Exhibit 99.1
Good Performance for Hecla's Third Quarter: Increased Income,
Revenue, Gross Profit and Cash Flow
For the Period Ended September 30, 2006
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Nov. 9, 2006--Hecla Mining
Company (NYSE:HL) today reported income applicable to common
shareholders of $0.9 million, or 1 cent per share, for the third
quarter of 2006, $9.6 million more than the loss of $8.7 million, or 7
cents per share, during the third quarter of 2005. Hecla's low average
total cash cost per ounce of silver production of just 59 cents,
combined with a 65% increase in the average silver price and a 42%
increase in the average gold price for the quarter, contributed to the
company's positive third quarter performance. Hecla greatly benefited
from its by-product metals, zinc and lead, as those prices increased
159% and 33%, respectively, over the same quarter last year. In
addition, compared to the same quarter last year, Hecla saw increases
in:
- -- Sales revenue by 66%, to $50.4 million
- -- Gross profit by 446%, to $14.4 million
- -- Net cash flow before exploration and pre-development expenditures
by 384%, to $19.3 million
- -- Cash flow provided by operating activities to $11 million (compared
to cash used of $3.6 million)
In the first nine months of 2006, Hecla recorded income applicable
to common shareholders of $48.2 million, or 40 cents per share, on
sales of $147.1 million, compared to a loss of $18.6 million, or
16 cents a share, on revenue of $80.1 million during the first nine
months of 2005. The improved 2006 results were primarily due to
increased gross profit at all operating mines, increased metals prices
and the gain on the sale of investments early in the year. Hecla's
cash and short-term investments rose to $85.7 million as of September
30, 2006, compared to $47.2 million at December 31, 2005.
Hecla Mining Company President and Chief Executive Officer,
Phillips S. Baker, Jr., said, "This was another great quarter in a
year that will be one of the best in our long history. With our North
American resource growth and low-cost production, Hecla continues to
be the lowest-risk primary silver company with low operating,
construction and political risks. Our silver operations also have
substantial zinc and lead production as a by-product, resulting in our
silver production having $11 of cash margin even if the silver price
is only slightly higher than $11. And we are reinvesting in
exploration, primarily at or near our current operations, as well as
in other strategic areas. We expect this effort to provide even more
resources with the same risk/return profile as our current silver
operations. This generates both short- and long-term value for our
shareholders."
Hecla has a major exploration program under way aimed at
increasing mineral resources and reserves at existing operations and
to explore in new, strategic areas to enhance the company's growth
strategy. Through the first three quarters of the year, $20.7 million
was spent on this successful effort. This cost is expensed, impacting
net income. Other factors impacting net income during the first three
quarters of 2006 included increased depreciation expense and a $1.3
million foreign exchange loss due to currency controls in Venezuela.
Higher labor and supplies costs also impacted results because
experienced professional mining employees are in high demand and
supplies prices have increased. In addition, the company has seen
somewhat increased general and administrative costs as Hecla focuses
on attracting and retaining the people necessary for company growth.
Hecla produced 1.5 million ounces of silver in the third quarter
at an average total cash cost of 59 cents per ounce, an 84% decrease
in costs compared to the third quarter of 2005. The company has now
lowered its 2006 estimated average total cash cost of production to
less than $2.00 per ounce of silver. Gold production increased during
the third quarter by 19% compared to last year's third quarter, with
43,340 ounces of gold produced, including 38,636 ounces in Venezuela
at an average total cash cost per ounce of $380. For the first nine
months of 2006, Hecla produced 4 million ounces of silver at an
average total cash cost per ounce of $1.48 and 127,837 ounces of gold,
including 114,656 ounces in Venezuela at an average total cash cost
per ounce of $359.
EXPLORATION
Lucky Friday - During the third quarter, Hecla announced the
anticipated addition of about 25 million ounces of silver to the
resource at the Lucky Friday silver mine in northern Idaho, growing
the resource base there to more than 115 million ounces, with a large
lead and zinc by-product enhancement. Importantly, the calculation of
resources was based on metals prices well below current prices. The
Lucky Friday resource expansion extended the eastern half of the known
resource down to the 6900 level and down to the 6100 level on the
western side, leaving the potential for the possible identification of
additional resource on the western half as drilling continues in 2007.
An additional hole was drilled to the 7900 level, confirming continued
deeper mineralization another 2,000 feet below the current mining
area. Drilling in the next few years has the potential to bring most
of this area into the resource.
