Exhibit 99.1
Hecla Reports Highest Earnings and Lowest Reported Cash Cost for Silver
in 116-Year History and Achieves Exploration Success by Increasing
Silver Reserves and Resources by 25%
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Feb. 21, 2007--Hecla Mining
Company (NYSE:HL) today reported 2006 income applicable to common
shareholders of $68.6 million, or 57 cents per share, compared to a
loss of $25.9 million, or 22 cents per share, during 2005. Earnings
were reported on revenue of $217.4 million, which is 30% more revenue
than the next best year for revenue in Hecla's 116-year history. Net
income was 20% higher than the company's next best year, and cash
provided by operations of $61.5 million was 70% better than any other
year. Hecla's cash cost per ounce of silver in 2006 was the lowest
since that statistic has been reported, at just 24 cents per ounce.
Hecla Mining Company President and Chief Executive Officer
Phillips S. Baker, Jr. said, "In 2006, Hecla achieved the best
financial results in the company's history. These results weren't just
a little better; they were better by double-digit margins than our
next best year ever. Cash costs for silver were extremely low, and it
is important to note that the cash provided by operations is after
spending $28 million on exploration and pre-development projects as
part of the most aggressive exploration program Hecla has ever
conducted."
In the fourth quarter of 2006, Hecla recorded income applicable to
common shareholders of $20.4 million, or 17 cents per share, compared
to a loss of $7.4 million, or 6 cents per share, in the fourth quarter
of 2005. Revenue during 2006's fourth quarter was $70.3 million,
compared to $30 million in the same period last year. Positively
impacting fourth quarter 2006 financial results was recognition of an
$11.8 million deferred tax asset. This item was largely offset by
Venezuelan foreign exchange losses and tax accruals, settlement of a
dispute with an engineering firm and expensing of stock options. Even
without these items, Hecla's fourth quarter 2006 net income would
still be well above the market's consensus estimate, largely because
of significantly higher-than-expected production from Hecla's La
Camorra Unit of 45,907 ounces of gold during the fourth quarter, as
well as high metals prices.
For the full year, robust metals prices, a gain on the sale of
investments and recognition of a portion of the company's tax assets
made contributions to the excellent annual financial results in 2006.
However, the primary reason for outstanding results was production of
5.5 million ounces of silver at an average total cash cost of 24 cents
per ounce and 179,276 ounces of gold at an average total cash cost of
$345 per ounce. The average price of gold during 2006 was $604 per
ounce, the highest yearly average in recorded history and 36% higher
than 2005. Silver, although a long way from the 1980 average price of
more than $20 per ounce, was a healthy $11.57 per ounce during 2006,
an increase of 58% over 2005. Hecla also greatly benefited from its
by-product metals, zinc and lead, as those prices increased 137% and
32%, respectively, compared to 2005.
In addition to outstanding financial results, Hecla had
significant exploration successes, identified additional exploration
targets and increased its resources in the ground. Baker said,
"Overall, Hecla saw a 33 million-ounce increase in its silver
resource, a 33% increase in lead resource and an 18% increase in zinc
resource during 2006. At the Lucky Friday silver mine in northern
Idaho, we increased the silver resource by 34% and achieved a better
understanding of the intermediate veins and the future potential of
the mine. The combined successes at San Sebastian and Lucky Friday
have increased the value of their mineral resources by an astounding
50% compared to the end of 2005. And this is using the same price
assumptions for both years - it really is a reflection of the value of
these polymetallic ore bodies. At the Greens Creek mine in Alaska, we
discovered an extension to the silver-rich 5250 vein and advanced the
knowledge of the new West Gallagher zone. And we see much more
opportunity for the future. At current metals prices, Hecla generates
a huge amount of cash flow. Now is the time to make the investments
for future discovery and growth, and toward that end we are budgeting
approximately $22 million, $2 million more than last year, to continue
our aggressive exploration program."
2006 HIGHLIGHTS
--Income applicable to common shareholders of $68.6 million, or 57
cents per share, on revenue of $217.4 million
--Cash provided by operations of $61.5 million
--A gain on sale of investments of $36.4 million
--Cash and short-term investments on hand of $101 million, and no
corporate debt
--$28 million in exploration and pre-development expenditures
--Exploration successes at Lucky Friday, Greens Creek and San
Sebastian, with a 33 million-ounce increase in silver resource
--5.5 million ounces of silver produced at an average total cash
cost of 24 cents per ounce
--179,276 ounces of gold produced, with 160,563 of those ounces
produced at La Camorra at an average total cash cost of $345 per
ounce of gold
--Double and triple-digit percentage increases compared to a year
ago in the prices for all the metals Hecla produces: silver, gold,
lead and zinc
OPERATIONS
In 2006, Hecla produced 5.5 million ounces of silver at an average
total cash cost of 24 cents per ounce and 179,276 ounces of gold, with
160,563 of those ounces produced at La Camorra at an average total
cash cost of $345 per ounce of gold. For 2007, the company is
estimating production of 6 million ounces of silver at an average
total cash cost of less than $1 per ounce and approximately 140,000
ounces of gold at an average total cash cost in the range of $390 to
$440 per ounce.
