Exhibit 99.1
Hecla Reports Second Quarter Income and Record Low Silver Cash Costs
Per Ounce
For the Period Ended June 30, 2007
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Aug. 8, 2007--Hecla Mining
Company (NYSE:HL) today reported another quarter of record low silver
cash costs per ounce and the second highest recorded quarterly revenue
in the company's 116-year history. During the second quarter of 2007,
the company recorded net income of $24.3 million, or 20 cents per
common share, compared to net income of $9.2 million, or 8 cents per
common share, during the second quarter a year ago. Second quarter
2007 results included several significant items outside of gross
profit: a pre-tax gain of $63.8 million on the sale of the Hollister
Development Block gold exploration project, a $44.7 million increase
in the accrual for potential environmental liabilities, a tax benefit
from an increase in deferred tax assets of $3.2 million, and a $6.1
million charge for foreign exchange transactions. Second quarter 2006
results included a $4.4 million pre-tax gain on the sale of a gold
exploration property in Mexico. For the first six months of 2007,
Hecla recorded net income of $32.5 million, or 27 cents per common
share, compared to net income of $47.6 million, or 40 cents per common
share, in the first half of 2006.
Hecla Mining Company President and Chief Executive Officer
Phillips S. Baker, Jr., said, "Hecla realized value in the second
quarter through our lowest silver cash costs ever and with the sale of
Hollister. Hecla is also creating new value with its exploration
success in Mexico, the work being done on our extensive land package
in the Silver Valley and the progress on the extension and expansion
of Lucky Friday. The accrual for potential environmental liabilities
is for the long-term work relating to historic mining activities,
which we don't expect to impact our current plans. With these results,
Hecla is well-positioned to both grow our asset base and acquire new
assets."
Highlights for the second quarter and first half of 2007 include:
-- Lowest average total cash cost per ounce of silver in the
company's history at negative $1.98 per ounce
-- Second-best quarterly sales revenue on record
-- Significant exploration success in Alaska, Idaho and Mexico
-- Double-digit percentage increases in metals prices compared to
the first half of 2006
-- Progress on pre-feasibility study for Lucky Friday expansion
plans
-- $63.8 million pre-tax gain on the sale of the Hollister
Development Block gold project
-- $44.7 million increase in the accrual for historic
environmental liabilities in Idaho
-- No debt and a healthy balance sheet that includes a current
ratio of 5.7:1 at June 30, 2007
METALS PRICES
Prices for the metals produced by Hecla continued to rise during
the second quarter of 2007, resulting in first half 2007 average
prices being significantly higher than in the same period a year ago.
The average price of silver rose 21%, from $10.99 per ounce last year
to $13.33 per ounce in the first six months of this year. The price of
lead, an important by-product at Hecla's silver operations, increased
70% from a year ago to a six-month average price of 90 cents per
pound. The lead price has continued to improve, and recently has
approached $1.50 per pound. To put this in perspective in terms of
value to Hecla, at current production rates the estimated impact of a
50 cents-per-pound increase in the price of lead over a one-year
period would positively impact Hecla's bottom line by nearly $20
million. Average zinc and gold prices increased 29% and 12%,
respectively, from the first half of 2006 to the first half of 2007,
with the zinc price averaging $1.62 per pound and the gold price
averaging $659 per ounce in the first half of this year. Credits from
by-product metals at the silver operations lower the cash cost per
ounce of silver.
Baker said, "Hecla is positioned to take advantage of the best
base and precious metals prices in 20 years, and in real terms -
probably the best prices ever. While there may be some volatility in
those prices, strong global growth, particularly in the developing
world and lack of near-term supply, is positive for all our metals,
especially silver, lead and zinc."
OPERATIONS
Hecla produced 1.5 million ounces of silver in the second quarter
at an average total cash cost of negative $1.98 per ounce. That's an
18% increase in production and a $3.96 per ounce improvement in cash
costs compared to the same period a year ago. For the first six months
of 2007, silver production was more than 3 million ounces (22% more
than the first six months of 2006) at an average total cash cost of
negative $1.54 per ounce. The average total cash cost per ounce for
the first six months decreased by $3.55 per ounce compared to the same
period last year, primarily due to favorable by-product metals price
increases.
