Exhibit 99.1
Hecla Reports Robust Third Quarter Results: Increased Income,
Gross Profit and Cash Flow
For the Period Ended September 30, 2007
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Nov. 8, 2007--Hecla Mining
Company (NYSE:HL) today reported increased income, gross profit and
cash flow for the third quarter of 2007 compared to the same quarter a
year ago. Hecla recorded income applicable to common shareholders of
$12.4 million, or 10 cents per share, for the third quarter of 2007
compared to $0.9 million, or 1 cent per share, in the same quarter a
year ago. Total gross profit increased 46% to $21 million in the third
quarter compared to the same period of 2006. Net cash provided by
operating activities before exploration and pre-development expenses
rose to $28 million in the third quarter, a 45% increase over the same
period a year ago.
Hecla Mining Company President and Chief Executive Officer,
Phillips S. Baker, Jr., said, "This quarter Hecla continued to build
on its world-class silver operations and exploration potential. Not
only was the quarter better than last year, but it also continued the
profitability and cash generation of our silver business that began in
2001. This is the seventh straight quarter that the silver operations'
gross profit was greater than $10 million. And, with by-product
credits, our average silver cash costs per ounce hit yet another
record low in the third quarter at negative $4.91 per ounce. This is
all further evidence of Hecla's attractive risk/return profile. Low
costs, low capital, high cash generation, and almost $200 million in
cash and cash equivalents on the balance sheet are matched with
outsized growth potential as we evaluate expansions and continue
exploring on our extremely large, contiguous, mine-producing land
packages. We believe Hecla is in the best position in its history to
grow."
3rd QUARTER AND 2007 YEAR-TO-DATE HIGHLIGHTS
-- Record low average total cash cost per ounce of silver in the
third quarter of negative $4.91, with production of 1.3 million ounces
-- 4.4 million ounces of silver produced during the first nine
months, also at a record low average total cash cost per ounce of
negative $2.58
-- 23,238 ounces of gold produced during the third quarter at an
average total cash cost per ounce of $538
-- Gold production in the first nine months of 85,611 ounces at an
average total cash cost per ounce of $521
-- Net income applicable to common shareholders of 10 cents per
share in the third quarter and 37 cents per share for the first nine
months of the year
-- Cash, cash equivalents and short-term investments totaling
approximately $195 million as of September 30, 2007, an all-time high
in the company's history
-- Revenue increased more than 10% for the first nine months of
2007 compared to the same period last year, helped by a record
increase in the lead price
-- In the Silver Valley, Hecla drilled its first surface
exploration hole in more than a decade
For the first nine months of 2007, Hecla recorded income
applicable to common shareholders of $44.6 million, or 37 cents per
share, compared to $48.2 million, or 40 cents per share, in the first
three quarters of 2006. Income was slightly lower in the first nine
months of 2007 compared to 2006 because of an environmental accrual
recorded during the second quarter of 2007. Along with this $44.7
million charge to expense, factors impacting the first three quarters
of 2007 compared to last year included decreased gross profit at the
La Camorra gold unit. These items were offset in the second quarter by
a pre-tax gain of $63.8 million on the sale of our interest in the
Hollister Development Block gold exploration project. In early 2006,
Hecla had a pre-tax gain of $36.4 million from the sale of its
investment in Alamos Gold, Inc.
METALS PRICES
The average prices of the metals Hecla mines were significantly
higher during the first nine months of 2007 compared to the same
period of 2006. Leading the way was the price of lead with a 100%
increase, to an historic high of an average $1.07 per pound
year-to-date 2007. In the third quarter alone, the price of lead
averaged $1.43 per pound, compared to a 54 cents per pound average in
the third quarter of 2006. Lead is an important by-product metal at
both the Lucky Friday and Greens Creek silver operations; and at
current production rates, a 50 cent increase per pound in the price of
lead over the course of a year could have a $20 million impact on
Hecla's revenue. The average prices of silver, gold and zinc also
increased 17% to $13.12 per ounce, 11% to $666 per ounce and 16% to
$1.56 per pound, respectively, compared to the first nine months of
2006.
Baker said, "With 6 million ounces of silver production annually,
we are benefiting from these good prices now and will continue to
benefit in the future. We've seen a good run up in the metals prices
in the past few days, which I believe is a precursor for higher prices
to come. While I expect some volatility, I anticipate strong metals
prices for the next several years. Unfortunately, we are experiencing
global unrest and financial uncertainty in the world these days.
However, those are conditions that typically result in strong precious
metals prices. At the same time, unprecedented growth in developing
countries such as China and India are increasing demand for the base
metals we produce as by-products."