The company plans to continue to focus on exploration efforts at
the Lucky Friday, both to the east and to the west along strike of the
currently identified resource, as well as continuing to focus on
drilling deeper. An exploration program to test the updip potential
from the current mining area is expected to get underway in the fourth
quarter, as there is approximately 3,000 feet of very prospective
unexplored ground between the historic mining area near the surface
and our currently identified resource at depth. The 3,000-foot gap
will be evaluated by a series of drill holes that has the potential to
bridge the two ore-producing areas with continuous mineralization,
adding dramatically to the Lucky Friday resource. In addition, a
broader exploration review is being initiated over Hecla's large land
position surrounding the Lucky Friday mine in North Idaho's
historically prolific Silver Valley. This generative exploration
program will compile the vast database of exploration and production
information collected over the past 100 years on Hecla's properties.
Advanced analysis and modeling of the geological structures on the
property are expected to provide numerous exploration opportunities in
the future, as much of the ground has never been tested with modern
exploration techniques.
Baker said, "The recent discoveries and resource additions at
Lucky Friday reinforce our strategy of operating and exploring in
major mining districts like the billion-ounce Silver Valley. The Lucky
Friday has already proven its world-class status through its 60 years
of operation, and we have now identified nearly as much resource for
the future as has been mined in the entire history of this great
mine."
Mexico - Hecla now holds over 340 square miles of contiguous
concessions at the San Sebastian silver/gold property, located in the
state of Durango in central Mexico. In addition to the recently
discovered Hugh Zone, Hecla has identified a number of outstanding
exploration targets through traditional mapping, sampling, geochemical
and geophysical methods and defined a number of regional trends that
contain multiple mineralized zones. Target types include high-grade,
precious and base metal-rich, narrow vein deposits and broad,
disseminated epithermal deposits with the potential for surface and/or
underground bulk mining. Current priority targets include a huge
silver anomaly with coincident geophysics on the southwest corner of
the property and the St. Jude Vein. Both projects saw their first
drilling in the third quarter and mineralization has been intersected
recently on both targets. Assays are pending from the silver anomaly
area, and ore grades of up to 0.58 ounce per ton gold (20 grams) and
7.29 ounces per ton of silver (250 grams) have been encountered on the
St. Jude Vein. There is good potential that these or other prospects
will turn into additional orebodies on the San Sebastian property near
the Hugh Zone. The La Roca trend cuts the San Sebastian property and
has hosted historic silver and base metal production. It will be one
of the exploration areas advanced using modern techniques leading to
aggressive drilling before the end of 2007. Additional targets
continue to be developed, as previously targeted areas are
concurrently advanced.
A recent addition to Hecla's land package in central Mexico was
the acquisition of the Rio Grande project, located 50 miles north of
the major Fresnillo silver mine in Zacatecas state, and approximately
30 miles from San Sebastian. On the property, the very top of an
epithermal system has been identified and there are more than nine
quartz veins and breccias containing localized high-grade gold and
silver, exposed over a combined strike length approaching nine miles.
The company is completing mapping and sampling and is planning for
geochemical, geophysical and drilling activities in 2007. Ore-grade
mineralization has already been identified in rock chip samples on the
surface veins at this extremely prospective property, and the
development of drill-ready targets is advancing quickly. The Rio
Grande property is strategically located via paved highways
approximately 100 miles from Hecla's Velardena mill, where Hecla
previously processed its ore from the Francine and Don Sergio veins at
San Sebastian.
Hecla announced an anticipated resource increase during the third
quarter at the polymetallic Hugh Zone deposit on the San Sebastian
property. The increased resource at the Hugh Zone is a result of
additional surface drilling on the deposit during 2005 and 2006,
bringing the total silver resource at San Sebastian to about 8 million
ounces, plus nearly 250 million pounds of zinc, lead and copper.
Baker said, "We are very bullish on Mexico and extremely
optimistic about mining in the future on the San Sebastian property.
Engineering and exploration work are continuing on the Hugh Zone. It
is a polymetallic orebody that we think will provide the basis for
being a low-cost, long-term producer. In addition, we are drilling
exploration targets that have the potential for even larger deposits.
We believe this property has as good or better potential than anything
we own."