Gold production in the second quarter and first half of 2007
decreased from the La Camorra unit, mainly due to the temporary
suspension of operations at Mina Isidora, which is now back in
operation. For the quarter, Hecla produced 26,043 ounces of gold,
21,546 ounces of which were mined in Venezuela at an average total
cash cost of $577 per ounce. This compares to 42,234 ounces of gold
produced in the second quarter of 2006 at an average total cash cost
of $340 per ounce. In the first six months of this year, Hecla
produced 62,373 ounces of gold at an average total cash cost per ounce
of $514.
As a result of first half performance, Hecla has revised its
guidance of estimated total average silver cash cost for the year
downward to negative 25 cents per ounce (from a previous estimate of
less than 50 cents per ounce). The 2007 silver production estimate
remains unchanged, in the range of 6 million ounces. On the gold side,
a new estimate for the range of gold production in 2007 is 115,000 to
120,000 ounces (from a previous estimate of 128,000 ounces) at a total
average cash cost of $440 to $470 per ounce.
Lucky Friday - The Lucky Friday unit in northern Idaho had its
lowest total average cash cost of silver ever recorded at the mine
during the second quarter, at negative 72 cents per ounce. For the
first six months of 2007, the average total cash cost at the Lucky
Friday mine was a record low 56 cents per ounce. These low costs
include the profit sharing and silver-price premium payments made to
Lucky Friday hourly employees during the quarter.
The average grade of silver ore milled at the unit was 10.7 ounces
of silver per ton in the first half of the year, compared to 11.66
ounces per ton during the same period a year ago. The lower grade is
substantially related to the company's decision, in response to high
zinc prices, to continue mining some stopes wider in order to produce
more zinc. The zinc price averaged 29% higher in the first half of
2007 (at $1.62 average per pound) than last year. Mining wider stopes
to produce more zinc results in better economics for the mine, but
lowers the silver grade.
The ongoing Lucky Friday mill upgrade project will be at peak
construction activity in August. The project is scheduled to be
completed in the fourth quarter 2007, but is already resulting in
further efficiencies and better metal recoveries.
Detailed engineering work has begun on an internal shaft, or
winze, that has been designated as the Lucky Friday 4 Shaft. The basic
engineering contract for the 4 Shaft has been awarded to Nordmin
Engineering of Thunder Bay, Ontario. The concept is for the internal
shaft to be collared on the 4900 level and then sunk to the 6500
level. A bulkhead would be installed in the bottom of the shaft so the
shaft depth could be extended to approximately the 8000 level as
development and production progresses from the 6500 station. The 4
Shaft project is expected to be economically viable on its own by
supporting ongoing production at current levels, as well as be a key
component to any expansion effort. Excavation for 4 Shaft construction
is anticipated to start in the first half of 2008.
The mine expansion pre-feasibility study is underway, prompted by
Lucky Friday's large identified silver resource and reserve of close
to 120 million ounces. The expansion project would consist of an
additional surface shaft, an internal underground shaft and a new
mill. The mining method to be used and the production rate analysis
are critical components of the project. In-fill drilling consisting of
45 diamond drill holes totaling 24,000 feet will investigate
intermediate veins between the 4900 and 5900 levels. Information from
this program will determine a mining method to increase production,
lower extraction costs and control dilution of intermediate veins.
In-fill drilling is approximately 50% complete and the first phase of
resource analysis is expected to be completed in the third quarter.
Greens Creek - Like the Lucky Friday unit, the Greens Creek silver
mine in Alaska continues to enjoy the benefit of high metals prices,
which have driven the total average cash cost per ounce of silver to a
negative $3.45 in the second quarter of 2007, and a negative $4.04 per
ounce of silver for the first six months of 2007. The silver grade has
increased considerably at Greens Creek in 2007, with an average grade
of 17.23 ounces of silver per ton in the first six months, compared to
14.63 ounces per ton in the same period last year. Hecla holds an
approximate 30% interest in the Greens Creek operation, which is
managed by a subsidiary of Rio Tinto. Greens Creek continues to
deliver excellent results despite increased costs related to
attracting and retaining skilled labor. Management is addressing the
issue by using contracted labor and is developing additional
strategies to attract and train employees.
La Camorra - The La Camorra gold unit in eastern Venezuela is
spread over two locations: the La Camorra mill, where all of Hecla's
ore produced in the country is processed, and Mina Isidora, located
about 100 kilometers to the north. Gold production has now
transitioned completely from the La Camorra deposit to the Mina
Isidora deposit. A road blockade in early May disrupted access to Mina
Isidora and impacted gold production. The issues with the community
and a small number of employees have been resolved, which primarily
consisted of Hecla continuing its program of improving local
infrastructure. The mine went back into production in mid-July, with
gold production expected in the first half of August.