OPERATIONS
During the third quarter, Hecla produced 1.3 million ounces of
silver at an average total cash cost per ounce of negative $4.91, a
record low cost of production for the company. Gold production for the
quarter was 23,238 ounces of gold at an average total cash cost per
ounce of $538.
The quality of Hecla's silver operations and the strength of the
metals prices, which result in increased by-product credits, have
allowed Hecla's guidance regarding silver cash costs per ounce for the
year to be lowered. The estimated total average silver cash cost for
the year is now less than negative $2.75 per ounce, even with
conservative by-product price projections (from a previous estimate of
negative 25 cents per ounce). The 2007 silver production estimate
remains in the range of 6 million ounces. The gold production estimate
for 2007 has been revised to a range of 110,000 to 115,000 ounces of
gold (down from a previous estimate of 115,000-120,000 ounces). Due to
increased costs caused by a now-resolved protest at the La Camorra
unit, currency controls, and ongoing increased costs of doing business
in Venezuela, a revised 2007 average cash cost for gold has been
estimated at approximately $490 to $510 per ounce (from a previous
estimate of $440 to $470 per ounce).
Lucky Friday - The Lucky Friday silver operation in northern
Idaho's Silver Valley, owned and operated by Hecla for nearly 50
years, continues to be a flagship operation with 2.3 million ounces of
silver produced during the first nine months of the year at a total
average cash cost of negative 28 cents per ounce. In the third quarter
alone, Lucky Friday produced 661,511 ounces of silver at a record low
average cash cost of negative $2.38 per ounce, a 161% improvement
compared to the third quarter of last year. So far this year, Lucky
Friday has provided $30.1 million in gross profit, primarily a result
of higher average silver and lead prices, as well as increased silver
and zinc production during the first nine months of the year compared
to the same period last year. Increased productivity and lower
underground transportation costs have also contributed to the improved
total cash cost per ounce. Upgrades to the mill completed in 2006 have
allowed for operating efficiencies which resulted in an increase in
ore milled during the first nine months of 2007 compared to the first
nine months of 2006. Baker said, "All mining companies have
experienced tremendous pressure on costs, but our ability to lower
costs per ton reflects the increased utilization of our infrastructure
and the innovation and productivity of our workforce."
The Lucky Friday mine currently has 117 million ounces of silver
resource, almost as much as has been mined in its entire 60-year
history of operation. Baker said, "We are continuing to grow our
reserve and resource base at depth at Lucky Friday. We now know the
mineralization extends to at least 8,000 feet below the surface, which
is a full 2,000 feet deeper than where we are currently mining. To
take advantage of this continuing mineralization, we are analyzing a
plan for development of an internal shaft, or winze, that will have
the capability of reaching those depths." Engineering work is underway
on the shaft, and preparatory work for the construction of the new
shaft could commence in early 2008. Actual shaft excavation could
begin by the end of 2008, and could be completed as early as 2012. A
new shaft would also provide deeper access to explore for additional
silver reserves and resources.
Baker said, "With the large and growing silver resource at Lucky
Friday, our focus has been on how to increase production." A scoping
study was completed in early 2007, and based on those results, a
pre-feasibility study is underway to determine whether it is possible
to expand production from the Lucky Friday orebody. The scope of the
study involves resource delineation, a look at different mining
methods, an expanded production rate, the new internal shaft and
another shaft to the surface, ventilation, and preliminary design for
a new mill and general infrastructure upgrades. The study is scheduled
for completion in the third quarter of 2008.
Greens Creek - The Greens Creek mine near Juneau, Alaska, in which
Hecla holds a 29.73% interest with a subsidiary of Rio Tinto, produced
2.1 million ounces for Hecla's account during the first nine months of
the year, at an extremely low total cash cost per ounce of negative
$5.15. During the third quarter of 2007, Hecla's share of Greens Creek
production was 679,884 ounces of silver at an average total cash cost
of negative $7.42 per ounce. The 148% and 184% improvements in cash
costs per ounce for the nine month and third quarter periods compared
to last year are attributable primarily to increased by-product
credits because of the higher prices of zinc, lead and gold. These
credits more than offset increased costs from higher diesel prices and
the use of contract labor to compensate for a shortage of qualified
miners. In the first nine months of the year, Greens Creek provided
$30.6 million in gross profit for Hecla's account. In September,
Greens Creek set a record for the largest monthly ore concentrate
shipment in its history, the result of unusual timing between mining
and shipping schedules which is unlikely to be repeated in the fourth
quarter.
