For the Period Ended June 30, 2008
COEUR D'ALENE, Idaho--(Business Wire)--
Hecla Mining Company (NYSE:HL) today reported silver production of
2.4 million ounces for the second quarter of 2008, a 60% increase over
the same period a year ago. Second quarter financial results showed a
loss applicable to common shareholders of $44.4 million, or 35 cents
per share, on revenue of $64 million. The results include several
one-time or transactional items related to the purchase of the Greens
Creek Joint Venture, the sale of the Venezuelan operations and the
sale of Great Basin Gold stock which resulted in a combined charge of
$39.3 million. Absent those items, Hecla would have reported pre-tax
net loss of $1.7 million in the second quarter of 2008(1). Income
applicable to common shareholders in the second quarter of 2007 was
$24.2 million, or 20 cents per share, on revenue of $44.4 million.
Second quarter 2007 results also included a number of unusual items,
most notably the sale of the Hollister Development Block.
Unusual or one-time items that impacted Hecla's results from
operations during the second quarter of this year included:
-- a loss of $30.7 million relating to the recently sold
Venezuelan properties which consisted of a loss on impairment
of $11.4 million and a loss from operations of $19.3 million
(which included a foreign exchange loss of $13.3 million from
the repatriation of $38.7 million USD from Venezuela to the
United States);
-- cost of sales were $17 million higher due to the valuation of
in-process inventory associated with the Greens Creek Joint
Venture acquisition (received revenue of approximately the
same amount related to the sale of the inventory); and
-- a gain of $8.1 million from the sale of Great Basin Gold stock
previously received in connection with the sale of its
interest in the Hollister project.
Other items that impacted second quarter net income included a 42%
decrease in the price of zinc from $1.66 per pound in the second
quarter of 2007 to $0.96 in the second quarter of 2008, increased
smelter treatment and refining charges, and higher energy and steel
costs. These factors resulted in increased cash costs per ounce of
silver at the Lucky Friday and Greens Creek silver operations compared
to a year ago. Additionally, the noncash stock option expense totaled
$2.9 million in the second quarter of 2008.
For the first six months of 2008, Hecla recorded a loss applicable
to common shareholders of $32.3 million, or 26 cents per common share,
compared to income applicable to common shareholders of $32.2 million,
or 27 cents per common share, during the same period in 2007.
SECOND QUARTER 2008 HIGHLIGHTS
-- Completion of the acquisition of the Greens Creek Joint
Venture on April 16, 2008
-- Sale of the subsidiaries holding Hecla's Venezuelan properties
for approximately $25 million
-- Silver production of 2.4 million ounces, a 60% increase from
the second quarter of 2007, at an average cash cost per ounce
of $3.43
-- Highest quarterly silver production in nearly 5 years
-- Record zinc production
-- Capital expenditures of $20.3 million, as Hecla invests in the
future of the Greens Creek and Lucky Friday mines
-- Positive underground exploration drilling results at Greens
Creek and Lucky Friday
Hecla Mining Company President and Chief Executive Officer
Phillips S. Baker, Jr., said, "The second quarter has been a
transformational quarter for Hecla. We acquired the remainder of the
Greens Creek Joint Venture and sold our Venezuelan interests. Both
transactions had one-time impacts on the second quarter financial
results as we completed the transition related to these two assets. In
the long term, the Greens Creek acquisition and the Venezuelan
disposition provide our shareholders with 100% of the world's
lowest-cost and fifth-largest silver mine, a substantially lower
political risk profile, and a 60% increase in 2008 annual silver
production to 9 million ounces. We have already seen a 60% increase in
silver production for the second quarter compared to the same period a
year ago."
Baker continued, "Over the past 100 years Hecla has materially
changed itself before, but this year's transformation is unique. Hecla
now controls 100% of the two largest silver mines in the U.S. that
will produce more than 35% of all U.S. silver production, and has
large exploration programs in the historic southern Colorado (Creede)
mining district, the historic Silver Valley (Idaho), and the
world-class Mexican silver belt. We expect our mines' strong cash flow
to continue to fund growth in production, margins and resources. We've
added considerable mining and exploration expertise through our
acquisition of the Greens Creek Joint Venture, and we've retained some
talented people from our Venezuelan interests, so we are even better
positioned to add value to both internal and newly acquired assets."
