
Change in product inventory 497 (1,525) 108 (1,132)
Reclamation and other costs 90 172 142 346
------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $13,435 $12,766 $ 25,017 $ 28,087
======= ======= ======== ========
GREENS CREEK UNIT
(Reflects Hecla's 29.73% share)
Total cash costs $ 841 $ 361 $ 1,780 $ 1,090
Divided by silver ounces
produced 760 670 1,657 1,415
------- ------- -------- --------
Total cash cost per ounce
produced $ 1.11 $ 0.54 $ 1.07 $ 0.77
======= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ 841 $ 361 $ 1,780 $ 1,090
Depreciation, depletion and
amortization 1,806 1,929 3,828 3,639
Treatment & freight costs (3,948) (3,769) (8,181) (7,473)
By-product credits 7,945 7,336 15,930 14,682
Change in product inventory 916 (2,442) 855 (1,511)
Reclamation and other costs 42 89 81 179
------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 7,602 $ 3,504 $ 14,293 $ 10,606
======= ======= ======== ========
SAN SEBASTIAN UNIT
Total cash costs $ 83 $ 244 $ 83 $ (132)
Divided by silver ounces
produced 56 627 56 1,484
------- ------- -------- --------
Total cash cost per ounce
produced $ 1.49 $ 0.39 $ 1.49 $ (0.09)
======= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ 83 $ 244 $ 83 $ (132)
Depreciation, depletion and
amortization 535 910 922 2,158
Treatment & freight costs (40) (367) (40) (829)
By-product credits 484 3,956 484 8,640
Strike-related costs 865 - - 1,376 - -
Change in product inventory (561) 931 (561) 303
Reclamation and other costs 55 73 55 149
------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 1,421 $ 5,747 $ 2,319 $ 10,289
======= ======= ======== ========
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
LUCKY FRIDAY UNIT ------- ------- -------- --------
Total cash costs $ 2,663 $ 2,523 $ 5,389 $ 5,153
Divided by silver ounces
produced (4) 568 518 1,087 1,002
------- ------- -------- --------
Total cash cost per ounce
produced $ 4.69 $ 4.87 $ 4.96 $ 5.14
======= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ 2,663 $ 2,523 $ 5,389 $ 5,153
Depreciation, depletion and
amortization 89 - - 178 - -
Treatment & freight costs (1,908) (1,606) (3,686) (3,111)
By-product credits 3,433 2,602 6,704 5,056
Change in product inventory 142 (14) (186) 76
Reclamation and other costs (7) 10 6 18
------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 4,412 $ 3,515 $ 8,405 $ 7,192
======= ======= ======== ========
RECONCILIATION TO GAAP, ALL
OPERATIONS
Total cash costs $11,821 $ 9,110 $ 21,668 $ 17,328
Depreciation, depletion and
amortization 3,879 6,085 7,705 12,478
Treatment & freight costs (6,411) (6,317) (12,834) (12,447)
By-product credits 12,299 13,945 23,861 28,494
Strike-related costs 865 - - 1,376 - -
Change in product inventory (768) (1,269) (1,205) (1,278)
Reclamation and other costs 90 87 173 307
------- ------- -------- --------
Costs of sales and other direct
production costs and
depreciation, depletion and
amortization (GAAP) $21,775 $21,641 $ 40,744 $ 44,882
======= ======= ======== ========
(1) Cash costs per ounce of silver or gold represent non-U.S.
generally accepted accounting principles (GAAP) measurements that the
company believes provide management and investors an indication of net
cash flow, after consideration of the realized price received for
production sold. Management also uses this measurement for the
comparative monitoring of performance of mining operations
period-to-period from a cash flow perspective. "Total cash cost per
ounce" is a measure developed by gold 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. Cost of
sales and other direct production costs and depreciation, depletion
and amortization, is the most comparable financial measure calculated
in accordance with GAAP to total cash costs.
(2) Costs per ounce of gold are based on the gold produced by the
La Camorra mine and Block B concessions only. Gold produced from
third-party mining operations located near the La Camorra mine and
Block B concessions is treated as a by-product credit and included in
the calculation of gold costs per ounce.
(3) During the first quarter and for most of the second quarter,
ending in June 2005, the mill that processes ore from San Sebastian
was closed due to a strike by mill employees. During the second
quarter and first six months of 2005, cost of sales and other direct
production costs of $0.9 million and $1.3 million, respectively, were
not included in the determination of total cash costs for silver
operations.
(4) Ounces mined from the 5900 level development project at Lucky
Friday are not included in the determination of total cash costs.
During the second quarter and first six months of 2005, approximately
55,000 ounces and 58,000 ounces, respectively, of silver were excluded
from the calculation.
CONTACT: Hecla Mining Company
Vicki Veltkamp, 208-769-4100
Fax: 208-769-7612