La Camorra - The La Camorra unit in Venezuela comprises Hecla's
gold operation. In the first nine months of the year, La Camorra
produced 70,649 ounces of gold at an average total cash cost per ounce
of $521. During the third quarter of 2007, the unit produced 17,624
ounces of gold at an average total cash cost of $538 per ounce,
generated good cash flow and broke about even on an income basis. A
reduction in gross profit at La Camorra in the third quarter compared
to the same period in 2006 primarily resulted from increased costs for
labor and supplies, as well as higher transportation costs per ounce,
because all mining is now occurring at the Mina Isidora deposit with
the ore trucked to the La Camorra mill about 70 miles away. Third
quarter results were partially impacted by a road blockade, which
occurred primarily during the second quarter but bridged into the
first two weeks of the third quarter. That issue was resolved, with
operations resuming in July. A small improvement in the total cash
cost per ounce at the La Camorra unit is anticipated during the fourth
quarter of 2007.
EXPLORATION
During the third quarter, Hecla spent $5.4 million on exploration
at the company's properties in Idaho, Mexico, Alaska and Venezuela.
The quarter's efforts included 69,433 feet of surface and underground
exploration drilling completed in total at all properties. There was
also another 41,161 feet of underground definition, pre-production and
in-stope drilling completed in the third quarter to further define
mineralization at Lucky Friday and on the 5250, NNW and 9A Zones at
Greens Creek.
Idaho - Hecla's approximately 25-square-mile property position in
northern Idaho's Silver Valley (also known as the Coeur d'Alene Mining
District) offers excellent potential for discovery of additional ore
deposits, both from extensions of mineralization around existing and
historic mines and from new discoveries on newly-identified trends. In
addition, Hecla recently signed exclusivity agreements with
33 companies that own properties in the Silver Valley, giving Hecla
more than a year to evaluate the properties and decide whether to
enter into an arrangement on any of the properties. The total property
position covered by these additional agreements is more than 11 square
miles.
Baker said, "Historic silver production from Hecla's
25-square-mile property position totals 328 million ounces of silver,
along with considerable lead and zinc. At current prices, this
historic production would exceed $24 billion. I point this out to give
investors an idea of the size and scope of this mining district. Some
of the large, historic deposits were mined over a continuous 8,000
vertical feet. Since the price of silver was so low for decades, very
few exploration holes have been drilled from the surface between these
deposits despite the clear prospectivity of the district. We are now
in the midst of a long-term program to change that."
Hecla is in the process of compiling and digitizing 100 years of
historic exploration and production records. This work provides the
foundation for defining the subsurface 'Gap' area immediately above
the Lucky Friday Expansion Area, where mining is currently taking
place, as well as for surface expansion targets in proximity to the
Lucky Friday mine. Drill targeting for potential resource expansion
around and between the historic mines on Hecla's property sets the
stage to identify exploration opportunities elsewhere in the Silver
Valley.
At Lucky Friday, Hecla has identified good potential for
additional silver resources in the 2,500-foot 'Gap' area above where
mining is currently occurring. The first underground exploration hole
into the area hit mineralized material grading up to seven ounces of
silver per ton. However, it is challenging to effectively drill
underground exploration holes from the current infrastructure, so
Hecla has begun drilling from the surface. The initial drilling near
the upper Gold Hunter historic production area will attempt to define
the full strike of the mineralization at the upper projection of the
Lucky Friday Expansion Area where mining is currently taking place.
Information from these holes is expected to provide additional
structural information for a future deep drilling program, which is
expected to begin in the fourth quarter. Baker said, "If our
exploration drilling shows the Gap has continuous mineralization, that
means we may have a mineralized deposit at the Lucky Friday Expansion
Area that reaches from the surface to at least an astounding 9,000
feet below the surface. This is not far-fetched, as the Silver Valley
has a history of extremely large deposits that extend to great
depths."
Mexico - Hecla is advancing a number of exploration targets on its
340-square-mile San Sebastian property in central Mexico's silver
belt. Targets drilled at San Sebastian in the third quarter included
core drilling at the La Roca area and reverse circulation drilling at
La Virgen, La Joya and Nazarena. Assays are pending for the reverse
circulation drilling in these areas.
Drilling at La Roca, located in the northern area of the San
Sebastian property, has intersected a number of mineralized breccias
and veins at the La Perla target; but more importantly, a high-grade
silver structure has been identified. This regional northeast trending
structure has been traced for over 1.5 kilometers and crosses a number
of mineralized veins and breccias. Drill intersections in this
structure during the third quarter produced a number of exceptional
assays, including silver intercepts of 301.1 grams per tonne (8.8
ounces per ton) over 1.93 meters, 634 grams per tonne (18.5 ounces per
ton) over 0.30 meters and 191 grams per tonne (5.6 ounces per ton)
over 0.97 meters. The results to date are particularly encouraging
because they support the interpretation that the strong altered
structures seen on surface are the shallow expression of precious
metal-rich veins at depth. Future drilling at La Roca will continue to
define this exciting new silver-rich structure.