METALS PRICES
With the exception of zinc, prices for the other metals produced
by Hecla improved in the second quarter compared to the same period a
year ago. The average price of silver in the second quarter of 2008
was $17.17, an increase of 29% compared to the same period a year ago.
The average gold price increased 34% to $896 per ounce, and the
average lead price was 6% higher than a year ago, at $1.05 per pound.
OPERATIONS
From continuing operations in the second quarter of 2008, Hecla
produced approximately 2.4 million ounces of silver, 15,257 ounces of
gold, 16,000 tons of zinc, and 9,000 tons of lead at an average cash
cost of $3.43 per ounce of silver, after by-product credits. Hecla
anticipates producing a total of 9 million ounces of silver in 2008,
at an average cash cost of approximately $3.25 per ounce, given
current metals prices. The anticipated increase in cash costs per
ounce for 2008 is the result of higher smelter charges and lower
by-product metals prices. Even with increased costs, Hecla expects to
maintain its position as a low-cost silver producer relative to its
peers and continues to benefit from a wide margin between costs and
current metals prices.
Greens Creek - The Greens Creek unit in Alaska produced a total of
2.2 million ounces of silver for Hecla's account during the first six
months of 2008, with 1.7 million of those ounces produced in the
second quarter. This reflects the 29.7% ownership share through April
16, 2008, and the 100% ownership thereafter. The average cash cost of
silver at Greens Creek during the first half of 2008 was $0.50 per
ounce, with cash costs in the second quarter averaging $2.10 per
ounce, after by-product credits. Cash costs increases in the second
quarter are largely due to increased diesel fuel and steel costs, as
well as increased smelter treatment and freight charges, which are
impacting mining companies worldwide.
Decreases in gross profit at Greens Creek during the second
quarter and first six months of 2008 compared to the same 2007 periods
were primarily the result of a one-time, noncash increase to cost of
sales and other direct production costs of approximately $17 million
to reflect the sale of concentrate inventory in the second quarter
that was valued at market price on the date of the acquisition of the
remaining 70.3% ownership completed on April 16, 2008.
Baker said, "The second half of the year will see an increase in
production as a result of the acquisition of the remaining 70.3% of
the Greens Creek Joint Venture and improvements in the production
profile over the remainder of 2008. With the opening of the Northwest
West longhole stopes in June, second half 2008 silver production is
expected to be more than double Hecla's share of the first six months'
production. At Greens Creek, variability in quarterly and even
half-yearly production happens periodically, but will be more
noticeable now that Hecla owns 100% of the mine. On the cost side, we
are impacted by increases that are affecting the whole industry, but
we can see dramatic containment of costs when we go to hydropower in
the next few years."
Hecla's transition to operator of Greens Creek is progressing
smoothly and operations are in line with expectations. The first six
months of production from Greens Creek averaged about 1,950 tons per
day. Performance during June was the best of the year at 2,369 tons
per day, a 21% improvement due to the opening of the longhole stopes
and improved mine planning. Capital expenditures during the second
quarter at Greens Creek totaled $10.2 million and were targeted
primarily at tailings facility expansion, purchase of underground
mining equipment, underground mine development, and definition
drilling.
Lucky Friday - For the first six months of 2008, the Lucky Friday
unit in northern Idaho produced more than 1.4 million ounces of silver
at an average cash cost per ounce of $3.76, after by-product credits.
During the second quarter, Lucky Friday produced more than 665,000
ounces of silver at an average cash cost of $6.93 per ounce, after
by-product credits. Increased cash costs per ounce in the second
quarter of 2008 compared to the second quarter of 2007 can be almost
equally attributed to increases in smelter treatment and freight
charges, as well as mining and milling costs. The increases in smelter
costs and consumables are the same items that are impacting mines
worldwide.
