UPDATE 2-Hecla cuts capex plan, sees silver prices falling further
* Second-quarter realized prices to be lower than first quarter: CEO
* Average realized silver price/ounce falls 21 pct in first quarter
* Hecla reiterates full-year cash cost outlook
* Shares fall as much as 5 pct
By Garima Goel
May 10 (Reuters) - Hecla Mining Co, the No. 2 U.S. silver miner by output, cut its capital spending plan for the year by 5 percent and said it expects metal prices to extend their decline in the second quarter.
The company said first-quarter sales fell 16 percent to $76.5 million, well below analysts' average estimate of $94.78 million, due mainly to lower silver prices and higher costs.
Hecla said its average realized silver prices fell 21 percent to $28.86 per ounce in the quarter.
"Our realized price will largely track the current spot price of the metal," Chief Executive Phillips Baker told Reuters in a telephone interview.
"If you look at what has happened to the prices since the end of the first quarter, (they have) declined. So presumably our realized price will decline."
Spot silver prices have fallen about 16 percent to $23.65 since March 28.
Miners around the world are under intense pressure to cut costs as they contend with volatile commodity prices, rising wages, labor unrest and lower-grade ores.
Like many other precious metals miners, Hecla is cutting capital spending as prices fall. The company lowered its planned capital spending for 2013 to $145 million from the $152 million it had forecast in February.
Cash costs for the company almost tripled to $7.02 per ounce in the first quarter, partly due to the start-up of production at its Lucky Friday mine in Idaho, which was shuttered for about a year.
Baker said, however, that Hecla had not changed its total full-year cash cost forecast from the $5 per ounce of silver it announced in February.
This is because Hecla expects exceptionally steep costs at Lucky Friday to fall as the mine ramps up to full production in the third quarter. The mine is expected to produce about 2 million ounces of silver this year. ()
The biggest threat to Hecla's guidance on costs would be continued weakness in prices for the lead and zinc that the company mines as a by-product of silver, Baker said.
But Baker said he did not expect the cost of labor - the largest component of Hecla's costs - to change materially in the next few quarters.
Hecla's silver production rose 46 percent to 1.9 million ounces in the quarter, driven by increased output at its other mine - Greens Creek, which is located in Alaska.
Coeur d'Alene, Idaho-based Hecla said its profit dipped to $11 million, or 4 cents per share, in the first quarter, from $12.4 million, or 4 cents per share, a year earlier.
Excluding one-time items, the miner earned 1 cent per share, missing the average analyst estimate of 4 cents, according to Thomson Reuters I/B/E/S.
Profit was also hit by the recent acquisition of Aurizon Mines Ltd.
Hecla said in March it would acquire Aurizon for about $774 million to gain control of the Casa Berardi gold mine in Quebec.
Baker said he expects the deal to close in early June.
Local rival Coeur d'Alene Mines Corp, the No. 1 U.S. silver miner, also missed analysts' estimates, weighed by lower silver prices and production.
Hecla shares fell as much as 5 percent on Friday on the New York Stock Exchange. Couer d'Alene shares also fell as much as 5 percent, while those of Silver Wheaton Corp fell 4 percent.