LUCKY FRIDAY - The Lucky Friday Unit in northern Idaho produced
2.9 million ounces of silver at an average total cash cost of $3.65
per ounce, compared to 2.4 million ounces of silver at an average
total cash cost of $5.27 per ounce in 2005. This is a 19% increase in
production and a 31% improvement in cash costs over the previous year.
Decreased cash costs per ounce were due to high by-product metals
prices, and because the new development on the 5900 level has
increased productivity and lowered transportation costs. Early 2006
estimates had called for Lucky Friday to produce more than 3 million
ounces of silver. However, the high prices for lead and zinc generated
more profit by mining these metals that otherwise would have been left
behind, lowering the silver grade but improving the economics. In
2007, Hecla is anticipating production at Lucky Friday of
approximately 3.5 million ounces of silver at an average total cash
cost of under $4 per ounce.
Hecla spent approximately $9.4 million in capital improvements at
Lucky Friday during 2006, completing the 5900 level development and
making it possible to access the next 28 million ounces of silver. The
capital expenditures also included improvements to the Lucky Friday
mill, including a third-stage crushing system, increased flotation
capacity and a new flash cell, new column cells and tailings
thickeners. In addition, in anticipation of a long mine life and
increased annual production in the future, the Lucky Friday Unit
acquired the land necessary for a new tailings pond, which is
projected to be completed in late 2010.
A positive scoping study to double Lucky Friday's tonnage has been
completed. The study outlines how the company could increase annual
production by as much as 70%, extend the mine life, lower the cost per
ounce and increase the minable resource. This preliminary study
estimates $150 to $200 million of capital for a new mill, a surface
shaft to the existing levels, and an underground shaft to more than
1,000 feet below the deepest identified resources. The study assumed
significantly lower metals prices than what has been experienced over
the last year. Based on the scoping study's positive economics, a
prefeasibility study is expected to begin in the next couple of months
and be completed by year-end.
GREENS CREEK - Hecla holds a 29.73% interest in the Greens Creek
mine in partnership with Kennecott Greens Creek Mining Company, a
subsidiary of Rio Tinto. The Greens Creek silver/gold/zinc/lead mine
is located on Admiralty Island, near Juneau, Alaska. For Hecla's
account in 2006, Greens Creek produced 2.6 million ounces of silver at
an average total cash cost of negative $3.47 per ounce. Because of
high prices for its rich by-product metals, Greens Creek is one of the
lowest cash cost silver producers in the world. Greens Creek also
produced 18,713 ounces of gold for Hecla's account during 2006. For
2007, Hecla is estimating its share of production from Greens Creek to
be approximately 2.5 million ounces of silver, again at an average
total cash cost of less than negative $3 per ounce.
During 2006, Hecla's share of capital expenditures at Greens Creek
was $7.8 million. These expenditures included installing the
infrastructure to augment the mine's use of diesel-generated power
with less expensive hydroelectric power in the future, additional
underground development and an ongoing project to expand the tailings
facility, which should be completed in about two years.
LA CAMORRA - The two underground gold mines that make up the La
Camorra Unit in Venezuela are the La Camorra mine and Mina Isidora.
All ore from both mines is processed through the La Camorra mill,
about 70 miles south of Mina Isidora, which is located on Hecla's
Block B concession. Hecla, the largest gold miner in Venezuela, has
been operating successfully since 1999. In 2006, the La Camorra Unit
produced 160,563 ounces of gold at an average total cash cost of $345
per ounce. Gold production exceeded Hecla's earlier estimates for
2006, while cash costs were just slightly less than the company's most
recent estimate for the year. Mining and milling costs per ton at the
La Camorra Unit increased compared to 2005, due to increased haulage,
labor costs and inflation. In addition, an ever-greater percentage of
the ore will continue to come from Mina Isidora, which uses a more
expensive mining method because of the dip of the vein. This is
largely offset by the fact that Mina Isidora has a much higher gold
grade than the La Camorra mine.
Baker said, "Our cash margin per ounce of gold in 2006 at La
Camorra was better than it has ever been, thanks to a higher gold
price. Our operations are associated with land packages with
outstanding gold exploration potential. But one challenge facing Hecla
is concern over Venezuelan political risk. We recognize the discomfort
that some investors have about that country at this time, so we are
judiciously managing our growth and operations there and remain
positioned to take long-term advantage of our property position. La
Camorra is about 10% to 20% of the value of our company in terms of
net asset value or gross profit, but its true value to Hecla lies in
its great mineral potential." Baker said other challenges for
operating in Venezuela include increasing labor costs and currency
restrictions and discounts, which has a negative impact on Hecla's
cost of moving funds out of the country. He said, "We'll continue to
adapt to the regulatory changes in Venezuela and operate our mines as
efficiently as possible, as we have successfully done for the past
seven years."
