Exhibit 99.1
Hecla Reports Third Quarter Results,
Announces Positive Exploration Results;
For the Period Ended September 30, 2005
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Nov. 8, 2005--Hecla Mining
Company (NYSE:HL) recorded a loss applicable to common shareholders in
the third quarter of 2005 of $8.7 million, or 7 cents per share,
compared to a loss of $11.4 million, or 10 cents per share, in the
same period a year ago. For the first nine months of 2005, Hecla
reported a loss of $18.6 million, or 16 cents per share, compared to a
loss of $13.8 million, or 12 cents per share, in the first nine months
of 2004.
Hecla President and Chief Executive Officer, Phillips S. Baker,
Jr., said, "The nine-month results reflect impacts of a work slowdown
and 32% lower gold ore grade at our Venezuelan gold operations,
although workforce productivity is improving and is expected to reach
target levels in the coming quarters. Preliminary results from the
month of October show production up significantly compared to any
month in the third quarter, with higher ore grades and tonnages. Some
of the loss posted in the third quarter of this year was also due to
funding of our very aggressive exploration and pre-development
program, which is an investment in the long-term future of the
company, but is taken as a current charge. In the first nine months,
we spent $19.2 million on exploration and pre-development." Baker
added, "Increased silver and gold prices have partially offset the
negative impacts on the third quarter, and while we have seen some
weakness in the prices recently, we believe there is very good
potential for continued strong metals prices in the future."
THIRD QUARTER HIGHLIGHTS
-- Expansion of the Hugh Zone silver resource in Mexico by at
least an additional 300 meters to the west through successful
exploration drilling, growing the potential tonnage by 50%
-- Further advancement of the underground exploration decline
ramp at the Hollister Development Block gold project in
Nevada, with the first underground exploration drill rig
scheduled to begin operating in January 2006
-- 1.8 million ounces of silver produced, at an average total
cash cost of $3.76 per ounce of silver
-- 36,365 ounces of gold produced, with the Venezuelan portion
produced at an average total cash cost of $381 per ounce
-- Strong balance sheet, no debt, $42.8 million of cash and
short-term investments and securities available
The third quarter was also impacted by rising fuel, steel and
cement expenses at most operations. Higher labor expenses and a
stronger Venezuelan currency affected costs at Hecla's Venezuelan
operations. Total average cash costs per ounce of gold from the
Venezuelan operations for the first nine months of the year were $330.
Lower tonnage due to a work slowdown initiated by a new labor union
and a gold ore grade average of 0.531 ounce of gold per ton during the
first nine months compared to a grade of 0.779 ounce of gold per ton
in the same period last year contributed to the increased costs, along
with the higher supply costs. Hecla produced a company-wide total of
98,660 ounces of gold in the first nine months of 2005, with gold
production from all properties estimated at 145,000 ounces for all of
2005. Approximately 105,000 ounces of gold production for the full
year 2005 is anticipated from Venezuela at an average total cash cost
in the range of $290 to $300 per ounce.
Silver production during the first nine months was 4.7 million
ounces at a total average cash cost per ounce of $3.28. The higher
costs per silver ounce during the first nine months of 2005 compared
to the same period in 2004 are due in part to absence of production
from the San Sebastian Unit in the first two quarters of this year.
Overall, the silver properties have been operating well, despite
significant increases in supply costs. Although Hecla remains a
low-cost silver producer relative to other primary silver producers,
those increases in fuel, power, steel and cement costs have
contributed to the increase in cash costs compared to a year ago.
Hecla's estimated silver production is 6.3 million ounces of silver at
an average total cash cost in the range of $3.10 to $3.30 per ounce
for the entire 2005 year.
Baker said, "Hecla's share price has been beaten down over the
past several weeks, we believe excessively, largely due to media
coverage out of Venezuela concerning the review of inactive mining
concessions and reports of a tax audit by the Venezuelan tax agency,
SENIAT, of our company. I want to reassure shareholders that we are
operating legally in Venezuela, have had a good relationship with the
government during the nearly seven years we've been operating there,
and have had tax reviews frequently in the past with satisfactory
results. In fact, we're doing much more than just operating legally,
through our employment of nearly 1,000 employees in Venezuela, our
support of numerous community projects, and training and funding of
the informal miners in the area. Hecla's fundamental value is
determined by our long-term operations and the properties and
exploration prospects we hold in five world-class mineral districts,
and I sincerely believe the current stock price does not reflect the
true value of our company."