The lower silver ore grade compared to a year ago is due to the
nature of the ore body and methods being used to optimize the
economics of the mine. Mining longer strike lengths has allowed Lucky
Friday to take advantage of the high metals prices and the mill's
ability to recover more zinc due to recent upgrades. Ore has been
mined at greater widths to include stringers that provide access to
silver, lead and zinc that otherwise would not be mined, but generate
a positive margin at current prices. This results in an economic
benefit and allows Lucky Friday to temporarily mine a grade of ore
that is lower than life-of-mine reserve grade, delaying some
production of metals included in the reserves to later periods.
Capital expenditures at Lucky Friday during the second quarter
totaled $10.1 million, and included progress on evaluating the #4
Shaft project, further progress on construction of a new tailings pond
which puts the mine in position to handle tailings for the next few
decades, and upgrades to the shaft ore passes.
EXPLORATION
Hecla has increased its 2008 annual exploration budget to a range
of $23 million to $27 million as it incorporates 100% of the Greens
Creek exploration program and commences activities at the San Juan
Silver Joint Venture project in southern Colorado. In the first six
months of the year, approximately $12.9 million was spent on
exploration, including approximately $6.5 million at Lucky Friday and
in North Idaho's Silver Valley, $3.5 million at the San Sebastian and
Rio Grande projects in Mexico and $1.1 million at Greens Creek
(Hecla's share).
Greens Creek - A major underground drilling campaign during the
second quarter at Greens Creek focused on the Gallagher zone, where
drilling pinpointed the location and extent of the resource that dips
to the west and plunges to the south. The mineralization is now better
defined for over 200 feet and transitions from two bands of
mineralization with widths totaling 63 feet to one thick band of
mineralization with a 105-foot width. This adds 200 feet to the
Gallagher zone that earlier was 700 feet in strike length, potentially
adding 20% to the existing resource. Targets in the SW and East zones
are the focus for the remaining 2008 exploration program at Greens
Creek. Exploration drilling will focus on historic underground
higher-grade intercepts in the SW zone and on results from recent
surface drilling in the vicinity of the East zone.
The 2008 surface exploration program began May 17 with two drill
rigs. Drilling targeted a prospective area known as the 'Northeast
Contact', which represents an extension of the mine contact rocks into
an area northeast of the current mine workings. The drilling shows
that these newly defined mine contacts are relatively flat-lying, can
be correlated for over 800 feet and are still open in both directions.
Assays are pending on all of these holes, but additional targets along
this trend will be evaluated by drilling during the summer.
Baker said, "Greens Creek's underground exploration program is
exciting because we expect it to continue to add to the resource base,
just as it has done over the past 20 years. The surface program has
defined new mine 'contact' rocks to the northeast of the current
workings. This new area has the potential to host new ore zones, which
could result in a dramatic increase in resources in the future."
Silver Valley/Lucky Friday - The Gap drilling program, which tests
the mineralized structure above the current mine resource at Lucky
Friday, is being evaluated. All seven holes have intersected multiple
vein zones and assay results from this drilling are still pending. An
analysis of this program is expected to be completed by the end of the
third quarter.
Elsewhere in northern Idaho's Silver Valley, the three-dimensional
(3D) modeling and resource assessment has defined nine new, separate
target areas for expansion of known mineralization. Baker said, "These
targets are what we expected when we combined more than 100 years of
historical data with 3D computer exploration techniques. It's now
possible that these new target areas could be incorporated into next
year's drilling program."
At Lucky Friday, exploration drilling off the 5900 level (where
mining is currently taking place) to the east of the current resource
returned significant grades from several intermediate veins. These
results show the potential for additional resources to be developed
between the 6100 and 6400 levels, east of previous resource
boundaries, and indicate the possibility for extending the mining area
farther east. The drilling to the west, past a fault that previously
limited the resource, has encountered mineralization.
Mexico - Hecla's 500-square-mile San Sebastian land package is
located in central Mexico, in the middle of the world's most prolific
silver trend. Drilling, surface trenching and sampling are ongoing at
this recently expanded property. The highlight of this quarter's
exploration program is the identification of the Penascote target area
that contains a strongly anomalous silver-in-soil anomaly, similar to
the one observed over the past-producing Francine vein. In addition,
three new vein systems were discovered northeast of Penascote. The
Fernanda, Guadalupe, and Alto Guadalupe vein systems strike northwest
and have been mapped for over 2.5 miles of strike length and range in
width from 1.6 feet to more than 29 feet.