At the Rio Grande property, 70 kilometers south of the San
Sebastian property in Zacatecas State, drilling continued to build on
some outstanding intersections reported in the second quarter. In the
third quarter, drilling was concentrated on the Arcangeles and
Concepcion veins with preparations to follow-up high-grade
intersections at the San Martin vein. Although assay results are
incomplete, wide-spaced exploration drilling of the Arcangeles vein in
the third quarter added intersections of 5.24 meters grading 51.5
grams per tonne silver (1.50 ounces per ton silver), and 12.10 meters
grading 18.8 grams per tonne silver (0.55 ounce per ton silver).
Drilling at Arcangeles has now defined a mineralized vein that extends
over 1.5 kilometers and is open along strike. Drill results from the
Concepcion vein (which has had the highest gold and silver abundances
to date) are pending.
Alaska - The Greens Creek underground exploration program
completed a total of 19,502 feet of drilling during the third quarter,
with the majority of it being pre-production drilling. Work continues
on the silver-rich 5250 North Extension Zone. Assay results for most
holes have been returned and resource modeling for the 5250 North
Extension is in progress. With the completion of the definition
drilling in the 5250 area, emphasis has been on pre-production
drilling in the NWW Zone, as well as in the 38R and the 9A Zones.
Assays will be collected and analyzed during the winter months.
The surface exploration at Greens Creek has been completed for the
season with 17,450 feet drilled in 14 holes. Two diamond drills were
active for the entire quarter. Three holes drilled from the West
Gallagher East drillpad successfully intersected multiple fold repeats
of the mine contact along 1200 feet of strike length and show that
there are still significant areas east and west of the Gallagher Fault
that remain prospective. A new surface drill hole from the North Big
Sore drillpad successfully intersected the mine contact zone
intersected last year. Although not mineralized, these results are
significant because now a mine-altered contact has been intersected
for the first time to the east of the East Ore trend, one of the
mining areas. This opens up an entire new area to explore for mine
extensions in close proximity to underground infrastructure.
Fieldwork included extensive geochemical soil sampling, geologic
mapping and geophysics on numerous prospects. A sulfide-bearing
stratigraphic horizon similar to the mine stratigraphy was identified,
and some sulfide mineralization was encountered, but full geochemistry
results are pending. The identification of long strike lengths of
mineralized mine horizons in previously unidentified areas is a
considerable breakthrough in defining new deposits at Greens Creek.
Venezuela - Highlights from third quarter exploration in Venezuela
show that drilling has identified high-grade intercepts below the
known resource at Mina Isidora on Block B near El Callao, where mining
is currently occurring. One exploration drill hole 125 meters below
the current resource intersected a quartz-shear zone containing 23.4
grams per tonne gold (0.68 ounce per ton) over a width of 3.72 meters.
There were also intersections of 93.70 grams per tonne gold (2.73
ounces per ton) over a width of 1.35 meters, 12.46 grams per tonne
gold (0.36 ounce per ton) over a width of 2.79 meters, and 22.11 grams
per tonne gold (0.64 ounce per ton) over a width of 1.35 meters.
FINANCIAL
Hecla's current ratio remained healthy at 5.3:1 at the end of
September. The company is debt-free, has no forward hedging on any of
the metals it produces and had cash, cash equivalents and short-term
investments totaling approximately $195 million on its balance sheet
at the end of the third quarter.
For the first nine months of 2007, net foreign exchange losses
were $6.1 million, an increase of $4.8 million compared to the same
period last year, primarily resulting from the conversion of cash from
Venezuelan currency to U.S. dollars.
Hecla continues to position itself for growth, not only through
new discoveries and identifying increased resources at its current
properties, but also through the potential of new acquisitions. In
anticipation of those opportunities, during the third quarter the
company modified its shelf registration statement on Form S-3 with the
U.S. Securities and Exchange Commission to allow Hecla to offer and
sell from time to time shares of common stock, preferred stock,
warrants and debt securities. Baker said, "We have a very strong
balance sheet with a healthy cash position, but we believe our
projects and potential acquisitions could require us to raise capital
quickly - and this shelf registration will facilitate that activity
when necessary."