Greens Creek - At the Greens Creek silver mine in Alaska, in which
Hecla holds an approximate 30% interest, good exploration results in
the northern extension of the 5250 Zone have resulted in a continued
focus on exploration in this area. Funding has been redirected to
develop additional drill platforms in the area during the remainder of
the year in order to facilitate accelerated drilling focused on adding
resources and reserves in 2007. The 5250 Zone, where mining is
currently taking place, contains very high-grade silver with
lower-grade base metals and has very favorable grinding
characteristics, which allows higher mill throughput and enhanced
economics. The new discovery was a result of re-evaluating an older
structural interpretation, which has opened up the possibility of a
large continuation of the ore zone. An addition to the 5250 Zone has
the potential to increase mill throughput and increase profit margins.
Significant additions to the resource at Greens Creek are expected to
occur in the West Gallagher Zone, along with the possible conversion
of resource to reserve in areas currently being mined. Overall, an
aggressive five-year exploration program is being proposed for the
Greens Creek mine as it continues to invest in both underground
exploration across the Gallagher Fault and surface exploration
efforts, where a number of Greens Creek-like targets have been
identified.
Hollister - At the Hollister Development Block gold project in
northern Nevada, where Hecla is earning into a 50/50 joint venture
with partner Great Basin Gold, some significant milestones have been
accomplished. The Phase I development was completed in early October
and a little more than 50% of the diamond drilling has been completed.
Drilling to date has confirmed the narrow but very high-grade nature
of the veins in the mineralized zone at Hollister. The focus is now
shifting towards completion of underground drilling and work on the
resource model and feasibility study. Drilling should be completed in
the first quarter of next year, with the feasibility study completed
in the second quarter. Hecla and Great Basin Gold have begun to
evaluate the exploration potential of the rest of the joint venture
area and continue to be quite encouraged by the potential of this
property that is located at the intersection of the Carlin Trend and
the Northern Nevada Rift.
Venezuela - Venezuela remains an under-explored region, and Hecla
has title to two outstanding greenstone belt packages surrounding its
current operations. Hecla plans to continue to explore for gold on the
packages that are geologically comparable to the great Canadian gold
producing greenstone belts of Red Lake, Timmins and Kirkland Lake, and
are the same rock as West Africa. At the Block B concession near El
Callao, drilling programs continue to identify high-grade gold in
veins and shear zones near Mina Isidora at Twin Shear and the Panama
Vein. Hecla has also had good success in extending the life of this
high-grade gold mine. On the El Dorado concessions, exploration near
the La Camorra mine has shifted to adjacent areas where parallel shear
structures have been identified. In addition, there are several
prospective targets awaiting exploration permits.
OPERATIONS
Lucky Friday - The Lucky Friday unit produced 737,450 ounces of
silver in the third quarter and 2.1 million ounces in the first nine
months of the year, at an average total cash cost of $3.88 and
$4.69 per ounce, respectively. The Lucky Friday mine has now completed
the necessary development to commence mining on a full-scale basis
from the 5900 level. In addition to mining on the 5900 level, the
company is focused on infrastructure issues to allow for more
efficient mining and to provide for mining deeper at the Lucky Friday.
Hecla has taken advantage of high zinc prices to mine wider cuts to
recover more zinc. This results in the best economics for the mine and
lowers the cost per ounce of silver production. Although mining more
zinc leads to lower silver grades, Hecla will continue to review the
best mix of production in order to optimize the economics of the mine.
Hecla's 2005 mill upgrade project has improved zinc recovery by more
than 15%. The company is evaluating additional upgrades to the zinc
circuit in the process plant, which could continue to improve the
economics of the mine.
Baker said, "Our increasing resources at Lucky Friday are
prompting us to take a look at the potential for increasing the annual
production capacity at the unit and extending the infrastructure to
handle mining beyond 2013. This is a process that takes time, but we
are beginning to evaluate what sort of engineering it would take, what
it would cost and how to make it the most economic over the long term.
We expect to be mining here for a long time and intend to optimize the
value of this property for our shareholders."
Greens Creek - The Greens Creek unit produced 758,865 ounces of
silver in the third quarter of 2006, at an average total cash cost of
negative $2.61 per ounce of silver. While Greens Creek has
consistently been a low-cost producer, the current extraordinarily low
costs of production are due primarily to high by-product metals
prices. The average silver grade for the third quarter was 18.05
ounces of silver per ton, compared to 15.37 ounces per ton in the
third quarter of last year, because the majority of the mining during
the quarter took place in the silver-rich 5250 Zone. For the first
nine months of the year, Greens Creek has produced 1.9 million ounces
of silver for Hecla's account at an average total cash cost of
negative $2.08 per ounce. The mine continues to be an excellent
performer, despite significant mine rehabilitation efforts that have
been under way since the fall of 2005, as well as increased mine
development activities to better position the mine for the future.