OPERATIONS
Lucky Friday -- The Lucky Friday Unit in North Idaho produced
812,855 ounces of silver in the third quarter of 2005, a 59% increase
over last year's production during the same period. In the first nine
months, Lucky Friday produced nearly 2 million ounces of silver, at an
average total cash cost of $4.88 per ounce, compared to about 1.5
million ounces at an average total cash cost of $4.98 per ounce in the
first nine months of 2004.
Development on the 5900 level continues on schedule, and the Lucky
Friday should reach its 4 million ounce-per-year production rate by
the middle of 2006, with cash costs decreasing as production begins
coming out of the new level. Work on upgrading the mill should be
complete in December 2005, including the addition of crushing and
flotation capacity and replacing thickener tanks. The improvements
will reduce deleterious material in the concentrates, which will
decrease transportation and smelting costs. Payable recovery of metals
to concentrates at Lucky Friday is already high: 92% recovery of
silver, 92% recovery of lead, and 45% recovery of zinc. The mill
improvements will also result in a slight increase in recovery rates
of all metals, particularly zinc. The total mill upgrade capital costs
are estimated at $3.7 million.
Greens Creek -- The Greens Creek Unit, located on Admiralty Island
in Alaska, is a joint venture between Hecla and the Greens Creek
Mining Company, a subsidiary of Rio Tinto. This underground silver
mine yielded 555,707 ounces of silver to Hecla's account during the
third quarter of 2005, at an average total cash cost of $3.05 per
ounce of silver. For the first nine months, Greens Creek produced 2.2
million ounces of silver for Hecla's account, at an average total cash
cost of $2.09 per ounce. Last year's total cash cost for the first
nine months was $1.04 per ounce. The increase in cost is due to rising
energy, fuel, supplies and labor costs, as well as ground support
issues in the haulageways during the third quarter. Major
intersections at this large underground mine, some of which are now 15
years old, are undergoing rehabilitation in a mine-wide preventative
ground support maintenance and safety program to prevent any further
impacts on production due to groundfalls in the haulageways. In
addition, the operation is working with Alaska Power and Light to
install substations to power up electrical service to the mine and
transportation center. By early next year, these new lines should be
able to supply up to 25% of the electricity needed for the operation,
which is expected to result in some decrease in power costs. Greens
Creek is currently solely operated on diesel generators.
San Sebastian -- The San Sebastian Unit in central Mexico produced
480,599 ounces of silver and 9,648 ounces of gold during the third
quarter of 2005. In the first nine months, San Sebastian produced
536,346 ounces of silver and 10,773 ounces of by-product gold at an
average total cash cost of $3.19 per ounce of silver. Mill workers
were on strike during the first two quarters of 2005. The mine
employees continued to operate and stockpile ore during that period,
but no production was reported. The Don Sergio vein at San Sebastian
was mined out in October 2005, and Hecla expects the stockpiled
production at the mine to be processed by mid-November 2005. The mine
has undergone an orderly shutdown and the same is expected at the mill
by the end of the year. The mine and mill will be placed on
care-and-maintenance status while Hecla continues exploration
activities on the property.
La Camorra -- The La Camorra Unit, which consists of all Hecla's
gold operations in Venezuela, produced 22,175 ounces of gold in the
third quarter of 2005 at an average total cash cost of $381 per ounce.
During the first nine months of the year, La Camorra produced 71,056
ounces of gold at an average total cash cost per ounce of $330. For
the first nine months of this year, approximately one-third of Hecla's
sales and about one-fourth of gross profit came from the Venezuelan
properties. In the third quarter alone, that contribution was about
25% of sales with a reported gross loss. Baker said, "We have had
substantial exploration expenditures in Venezuela. We've also
increased activity at our custom milling business, which benefits the
informal miners in the area, and we've seen a foreign exchange loss
due to the strengthening of the Venezuelan bolivar in relation to the
dollar. We expect to see future improvement in the La Camorra Unit's
contribution to Hecla, particularly with the startup of Mina Isidora,
a new gold deposit we are currently developing. Mina Isidora should be
in full production by mid-2006, with average ore grades of around one
ounce of gold per ton. In the meantime, we're working hard to get our
workforce back on track at La Camorra to mine the declining gold grade
at that deposit more efficiently and will continue to concentrate on
the exceptional exploration opportunities in Venezuela."