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)
Third Quarter Ended Nine Months Ended
---------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
HIGHLIGHTS 2007 2006 2007 2006
- ----------------------------------------------------------------------
FINANCIAL DATA
- ----------------------------------------------------------------------
Sales:
Silver operations (1) $ 39,809 $ 29,255 $ 117,341 $ 79,345
Gold operations 9,419 21,159 45,132 67,800
---------- --------- ---------- ---------
Total sales $ 49,228 $ 50,414 $ 162,473 $ 147,145
========== ========= ========== =========
Gross Profit (Loss):
Silver operations (1) $ 20,718 $ 12,361 $ 60,701 $ 34,182
Gold operations 275 2,011 (4,828) 9,624
---------- --------- ---------- ---------
Total gross profit $ 20,993 $ 14,372 $ 55,873 $ 43,806
========== ========= ========== =========
Net income $ 12,485 $ 1,001 $ 44,965 $ 48,610
Income applicable to
common shareholders $ 12,347 $ 863 $ 44,551 $ 48,196
Basic income per common
share $ 0.10 $ 0.01 $ 0.37 $ 0.40
Cash flow provided by
operating activities $ 22,617 $ 11,049 $ 46,984 $ 39,658
Net cash provided by
operating activities
before exploration and
pre-development expenses
(2) $ 28,043 $ 19,347 $ 61,322 $ 60,403
- ----------------------------------------------------------------------
PRODUCTION SUMMARY -
TOTALS
- ----------------------------------------------------------------------
Silver - Ounces 1,341,395 1,496,315 4,391,176 4,000,076
Gold - Ounces 23,238 43,340 85,611 127,837
Lead - Tons 5,729 6,011 18,318 16,508
Zinc - Tons 6,627 6,203 19,285 16,836
Average cost per ounce of
silver produced (1):
Cash operating costs
($/oz.) (5.44) 0.30 (3.08) 1.19
Total cash costs
($/oz.) (3) (4.91) 0.59 (2.58) 1.48
Total production costs
($/oz.) (2.40) 2.70 (0.39) 3.60
Average cost per ounce of
gold produced (4):
Cash operating costs
($/oz.) 516 339 501 340
Total cash costs
($/oz.) (3) 538 380 521 359
Total production costs
($/oz.) 689 571 688 527
- ----------------------------------------------------------------------
AVERAGE METAL PRICES
- ----------------------------------------------------------------------
Silver - London Fix
($/oz.) 12.70 11.70 13.12 11.22
Gold - London Final
($/oz.) 681 622 666 601
Lead - LME Cash ($/pound) 1.43 0.54 1.07 0.53
Zinc - LME Cash ($/pound) 1.46 1.53 1.56 1.35
(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 nine
months ended September 30, 2007 and 2006:
Cash flow provided by
operating activities $ 22,617 $ 11,049 $ 46,984 $ 39,658
Add exploration 5,426 6,058 13,311 15,056
Add pre-development
expenses -- 2,240 1,027 5,689
--------- --------- --------- ---------
Net cash provided by
operating activities
before exploration and
pre-development expenses$ 28,043 $ 19,347 $ 61,322 $ 60,403
========= ========= ========= =========
(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, 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)
Third Quarter Ended Nine Months Ended
------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2007 2006 2007 2006
--------- --------- ---------- ---------
Sales of products $ 49,228 $ 50,414 $ 162,473 $147,145
-------- -------- -------- --------
Cost of sales and other
direct production costs 22,288 25,696 85,312 76,322
Depreciation, depletion and
amortization 5,947 10,346 21,288 27,017
-------- -------- -------- --------
28,235 36,042 106,600 103,339
-------- -------- -------- --------
Gross profit 20,993 14,372 55,873 43,806
-------- -------- -------- --------
Other operating expenses
General and administrative 3,117 2,601 10,753 9,482
Exploration 5,426 6,058 13,311 15,056
Pre-development expenses -- 2,240 1,027 5,689
Depreciation and
amortization 28 196 251 743
Other operating expenses 37 683 1,336 1,877
Gain on sale of properties,
plants and equipment (47) (31) (63,874) (4,451)
Provision for closed
operations and
environmental matters 3,176 906 49,579 2,503
-------- -------- -------- --------
11,737 12,653 12,383 30,899
-------- -------- -------- --------
Income from operations 9,256 1,719 43,490 12,907
-------- -------- -------- --------
Other income (expense):
Gain on sale of investments -- -- -- 36,416
Interest and other income 2,183 1,117 5,840 2,808
Interest expense (133) (189) (575) (552)
Net foreign exchange loss (3) (1,264) (6,126) (1,334)
-------- -------- -------- --------
2,047 (336) (861) 37,338
-------- -------- -------- --------
Income from operations before
income taxes 11,303 1,383 42,629 50,245
Income tax benefit (provision) 1,182 (382) 2,336 (1,635)
-------- -------- -------- --------
Net income 12,485 1,001 44,965 48,610
Preferred stock dividends (138) (138) (414) (414)