La Camorra - The La Camorra unit produced 38,636 ounces of gold at
an average total cash cost of $380 per ounce in the third quarter of
this year, compared to 22,175 ounces of gold at about the same cash
cost during the same period last year. For the first nine months of
2006, La Camorra produced 114,656 ounces of gold at an average total
cash cost of $359 per ounce. La Camorra is on track to meet production
and cost estimates set earlier this year, and continues to provide the
company with good cash flow. However, challenges at the operations
include increased depreciation expense as a result of the
commissioning of the shaft at the La Camorra mine last year, increased
labor, commodity and transportation costs, rising costs due to deeper
mining at the La Camorra mine and elimination of foreign exchange
gains realized in 2005 due to changes in currency regulations in
Venezuela.
FINANCIAL
Hecla maintains a strong balance sheet, with a current ratio at
September 30 of 3.2:1, up from 2.6:1 at December 31, 2005. Cash and
short-term investments totaled $85.7 million at the end of the
quarter, with no debt. Hecla has not hedged any of its gold or silver
production.
OTHER
Hecla's Board of Directors has appointed Ronald W. Clayton to the
position of Senior Vice President - Operations. Clayton has been Hecla
Vice President - North American Operations since 2002 and has been
with the company for 17 years. The Board also appointed Philip C. Wolf
as Senior Vice President and General Counsel. Wolf joined Hecla early
in 2006 as Vice President and General Counsel. In addition, Michael H.
Callahan, Hecla's President of Venezuelan Operations and Vice
President - Corporate Development, will retain the presidency of
Venezuelan operations and in addition become Vice President with
oversight of Hecla's growth initiatives in northern Idaho's Silver
Valley. Callahan was originally appointed Vice President in 2002 and
has been with the company for 15 years.
The Board also appointed a new officer of the company: Jay S.
Layman will be Hecla's new Vice President - Corporate Development.
Layman has been in the mining industry for 25 years, with 13 years of
experience in project evaluation and development, most recently as
President for Tactical & Strategic Advisory Services in Littleton,
Colorado. Prior to that, Layman worked for Quadrem in Australia and
Asia, and Newmont Gold Company as project manager and in strategic
planning. He holds BSME and BABA degrees from Washington State
University and an MBA in Finance from Eastern Washington University.
Baker said, "I'm pleased to be able to recognize the hard work and
leadership abilities of these Hecla executives. We also welcome Jay as
another experienced member to our management team. His appointment
underscores Hecla's emphasis on growth as we continue to search out
opportunities for acquisition and partnerships."
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho,
mines, processes and explores for silver and gold in the United
States, Venezuela and Mexico. A 115-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, political risks, project development
risks, labor issues 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," "reserve," and "inferred
resource" that the SEC guidelines strictly prohibit us from including
in our filing with the SEC. U.S. investors are urged to consider
closely the disclosure in our Form 10-K. You can review and obtain
copies of these filings from the SEC's website at
http://www.sec.gov/edgar.shtml.