EXPLORATION
San Sebastian -- Hecla has received more good news on the
exploration of the Hugh Zone, which is an extension of the Francine
vein at the San Sebastian property. Four more intercepts have expanded
the ore zone to at least an additional 300 meters to the west of the
last resource estimate. This increases the identified deposit by about
50%. Twenty reverse circulation and core holes totaling nearly 8,000
meters have been drilled into the Hugh Zone. The Zone lies
approximately 300 meters below the surface. Another drill hole is in
progress, and based on preliminary visual information, it has the
potential to even further advance this deep, polymetallic ore zone.
Baker is enthusiastic about the discovery, "We've said in the past
that we need to identify enough mineralized tonnage in this deposit to
justify an attempt at underground exploration. We just moved
significantly closer to that goal with these new results. If we get
more of these kinds of results, we will likely go underground to do
the close-spaced drilling necessary for future production." The two
most noteworthy intercepts had the following grades: 1) 436 grams
(12.7 ounces) per tonne silver, 0.064 gram per tonne gold, 4.7%
copper, 4.1% lead and 6.7% zinc, diluted to a two-meter mining width,
and 2) 271 grams (7.9 ounces) per tonne silver, 0.02 gram per tonne
gold, 2.2% copper, 5.5% lead and 4.4% zinc, over 2.14 meters. Based on
preliminary metallurgical studies and October metals prices, these
intercepts would translate into excellent net smelter returns of $253
per tonne and $157 per tonne, respectively.
The surface drilling program continues, and a decision to initiate
an underground exploration and feasibility program could be made by
the third quarter of 2006.
Hecla also continues reconnaissance drilling on the highest
priority geochemical targets identified within a vast geochemical
anomaly spanning many kilometers on the 200-square-mile property in
Mexico. A total of approximately 6,200 meters in 18 holes have been
drilled into the targets already. Every hole intercepted vein
material, and there were enough high-grade intercepts to indicate
excellent geologic potential on the property. Another 2,300 meters in
five holes were drilled, looking for the eastern extension of the
Francine vein. Additionally, 1,800 meters were drilled in eight holes
for initial testing of the La Roca and El Gato targets, further north
on the property.
Baker said, "We've been very encouraged by the vein and stockwork
intercepts we've encountered on these targets. I think we're in the
right areas and we intend to continue this drilling program. We took
the time to do good, basic science on this property last year, and now
we're seeing the results, both on the Hugh Zone and on the untested,
wide-ranging, underground and surface targets. I believe it's only a
matter of time until we identify the next deposit to mine on our
property in Mexico."
Greens Creek -- Drilling into the West Gallagher Zone across the
Gallagher fault from the current underground working areas at Greens
Creek continues to return good results. The existing drift across the
fault will be further advanced next year in order to set up more
exploration drilling platforms to additionally define this newly
discovered deposit. Expectations are to identify and quantify a
resource by the end of 2006. Underground definition, pre-production,
in-stope, mine-operation and exploration drilling at Greens Creek for
the year has totaled more than 78,000 feet, with nearly 30,000 feet of
that solely dedicated to new exploration. The majority of this
drilling has been aimed at the West Gallagher Zone area. Baker said,
"The exploration at Greens Creek is particularly exciting in this
geologically complex, but mineral-rich deposit. The effort to date has
been to confirm the existence and extent of the mineralization in the
West Gallagher Zone. That program will continue in 2006." Baker added
that during the remainder of 2005, a close-spaced drilling program is
underway to determine the character and quality of the deposit. He
continued, "Greens Creek resources have grown significantly since our
first involvement in 1987. We believe the work taking place beyond the
Gallagher Fault has the potential to do that again."
Lucky Friday -- Exploration drilling on intermediate veins off the
5900 level underground at the Lucky Friday mine is in progress, and
infill drilling is taking place through the end of the year. Results
clearly indicate that these veins will continue to provide high-grade,
low-tonnage mill feed for the long term. Future plans include drilling
holes deeper into the deposit than previously attempted, as well as
the possibility of drilling above the current resource to expand the
ore zone. The program is confirming Hecla's understanding of the
orebodies in the district that it has been discovering and mining
since the 1940s. Lucky Friday currently has more reserve and resource
identified than at any time in its history. A third quarter 2006
evaluation of reserves and resources is anticipated at Lucky Friday,
with the expectation of moving resource into the proven and probable
reserve category and adding additional resource.
Hollister Block -- The Hollister Development Block gold
exploration project is an earn-in to a joint venture with Great Basin
Gold. The project is targeting a new underground deposit on the Carlin
Trend in Nevada, identified earlier with surface drilling by Great
Basin Gold. For the past nine months, Hecla has been driving drift
toward the vein systems, and it is anticipated that the first
exploration drill will be placed underground in January. The
exploration drift has intersected a number of veins and veinlets along
the trend of the Gwenivere vein. A feasibility study on the economics
of mining the deposit is expected to be completed by early 2007.