-------- -------- -------- --------
Income applicable to common
shareholders $ 12,347 $ 863 $ 44,551 $ 48,196
======== ======== ======== ========
Basic and diluted income per
common share after preferred
dividends $ 0.10 $ 0.01 $ 0.37 $ 0.40
======== ======== ======== ========
Basic weighted average number
of common shares outstanding 120,440 119,483 120,218 119,146
======== ======== ======== ========
Diluted weighted average
number of common shares
outstanding 120,975 119,869 120,811 119,561
======== ======== ======== ========
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
September Dec. 31,
30, 2007 2006
- ----------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 120,925 $ 75,878
Short-term investments and securities held for
sale 73,866 25,455
Accounts and notes receivable 28,365 26,647
Inventories 18,273 22,305
Deferred taxes 15,029 11,822
Other current assets 5,502 3,454
--------- ---------
Total current assets 261,960 165,561
Investments 9,242 6,213
Restricted cash and investments 15,110 21,286
Properties, plants and equipment, net 125,602 125,986
Other noncurrent assets 24,807 27,223
--------- ---------
Total assets $ 436,721 $ 346,269
========= =========
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LIABILITIES
- ----------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 22,756 $ 24,238
Accrued payroll and related benefits 12,948 15,036
Accrued taxes 2,822 5,678
Current portion of accrued reclamation and
closure costs 10,935 7,365
-------- --------
Total current liabilities 49,461 52,317
Accrued reclamation and closure costs 98,257 58,539
Other noncurrent liabilities 11,975 10,685
--------- ---------
Total liabilities 159,693 121,541
--------- ---------
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SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------
Preferred stock 39 39
Common stock 30,166 29,957
Capital surplus 519,767 513,785
Accumulated deficit (282,970) (327,522)
Accumulated other comprehensive income 10,666 8,900
Treasury stock (640) (431)
--------- ---------
Total shareholders' equity 277,028 224,728
--------- ---------
Total liabilities and shareholders' equity $ 436,721 $ 346,269
========= =========
Common shares outstanding at end of period 120,218 119,771
========= =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Nine Months Ended
Sept. 30, Sept. 30,
2007 2006
- ----------------------------------------------------------------------
OPERATING ACTIVITIES
- ----------------------------------------------------------------------
Net income $ 44,965 $ 48,610
Noncash elements included in net income:
Depreciation, depletion and amortization 21,547 27,760
Gain on sale of investments -- (36,416)
Gain on disposition of properties, plants and
equipment (63,872) (4,451)
Gain on sale of royalty interests -- (341)
Provision for inventory obsolescence 1,091 1,342
Provision for reclamation and closure costs 46,221 261
Stock compensation 3,149 2,202
Provision for deferred taxes (3,207) --
Other non-cash charges, net -- 266
Change in assets and liabilities:
Accounts and notes receivable (1,617) (4,667)
Inventories 2,684 1,827
Other current and noncurrent assets 3,562 15
Accounts payable and accrued expenses (447) 1,852
Accrued payroll and related benefits (1,903) 2,984
Accrued taxes (2,855) 572
Accrued reclamation and closure costs and other
noncurrent liabilities (2,329) (2,158)
--------- --------
Net cash provided by operating activities 46,989 39,658
--------- --------
- ----------------------------------------------------------------------
INVESTING ACTIVITIES
- ----------------------------------------------------------------------
Additions to properties, plants and equipment (28,421) (20,115)
Proceeds from sale of investments -- 57,441
Proceeds from disposition of properties, plants
and equipment 45,048 4,368
Purchase of equity securities (181) --
Purchase of short-term investments (87,959) (43,060)
Maturities of short-term investments 64,170 28,210
Increase in restricted investments 2,981 (729)
--------- --------
Net cash provided by (used in) investing
activities (4,362) 26,115
--------- --------
- ----------------------------------------------------------------------
FINANCING ACTIVITIES
- ----------------------------------------------------------------------
Common stock issued under stock option plans 3,042 2,452
Dividends paid to preferred shareholders (414) (414)
Purchase of treasury shares (208) (313)
Other financing activities -- --
Borrowings on debt -- 4,060
Repayment on debt -- (7,060)
--------- --------
Net cash provided by (used in) financing
activities 2,420 (1,275)
--------- --------