EXPLORATION
Exploration during the second quarter of 2007 showed significant
progress on Hecla's programs in the Silver Valley of northern Idaho,
in Mexico, and at Greens Creek in Alaska.
Silver Valley - One hundred years of geologic information on
Hecla's property in the Coeur d'Alene Mining District's Silver Valley
is being digitized and developed into 3D models of past producing
mines and related structural and geochemical controls. The computer 3D
models have been completed on 10 major historic producing mines,
showing the spatial relationship between those mines and regional
structures and mineral trends. Baker said, "We are leveraging our long
and extensive knowledge of the Silver Valley into a multi-disciplinary
exploration program that is defining new drill targets. Even though
more than 300 million ounces of silver have been mined from Hecla's
land holdings within this valley, there has really been very little
modern exploration. Our people have made some major advances in
compiling this vast database of historic information, aimed at better
targeting new exploration that could potentially turn into the next
Lucky Friday." In addition to Hecla's own property, the company has
acquired an option to evaluate the Vindicator claims located
immediately east of the Lucky Friday mine, and exploration data is
being compiled.
Lucky Friday - As reported in the first quarter of 2007, a
significant drill intercept into vein material was encountered in the
"Gap area" above the current mining area and in line with the historic
Gold Hunter production area near the surface. Surface drilling will
begin next month near the upper Gold Hunter structure to define the
upper extent of the "Gap" mineralization and provide additional
structural information for an extensive deep drilling program.
Mexico - Exploration at the San Sebastian and Rio Grande
properties in Mexico has involved extensive surface mapping,
geochemical and geophysical programs in the first half of the year,
which have identified significant regional trends within each
property. In the second quarter, there has been an increasing
proportion of the programs directed toward drilling and this emphasis
on drilling in Mexico will increase further in the third and fourth
quarters.
At the Rio Grande property, located approximately 30 miles south
of Hecla's large San Sebastian holdings in central Mexico near
Durango, initial drilling has turned up some excellent intercepts.
According to Baker, "We're excited about the Rio Grande property
because we've just begun drilling and we are already getting some
great results. It's too early to call it a resource as much work
remains to be done on all six veins, but it's looking very good."
During the second quarter, 3,559 meters of core drilling in 18 holes
on six veins were completed at Rio Grande. Positive drilling results
were obtained from five of the six veins, with significant intercepts
including intervals of 0.85 meters grading 6,120.8 grams per tonne
silver (178.55 ounces per ton silver) and 1.1 meters grading 296.6
grams per tonne silver (8.66 ounces per ton silver). In Rio Grande's
Concepcion vein, there are interesting gold abundances as well,
including intervals up to 5 grams of gold per tonne (0.15 ounce per
ton silver). Results from additional intercepts are included in the
table below. These veins are open in various directions and will be
the focus of a major follow-up drill program for the third quarter.
Additional Rio Grande Intercepts
- ----------------------------------------------------------------------
VEIN DRILL HOLE INTERVAL (m) Ag (g/t) Ag (opt) Au (g/t) Au (opt)
- --------------------- ------------ -------- -------- -------- --------
- --------------------- ------------ -------- -------- -------- --------
Le Soledad RG-04 1.10 296.9 8.66 0.09 0.00
- --------------------- ------------ -------- -------- -------- --------
RG-06 2.54 65.3 1.90 0.32 0.01
---------- ------------ -------- -------- -------- --------
12.10 59.7 1.74 0.08 0.00
------------ -------- -------- -------- --------
Arcangeles RG-07 4.75 113.4 3.31 0.06 0.00
------------ -------- -------- -------- --------
13.80 32.6 0.95 0.03 0.00
------------ -------- -------- -------- --------
13.20 26.1 0.76 0.16 0.00
- --------------------- ------------ -------- -------- -------- --------
San Martin RG-10 0.85 6,120.8 178.55 1.29 0.04
- --------------------- ------------ -------- -------- -------- --------
Sacramento RG-13 1.00 96.4 2.81 0.07 0.00
- --------------------- ------------ -------- -------- -------- --------
RG-14 2.20 69.5 2.03 0.62 0.02
------------ -------- -------- -------- --------
1.35 57.6 1.68 0.18 0.01
---------- ------------ -------- -------- -------- --------
Concepcion RG-15 2.68 157.6 4.60 2.51 0.07
------------ -------- -------- -------- --------
0.98 263.7 7.69 5.16 0.15
---------- ------------ -------- -------- -------- --------
RG-16 1.35 140.3 4.09 3.08 0.09
---------- ------------ -------- -------- -------- --------
RG-18 1.05 245 7.15 5.34 0.16
- --------------------- ------------ -------- -------- -------- --------
Drilling on the San Sebastian property has identified narrow,
high-grade silver zones ranging from 15 to 225 grams per tonne silver
(0.44 to 6.56 ounces per ton silver) in veins in the St. Jude area,
just east of the Hugh Zone. Additional drilling is required to
identify a resource in this area.