At the Rio Grande project, located 31 miles south of San
Sebastian, the 11-hole drilling program targeted the San Martin, El
Leon, Jessica and Sacramento vein systems. Initial assay information
has been returned, which includes a significant intercept in the San
Martin vein. El Leon drilling consisted of five drill holes, with
assays pending. Assays are also pending for drill holes in the Jessica
and Sacramento veins.
Colorado - The San Juan Silver Joint Venture project in southern
Colorado has received all approvals from the state and the U.S. Forest
Service to begin exploration drilling. The first drill is moving into
place, with two additional drills expected in the future. The intent
of the program is to confirm the remaining reserves and resources in
the Bulldog Vein system that were reported in prior estimates by the
previous operator, and add new resources in the Bulldog Vein.
Baker said, "It has been encouraging to receive widespread public
support for this project in the Creede area and the cooperation from
the various regulatory agencies. If the drilling is successful in this
highly mineralized mining camp, we could quickly add meaningful
resources to our account."
SALE OF VENEZUELAN OPERATIONS
During the second quarter of 2008, Hecla reached an agreement to
sell its subsidiaries engaged in mining and exploring for gold in
Venezuela to Rusoro Mining Ltd. for approximately $25 million,
consisting of $20 million in cash and 4,273,504 shares of Rusoro
common stock. The proceeds will primarily be used as part of the
strategy to increase Hecla's investment in mining properties, or
alternatively, to reduce the debt associated with the acquisition of
the remaining 70.3% of the Greens Creek Joint Venture. Because the
transaction closed in the third quarter (on July 8, 2008), the
Venezuelan business and operations have been classified as held for
sale in the financial statements and results of its operations have
been reported in discontinued operations. A loss on asset impairment
of $11.4 million was recorded for the second quarter of 2008.
FINANCIAL
Completing a transaction the size of the Greens Creek Joint
Venture acquisition causes some additional long-term impacts. These
impacts include increased depreciation, depletion and amortization as
the result of purchase price accounting that will initially amortize
and depreciate approximately $334 million of the purchase price over
Greens Creek's current proven and probable reserves.
As part of the financing for the acquisition, Hecla had put a $220
million bridge loan in place. The Company is currently examining a
number of options to retire the bridge loan. Baker said, "Hecla has a
history of carefully controlling dilution to shareholders. I continue
to believe that is an important factor in managing our business, so we
are considering all our options, including deferral of capital
expenditures, to retire the bridge loan."
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho,
mines, processes and explores for silver and gold in the United States
and Mexico. A 117-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", "HL-PrB" and "HL-PrC."
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.
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.
(1) Pre-tax net income before unusual or one-time charges
represents a non-U.S. Generally Accepted Accounting Principle (GAAP)
measurement. The following table presents a reconciliation between net
income (loss) to non-GAAP pre-tax net income before unusual or
one-time charges for the quarters and six months ended June 30, 2008
and 2007 (dollars in thousands):
-0-
*T
Second Quarter Ended Six Months Ended
-------------------- ------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
----------- ------------------ --------
Net income (loss) $(40,979) $24,337 $(25,497) $32,480
Add loss from discontinued
operations, net of tax 19,298 11,804 17,380 11,527
Add loss on disposal of
discontinued operation, net
of tax 11,372 - - 11,372 - -
Add valuation of in-process
inventory at Greens Creek 16,637 - - 16,637 - -
Less gain on sale of Great
Basin Gold stock (8,097) - - (8,097) - -
Income tax (provision) benefit 89 90 (3,985) 322
----------- -------- --------- --------
Pre-tax net income (loss)
before unusual or one-time
charges $ (1,680) $36,231 $ 7,810 $44,329
=========== ======== ========= ========
*T
Hecla Mining company news releases can be accessed on the Internet
at http://www.hecla-mining.com.