Net increase in cash and cash equivalents 45,047 64,498
Cash and cash equivalents at beginning of period 75,878 6,308
--------- --------
Cash and cash equivalents at end of period $ 120,925 $ 70,806
========= ========
HECLA MINING COMPANY
Production Data
Third Quarter Ended Nine Months Ended
------------------- -----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2007 2006 2007 2006
- ----------------------------------------------------------------------
LUCKY FRIDAY UNIT
- ----------------------------------------------------------------------
Tons of ore milled 72,592 72,713 241,011 202,140
Mining cost per ton $ 56.35 $ 57.85 $ 52.99 $ 53.80
Milling cost per ton $ 15.30 $ 13.45 $ 12.19 $ 12.35
Ore grade milled - Silver
(oz./ton) 9.89 10.96 10.46 11.41
Silver produced (oz.) 661,511 737,450 2,317,741 2,106,367
Lead produced (tons) 4,032 4,339 13,630 12,025
Zinc produced (tons) 1,606 2,061 5,711 4,467
Average cost per ounce of
silver produced (1):
Cash operating costs $ (2.56) $ 3.78 $ (0.53) $ 4.61
Total cash costs (2) $ (2.38) $ 3.88 $ (0.28) $ 4.69
Total production costs $ (0.80) $ 5.23 $ 1.00 $ 5.88
Capital additions (in
thousands) $ 8,052 $ 2,058 $ 16,112 $ 6,565
- ----------------------------------------------------------------------
GREENS CREEK UNIT (Reflects Hecla's
29.73% share)
- ----------------------------------------------------------------------
Tons of ore milled 58,384 53,116 161,204 156,509
Mining cost per ton $ 45.87 $ 39.69 $ 45.21 $ 36.67
Milling cost per ton $ 25.77 $ 21.66 $ 28.29 $ 23.74
Ore grade milled - Silver
(oz./ton) 15.54 18.05 16.62 15.79
Silver produced (oz.) 679,884 758,865 2,073,435 1,893,709
Gold produced (oz.) 5,614 4,704 14,963 13,182
Lead produced (tons) 1,697 1,672 4,688 4,483
Zinc produced (tons) 5,021 4,142 13,574 12,369
Average cost per ounce of
silver produced (1):
Cash operating costs $ (8.25) $ (3.07) $ (5.94) $ (2.61)
Total cash costs (2) $ (7.42) $ (2.61) $ (5.15) $ (2.08)
Total production costs $ (3.96) $ 0.24 $ (1.93) $ 1.07
Capital additions (in
thousands) $ 2,842 $ 2,078 $ 6,823 $ 6,031
- ----------------------------------------------------------------------
LA CAMORRA UNIT
- ----------------------------------------------------------------------
Tons of ore processed 21,982 57,647 120,040 173,026
Mining cost per ton $ 175.05 $ 116.75 $ 161.00 $ 122.91
Milling cost per ton $ 41.09 $ 20.38 $ 31.35 $ 17.50
Ore grade milled - Gold
(oz./ton) 0.834 0.684 0.611 0.695
Gold produced (oz.) 17,624 38,636 70,649 114,656
Average cost per ounce of
gold produced:
Cash operating costs $ 516 $ 339 $ 501 $ 340
Total cash costs (2) $ 538 $ 380 $ 521 $ 359
Total production costs $ 689 $ 571 $ 688 $ 527
Capital additions (in
thousands) $ 2,393 $ 2,234 $ 6,373 $ 7,786
(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,
2007 2006 2007 2006
- ----------------------------------------------------------------------
SILVER OPERATIONS
- ----------------------------------------------------------------------
Total cash costs (1) $ (6,615) $ 881 $(11,314) $ 5,928
Divided by silver ounces
produced 1,341 1,496 4,391 4,000
--------- ------- -------- --------
Total cash cost per ounce
produced $ (4.91) $ 0.59 $ (2.58) $ 1.48
========= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ (6,615) $ 881 $(11,314) $ 5,928
Depreciation, depletion
and amortization 3,318 3,117 9,463 8,331
Treatment & freight costs (7,684) (9,177) (23,792) (24,193)
By-product credits (1) 30,772 21,520 82,298 54,234
Change in product
inventory (2) (750) 506 (161) 718
Reclamation and other
costs 50 49 145 146
--------- ------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization (GAAP) $ 19,091 $16,896 $ 56,639 $ 45,164
========= ======= ======== ========
- ----------------------------------------------------------------------
GOLD OPERATIONS (3)
- ----------------------------------------------------------------------
Total cash costs (1) $ 9,681 $14,073 $ 35,405 $ 39,844
Divided by gold ounces
produced 18 37 68 111
--------- ------- -------- --------
Total cash cost per ounce
produced $ 538 $ 380 $ 521 $ 359
========= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ 9,681 $14,073 $ 35,405 $ 39,844
Depreciation, depletion
and amortization 2,627 7,229 11,824 18,686
Treatment & freight costs (630) (445) (2,130) (4,127)
By-product credits (1) 120 555 1,849 1,980
Change in product
inventory (2,363) (2,492) (899) 1,619
Reduction in labor cost
(4) -- -- 1,280 --
Shutdown-related costs at
Mina Isidora (5) -- -- 2,708 --
Reclamation and other
costs (291) 226 (76) 173
--------- ------ -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization (GAAP) $ 9,144 $19,146 $ 49,961 $ 58,175