Also on San Sebastian, drilling was initiated during the second
quarter at the La Roca prospect. La Roca represents a major district
with a series of historic mercury mines that are concentrated along
three distinct regional trends. The significance of the mines is that
they typically represent the upper expression of precious metal-rich
epithermal systems. Early drilling has intersected mineralized
breccias and veins and is the beginning of an extensive drill program
that will carry on for the rest of the year. Other geochemistry and
geophysics programs continue to identify additional targets on the
340-square-mile San Sebastian property, located in the center of
Mexico's prolific silver belt.
Greens Creek - Second quarter exploration emphasis was on
definition drilling of the 5250 North extension, where some
spectacular intersections have been recorded with intervals exceeding
50 ounces of silver per ton and combined lead and zinc grades of 20%.
Although structural interpretation is challenging, the zone appears
continuous throughout the 800 feet of drilled strike length and
appears to continue along a shallow-dipping structure to the west.
Near-record snowfalls resulted in a late start this summer to the
surface drilling program at Greens Creek in Alaska, but drilling on
the Gallagher zone from surface has begun.
ENVIRONMENTAL
In the second quarter of 2007, Hecla completed a reassessment of
its potential liabilities for remediation of the Coeur d'Alene Basin
of northern Idaho under pending Federal Court litigation and for its
remaining liabilities under the 1994 Consent Decree for the Bunker
Hill superfund site, and recorded an additional accrual of $44.7
million. Specifically, Hecla finalized a proposed multi-year cleanup
plan for the upper portion of the Coeur d'Alene Basin, together with
an estimate of related costs to implement the plan. Based on that work
and a reassessment of its other potential liabilities in the Basin,
the company increased its accrual for remediation in the Basin by $42
million and increased the estimated potential liability to a range
between $65.6 million and $93.6 million from the previous disclosure
of $23.6 million to $72 million. The company continues to believe that
it is not possible to determine that any one cost estimate is more
probable than the other; thus under the accounting guidance, it
continues to accrue to the lower end of the range. The company also
accrued an additional $2.7 million (for a total of $4.3 million) for
the remaining Bunker Hill superfund site work. Baker said, "We don't
believe that these liabilities will have a material impact on our
current or future operating or growth plans, because we expect
expenditures associated with any cleanup program would be spread out
over 20 to 30 years. It is important for our shareholders to
understand that the current environmental liabilities are the result
of historic mining activities in the district that were both legal and
consistent with industry practices at the time."
HOLLISTER SALE
In April 2007, Hecla completed the sale of its interest in the
Hollister Development Block gold exploration project in Nevada to the
partner in that project, Great Basin Gold, Inc., for $45 million in
cash and 7.9 million shares of Great Basin Gold common stock. As a
result of the sale, Hecla recognized a pre-tax gain of $63.8 million
in the second quarter of 2007.
FINANCIAL
Hecla's financial position is strong. The company has no debt and
has cash, cash equivalents and short-term investments totaling more
than $180 million at the end of the second quarter. The balance sheet
is extremely healthy with a current ratio of 5.7:1 at the end of the
second quarter.
In the second quarter of 2007, Hecla recognized net foreign
exchange losses of $6.1 million, primarily resulting from the
conversion of cash from Venezuelan currency to US dollars. The
conversion must be based on the official exchange rate of 2,150
bolivares to US$1.00, while the parallel market rate is closer to
4,200 bolivares to US$1.00.
OTHER
Hecla's Annual Meeting of Shareholders was conducted during the
second quarter, and Ted Crumley, who is Chairman of the Board, was
reelected to the Board of Directors for a three-year term. In
addition, shareholders elected two new directors: Charles B. Stanley,
Executive Vice President and Director of Questar Corporation; and
Terry V. Rogers, retired Senior Vice President and Chief Operating
Officer of Cameco Corporation.