Venezuela -- Exploration in Venezuela has been in full swing
during 2005, with a total of 40 drill holes completed this year on the
various properties, for a total of over 15,000 meters drilled. More
than 10,000 soil and rock samples and 1,800 core samples have been
logged.
On Hecla's Block B property in Venezuela, drilling continued to
test the down plunge extension of the Twin/Conductora Shear system
during the third quarter. Four holes were completed for a total of
2,752 meters. One hole intersected 13.4 grams of gold per tonne over 2
meters at a depth of 550 meters vertical confirming the continuation
of mineralization down plunge. The Twin/Conductora Shear system still
remains open in this direction.
Drill testing on the eastern projection of the Chile Trend on the
Block B property has not yet returned any significant results, other
than 27.86 grams of gold per tonne over 0.5 meter.
One hundred kilometers south of Block B, deep directional drilling
at the La Camorra mine continued to test continuity at depth, with one
hole intercepting high-grade gold during the second quarter. Two
additional holes have returned no significant assays, with results
pending for a fourth hole. Additional drilling is planned in the
future to test the area to the west of the current intercepts.
On the property position surrounding the La Camorra mine,
generative work continued on three concessions located in the northern
part of the El Dorado property. Several excellent gold targets have
been identified by soil geochemistry and ground magnetic surveying.
Several are already considered high priority targets that will be
drill tested as soon as the necessary permits are obtained.
Exploration work has also begun on the La Fe property, another
group of concessions in the El Dorado area. The La Fe property is
interpreted to occur on a northwest-trending regional shear structure
located to the south of and parallel to the La Camorra veins. A
systematic exploration program is underway to confirm the presence of
gold in the known structures and to explore several other parallel
structures for gold potential. Baker said, "La Fe is evidence of our
confidence in the geology of the area and our ability to move forward
with growth in Venezuela. It hosts high-grade quartz veins, similar to
those being mined at La Camorra. It is virgin territory in terms of
gold exploration, and we now have access to the best part of it."
ENVIRONMENTAL
Hecla was pleased to accept an award in the third quarter for
Excellence in Mine Reclamation in Nevada for its accomplishments in
restoring and preserving Nevada's environment. The award was presented
to the Rosebud Mining Company for Overall Mine Reclamation at the
Rosebud mine in Pershing County, Nevada, due to its impressive work in
concurrent reclamation, wildlife habitat enhancement, recontouring and
revegetation, and closure plan development and implementation. Rosebud
was an underground gold mine that operated from 1996 to 2000, and was
a joint venture between Hecla Mining Company and Newmont Mining
Corporation, with Hecla as the operator.
Before and after photographs of the mine site can be seen on
Hecla's website in the environmental policy section at
http://www.hecla-mining.com/RosebudReclamationAward.pdf.
FINANCIAL
Hecla is in healthy shape financially, with no debt and
$42.8 million in cash and short-term investments and securities as of
September 30, 2005.
In July, Hecla announced that it had filed a shelf registration
statement, allowing the company to sell up to $275 million of common
stock, debt securities, preferred stock or warrants. In September
2005, the company entered into a credit agreement for a $30 million
revolving credit facility. Baker said, "These financial moves put
Hecla in position to take advantage of any growth opportunities that
make sense for the company."
PERSONNEL
In October 2005, Hecla's Vice President of Exploration and
Strategy, Ian Atkinson, announced he was leaving to take a position
with another mining company. Hecla's exploration program is well
planned and staffed to move forward in his absence. The company is
currently reviewing candidates for the positions of general counsel
and exploration vice president.