EXPLORATION
Hecla announced that exploration success during 2006 led to a 33
million-ounce, or 25%, increase in silver reserves and resources,
bringing Hecla's total reserve and resource base to more than 169
million ounces of silver and 2.6 billion pounds of lead and zinc. In
addition, Hecla has a significant gold resource totaling 1.08 million
ounces. The majority of these silver and base metals resources are at
already-operating mines in areas with low political and operating
risks.
Baker said, "As we identified these resources in 2006, we
concurrently developed more exploration targets with the result that
Hecla now has more resources and more targets than we did a year ago,
providing many more opportunities ahead of us for continued growth in
our reserve/resource base."
During 2006, Hecla spent approximately $28 million on exploration
and pre-development projects in Alaska, Idaho, Nevada, Mexico and
Venezuela.
The reserve table below was calculated on prices much more
conservative than current market prices. The prices used for the
calculations were $8 per ounce of silver, $500 per ounce of gold,
$0.42 per pound of lead and $0.67 per pound of zinc.
ESTIMATED ORE RESERVES & RESOURCES
(as of December 31, 2006)
- ----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) Tons (oz/ton) (oz/ton) (%) (%)
- ----------------------------------------------------------------------
Proven and Probable
Lucky Friday Unit, USA 1,361,896 - 13.3 8.2 2.9
Greens Creek (29.73%), USA 2,282,574 0.11 14.4 4.0 10.4
La Camorra Unit, Venezuela 435,935 0.80 - - -
- ----------------------------------------------------------------------
Mineralized Material
La Camorra Unit, Venezuela(1) 634,061 0.39 - - -
Lucky Friday Unit, USA(2) 7,116,767 - 8.2 5.0 2.6
- ----------------------------------------------------------------------
Other Resources
San Sebastian, Mexico(3) 1,142,483 0.01 8.0 2.9 4.4
Lucky Friday Unit, USA(4) 4,754,970 - 8.6 5.6 2.7
Greens Creek (29.73%), USA(5) 717,665 0.13 13.8 4.0 10.4
La Camorra Unit, Venezuela(6) 252,748 0.47 - - -
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in
%) (ounces) (ounces) (tons) (tons)
- ----------------------------------------------------------------------
Proven and Probable
Lucky Friday Unit, USA - 18,135,795 111,606 39,154
Greens Creek (29.73%),
USA 257,101 32,913,002 90,919 237,187
La Camorra Unit,
Venezuela 350,468 - - -
-------- ----------- -------- --------
TOTAL 607,569 51,048,797 202,525 276,341
- ----------------------------------------------------------------------
Mineralized Material
La Camorra Unit,
Venezuela(1) 249,351 - - -
Lucky Friday Unit, USA(2) - 58,369,444 354,650 185,492
-------- ----------- -------- --------
TOTAL 249,351 58,369,444 354,650 185,492
- ----------------------------------------------------------------------
Other Resources
San Sebastian, Mexico(3) 14,289 9,186,225 33,018 49,927
Lucky Friday Unit, USA(4) - 40,817,096 268,121 129,629
Greens Creek (29.73%),
USA(5) 95,236 9,931,426 28,977 74,289
La Camorra Unit,
Venezuela(6) 118,538 - - -
-------- ----------- -------- --------
TOTAL 228,063 59,934,747 330,116 253,845
- ----------------------------------------------------------------------
(1) In situ resources, Canaima Lower and Middle veins, diluted and
factored for mining recovery and Isidora Indicated material at an 8.0
gpt cutoff, factored and diluted for mining.
(2) In situ Measured and Indicated resources from Gold Hunter and
Lucky Friday vein systems, diluted and factored for expected mining
recovery.
(3) Inferred resources, Hugh zone (Deep Francine), also includes 2.1%
copper (23,992 tons).
(4) Inferred resources, diluted to assumed mining width and adjusted
for mining recovery.
(5) Inferred resources, East, West, SW, NWW, '9A' and 200S orebodies,
factored for dilution and mining recovery.
(6) Inferred resources, diluted and factored for mining recovery.
LUCKY FRIDAY - In the third quarter of 2006, Hecla announced
growth in the silver resource at the Lucky Friday mine in northern
Idaho of approximately 27.5 million ounces, a significant increase
over last year. The silver reserve and resource at the Lucky Friday
mine now totals about 117 million ounces, which is nearly as much
silver as has been mined at Lucky Friday in its entire 60-year
history.