In July, Hecla announced the appointment of Don Poirier to the
position of Vice President - Corporate Development. Poirier will be
instrumental in moving the company's growth program forward. Hecla's
merger and acquisition program is focused on the Silver Valley in
Idaho, Mexico, large silver projects and underground gold projects.
Baker said, "We are not limiting ourselves geographically on the
silver side, but will look anywhere in the world for a deposit with
100 million silver equivalent ounces or more. For gold, we are
concentrating on North America and Australia and favor underground
operations, in which Hecla has specific expertise and a competitive
advantage."
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
producer of silver and gold. 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)
Second Quarter Ended Six Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
HIGHLIGHTS 2007 2006 2007 2006
FINANCIAL DATA
Sales:
Silver operations (1) $ 44,431 $ 25,875 $ 77,531 $ 50,090
Gold operations 15,669 31,066 35,714 46,641
--------- --------- --------- ---------
Total sales $ 60,100 $ 56,941 $ 113,245 $ 96,731
========= ========= ========= =========
Gross Profit:
Silver operations (1) $ 23,965 $ 11,835 $ 39,983 $ 21,821
Gold operations (5,507) 5,866 (5,103) 7,613
--------- --------- --------- ---------
Total gross profit $ 18,458 $ 17,701 $ 34,880 $ 29,434
========= ========= ========= =========
Net income $ 24,337 $ 9,215 $ 32,480 $ 47,609
Income applicable to
common shareholders $ 24,199 $ 9,077 $ 32,204 $ 47,333
Basic income per common
share $ 0.20 $ 0.08 $ 0.27 $ 0.40
Net cash provided by
operating activities
before exploration and
pre-development
expenses (2) $ 11,814 $ 36,477 $ 33,295 $ 41,056
PRODUCTION SUMMARY -
TOTALS
Silver - Ounces 1,492,740 1,262,875 3,049,781 2,503,761
Gold - Ounces 26,043 42,234 62,373 84,653
Lead - Tons 6,289 5,288 12,590 10,497
Zinc - Tons 6,012 5,063 12,658 10,632
Average cost per ounce
of silver produced (1):
Cash operating costs
($/oz.) (2.60) 1.65 (2.04) 1.72
Total cash costs
($/oz.) (3) (1.98) 1.98 (1.54) 2.01
Total production costs
($/oz.) 0.11 3.44 0.51 3.54
Average cost per ounce
of gold produced (4):
Cash operating costs
($/oz.) 556 332 495 340
Total cash costs
($/oz.) (3) 577 340 514 348
Total production costs
($/oz.) 777 502 688 505
AVERAGE METAL PRICES
Silver - London Fix
($/oz.) 13.34 12.28 13.33 10.99
Gold - London Final
($/oz.) 667 627 659 591
Lead - LME Cash
($/pound) 0.99 0.50 0.90 0.53
Zinc - LME Cash
($/pound) 1.66 1.49 1.62 1.26
(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) 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 six
months ended June 30, 2007 and 2006:
Cash flow provided by
operating activities $ 8,018 $ 28,912 $ 24,383 $ 28,609
Add exploration 3,821 5,610 7,885 8,998
Add pre-development
expenses (25) 1,955 1,027 3,449
--------- --------- --------- ---------
Net cash provided by
operating activities
before exploration and
pre-development
expenses $ 11,814 $ 36,477 $ 33,295 $ 41,056
========= ========= ========= =========
(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 six months ended June 30, 2007 and 2006,
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)
Second Quarter Ended Six Months Ended
-------------------- -------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
Sales of products $ 60,100 $ 56,941 $113,245 $ 96,731
------- ------- ------- -------
Cost of sales and other
direct production costs 34,138 30,716 63,024 50,626
Depreciation, depletion and
amortization 7,504 8,524 15,341 16,671
------- ------- ------- -------
41,642 39,240 78,365 67,297
------- ------- ------- -------
Gross profit 18,458 17,701 34,880 29,434
------- ------- ------- -------
Other operating expenses
General and administrative 4,452 3,781 7,636 6,881
Exploration 3,821 5,610 7,885 8,998
Pre-development expenses 76 1,955 1,027 3,449
Depreciation and
amortization 44 238 224 547
Other operating expenses 1,456 983 1,298 1,194
Gain on sale of properties,