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*T
HECLA MINING COMPANY
(dollars in thousands, except per share, per ounce and per pound
amounts - unaudited)
Second Quarter Ended Six Months Ended
----------------------- -----------------------
HIGHLIGHTS June 30, June 30, June 30, June 30,
2008 2007 2008 2007
----------------------------------------------------------------------
FINANCIAL DATA
----------------------------------------------------------------------
Sales $ 63,995 $ 44,431 $ 100,622 $ 77,531
Gross Profit $ 1,625 $ 23,965 $ 20,277 $ 39,983
Income (loss)
applicable to common
shareholders $ (44,388) $ 24,199 $ (32,314) $ 32,204
Basic income (loss)
per common share $ (0.35) $ 0.20 $ (0.26) $ 0.27
Pre-tax net income
(loss) before unusual
or one-time
charges(1) $ (1,680) $ 36,231 $ 7,810 $ 44,329
Net income (loss) from
continuing operations $ (10,309) $ 36,141 $ 3,255 $ 44,007
Cash flow provided by
(used by) operating
activities $ (7,613) $ 8,020 $ 4,024 $ 24,383
----------------------------------------------------------------------
PRODUCTION SUMMARY - TOTALS
----------------------------------------------------------------------
Silver - Ounces 2,409,506 1,492,740 3,664,662 3,049,781
Gold - Ounces (2) 15,257 4,497 20,108 9,348
Lead - Tons 9,162 6,289 15,309 12,590
Zinc - Tons 15,988 6,012 23,009 12,658
Average cost per ounce
of silver produced
(3):
Total cash costs
($/oz.) (4) 3.43 (1.98) 1.77 (1.54)
Total production
costs ($/oz.) 7.63 0.11 5.34 0.51
----------------------------------------------------------------------
AVERAGE METAL PRICES
----------------------------------------------------------------------
Silver - London PM Fix
($/oz.) 17.17 13.34 17.43 13.33
Gold - London PM Fix
($/oz.) 896 667 911 659
Lead - LME Cash
($/pound) 1.05 0.99 1.18 0.90
Zinc - LME Cash
($/pound) 0.96 1.66 1.03 1.62
*T
(1) Pre-tax net income before unusual or one-time charges
represents a non-U.S. Generally Accepted Accounting Principle (GAAP)
measurement. The following table presents a reconciliation between net
income (loss) to non-GAAP pre-tax net income before unusual or
one-time charges for the quarters and six months ended June 30, 2008
and 2007 (dollars in thousands):
-0-
*T
Second Quarter Ended Six Months Ended
-------------------- ------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
---------- --------- --------- --------
Net income (loss) $(40,979) $ 24,337 $(25,497) $ 32,480
Add loss from discontinued
operations, net of tax 19,298 11,804 17,380 11,527
Add loss on disposal of
discontinued operation, net
of tax 11,372 - - 11,372 - -
Add valuation of in-process
inventory at Greens Creek 16,637 - - 16,637 - -
Less gain on sale of Great
Basin Gold stock (8,097) - - (8,097) - -
Income tax (provision) benefit 89 90 (3,985) 322
---------- --------- --------- --------
Pre-tax net income (loss)
before unusual or one-time
charges $ (1,680) $ 36,231 $ 7,810 $ 44,329
========== ========= ========= ========
*T
(2) Represents only gold production from our Greens Creek unit. In
addition, gold production from our discontinued Venezuelan operation
totaled 5,179 and 22,160 ounces, respectively, for the three- and
six-month periods ended June 30, 2008 and 21,546 and 53,025 ounces,
respectively, for the same 2007 periods.
(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) Includes gold, lead and zinc produced at silver operations,
which is treated as a by-product credit and included in the
calculation of silver costs per ounce.