Exploration efforts at Lucky Friday during 2007 will continue to
focus both to the east and the west of the currently identified ore
body, and on drilling deeper, where wide, high-grade veins containing
both silver and base metals were intersected as deep as the 7900
level, a full 2,000 feet below the current mining level. Nearly all
the holes drilled below the 6800 level returned assays similar to the
already-identified resource. Additional drilling is also planned for
the 2,500-foot vertical gap between the bottom of the historic Gold
Hunter mine production area and the top of the Lucky Friday expansion
area. An additional opportunity being considered involves driving an
underground exploration drift to the old Star mine, which is owned by
Hecla and is located about two miles north of Lucky Friday's current
production area. This platform would allow exploration drilling into
an area that has never been explored, but is in close proximity to the
Lucky Friday mine infrastructure.
Said Baker, "The Lucky Friday mine is a major surprise for the
silver mining industry. Many thought the best days of the mine were in
the past. But clearly, the geologic environment deserves the
exploration investment we have made and more, which we will do this
year. We are also working to determine how to mine the ore body
faster. Given the size of the ore body, we are considering ways to
expand the current operations. Because we are confident we will find
more, we don't need to mine the current resource more than 10 to 20
years, and we see potential for new ore bodies that could use our
current infrastructure. It is probably the most exciting time for
Lucky Friday in its 60-year history."
North Idaho's Silver Valley holds exploration promise for Hecla
beyond the Lucky Friday deposit. A generative exploration program is
underway on Hecla's 40-square-mile property position surrounding the
Lucky Friday mine. It has been at least 50 years since any concerted
surface exploration work on these properties has been undertaken. A
number of historic mines operated there, including the Star mine,
which was in production from the 1930s to the 1980s. This mine is two
miles from the Lucky Friday mine and is projected to be on the same or
parallel geologic structure, with little or no modern exploration
occurring between the two mines or elsewhere on Hecla's land position.
The first step is to compile and collect the vast database of
historical exploration and production information and convert it into
digital format. Through the use of modern exploration tools such as
GIS (geographic information systems) and 3-D modeling, it's
anticipated that a number of new exploration targets will be
identified in the future.
GREENS CREEK - Hecla owns an approximate 30% interest in the
Greens Creek Unit on Admiralty Island, near Juneau, Alaska. The bulk
of the exploration effort during 2006 at Greens Creek focused on the
5250 and West Gallagher zones. Mineralization intercepted across the
Gallagher Fault added more than 2 million ounces of silver from the
West Gallagher zone to Hecla's share of the silver resource. In
addition, excellent results in the northern extension of the
high-grade silver 5250 zone have resulted in a continued focus on
exploration along that structure. Mining is currently occurring in the
5250 zone, so any additional mineralization discovered in this area
will be easily accessible and minable.
An active program of surface exploration at Greens Creek was also
conducted during 2006, although this effort was somewhat hampered by
the lack of availability of drillers, which is an industry-wide issue
at this time. Complete results from the surface drilling program are
pending. Meanwhile, an aggressive program is being proposed for both
underground exploration across the Gallagher Fault and surface
exploration where Greens Creek-like targets have been identified
elsewhere on the property. The mine is located on a 12-square-mile
land package, and good potential for discoveries outside the Greens
Creek mine area exists.
LA CAMORRA - In Venezuela, proven and probable ore reserves
decreased as the La Camorra gold mine deposit exhibits lower ore
grades as the current resource is exhausted. An underground drilling
program in the North vein system has provided intersections
identifying quartz structures. Although not of ore width, the
intersections are encouraging and suggest an economic ore shoot could
be nearby. Hecla also holds a significant land position surrounding
the La Camorra mine. Baker said, "When exploration permits are in
place, advanced exploration can proceed on a number of outstanding
greenstone belt targets on our El Dorado concessions near the La
Camorra mine."
At Mina Isidora, a 16-hole underground drill program was completed
on both the M and S veins within the mine. This program defined the
boundary of a new ore shoot outlined in the lower western part of the
M vein, with one intersection grading 40.1 gram of gold per tonne
(1.17 ounces per ton), over 0.83 meter. In addition, intersections on
the S vein included one grading 1,392 grams of gold per tonne (40.6
ounces per ton) over 1.01 meters. Elsewhere on Block B, the concession
where Mina Isidora is located, drill programs continued to identify
high-grade gold in veins and shear zone near the Isidora mine at the
Twin Shear and the Panama vein. These zones are open in all directions
and will undergo further drilling to see if they can provide future,
additional production for Mina Isidora.
SAN SEBASTIAN - Hecla's exploration efforts at San Sebastian in
central Mexico brought the total resource of the Hugh zone to 9
million ounces of silver, plus nearly 250 million pounds of zinc, lead
and copper. Engineering and exploration work is continuing on the Hugh
zone. In addition, Hecla is looking to enhance the value of the Hugh
zone deposit by discovering additional resources on its large land
position. The company now holds more than 340 square miles of
contiguous concessions in the state of Durango and has generated
several promising precious metal targets. A buried target referred to
as the "Ag anomaly" represents the culmination of a regional soil
geochemistry and geophysical survey. Drilling in 2006 intersected a
mineralized structure, suggesting the presence of an entire
mineralized structure and providing a new, two-to-three-mile-long
exploration target. Other drilling in 2006 produced ore-grade
intersections in the St. Jude vein, which runs parallel to the Hugh
zone. Although this is early stage information, results to date
indicate they could contribute to a low-cost, long-lived mine for San
Sebastian.