plants and equipment (63,798) (4,420) (63,827) (4,420)
Provision for closed
operations and
environmental matters 45,750 882 46,403 1,597
------- ------- ------- -------
(8,199) 9,029 646 18,246
------- ------- ------- -------
Income from operations 26,657 8,672 34,234 11,188
------- ------- ------- -------
Other income (expense):
Gain on sale of investments -- (6) -- 36,416
Interest and other income 2,209 1,084 3,658 1,691
Interest expense (369) (236) (443) (363)
Net foreign exchange loss (6,103) (41) (6,123) (70)
------- ------- ------- -------
(4,263) 801 (2,908) 37,674
------- ------- ------- -------
Income from operations before
income taxes 22,394 9,473 31,326 48,862
Income tax (provision)
benefit 1,943 (258) 1,154 (1,253)
------- ------- ------- -------
Net income 24,337 9,215 32,480 47,609
Preferred stock dividends (138) (138) (276) (276)
------- ------- ------- -------
Income applicable to common
shareholders $ 24,199 $ 9,077 $ 32,204 $ 47,333
======= ======= ======= =======
Basic and diluted income per
common share after preferred
dividends $ 0.20 $ 0.08 $ 0.27 $ 0.40
======= ======= ======= =======
Basic weighted average number
of common shares outstanding 120,307 119,266 120,119 118,999
======= ======= ======= =======
Diluted weighted average
number of common shares
outstanding 120,818 119,673 120,628 119,427
======= ======= ======= =======
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
June 30, 2007 Dec. 31, 2006
ASSETS
Current assets:
Cash and cash equivalents $ 96,927 $ 75,878
Short-term investments and securities
held for sale 83,713 25,455
Accounts and notes receivable 29,796 26,647
Inventories 15,600 22,305
Deferred taxes 15,029 11,822
Other current assets 5,111 3,454
-------- --------
Total current assets 246,176 165,561
Investments 9,072 6,213
Restricted cash and investments 16,079 21,286
Properties, plants and equipment, net 118,126 125,986
Other noncurrent assets 24,290 27,223
-------- --------
Total assets $ 413,743 $ 346,269
======== ========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 16,262 $ 24,238
Accrued payroll and related benefits 13,913 15,036
Accrued taxes 3,802 5,678
Current portion of accrued reclamation
and closure costs 9,349 7,365
-------- --------
Total current liabilities 43,326 52,317
Accrued reclamation and closure costs 99,035 58,539
Other noncurrent liabilities 11,200 10,685
-------- --------
Total liabilities 153,561 121,541
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock 39 39
Common stock 30,157 29,957
Capital surplus 519,292 513,785
Accumulated deficit (295,318) (327,522)
Accumulated other comprehensive income 6,652 8,900
Treasury stock (640) (431)
-------- --------
Total shareholders' equity 260,182 224,728
-------- --------
Total liabilities and shareholders' equity $ 413,743 $ 346,269
======== ========
Common shares outstanding at end of period 120,420 119,771
======== ========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Six Months Ended
---------------------------
June 30, 2007 June 30, 2006
OPERATING ACTIVITIES
Net income $ 32,480 $ 47,609
Noncash elements included in net income:
Depreciation, depletion and amortization 15,569 17,218
Gain on sale of investments -- (36,416)
Gain on disposition of properties,
plants and equipment (63,827) (4,420)
Gain on sale of royalty interests -- (341)
Provision for reclamation and closure
costs 44,867 198
Provision for inventory obsolescence 612 1,326
Stock compensation 2,778 1,767
Provision for deferred taxes (3,207) --
Other non-cash charges, net -- 186
Change in assets and liabilities:
Accounts and notes receivable (3,043) 1,277
Inventories 5,836 1,772
Other current and noncurrent assets 3,270 (3,171)
Accounts payable and accrued expenses (6,941) 1,915
Accrued payroll and related benefits (938) 446
Accrued taxes (1,873) 476
Accrued reclamation and closure costs
and other noncurrent liabilities (1,200) (1,233)
------- -------
Net cash provided by operating activities 24,383 28,609
------- -------
INVESTING ACTIVITIES
Additions to properties, plants and