Hecla Mining Company news releases can be accessed on the
Internet at: http://www.hecla-mining.com
HECLA MINING COMPANY
(dollars in thousands, except per share, per ounce and per pound
amounts - unaudited)
Third Quarter Ended Nine Months Ended
----------------------- -----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
HIGHLIGHTS 2006 2005 2006 2005
----------- ----------- ----------- -----------
FINANCIAL DATA
Sales:
Silver operations (2) $ 29,255 $ 21,934 $ 79,345 $ 52,276
Gold operations 21,159 8,494 67,800 27,841
---------- ---------- ---------- ----------
Total sales $ 50,414 $ 30,428 $ 147,145 $ 80,117
========== ========== ========== ==========
Gross Profit (Loss):
Silver operations (2) $ 12,361 $ 3,295 $ 34,182 $ 8,620
Gold operations 2,011 (664) 9,624 2,956
---------- ---------- ---------- ----------
Total gross profit $ 14,372 $ 2,631 $ 43,806 $ 11,576
========== ========== ========== ==========
Net income (loss) $ 1,001 $ (8,595) $ 48,610 $ (18,136)
Income (loss)
applicable to common
shareholders $ 863 $ (8,733) $ 48,196 $ (18,550)
Basic income (loss)
per common share $ 0.01 $ (0.07) $ 0.40 $ (0.16)
Cash flow provided by
(used in) operating
activities $ 11,049 $ (3,634) $ 39,658 $ (9,934)
Net cash provided by
operating activities
before exploration
and pre-development
expenses (1) $ 19,347 $ 4,000 $ 60,403 $ 9,291
PRODUCTION
SUMMARY - TOTALS
Silver - Ounces 1,496,315 1,849,161 4,000,076 4,706,231
Gold - Ounces 43,340 36,365 127,837 98,660
Lead - Tons 6,011 6,232 16,508 16,713
Zinc - Tons 6,203 5,490 16,836 17,993
Average cost per ounce
of silver produced
(2):
Cash operating costs
($/oz.) 0.30 3.62 1.19 3.15
Total cash costs
($/oz.) (3) 0.59 3.76 1.48 3.28
Total production
costs ($/oz.) 2.70 5.81 3.60 5.03
Average cost per ounce
of gold produced (4):
Cash operating costs
($/oz.) 339 375 340 323
Total cash costs
($/oz.) (3) 380 381 359 330
Total production
costs ($/oz.) 571 501 527 407
AVERAGE METAL PRICES
Silver - London Fix
($/oz.) 11.70 7.07 11.22 7.06
Gold - London Final
($/oz.) 622 439 601 431
Lead - LME Cash
(cents/pound) 53.9 40.4 53.4 43.2
Zinc - LME Cash
(cents/pound) 152.5 58.8 134.6 58.8
(1) Net cash provided by operating activities before exploration and
pre-development expenses represents a non-U.S. generally accepted
accounting principle (GAAP) measurement. The following table presents
a reconciliation between cash flow provided by (used in) operating
activities to non-GAAP net cash provided by operating activities
before exploration and pre-development expenses for the quarters and
nine months ended September 30, 2006 and 2005:
Cash flow provided by
(used in) operating
activities $ 11,049 $ (3,634) $ 39,658 $ (9,934)
Add exploration 6,058 5,100 15,056 12,457
Add pre-development
expenses 2,240 2,534 5,689 6,768
---------- ---------- ---------- ----------
Net cash provided by
operating activities
before exploration
and pre-development
expenses $ 19,347 $ 4,000 $ 60,403 $ 9,291
========== ========== ========== ==========
(2) Includes gold produced at silver operations, which is treated as a
by-product credit and included in the calculation of silver costs per
ounce.
(3) Total cash costs per ounce of silver and gold represent non-U.S.
Generally Accepted Accounting Principles (GAAP) measurements. A
reconciliation of total cash costs to cost of sales and other direct
production costs 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.
(4) For the quarters and nine months ended September 30, 2006 and
2005, includes gold produced from third-party mining operations
located near the La Camorra mine and Mina Isidora, 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,
2006 2005 2006 2005
-------------- --------- ------------ ---------
Sales of products $ 50,414 $ 30,428 $147,145 $ 80,117
-------- -------- -------- --------
Cost of sales and
other direct
production costs 25,696 22,220 76,322 55,259
Depreciation,
depletion and
amortization 10,346 5,577 27,017 13,282