In addition, Hecla acquired the Rio Grande silver/gold property
during the year, located approximately 31 miles from the San Sebastian
property. An extensive drill program at Rio Grande is planned in 2007.
HOLLISTER - On February 20, 2007, Hecla Limited agreed to sell its
interest in the Hollister Development Block gold exploration project
in Nevada to its partner, Great Basin Gold, Inc., for $45 million in
cash and $15 million in stock. While Hollister is a good project, it
is not large enough to make a significant impact on Hecla's
production, revenue or income. Hecla had spent approximately $30
million over the past two years developing the underground ramp and
conducting underground exploration toward the earn-in requirement.
Hecla had a current book value for the Hollister project of less than
$1 million.
Baker said, "This transaction gives us the opportunity to focus on
projects with more opportunity for Hecla. Our properties, particularly
Lucky Friday and San Sebastian, have the potential to fundamentally
change our company as we invest in them. In addition, we improve our
position to take advantage of acquisition opportunities."
VANCOUVER OFFICE
On February 5, 2007, Hecla opened an additional corporate office
in Vancouver, British Columbia, Canada. Baker said, "Vancouver is
widely recognized as a major mining center, and certainly a hub of
exploration activity with more than 850 exploration companies
headquartered there. At Hecla, we've developed and operated many
underground and surface mines and we think that expertise can be a
good complement to any of these companies that have good properties.
We want to make it easier for them to partner with us by having a
presence in Vancouver." Property submissions and other inquiries to
Hecla's Vancouver office can be directed to Hecla's Vice President -
Exploration, Dean McDonald, at 604-682-6201, or
dmcdonald@hecla-mining.com.
FINANCIAL
Hecla maintains a strong balance sheet, with no debt, a healthy
current ratio of 3.2:1 at December 31, 2006, and $101 million in cash
and short-term investments on hand. Hecla has not hedged any of its
silver or gold production. Positively impacting fourth quarter and
full year 2006 financial results was the recognition of a $11.8
million deferred tax asset, which is just a small portion of a
potential $100 million tax asset, now fully reserved by a valuation
allowance, held by Hecla as a result of historic net loss
carryforwards. As of December 31, 2006, Hecla's pension plan assets
totaled approximately $80 million, exceeding the plan's benefit
obligations by about $25 million.
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 116-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 Web site 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)
Fourth Quarter Ended Year Ended
HIGHLIGHTS Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2006 2005 2006 2005
----------------------- -----------------------
FINANCIAL DATA
Sales:
Silver operations (1) $ 43,240 $ 18,876 $ 122,585 $ 71,152
Gold operations 27,032 11,168 94,832 39,009
---------- ---------- ---------- ----------
Total sales $ 70,272 $ 30,044 $ 217,417 $ 110,161
Gross Profit (Loss):
Silver operations (1) $ 24,679 $ 3,932 $ 58,861 $ 12,552
Gold operations 4,934 (1,001) 14,558 1,955
---------- ---------- ---------- ----------
Total gross profit $ 29,613 $ 2,931 $ 73,419 $ 14,507
Net income (loss) $ 20,512 $ (7,226) $ 69,122 $ (25,360)
Income (loss)
applicable to common
shareholders $ 20,374 $ (7,364) $ 68,570 $ (25,912)
Basic income (loss)
per common share $ 0.17 $ (0.06) $ 0.57 $ (0.22)
Cash flow provided by
operating activities
before exploration
and pre-development
expenses (2) $ 29,448 $ 10,992 $ 89,851 $ 20,284
PRODUCTION SUMMARY - TOTALS
Silver - Ounces 1,509,670 1,307,698 5,509,746 6,013,929
Gold - Ounces 51,438 41,899 179,276 140,559
Lead - Tons 6,391 4,362 22,899 21,075
Zinc - Tons 7,371 5,296 24,207 23,289
Average cost per ounce
of silver produced
(2):
Cash operating costs
($/oz.) (3.70) 1.69 (0.15) 2.83
Total cash costs
($/oz.) (3) (3.05) 1.84 0.24 2.96
Total production
costs ($/oz.) (0.75) 4.22 2.41 4.85
Average cost per ounce
of gold produced (4):
Cash operating costs
($/oz.) 293 356 327 330
Total cash costs
($/oz.) (3) 311 363 345 337
Total production
costs ($/oz.) 501 519 520 437
AVERAGE METAL PRICES
Silver - London Fix
($/oz.) 12.62 8.05 11.57 7.31
Gold - London Final
($/oz.) 614 486 604 445
Lead - LME Cash
(cents/pound) 74 48 58 44
Zinc - LME Cash
(cents/pound) 191 74 149 63
(1) Includes gold produced at silver properties, which is treated as a
by-product credit and included in the calculation of silver costs per
ounce.