equipment (16,329) (14,186)
Proceeds from sale of investments -- 57,441
Proceeds from disposition of properties,
plants and equipment 45,000 4,368
Purchase of equity securities (181) --
Purchase of short-term investments and
securities held for sale (62,825) (37,210)
Maturities of short-term investments and
securities held for sale 25,345 22,010
Decrease (increase) in restricted cash 3,213 (515)
------- -------
Net cash provided by (used in) investing
activities (5,777) 31,908
------- -------
FINANCING ACTIVITIES
Common stock issued under stock option
plans 2,927 2,331
Dividends paid to preferred shareholders (276) (276)
Purchase of treasury shares (208) (313)
Borrowings on debt -- 4,060
Repayments of debt -- (7,060)
------- -------
Net cash provided by (used in) financing
activities 2,443 (1,258)
------- -------
Net increase in cash and cash equivalents 21,049 59,259
Cash and cash equivalents at beginning of
period 75,878 6,308
------- -------
Cash and cash equivalents at end of period $ 96,927 $ 65,567
======= =======
HECLA MINING COMPANY
Production Data
Second Quarter Ended Six Months Ended
-------------------- -----------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
LUCKY FRIDAY UNIT
Tons of ore processed 83,571 65,703 168,419 129,427
Mining cost per ton $ 51.76 $ 51.89 $ 51.55 $ 51.51
Milling cost per ton $ 11.03 $ 12.07 $ 10.84 $ 11.73
Ore grade milled - Silver
(oz./ton) 10.45 12.29 10.70 11.66
Silver produced (oz.) 804,117 742,125 1,656,230 1,368,917
Lead produced (tons) 4,852 4,092 9,598 7,686
Zinc produced (tons) 2,060 1,374 4,105 2,406
Average cost per ounce of
silver produced (1):
Cash operating costs $ (1.00) $ 4.85 $ 0.30 $ 5.06
Total cash costs (2) $ (0.72) $ 4.97 $ 0.56 $ 5.13
Total production costs $ 0.50 $ 6.08 $ 1.73 $ 6.22
Capital additions (in
thousands) $ 5,124 $ 2,406 $ 8,060 $ 4,507
GREENS CREEK UNIT
(Reflects Hecla's 29.73%
share)
Tons of ore milled 48,466 51,506 102,820 103,394
Mining cost per ton $ 54.11 $ 35.72 $ 44.83 $ 35.12
Milling cost per ton $ 33.19 $ 25.84 $ 29.72 $ 24.81
Ore grade milled - Silver
(oz./ton) 18.19 13.73 17.23 14.63
Silver produced (oz.) 688,623 520,750 1,393,551 1,134,844
Gold produced (oz.) 4,497 3,750 9,349 8,478
Lead produced (tons) 1,437 1,196 2,992 2,811
Zinc produced (tons) 3,951 3,689 8,553 8,226
Average cost per ounce of
silver produced (1):
Cash operating costs $ (4.46) $ (2.92) $ (4.81) $ (2.30)
Total cash costs (2) $ (3.45) $ (2.28) $ (4.04) $ (1.74)
Total production costs $ (0.34) $ 1.22 $ (0.95) $ 1.62
Capital additions (in
thousands) $ 2,070 $ 1,966 $ 3,981 $ 3,953
LA CAMORRA UNIT
Tons of ore processed 37,430 60,832 98,059 115,379
Mining cost per ton $ 176 $ 124.48 $ 158 $ 123.87
Milling cost per ton $ 38 $ 15.59 $ 29 $ 16.06
Ore grade milled - Gold
(oz./ton) 0.758 0.699 0.558 0.700
Gold produced (oz.) 21,546 38,399 53,025 76,019
Average cost per ounce of
gold produced:
Cash operating costs $ 556 $ 332 $ 495 $ 340
Total cash costs (2) $ 577 $ 340 $ 514 $ 348
Total production costs $ 777 $ 502 $ 688 $ 505
Capital additions (in
thousands) $ 1,118 $ 1,847 $ 3,980 $ 5,552
(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 Six Months Ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
GOLD OPERATIONS
Total cash costs $10,972 $ 12,562 $ 25,724 $ 25,771
Divided by gold ounces produced 19 37 50 74
------- -------- -------- --------
Total cash cost per ounce
produced $ 577 $ 340 $ 514 $ 348
======= ======== ======== ========
Reconciliation to GAAP (2):
Total cash costs $10,972 $ 12,562 $ 25,724 $ 25,771
Depreciation, depletion and
amortization 4,427 5,925 9,197 11,456
Treatment and freight costs (123) (2,088) (1,500) (3,682)
By-product credits 1,252 1,015 1,729 1,425
Change in product inventory 759 7,822 1,464 4,111
Reduction in labor cost (3) 949 -- 1,280 --
Shutdown-related costs at
Mina Isidora (4) 2,708 -- 2,708 --
Reclamation, severance and
other costs 232 (37) 215 (53)
------- -------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $21,176 $ 25,199 $ 40,817 $ 39,028