-------- -------- -------- --------
36,042 27,797 103,339 68,541
-------- -------- -------- --------
Gross profit 14,372 2,631 43,806 11,576
-------- -------- -------- --------
Other operating
expenses
General and
administrative 2,601 2,652 9,482 7,581
Exploration 6,058 5,100 15,056 12,457
Pre-development
expenses 2,240 2,534 5,689 6,768
Depreciation and
amortization 196 154 743 437
Other operating
expenses 1,947 697 3,211 1,881
Gain on sale of
properties, plants
and equipment (31) - - (4,451) - -
Provision for closed
operations and
environmental
matters 906 830 2,503 1,517
-------- -------- -------- --------
13,917 11,967 32,233 30,641
-------- -------- -------- --------
Income (loss) from
operations 455 (9,336) 11,573 (19,065)
-------- -------- -------- --------
Other income
(expense):
Gain on sale of
investments - - - - 36,416 - -
Interest and other
income 1,117 840 2,808 1,628
Interest expense (189) (31) (552) (39)
-------- -------- -------- --------
928 809 38,672 1,589
-------- -------- -------- --------
Income (loss) from
operations before
income taxes 1,383 (8,527) 50,245 (17,476)
Income tax provision (382) (68) (1,635) (660)
-------- -------- -------- --------
Net income (loss) 1,001 (8,595) 48,610 (18,136)
Preferred stock
dividends (138) (138) (414) (414)
-------- -------- -------- --------
Income (loss)
applicable to common
shareholders $ 863 $ (8,733) $ 48,196 $(18,550)
======== ======== ======== ========
Basic and diluted
income (loss) per
common share after
preferred dividends $ 0.01 $ (0.07) $ 0.40 $ (0.16)
======== ======== ======== ========
Basic weighted average
number of common
shares outstanding 119,483 118,484 119,146 118,422
======== ======== ======== ========
Diluted weighted
average number of
common shares
outstanding 119,869 118,484 119,561 118,422
======== ======== ======== ========
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
September 30, 2006 Dec. 31, 2005
------------------ -------------
ASSETS
Current assets:
Cash and cash equivalents $ 70,806 $ 6,308
Short-term investments and
securities held for sale 14,850 40,862
Accounts and notes receivable 18,847 17,595
Inventories 22,297 25,466
Other current assets 4,653 3,546
--------- ---------
Total current assets 131,453 93,777
Investments 4,480 2,233
Restricted cash and investments 21,069 20,340
Properties, plants and equipment, net 130,695 137,932
Other noncurrent assets 19,934 17,884
--------- ---------
Total assets $ 307,631 $ 272,166
========= =========
LIABILITIES
Current liabilities:
Accounts payable and accrued
expenses $ 18,535 $ 16,684
Dividends payable 138 138
Accrued payroll and related
benefits 13,341 10,452
Accrued taxes 3,101 2,529
Current portion of accrued
reclamation and closure costs 6,365 6,328
--------- ---------
Total current liabilities 41,480 36,131
Long-term debt - - 3,000
Accrued reclamation and closure costs 60,238 62,914
Other noncurrent liabilities 8,637 8,791
--------- ---------
Total liabilities 110,355 110,836
--------- ---------
SHAREHOLDERS' EQUITY
Preferred stock 39 39
Common stock 29,889 29,651
Capital surplus 513,859 508,104
Accumulated deficit (347,896) (396,092)
Accumulated other comprehensive
income 1,816 19,746
Treasury stock (431) (118)
--------- ---------
Total shareholders' equity 197,276 161,330
--------- ---------
Total liabilities and shareholders'
equity $ 307,631 $ 272,166
========= =========
Common shares outstanding at end of
period 119,499 118,594
========= =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Nine Months Ended
--------------------------------
Sept. 30, 2006 Sept. 30, 2005
----------------- --------------
OPERATING ACTIVITIES
Net income (loss) $ 48,610 $(18,136)
Noncash elements included in net
income (loss):
Depreciation, depletion and
amortization 27,760 13,719
Gain on sale of investments (36,416) - -
Gain on disposition of properties,
plants and equipment (4,451) (53)
Gain on sale of royalty interests (341) (550)
Provision for inventory
obsolescence 1,342 - -