(2) 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 operating activities
to non-GAAP net cash provided by operating activities before
exploration and pre-development expenses for the quarters and years
ended December 31, 2006 and 2005:
Cash flow provided by
operating activities $ 21,836 $ 4,019 $ 61,494 $ (5,913)
Add exploration 5,210 4,321 20,266 16,777
Add pre-development
expenses 2,402 2,652 8,091 9,420
---------- ---------- ---------- ----------
Net cash provided by
operating activities
before exploration
and pre-development
expenses $ 29,448 $ 10,992 $ 89,851 $ 20,284
========== ========== ========== ==========
(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, 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) 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)
Fourth Quarter
Ended Year Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Sales of products $ 70,272 $ 30,044 $217,417 $110,161
-------- -------- -------- --------
Cost of sales and other direct
production costs 28,881 19,933 105,203 75,192
Depreciation, depletion and
amortization 11,778 7,180 38,795 20,462
-------- -------- -------- --------
40,659 27,113 143,998 95,654
-------- -------- -------- --------
Gross profit 29,613 2,931 73,419 14,507
-------- -------- -------- --------
Other operating expenses:
General and administrative 5,529 2,553 15,011 10,134
Exploration 5,210 4,321 20,266 16,777
Pre-development expenses 2,402 2,652 8,091 9,420
Depreciation and
amortization 229 185 972 621
Other operating expense 4,949 400 8,160 2,281
Gain on sale of fixed assets (152) - - (4,603) - -
Provision for closed
operations and
environmental matters 1,053 101 3,556 1,618
-------- -------- -------- --------
19,220 10,212 51,453 40,851
-------- -------- -------- --------
Income (loss) from operations 10,393 (7,281) 21,966 (26,344)
-------- -------- -------- --------
Other income (expense):
Gain on sale of investments - - - - 36,416 - -
Interest and other income 1,239 241 4,047 1,869
Interest expense (56) (186) (608) (225)
-------- -------- -------- --------
1,183 55 39,855 1,644
-------- -------- -------- --------
Income (loss) from operations
before income taxes 11,576 (7,226) 61,821 (24,700)
Income tax benefit (provision) 8,936 - - 7,301 (660)
-------- -------- -------- --------
Net income (loss) 20,512 (7,226) 69,122 (25,360)
Preferred stock dividends (138) (138) (552) (552)
-------- -------- -------- --------
Income (loss) applicable to
common shareholders $ 20,374 $ (7,364) $ 68,570 $(25,912)
======== ======== ======== ========
Basic and diluted income
(loss) per common share after
preferred stock dividends $ 0.17 $ (0.06) $ 0.57 $ (0.22)
======== ======== ======== ========
Basic weighted average number
of common
shares outstanding 119,589 118,574 119,255 118,458
======== ======== ======== ========
Diluted weighted average
number of common
shares outstanding 120,172 118,574 119,702 118,458
======== ======== ======== ========
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Dec. 31, Dec. 31,
2006 2005
----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 75,878 $ 6,308
Short-term investments and securities held
for sale 25,455 40,862
Accounts and notes receivable 26,647 17,595
Inventories 22,305 25,466
Deferred taxes 11,822 - -
Other current assets 3,454 3,546
---------- ---------
Total current assets 165,561 93,777
Investments 6,213 2,233
Restricted cash and investments 21,286 20,340
Properties, plants and equipment, net 125,986 137,932
Other noncurrent assets 27,223 17,884
---------- ---------
Total assets $ 346,269 $ 272,166
========== =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 24,238 $ 16,684
Dividends payable - - 138
Accrued payroll and related benefits 15,036 10,452
Accrued taxes 5,678 2,529
Current portion of accrued reclamation and
closure costs 7,365 6,328
---------- ---------
Total current liabilities 52,317 36,131
Long-term debt - - 3,000
Accrued reclamation and closure costs 58,539 62,914
Other noncurrent liabilities 10,685 8,791
---------- ---------
Total liabilities 121,541 110,836
---------- ---------
SHAREHOLDERS' EQUITY
Preferred stock 39 39
Common stock 29,957 29,651
Capital surplus 513,785 508,104
Accumulated deficit (327,522) (396,092)
Accumulated other comprehensive income 8,900 19,746
Treasury stock (431) (118)
---------- ---------
Total shareholders' equity 224,728 161,330
---------- ---------
Total liabilities and shareholders' equity $ 346,269 $ 272,166
========== =========
Common shares outstanding at end of period 119,771 118,594