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)
Third Quarter Ended Nine Months Ended
----------------------- ----------------------
HIGHLIGHTS
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
FINANCIAL DATA 2005 2004 2005 2004
---------- ---------- ---------- ----------
Sales:
Silver operations (1) $ 21,934 $ 22,242 $ 52,276 $ 65,350
Gold operations 8,494 11,476 27,841 36,730
---------- ---------- ---------- ----------
Total sales $ 30,428 $ 33,718 $ 80,117 $ 102,080
Gross Profit (Loss):
Silver operations (1) $ 3,295 $ 5,051 $ 8,620 $ 20,073
Gold operations (664) 1,854 2,956 10,311
---------- ---------- ---------- ----------
Total gross profit $ 2,631 $ 6,905 $ 11,576 $ 30,384
Loss from operations $ (9,336) $ (11,234) $ (19,065) $ (726)
Net loss (8,595) (11,292) (18,136) (2,364)
Loss applicable to
common shareholders (8,733) (11,430) (18,550) (13,828)
Basic loss per common
share (0.07) (0.10) (0.16) (0.12)
Cash flow provided by
(used in) operating
activities (3,634) 517 (9,934) 17,282
PRODUCTION SUMMARY - TOTALS
Silver - Ounces 1,849,161 1,749,681 4,706,231 5,650,402
Gold - Ounces 36,365 44,814 98,660 154,124
Lead - Tons 6,232 5,040 16,713 14,789
Zinc - Tons 5,490 6,425 17,993 18,868
Average cost per ounce
of silver produced (1):
Cash operating
costs ($/oz.) 3.62 2.16 3.15 1.66
Total cash
costs ($/oz.) (2) 3.76 2.32 3.28 1.81
Total production
costs ($/oz.) 5.81 3.89 5.03 3.39
Average cost per ounce
of gold produced (3):
Cash operating
costs ($/oz.) 375 204 323 162
Total cash
costs ($/oz.) (2) 381 211 330 165
Total production
costs ($/oz.) 501 310 407 259
AVERAGE METAL PRICES
Silver - London Fix ($/oz.) 7.07 6.45 7.06 6.46
Gold - Realized ($/oz.) 446 378 435 375
Gold - London Final($/oz.) 439 401 431 401
Lead - LME Cash
(cents/pound) 40.4 42.3 43.2 39.1
Zinc - LME Cash
(cents/pound) 58.8 44.4 58.8 46.5
(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)
Third Quarter Ended Nine Months Ended
------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004
--------- --------- ---------- ---------
Sales of products $ 30,428 $ 33,718 $ 80,117 $102,080
--------- --------- ---------- ---------
Cost of sales and other
direct production costs 22,220 21,552 55,259 53,957
Depreciation, depletion and
amortization 5,577 5,261 13,282 17,739
--------- --------- ---------- ---------
27,797 26,813 68,541 71,696
--------- --------- ---------- ---------
Gross profit 2,631 6,905 11,576 30,384
--------- --------- ---------- ---------
Other operating expenses
General and administrative 2,652 2,071 7,581 6,169
Exploration 5,100 5,656 12,457 11,476
Pre-development expenses 2,534 518 6,768 1,541
Depreciation and
amortization 154 89 437 238
Other operating expense 697 1,290 1,881 1,716
Provision for closed
operations and
environmental matters 830 8,515 1,517 9,970
--------- --------- ---------- ---------
11,967 18,139 30,641 31,110
--------- --------- ---------- ---------
Loss from operations (9,336) (11,234) (19,065) (726)
--------- --------- ---------- ---------
Other income (expense):
Interest and other income 840 446 1,628 1,212
Interest expense (31) (80) (39) (457)
--------- --------- ---------- ---------
809 366 1,589 755
--------- --------- ---------- ---------
Income (loss) from operations
before income taxes (8,527) (10,868) (17,476) 29
Income tax provision (68) (424) (660) (2,393)
--------- --------- ---------- ---------
Net loss (8,595) (11,292) (18,136) (2,364)
Preferred stock dividends (1) (138) (138) (414) (11,464)
--------- --------- ---------- ---------
Loss applicable to common
shareholders $ (8,733) $(11,430) $(18,550) $(13,828)
========= ========= ========= =========
Basic and diluted loss per
common share after preferred
dividends (2) $ (0.07) $ (0.10) $ (0.16) $ (0.12)
========= ========= ========= =========
Basic weighted average number
of common shares
outstanding (2) 118,484 118,285 118,422 117,955
========= ========= ========= =========
(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 nine months ended September 30, 2004.