Provision for reclamation and
closure costs 261 767
Stock compensation 2,202 1,085
Other non-cash charges, net 266 - -
Change in assets and liabilities:
Accounts and notes receivable (4,667) (1,454)
Inventories 1,827 (4,448)
Other current and noncurrent assets 15 984
Accounts payable and accrued
expenses 1,852 369
Accrued payroll and related
benefits 2,984 717
Accrued taxes 572 304
Accrued reclamation and closure
costs and other noncurrent
liabilities (2,158) (3,238)
-------- --------
Net cash provided by (used in)
operating activities 39,658 (9,934)
-------- --------
INVESTING ACTIVITIES
Additions to properties, plants and
equipment (20,115) (31,452)
Proceeds from sale of investments 57,441 - -
Proceeds from disposition of
properties, plants and equipment 4,368 21
Purchase of short-term investments (43,060) (68,694)
Maturities of short-term investments 28,210 91,128
Increase in restricted investments (729) (361)
-------- --------
Net cash provided by (used in)
investing activities 26,115 (9,358)
-------- --------
FINANCING ACTIVITIES
Common stock issued under stock
option plans 2,452 251
Dividends paid to preferred
shareholders (414) (2,899)
Purchase of treasury shares (313) - -
Other financing activities - - (604)
Borrowings on debt 4,060 1,000
Repayment on debt (7,060) (1,000)
-------- --------
Net cash used in financing activities (1,275) (3,252)
-------- --------
Net increase (decrease) in cash and
cash equivalents 64,498 (22,544)
Cash and cash equivalents at
beginning of period 6,308 34,460
-------- --------
Cash and cash equivalents at end of
period $ 70,806 $ 11,916
======== ========
HECLA MINING COMPANY
Production Data
Third Quarter Ended Nine Months Ended
------------------- -----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2006 2005 2006 2005
--------- --------- ----------- -----------
LUCKY FRIDAY UNIT
Tons of ore milled 72,713 65,076 202,140 163,641
Days of operation 72 68 210 171
Mining cost per ton $ 57.85 $ 61.46 $ 53.80 $ 60.69
Milling cost per ton $ 13.45 $ 7.97 $ 12.35 $ 8.06
Ore grade milled - Silver
(oz./ton) 10.96 13.42 11.41 12.86
Silver produced (oz.) 737,450 812,855 2,106,367 1,957,113
Lead produced (tons) 4,339 4,878 12,025 11,683
Zinc produced (tons) 2,061 1,294 4,467 3,298
Average cost per ounce of
silver produced (1):
Cash operating costs $ 3.78 $ 4.74 $ 4.61 $ 4.88
Total cash costs (2) $ 3.88 $ 4.74 $ 4.69 $ 4.88
Total production costs $ 5.23 $ 4.96 $ 5.88 $ 5.07
Capital additions (in
thousands) $ 2,058 $ 905 $ 6,565 $ 5,007
GREENS CREEK UNIT
(Reflects Hecla's 29.73%
share)
Tons of ore milled 53,116 50,508 156,509 163,996
Days of operation 79 80 245 250
Mining cost per ton $ 39.69 $ 33.61 $ 36.67 $ 32.31
Milling cost per ton $ 21.66 $ 24.29 $ 23.74 $ 21.81
Ore grade milled - Silver
(oz./ton) 18.05 15.37 15.79 18.25
Silver produced (oz.) 758,865 555,707 1,893,709 2,212,772
Gold produced (oz.) 4,704 4,445 13,182 16,585
Lead produced (tons) 1,672 1,354 4,483 5,030
Zinc produced (tons) 4,142 4,196 12,369 14,695
Average cost per ounce of
silver produced (1)
Cash operating costs $ (3.07) $ 2.95 $ (2.61) $ 1.91
Total cash costs (2) $ (2.61) $ 3.05 $ (2.08) $ 2.09
Total production costs $ 0.24 $ 5.87 $ 1.07 $ 4.57
Capital additions (in
thousands) $ 2,078 $ 1,336 $ 6,031 $ 2,650
LA CAMORRA UNIT
Tons of ore processed 57,647 42,235 173,026 141,836
Days of operation 84 68 254 231
Mining cost per ton $ 116.75 $ 89.27 $ 122.91 $ 65.20
Milling cost per ton $ 20.38 $ 13.39 $ 17.50 $ 12.93
Ore grade milled - Gold
(oz./ton) 0.684 0.569 0.695 0.531
Gold produced (oz.) 38,636 22,175 114,656 71,056
Average cost per ounce of
gold produced:
Cash operating costs $ 339 $ 375 $ 340 $ 323
Total cash costs (2) $ 380 $ 381 $ 359 $ 330
Total production costs $ 571 $ 501 $ 527 $ 407
Capital additions (in
thousands) $ 2,234 $ 5,050 $ 7,786 $ 23,349
(1) Gold, lead and zinc produced have been treated as by-product
credits in calculating 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.