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*T
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,
2008 2007 2008 2007
---------- --------- -------------------
Sales of products $ 63,995 $ 44,431 $100,622 $ 77,531
---------- --------- --------- ---------
Cost of sales and other
direct production costs 52,243 17,389 67,305 31,404
Depreciation, depletion and
amortization 10,127 3,077 13,040 6,144
---------- --------- --------- ---------
62,370 20,466 80,345 37,548
---------- --------- --------- ---------
Gross profit 1,625 23,965 20,277 39,983
---------- --------- --------- ---------
Other operating expenses
(income)
General and administrative 5,439 4,452 10,332 7,636
Exploration 7,340 3,166 12,911 6,521
Pre-development expenses -- 76 -- 1,027
Depreciation and
amortization -- 44 -- 224
Other operating expenses 960 (8) 1,457 1,258
Gain on sale of properties,
plants and equipment -- (63,798) -- (63,825)
Provision for closed
operations and
environmental matters 830 45,750 1,490 46,403
---------- --------- --------- ---------
14,569 (10,318) 26,190 (756)
---------- --------- --------- ---------
(Loss) income from operations (12,944) 34,283 (5,913) 40,739
---------- --------- --------- ---------
Other income (expense):
Gain on sale of investments 8,097 - - 8,097 - -
Interest and other income 595 2,093 3,109 3,884
Net foreign exchange loss (2) - - (14) (20)
Interest expense (5,796) (145) (5,839) (274)
---------- --------- --------- ---------
2,894 1,948 5,353 3,590
---------- --------- --------- ---------
(Loss) income from operations
before income taxes (10,050) 36,231 (560) 44,329
Income tax (provision)
benefit (259) (90) 3,815 (322)
---------- --------- --------- ---------
Net income (loss) from
continuing operations (10,309) 36,141 3,255 44,007
Loss from discontinued
operation, net of tax (19,298) (11,804) (17,380) (11,527)
Loss on impairment of
discontinued operation, net
of tax (11,372) -- (11,372) --
---------- --------- --------- ---------
Net income (loss) (40,979) 24,337 (25,497) 32,480
---------- --------- --------- ---------
Preferred stock dividends (3,409) (138) (6,817) (276)
---------- --------- --------- ---------
Income (loss) applicable to
common shareholders $(44,388) $ 24,199 $(32,314) $ 32,204
========== ========= ========= =========
Basic and diluted income
(loss) per common share
after preferred dividends $ (0.35) $ 0.20 $ (0.26) $ 0.27
========== ========= ========= =========
Basic weighted average number
of common shares outstanding 126,341 120,307 124,538 120,120
========== ========= ========= =========
Diluted weighted average
number of common shares
outstanding 126,341 120,818 124,538 120,628
========== ========= ========= =========
*T
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*T
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
June 30, Dec. 31,
2008 2007
----------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 45,810 $ 373,123
Short-term investments and securities held
for sale -- 25,759
Accounts and notes receivable 30,672 21,887
Inventories 23,644 15,511
Deferred taxes 10,562 7,370
Other current assets 5,266 5,934
Assets held for sale 43,888 --
----------- ----------
Total current assets 159,842 449,584
Investments 6,530 8,429
Restricted cash and investments 36,741 15,181
Properties, plants and equipment, net 807,724 132,308
Deferred taxes 36,466 14,938
Other noncurrent assets 35,662 30,297
----------- ----------
Total assets $1,082,965 $ 650,737
=========== ==========
----------------------------------------------------------------------
LIABILITIES
----------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 34,631 $ 22,564
Accrued payroll and related benefits 11,302 16,184
Accrued taxes 3,111 3,703
Liabilities held for sale 17,202 --
Current portion of accrued reclamation and
closure costs 8,931 9,686
Current portion of long-term debt 285,000 --
----------- ----------
Total current liabilities 360,177 52,137
Long-term debt 75,000 --
Accrued reclamation and closure costs 102,792 96,453
Other noncurrent liabilities 18,127 9,618
----------- ----------
Total liabilities 556,096 158,208
----------- ----------
----------------------------------------------------------------------
SHAREHOLDERS' EQUITY
----------------------------------------------------------------------
Preferred stock 543 543
Common stock 31,905 30,364
Capital surplus 790,757 725,076
Accumulated deficit (307,224) (274,877)
Accumulated other comprehensive income 11,528 12,063
Treasury stock (640) (640)
----------- ----------
Total shareholders' equity 526,869 492,529
----------- ----------
Total liabilities and shareholders' equity $1,082,965 $ 650,737
=========== ==========
Common shares outstanding at end of period 127,540 121,375
=========== ==========
*T
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*T