(2) For the quarter and nine months ended September 30, 2005,
4,110,487 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 and nine months ended September 30,
2004, 3,200,388 restricted stock units and various outstanding
stock options were included in the calculation of losses per
common share.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Sept. 30, Dec. 31,
2005 2004
ASSETS --------- ---------
Current assets:
Cash and cash equivalents $ 11,916 $ 34,460
Short-term investments and securities held
for sale 30,864 46,328
Accounts and notes receivable 23,390 21,936
Inventories 24,698 20,250
Other current assets 3,742 5,607
--------- ---------
Total current assets 94,610 128,581
Investments 2,225 1,657
Restricted cash and investments 20,150 19,789
Properties, plants and equipment, net 132,902 114,515
Other noncurrent assets 16,391 14,906
--------- ---------
Total assets $ 266,278 $ 279,448
========= =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 15,511 $ 15,904
Dividends payable -- 138
Accrued payroll and related benefits 10,018 9,405
Accrued taxes 2,683 2,379
Current portion of accrued reclamation and
closure costs 7,855 9,237
--------- ---------
Total current liabilities 36,067 37,063
Accrued reclamation and closure costs 64,146 65,951
Other noncurrent liabilities 8,445 7,107
--------- ---------
Total liabilities 108,658 110,121
--------- ---------
SHAREHOLDERS' EQUITY
Preferred stock 39 39
Common stock 29,643 29,588
Capital surplus 508,015 506,630
Accumulated deficit (388,730) (367,832)
Accumulated other comprehensive income 8,771 1,020
Treasury stock (118) (118)
--------- ---------
Total shareholders' equity 157,620 169,327
--------- ---------
Total liabilities and shareholders' equity $ 266,278 $ 279,448
========= =========
Common shares outstanding at end of period 118,572 118,351
========= =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Nine Months Ended
------------------
Sept. 30, Sept. 30,
OPERATING ACTIVITIES 2005 2004
--------- ---------
Net loss $(18,136) $ (2,364)
Noncash elements included in net loss:
Depreciation, depletion and amortization 13,719 17,977
Gain on disposition of properties, plants and
equipment (53) (105)
Gain on sale of royalty interests (550) - -
Provision for reclamation and closure costs 767 9,438
Deferred income taxes - - 1,989
Stock compensation 1,085 300
Change in assets and liabilities:
Accounts and notes receivable (1,454) (5,430)
Inventories (4,448) (930)
Other current and noncurrent assets 984 (4,219)
Accounts payable and accrued expenses 369 4,242
Accrued payroll and related benefits 717 2,389
Accrued taxes 304 (617)
Accrued reclamation and closure costs and other
noncurrent liabilities (3,238) (5,388)
-------- --------
Net cash provided by (used in) operating
activities (9,934) 17,282
-------- --------
INVESTING ACTIVITIES
Additions to properties, plants and equipment (31,452) (30,893)
Proceeds from disposition of properties, plants
and equipment 21 98
Purchase of short-term investments (68,694) (84,794)
Maturities of short-term investments 91,128 90,707
Increase in restricted investments (361) (13,427)
-------- --------
Net cash used in investing activities (9,358) (38,309)
-------- --------
FINANCING ACTIVITIES
Common stock issued under stock option plans 251 1,420
Dividends paid to preferred shareholders (2,899) - -
Other financing activities (604) - -
Borrowings on debt 1,000 2,430
Repayment on debt (1,000) (7,103)
-------- --------
Net cash used in financing activities (3,252) (3,253)
-------- --------
Net decrease in cash and cash equivalents (22,544) (24,280)
Cash and cash equivalents at beginning of period 34,460 73,662
-------- --------
Cash and cash equivalents at end of period $ 11,916 $ 49,382
======== ========
HECLA MINING COMPANY
Production Data
Third Quarter Ended Nine Months Ended
---------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004
--------- --------- --------- ----------
LA CAMORRA UNIT
Tons of ore
processed (1) 42,235 49,937 141,836 147,815
Days of operation 68 85 231 258
Mining cost per ton $ 89.27 $ 41.19 $ 65.20 $ 41.38
Milling cost per ton $ 13.39 $ 13.38 $ 12.93 $ 13.03
Ore grade milled - Gold
(oz./ton) 0.569 0.685 0.531 0.779
Gold produced (oz.) (1) 22,175 28,290 71,056 102,422
Average cost per ounce
of gold produced:
Cash operating costs $ 375 $ 204 $ 323 $ 162