======= ======== ======== ========
SILVER OPERATIONS
Total cash costs $(2,950) $ 2,503 $ (4,699) $ 5,043
Divided by silver ounces
produced 1,493 1,263 3,050 2,504
------- -------- -------- --------
Total cash cost per ounce
produced $ (1.98) $ 1.98 $ (1.54) $ 2.01
======= ======== ======== ========
Reconciliation to GAAP:
Total cash costs $(2,950) $ 2,503 $ (4,699) $ 5,043
Depreciation, depletion and
amortization 3,078 2,599 6,145 5,215
Treatment and freight costs (7,647) (8,063) (16,108) (15,016)
By-product credits 26,694 17,387 51,526 32,714
Change in product inventory 1,241 (441) 589 212
Reclamation, severance and
other costs 50 56 95 101
------- -------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $20,466 $ 14,041 $ 37,548 $ 28,269
======= ======== ======== ========
GREENS CREEK UNIT (Reflects
Hecla's 29.73% share)
Total cash costs $(2,375) $ (1,186) $ (5,633) $ (1,974)
Divided by silver ounces
produced 689 521 1,394 1,135
------- -------- -------- --------
Total cash cost per ounce
produced $ (3.45) $ (2.28) $ (4.04) $ (1.74)
======= ======== ======== ========
Reconciliation to GAAP:
Total cash costs $(2,375) $ (1,186) $ (5,633) $ (1,974)
Depreciation, depletion and
amortization 2,100 1,779 4,231 3,722
Treatment and freight costs (3,742) (4,396) (8,778) (8,738)
By-product credits 13,359 11,017 27,559 21,343
Change in product inventory 933 (250) 760 (467)
Reclamation, severance and
other costs 44 48 83 90
------- -------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $10,319 $ 7,012 $ 18,222 $ 13,976
======= ======== ======== ========
LUCKY FRIDAY UNIT
Total cash costs $ (575) $ 3,689 $ 934 $ 7,017
Divided by silver ounces
produced 804 742 1,656 1,369
------- -------- -------- --------
Total cash cost per ounce
produced $ (0.72) $ 4.97 $ 0.56 $ 5.13
======= ======== ======== ========
Reconciliation to GAAP:
Total cash costs $ (575) $ 3,689 $ 934 $ 7,017
Depreciation, depletion and
amortization 978 820 1,914 1,493
Treatment and freight costs (3,905) (3,667) (7,330) (6,278)
By-product credits 13,335 6,370 23,967 11,371
Change in product inventory 308 (192) (171) (228)
Reclamation and other costs 6 8 12 11
------- -------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $10,147 $ 7,028 $ 19,326 $ 13,386
======= ======== ======== ========
RECONCILIATION TO GAAP, ALL
OPERATIONS
Total cash costs $ 8,022 $ 15,065 $ 21,025 $ 30,814
Depreciation, depletion and
amortization 7,505 8,524 15,342 16,671
Treatment and freight costs (7,770) (10,151) (17,608) (18,698)
By-product credits 27,946 18,402 53,255 34,139
Change in product inventory 2,000 7,381 2,053 4,323
Reduction in labor cost (3) 949 -- 1,280 --
Shutdown-related costs at Mina
Isidora (4) 2,708 -- 2,708 --
Reclamation and other costs 282 19 310 48
------- -------- -------- --------
Costs of sales and other direct
production costs and
depreciation, depletion and
amortization (GAAP) $41,642 $ 39,240 $ 78,365 $ 67,297
======= ======== ======== ========
(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, was 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 producedby the La
Camorramine 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) Incentives have been offered at the La Camorra mine for voluntary
reduction of the workforce.During the six months ended June 30, 2007,
these costs of sales and other direct production costs of $1.3
million were not included in the determination of total cash costs
for gold operations. For the second quarter of 2007, the related cost
was $1.0 million.
(4) Operations at the Mina Isidora mine in Venezuela wereclosed during
a portion of the second quarter when a small group of local residents
blocked Hecla employees from accessing the mine. Costs of sales and
other direct production costs and depreciation, depletion, and
amortization totaling $2.7 million were incurred during this period,
and were not included in the total cash costs for gold operations.
CONTACT: Hecla Mining Company
Vicki Veltkamp, VP -- Investor and Public Relations
208-769-4100
Fax: 208-769-7612