========== =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Year Ended
Dec. 31, Dec. 31,
2006 2005
--------- -----------
OPERATING ACTIVITIES
Net income (loss) $ 69,122 $ (25,360)
Noncash elements included in net income (loss):
Depreciation, depletion and amortization 39,767 21,083
Gain on sale of investments (36,416) - -
(Gain) loss on disposition of properties,
plants and equipment (4,601) 984
Provision for inventory obsolescence 1,760 555
Gain on sale of royalty interests (341) (550)
Provision for reclamation and closure costs 642 923
Benefit from deferred incomes taxes (11,822) - -
Other noncash charges 285 - -
Stock compensation 2,459 1,268
Change in assets and liabilities:
Accounts and notes receivable (12,467) 4,341
Inventories 1,401 (5,216)
Other current and noncurrent assets (1,928) (917)
Accounts payable and accrued expenses 7,554 1,543
Accrued payroll and related benefits 4,675 1,055
Accrued taxes 3,149 150
Accrued reclamation and closure costs and
other noncurrent liabilities (1,745) (5,772)
-------- ----------
Net cash provided by (used in) operating
activities 61,494 (5,913)
-------- ----------
INVESTING ACTIVITIES
Additions to properties, plants and equipment (27,345) (44,918)
Proceeds from sales of investments 57,441 58
Proceeds from disposition of properties, plants
and equipment 4,487 - -
Purchase of short-term investments (54,665) (68,694)
Maturities of short-term investments 29,210 92,128
Decrease in restricted investments (945) (551)
-------- ----------
Net cash provided by (used in) investing
activities 8,183 (21,977)
-------- ----------
FINANCING ACTIVITIES
Common stock issued under stock option plans 3,896 262
Dividends paid to preferred shareholders (690) (2,900)
Treasury share purchase (313) - -
Other financing activities - - (624)
Borrowings on debt 4,060 4,000
Repayment on debt (7,060) (1,000)
-------- ----------
Net cash used in financing activities (107) (262)
-------- ----------
Net increase (decrease) in cash and cash
equivalents 69,570 (28,152)
Cash and cash equivalents at beginning of year 6,308 34,460
-------- ----------
Cash and cash equivalents at end of year $ 75,878 $ 6,308
======== ==========
HECLA MINING COMPANY
Production Data
(dollars in thousands, except per ounce, and per ton - unaudited)
Fourth Quarter
Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2006 2005 2006 2005
------------------- ----------------------
LUCKY FRIDAY UNIT
Tons of ore milled 74,253 50,517 276,393 214,158
Mining cost per ton $ 48.87 $ 53.36 $ 52.47 $ 58.86
Milling cost per ton $ 11.47 $ 9.82 $ 12.12 $ 8.50
Ore grade milled - Silver
(oz./ton) 11.16 10.08 11.34 12.20
Silver produced (oz.) 767,296 465,424 2,873,663 2,422,537
Lead produced (tons) 4,632 2,877 16,657 14,560
Zinc produced (tons) 2,070 782 6,537 4,080
Average cost per ounce of
silver produced (1):
Cash operating costs $ 0.71 $ 6.80 $ 3.57 $ 5.26
Total cash costs (2) $ 0.79 $ 6.83 $ 3.65 $ 5.27
Total production costs $ 2.20 $ 7.55 $ 4.90 $ 5.56
Capital additions $ 2,844 $ 5,236 $ 9,409 $ 10,243
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
Tons of ore milled 61,167 49,358 217,676 213,354
Mining cost per ton $ 38.56 $ 38.10 $ 37.20 $ 33.65
Milling cost per ton $ 22.80 $ 25.53 $ 23.48 $ 22.67
Ore grade milled - Silver
(oz./ton) 15.73 17.92 15.78 18.17
Silver produced (oz.) 742,374 660,760 2,636,083 2,873,532
Gold produced (oz.) 5,531 5,036 18,713 21,631
Lead produced (tons) 1,759 1,485 6,242 6,515
Zinc produced (tons) 5,301 4,514 17,670 19,209
Average cost per ounce of
silver produced (1):
Cash operating costs $ (8.27) $ (0.76) $ (4.20) $ 1.30
Total cash costs (2) $ (7.02) $ (0.66) $ (3.47) $ 1.46
Total production costs $ (3.80) $ 2.18 $ (0.30) $ 4.02
Capital additions $ 1,754 $ 2,314 $ 7,785 $ 4,964
LA CAMORRA UNIT
Tons of ore processed 63,434 50,064 236,460 191,900
Mining cost per ton $ 149.88 $ 93.21 $ 130.08 $ 71.61
Milling cost per ton $ 20.83 $ 18.02 $ 18.39 $ 14.14
Ore grade crushed - Gold
(oz./ton) 0.751 0.637 0.708 0.558
Gold produced (oz.) 45,907 30,418 160,563 101,474
Average cost per ounce of
gold produced:
Cash operating costs $ 293 $ 356 $ 327 $ 330
Total cash costs (2) $ 311 $ 363 $ 345 $ 337
Total production costs $ 501 $ 519 $ 520 $ 437
Capital additions $ 2,643 $ 5,468 $ 10,429 $ 28,817
(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 Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2006 2005 2006 2005
-------- --------- ---------- --------
GOLD OPERATIONS
Total cash costs $13,677 $10,533 $53,521 $32,648
Divided by gold ounces produced 44 29 155 97
-------- --------- ---------- --------