Total cash costs (2) $ 381 $ 211 $ 330 $ 165
Total production
costs $ 501 $ 310 $ 407 $ 259
Capital additions (in
thousands) $ 5,050 $ 9,867 $ 23,349 $ 23,427
SAN SEBASTIAN UNIT (3)
Tons of ore processed 43,964 40,675 50,784 121,293
Days of operation 87 83 106 265
Mining cost per ton $ 20.82 $ 43.67 $ 21.89 $ 40.87
Milling cost per ton $ 37.19 $ 40.11 $ 38.24 $ 35.66
Ore grade milled -
Silver (oz./ton) 11.93 13.27 12.54 18.15
Ore grade milled - Gold
(oz./ton) 0.245 0.275 0.257 0.288
Silver produced (oz.) 480,599 471,809 536,346 1,955,838
Gold produced (oz.) 9,648 10,305 10,773 31,850
Average cost per ounce
of silver produced (4):
Cash operating costs $ 3.01 $ 0.83 $ 2.82 $ (0.08)
Total cash costs (2) $ 3.38 $ 1.20 $ 3.19 $ 0.22
Total production
costs $ 6.78 $ 3.63 $ 6.83 $ 1.99
Capital additions (in
thousands) $ 3 $ 24 $ 225 $ 955
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
Tons of ore milled 50,508 59,796 163,996 177,437
Days of operation 92 92 273 274
Mining cost per ton $ 33.61 $ 28.22 $ 32.31 $ 27.68
Milling cost per ton $ 24.29 $ 17.31 $ 21.81 $ 17.61
Ore grade milled -
Silver (oz./ton) 15.37 18.05 18.25 17.03
Silver produced (oz.) 555,707 766,967 2,212,772 2,182,107
Gold produced (oz.) 4,445 6,154 16,595 19,676
Lead produced (tons) 1,354 1,788 5,030 5,527
Zinc produced (tons) 4,196 5,550 14,695 16,684
Average cost per ounce
of silver produced (4)
Cash operating costs $ 2.95 $ 1.40 $ 1.91 $ 0.92
Total cash costs (2) $ 3.05 $ 1.55 $ 2.09 $ 1.04
Total production
costs $ 5.87 $ 3.58 $ 4.57 $ 3.51
Capital additions (in
thousands) $ 1,336 $ 1,235 $ 2,650 $ 2,860
LUCKY FRIDAY UNIT
Tons of ore milled (5) 65,076 42,580 163,641 122,170
Days of operation 92 92 273 274
Mining cost per ton $ 61.46 $ 55.35 $ 60.69 $ 54.69
Milling cost per ton $ 7.97 $ 8.16 $ 8.06 $ 7.54
Ore grade milled - Silver
(oz./ton) 13.42 12.85 12.86 13.32
Silver produced (oz.) (5) 812,855 510,905 1,957,113 1,512,457
Lead produced (tons) 4,878 3,252 11,683 9,262
Zinc produced (tons) 1,294 875 3,298 2,184
Average cost per ounce of
silver produced (4):
Cash operating costs $ 4.74 $ 4.53 $ 4.88 $ 4.98
Total cash costs (2) $ 4.74 $ 4.53 $ 4.88 $ 4.98
Total production costs $ 4.96 $ 4.59 $ 5.07 $ 5.02
Capital additions (in
thousands) $ 905 $ 1,646 $ 5,007 $ 3,385
(1) Production results include approximately 900 tons and 957 ounces
of gold, respectively, for the third quarter and first nine months
of 2005 that were mined from Mina Isidora, currently under
development.
(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.
(3) 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.
(4) Gold, lead and zinc produced have been treated as by-product
credits in calculating silver costs per ounce.
(5) Production results include approximately 21,000 tons and 227,000
ounces of silver, respectively, for the third quarter of 2005, and
approximately 29,000 tons and 285,000 ounces of silver,
respectively, for the first nine 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 Nine Months Ended
------------------- ------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
GOLD OPERATIONS 2005 2004 2005 2004
-------- -------- -------- --------
Total cash costs $ 7,610 $ 5,684 $ 22,115 $ 16,380
Divided by gold ounces
produced (2) 20 27 67 99
-------- -------- -------- --------
Total cash cost per ounce
produced $ 381 $ 211 $ 330 $ 165
======== ======== ======== ========
Reconciliation to GAAP (3):
Total cash costs $ 7,610 $ 5,684 $ 22,115 $ 16,380
Depreciation, depletion and
amortization 2,348 2,619 5,127 9,299
Treatment & freight costs (594) (427) (1,606) (1,462)
By-product credits 580 584 1,323 1,146
Change in product inventory (761) 1,096 (2,074) 951
Reclamation and other costs (22) 67 -- 104
-------- -------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and amortization
(GAAP) $ 9,161 $ 9,623 $ 24,885 $ 26,418
======== ======== ======== ========
SILVER OPERATIONS
Total cash costs (4) $ 6,098 $ 4,068 $ 14,503 $ 10,249
Divided by silver ounces
produced 1,623 1,750 4,423 5,650
-------- -------- -------- --------
Total cash cost per ounce
produced $ 3.76 $ 2.32 $ 3.28 $ 1.81
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 6,098 $ 4,068 $ 14,503 $ 10,249
Depreciation, depletion and
amortization 3,229 2,642 8,155 8,440
Treatment & freight costs (5,136) (5,673) (18,196) (17,160)
By-product credits 13,628 14,250 36,749 42,628