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Six Months Ended
--------------------
June 30, June 30,
2008 2007
----------------------------------------------------------------------
OPERATING ACTIVITIES
----------------------------------------------------------------------
Net income (loss) $ (25,497) $ 32,480
Loss on discontinued operations, net of tax 28,752 11,527
---------- ---------
Income from continuing operations 3,255 44,007
Noncash elements included in net income:
Depreciation, depletion and amortization 13,040 6,272
Gain on sale of investments (8,097) - -
Gain on disposition of properties, plants and
equipment -- (63,827)
Provision for reclamation and closure costs 314 44,867
Stock compensation 3,186 2,778
Provision for deferred taxes (1,720) (3,207)
Amortization of intangible asset 241 --
Amortization of loan origination fees 1,438 --
Change in assets and liabilities:
Accounts and notes receivable (2,789) (399)
Inventories (502) (360)
Acquired fair value of purchased product
inventory 16,637 --
Other current and noncurrent assets (572) (963)
Accounts payable and accrued expenses (5,945) (2,596)
Accrued payroll and related benefits 413 420
Accrued taxes (228) 534
Accrued reclamation and closure costs and other
noncurrent liabilities (2,077) (1,245)
Net cash provided by (used by) discontinued
operations (12,570) (1,898)
---------- ---------
Net cash provided by operating activities 4,024 24,383
---------- ---------
----------------------------------------------------------------------
INVESTING ACTIVITIES
----------------------------------------------------------------------
Additions to properties, plants and equipment (31,161) (12,349)
Acquisition of business, net of cash obtained (688,091) --
Proceeds from sale of investments 27,001 --
Deposit on operations held for sale 10,000 --
Proceeds from disposition of properties, plants
and equipment -- 45,000
Purchase of equity securities -- (181)
Purchase of short-term investments and securities
held for sale -- (62,825)
Maturities of short-term investments and
securities held for sale 4,036 25,345
Decrease (increase) in restricted cash (282) (2,161)
Net cash provided by (used by) discontinued
operations (456) 1,394
---------- ---------
Net cash used in investing activities (678,953) (5,777)
---------- ---------
----------------------------------------------------------------------
FINANCING ACTIVITIES
----------------------------------------------------------------------
Common stock issued under stock option plans 155 2,927
Dividends paid to preferred shareholders (7,289) (276)
Purchase of treasury shares -- (208)
Loan origination fees (5,250) --
Borrowings on debt 360,000 --
Repayments of debt -- --
---------- ---------
Net cash provided by financing activities 347,616 2,443
---------- ---------
Net (decrease) increase in cash and cash
equivalents (327,313) 21,049
Cash and cash equivalents at beginning of period 373,123 75,878
---------- ---------
Cash and cash equivalents at end of period $ 45,810 $ 96,927
========== =========
*T
-0-
*T
HECLA MINING COMPANY
Production Data
Second Quarter Ended Six Months Ended
-------------------- ----------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
----------------------------------------------------------------------
GREENS CREEK UNIT (1)
----------------------------------------------------------------------
Tons of ore milled 155,535 48,466 205,585 102,820
Mining cost per ton $ 47.45 $ 54.11 $ 47.09 $ 44.83
Milling cost per ton $ 34.32 $ 33.19 $ 33.96 $ 29.72
Ore grade milled - Silver
(oz./ton) 15.88 18.19 15.31 17.23
Silver produced (oz.) 1,744,341 688,623 2,240,194 1,393,551
Gold produced (oz.) 15,257 4,497 20,108 9,349
Lead produced (tons) 4,701 1,437 6,139 2,992
Zinc produced (tons) 13,445 3,951 17,919 8,553
Average cost per ounce of
silver produced (2):
Total cash costs (3) $ 2.10 $ (3.45) $ 0.50 $ (4.04)
Total production costs $ 7.22 $ 0.34 $ 5.33 $ (0.95)
Capital additions (in
thousands) $ 10,177 $ 2,070 $ 13,713 $ 3,981
----------------------------------------------------------------------
LUCKY FRIDAY UNIT
----------------------------------------------------------------------
Tons of ore processed 83,448 83,571 163,815 168,419
Mining cost per ton $ 62.64 $ 51.76 $ 61.23 $ 51.55
Milling cost per ton $ 13.52 $ 11.03 $ 13.66 $ 10.84
Ore grade milled - Silver
(oz./ton) 8.63 10.45 9.32 10.70
Silver produced (oz.) 665,165 804,117 1,424,468 1,656,230
Lead produced (tons) 4,461 4,852 9,170 9,598
Zinc produced (tons) 2,543 2,060 5,090 4,105
Average cost per ounce of
silver produced (3):
Total cash costs (2) $ 6.93 $ (0.72) $ 3.76 $ 0.56
Total production costs $ 8.72 $ 0.50 $ 5.36 $ 1.73
Capital additions (in
thousands) $ 10,144 $ 5,124 $ 17,041 $ 8,060
*T
(1) Reflects Hecla's 100% share of Green Creek as of April 16,
2008, and its 29.73% ownership prior to that date.