========= ======= ======== ========
- ----------------------------------------------------------------------
LUCKY FRIDAY UNIT
- ----------------------------------------------------------------------
Total cash costs (1) $ (1,575) $ 2,859 $ (641) $ 9,876
Divided by silver ounces
produced 662 737 2,318 2,106
--------- ------- -------- --------
Total cash cost per ounce
produced $ (2.38) $ 3.88 $ (0.28) $ 4.69
========= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ (1,575) $ 2,859 $ (641) $ 9,876
Depreciation, depletion
and amortization 1,016 997 2,930 2,489
Treatment & freight costs (3,251) (3,942) (10,581) (10,220)
By-product credits (1) 13,776 8,678 37,743 20,049
Change in product
inventory (24) (39) (195) (267)
Reclamation and other
costs 6 3 18 14
--------- ------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization (GAAP) $ 9,948 $ 8,556 $ 29,274 $ 21,941
========= ======= ======== ========
- ----------------------------------------------------------------------
GREENS CREEK UNIT (Reflects Hecla's 29.73%
share)
- ----------------------------------------------------------------------
Total cash costs (1) $ (5,040) $(1,978) $(10,673) $ (3,948)
Divided by silver ounces
produced 679 759 2,073 1,894
--------- ------- -------- --------
Total cash cost per ounce
produced $ (7.42) $ (2.61) $ (5.15) $ (2.08)
========= ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ (5,040) $(1,978) $(10,673) $ (3,948)
Depreciation, depletion
and amortization 2,302 2,120 6,533 5,842
Treatment & freight costs (4,433) (5,235) (13,211) (13,973)
By-product credits (1) 16,996 12,842 44,555 34,185
Change in product
inventory (726) 545 34 78
Reclamation and other
costs 44 46 127 132
--------- ------- -------- --------
Costs of sales and other
direct production costs
and depreciation,
depletion and
amortization (GAAP) $ 9,143 $ 8,340 $ 27,365 $ 22,316
========= ======= ======== ========
- ----------------------------------------------------------------------
RECONCILIATION TO GAAP, ALL OPERATIONS
- ----------------------------------------------------------------------
Total cash costs (1) $ 3,066 $14,954 $ 24,091 $ 45,772
Depreciation, depletion and
amortization 5,945 10,346 21,287 27,017
Treatment & freight costs (8,314) (9,622) (25,922) (28,320)
By-product credits (1) 30,892 22,075 84,147 56,214
Change in product inventory
(2) (3,113) (1,986) (1,060) 2,337
Reduction in labor cost (4) -- -- 1,280 --
Shutdown-related costs at
Mina Isidora (5) -- -- 2,708 --
Reclamation and other costs (241) 275 69 319
--------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $ 28,235 $36,042 $106,600 $103,339
========= ======= ======== ========
(1) Includes all direct and indirect operating cash costs related
directly to the physical activities of producing metals, including
mining, processing and other plant costs, third-party refining and
marketing expense, on-site general and administrative costs, royalties
and mining production taxes, net of by-product revenues earned from
all metals other than the primary metal produced at each unit.
(2) The change in product inventory for the nine months ended
September 30, 2006 includes approximately $905,000 related to San
Sebastian cost of sales during the first quarter of 2006 for prior
period dore shipments.
(3) Costs per ounce of gold are based on the gold produced by the
La Camorra mine and our Block B concessions, including Mina Isidora,
only. During the quarters and nine-month periods ended September 30,
2007 and 2006, a total of 181 and 934 ounces, and 2,882 and 3,366
ounces of gold, respectively, were produced from third-party mining
operations located near the La Camorra mine and Block B concessions.
The revenues from these gold ounces were treated as a by-product
credit and included in the calculation of gold costs per ounce.
Included in total cash costs for the three and nine months ending
September 30, 2007 and 2006, were the costs to purchase the ore of
approximately $0.2 million and $0.6 million, respectively, and $1.9
million and $2.0 million, respectively.
(4) Incentives have been offered at the La Camorra mine for
voluntary reduction of the workforce. During the nine months ended
September 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.
(5) Operations at the Mina Isidora mine in Venezuela were closed
during a portion of the second quarter of 2007 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
the second quarter of 2007, and were not included in the total cash
costs for gold operations.
CONTACT: Hecla Mining Company
vice president - investor and public relations
Vicki Veltkamp, 208-769-4128