Strike-related costs -- -- 1,341 --
Change in product inventory 386 1,674 515 544
Reclamation and other costs 431 229 589 577
-------- -------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization(GAAP) $ 18,636 $ 17,190 $ 43,656 $ 45,278
======== ======== ======== ========
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
Total cash costs $ 1,694 $ 1,190 $ 4,626 $ 2,280
Divided by silver ounces
produced 556 767 2,213 2,182
-------- -------- -------- --------
Total cash cost per ounce
produced $ 3.05 $ 1.55 $ 2.09 $ 1.04
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 1,694 $ 1,190 $ 4,626 $ 2,280
Depreciation, depletion and
amortization 1,526 1,542 5,354 5,181
Treatment & freight costs (3,049) (3,679) (12,382) (11,152)
By-product credits 6,106 6,889 22,037 21,571
Change in product inventory 1,420 1,541 2,275 32
Reclamation and other costs 41 59 123 237
-------- -------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and amortization
(GAAP) $ 7,738 $ 7,542 $ 22,033 $ 18,149
======== ======== ======== ========
SAN SEBASTIAN UNIT
Total cash costs $ 1,627 $ 565 $ 1,711 $ 432
Divided by silver ounces
produced 481 472 537 1,956
-------- -------- -------- --------
Total cash cost per ounce
produced $ 3.38 $ 1.20 $ 3.19 $ 0.22
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 1,627 $ 565 $ 1,711 $ 432
Depreciation, depletion and
amortization 1,580 1,074 2,500 3,233
Treatment & freight costs (223) (208) (263) (1,037)
By-product credits 4,235 4,133 4,720 12,773
Strike related costs -- -- 1,341 --
Change in product inventory (675) 53 (1,215) 356
Reclamation and other costs 386 118 458 268
-------- -------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and amortization
(GAAP) $ 6,930 $ 5,735 $ 9,252 $ 16,025
======== ======== ======== ========
LUCKY FRIDAY UNIT
Total cash costs $ 2,777 $ 2,313 $ 8,168 $ 7,537
Divided by silver ounces
produced (5) 586 511 1,673 1,512
-------- -------- -------- --------
Total cash cost per ounce
produced $ 4.74 $ 4.53 $ 4.88 $ 4.98
======== ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ 2,777 $ 2,313 $ 8,168 $ 7,537
Depreciation, depletion and
amortization 123 26 301 26
Treatment & freight costs (1,864) (1,786) (5,553) (4,971)
By-product credits 3,287 3,228 9,992 8,284
Change in product inventory (359) 80 (545) 156
Reclamation and other costs 4 52 10 72
-------- -------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and amortization
(GAAP) $ 3,968 $ 3,913 $ 12,373 $ 11,104
======== ======== ======== ========
RECONCILIATION TO GAAP, ALL OPERATIONS
Total cash costs $ 13,708 $ 9,752 $ 36,618 $ 26,629
Depreciation, depletion and
amortization 5,577 5,261 13,282 17,739
Treatment & freight costs (5,730) (6,100) (19,802) (18,622)
By-product credits 14,208 14,834 38,072 43,774
Strike-related costs -- -- 1,341 --
Change in product inventory (375) 2,770 (1,559) 1,495
Reclamation and other costs 409 296 589 681
-------- -------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $ 27,797 $ 26,813 $ 68,541 $ 71,696
======== ======== ======== ========
(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 are
the most comparable financial measures calculated in accordance
with GAAP to total cash costs.
(2) Ounces mined from Mina Isidora are not included in the
determination of total cash costs. Mina Isidora is currently under
development and revenue generated from its ore is offset against
capital costs associated with the project. For the third quarter
and first nine months of 2005, approximately 957 ounces of gold
were excluded from the calculation.
(3) 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.
(4) 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 first nine
months of 2005, these strike-related cost of sales and other
direct production costs of $1.3 million were not included in the
determination of total cash costs for silver operations.
(5) Ounces mined from the 5900 level development project at Lucky
Friday are not included in the determination of total cash costs.
During the third quarter and first nine months of 2005,
approximately 227,000 ounces and 285,000 ounces, respectively, of
silver were excluded from the calculation, as the revenue
associated with these ounces was offset against capital costs
incurred with the project.
CONTACT: Hecla Mining Company
Vicki Veltkamp, 208/769-4100
FAX 208/769-7612