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,
2006 2005 2006 2005
--------- --------- ---------- ---------
GOLD OPERATIONS
Total cash costs $14,073 $ 7,610 $ 39,844 $ 22,115
Divided by gold ounces
produced 37 20 111 67
------- -------- --------- --------
Total cash cost per ounce
produced $ 380 $ 381 $ 359 $ 330
======= ======== ========= ========
Reconciliation to GAAP (2):
Total cash costs $14,073 $ 7,610 $ 39,844 $ 22,115
Depreciation, depletion
and amortization 7,229 2,348 18,686 5,127
Treatment & freight costs (445) (594) (4,127) (1,606)
By-product credits 555 580 1,980 1,323
Change in product
inventory (2,492) (761) 1,619 (2,074)
Reclamation and other
costs 226 (22) 173 - -
------- -------- --------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization (GAAP) $19,146 $ 9,161 $ 58,175 $ 24,885
======= ======== ========= ========
SILVER OPERATIONS
Total cash costs (4) $ 881 $ 6,098 $ 5,928 $ 14,503
Divided by silver ounces
produced 1,496 1,623 4,000 4,423
------- -------- --------- --------
Total cash cost per ounce
produced $ 0.59 $ 3.76 $ 1.48 $ 3.28
======= ======== ========= ========
Reconciliation to GAAP:
Total cash costs $ 881 $ 6,098 $ 5,928 $ 14,503
Depreciation, depletion
and amortization (3) 3,117 3,229 8,331 8,155
Treatment & freight costs (9,177) (5,136) (24,193) (18,196)
By-product credits 21,520 13,628 54,234 36,749
Strike-related costs (3) - - - - - - 1,341
Change in product
inventory (4) 506 386 718 515
Reclamation and other
costs 49 431 146 589
------- -------- --------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization(GAAP) $16,896 $ 18,636 $ 45,164 $ 43,656
======= ======== ========= ========
GREENS CREEK UNIT (Reflects
Hecla's 29.73% share)
Total cash costs $(1,978) $ 1,694 $ (3,948) $ 4,626
Divided by silver ounces
produced 759 556 1,894 2,213
------- -------- --------- --------
Total cash cost per ounce
produced $ (2.61) $ 3.05 $ (2.08) $ 2.09
======= ======== ========= ========
Reconciliation to GAAP:
Total cash costs $(1,978) $ 1,694 $ (3,948) $ 4,626
Depreciation, depletion
and amortization 2,120 1,527 5,842 5,354
Treatment & freight costs (5,235) (3,049) (13,973) (12,382)
By-product credits 12,842 6,106 34,185 22,037
Change in product
inventory 545 1,420 78 2,275
Reclamation and other
costs 46 40 132 123
------- -------- --------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization (GAAP) $ 8,340 $7,738 $ 22,316 $ 22,033
======= ======== ========= ========
LUCKY FRIDAY UNIT
Total cash costs $ 2,859 $ 2,777 $ 9,876 $ 8,168
Divided by silver ounces
produced (5) 737 586 2,106 1,673
------- -------- --------- --------
Total cash cost per ounce
produced $ 3.88 $ 4.74 $ 4.69 $ 4.88
======= ======== ========= ========
Reconciliation to GAAP:
Total cash costs $ 2,859 $ 2,777 $ 9,876 $ 8,168
Depreciation, depletion
and amortization 997 123 2,489 301
Treatment & freight costs (3,942) (1,864) (10,220) (5,553)
By-product credits 8,678 3,287 20,049 9,992
Change in product
inventory (39) (359) (267) (545)
Reclamation and other
costs 3 4 14 10
--------- --------- --------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization (GAAP) $ 8,556 $ 3,968 $ 21,941 $ 12,373
======= ======== ========= ========
RECONCILIATION TO GAAP, ALL
OPERATIONS
Total cash costs $14,954 $ 13,708 $ 45,772 $ 36,618
Depreciation, depletion and
amortization (3) 10,346 5,577 27,017 13,282
Treatment & freight costs (9,622) (5,730) (28,320) (19,802)
By-product credits 22,075 14,208 56,214 38,072
Strike-related costs (3) - - - - - - 1,341
Change in product inventory
(4) (1,986) (375) 2,337 (1,559)
Reclamation and other costs 275 409 319 589
------- -------- --------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $36,042 $ 27,797 $ 103,339 $ 68,541
======= ======== ========= ========
(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 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) 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 was 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 processed ore from San Sebastian
was closed due to a strike by mill employees. During the first nine
months of 2005, cost of sales and other direct production costs of
$1.4 million were not included in the determination of total cash
costs for silver operations. Additionally during the third quarter
and first nine months of 2005, San Sebastian recognized depreciation,
depletion and amortization expense of $1.6 million and $2.5 million,
which is reflected in the total for all properties and combined
silver properties above.
(4) Ounces mined from the 5900 level development project at Lucky
Friday in 2005 were 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.
CONTACT: Hecla Mining Company
Vicki Veltkamp
Vice President -- Investor and Public Relations
208-769-4128