Total cash cost per ounce
produced $311 $363 $345 $337
======== ========= ========== ========
Reconciliation to GAAP (2):
Total cash costs $13,677 $10,533 $53,521 $32,648
Depreciation, depletion and
amortization 8,353 4,495 27,039 9,622
Treatment & freight costs (1,656) (1,006) (5,783) (2,612)
By-product credits 1,232 591 3,212 1,914
Change in product inventory 566 (2,531) 2,185 (4,605)
Reclamation, severance and
other costs (73) 87 100 87
-------- --------- ---------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $22,099 $12,169 $80,274 $37,054
======== ========= ========== ========
SILVER OPERATIONS
Total cash costs $(4,599) $2,304 $1,329 $16,807
Divided by silver ounces
produced 1,510 1,255 5,510 5,677
-------- --------- ---------- --------
Total cash cost per ounce
produced $(3.05) $1.84 $0.24 $2.96
======== ========= ========== ========
Reconciliation to GAAP:
Total cash costs $(4,599) $2,304 $1,329 $16,807
Depreciation, depletion and
amortization 3,426 2,685 11,757 10,840
Treatment & freight costs (12,853) (4,228) (37,046) (22,424)
By-product credits 31,982 14,150 86,216 50,899
Change in product inventory 560 (1,454) 1,278 (939)
Strike-related costs - - - - - - 1,341
Care and maintenance-related
costs - - 681 - - 681
Reclamation, severance and
other costs 44 806 190 1,395
-------- --------- ---------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $18,560 $14,944 $63,724 $ 58,600
======== ========= ========== ========
GREENS CREEK UNIT (Reflects
Hecla's 29.73% share)
Total cash costs $(5,209) $(433) $(9,157) $4,190
Divided by silver ounces
produced 742 661 2,636 2,874
-------- --------- ---------- --------
Total cash cost per ounce
produced $(7.02) $(0.66) $(3.47) $1.46
======== ========= ========== ========
Reconciliation to GAAP:
Total cash costs $(5,209) $(433) $(9,157) $4,190
Depreciation, depletion and
amortization 2,350 1,713 8,192 7,067
Treatment & freight costs (7,713) (2,708) (21,686) (15,090)
By-product credits 19,896 8,163 54,081 30,200
Change in product inventory 640 (2,605) 718 (330)
Reclamation, severance and
other costs 38 163 170 286
-------- --------- ---------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $10,002 $4,293 $32,318 $26,323
======== ========= ========== ========
LUCKY FRIDAY UNIT
Total cash costs $610 $2,814 $10,486 $10,986
Divided by silver ounces
produced (3) 768 412 2,874 2,085
-------- --------- ---------- --------
Total cash cost per ounce
produced $0.79 $6.83 $3.65 $5.27
======== ========= ========== ========
Reconciliation to GAAP:
Total cash costs $610 $2,814 $10,486 $10,986
Depreciation, depletion and
amortization 1,076 292 3,565 593
Treatment & freight costs (5,140) (1,453) (15,360) (7,006)
By-product credits 12,086 2,970 32,135 12,962
Change in product inventory (80) 550 (345) 5
Reclamation, severance and
other costs 6 3 20 13
-------- --------- ---------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $8,558 $5,176 $30,501 $17,553
======== ========= ========== ========
RECONCILIATION TO GAAP, ALL
OPERATIONS
Total cash costs $9,078 $ 12,837 $ 54,850 $49,455
Depreciation, depletion and
amortization 11,779 7,180 38,796 20,462
Treatment & freight costs (14,509) (5,234) (42,829) (25,036)
By-product credits 33,214 14,741 89,428 52,813
Strike-related costs (4) - - - - - - 1,341
Care and maintenance-related
costs - - 681 - - 681
Change in product inventory (3) 1,126 (3,985) 3,463 (5,544)
Reclamation, severance and
other costs (29) 893 290 1,482
-------- --------- ---------- --------
Costs of sales and other direct
production costs and
depreciation, depletion and
amortization (GAAP) $40,659 $27,113 $143,998 $95,654
======== ========= ========== ========
(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 is treated as a by-product credit and included in the
calculation of gold costs per ounce.
(3) Ounces mined from the 5900 level development project at Lucky
Friday are not included in the determination of total cash costs.
During the fourth quarter and year ended December 31, 2005,
approximately 53,000 ounces and 338,000 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.
(4) For most of the second half of 2005, the mill that processes ore
from San Sebastian was closed due to a strike by mill employees.
During the year ended December 31, 2005, these strike-related costs
of sales and other direct production costs of $1.3 million were not
included in the determination of total cash costs for silver
operations.
CONTACT: Hecla Mining Company
Vicki Veltkamp, vice president - investor and public
relations
208-769-4128