(2) Gold, lead and zinc produced have been treated as by-product
credits in calculating silver costs per ounce.
(3) Total cash costs per ounce of silver and gold represent
non-U.S. Generally Accepted Accounting Principles (GAAP) measurements.
A reconciliation of total cash costs to cost of sales and other direct
production costs and depreciation, depletion and amortization (GAAP)
can be found in the cash costs per ounce reconciliation section of
this news release.
-0-
*T
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,
2008 2007 2008 2007
----------------------------------------------------------------------
RECONCILIATION TO GAAP, ALL
OPERATIONS
----------------------------------------------------------------------
Total cash costs $ 8,269 $(2,950) $ 6,484 $ (4,699)
Divided by silver ounces
produced 2,409 1,493 3,664 3,050
--------- -------- --------- ---------
Total cash cost per ounce
produced $ 3.43 $ (1.98) $ 1.77 $ (1.54)
========= ======== ========= =========
Reconciliation to GAAP:
Total cash costs $ 8,269 $(2,950) $ 6,484 $ (4,699)
Depreciation, depletion and
amortization 9,855 3,078 12,768 6,145
Treatment and freight costs (23,922) (7,647) (34,776) (16,108)
By-product credits 49,147 26,694 78,729 51,526
Change in product inventory 18,452 1,241 16,523 589
Reclamation, severance and
other costs 569 50 617 95
--------- -------- --------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $ 62,370 $20,466 $ 80,345 $ 37,548
========= ======== ========= =========
----------------------------------------------------------------------
GREENS CREEK UNIT
----------------------------------------------------------------------
Total cash costs $ 3,658 $(2,375) $ 1,127 $ (5,633)
Divided by silver ounces
produced 1,744 689 2,240 1,394
--------- -------- --------- ---------
Total cash cost per ounce
produced $ 2.10 $ (3.45) $ 0.50 $ (4.04)
========= ======== ========= =========
Reconciliation to GAAP:
Total cash costs 3,658 (2,375) 1,127 (5,633)
Depreciation, depletion and
amortization 8,669 2,100 10,505 4,231
Treatment and freight costs (18,663) (3,742) (23,566) (8,778)
By-product credits 38,180 13,359 52,402 27,559
Change in product inventory 18,232 933 16,275 760
Reclamation, severance and
other costs 530 44 573 83
--------- -------- --------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $ 50,606 $10,319 $ 57,316 $ 18,222
========= ======== ========= =========
----------------------------------------------------------------------
LUCKY FRIDAY UNIT
----------------------------------------------------------------------
Total cash costs $ 4,611 $ (575) $ 5,357 $ 934
Divided by silver ounces
produced 665 804 1,424 1,656
--------- -------- --------- ---------
Total cash cost per ounce
produced $ 6.93 $ (0.72) $ 3.76 $ 0.56
========= ======== ========= =========
Reconciliation to GAAP:
Total cash costs 4,611 (575) 5,357 934
Depreciation, depletion and
amortization 1,186 978 2,263 1,914
Treatment and freight costs (5,259) (3,905) (11,210) (7,330)
By-product credits 10,967 13,335 26,327 23,967
Change in product inventory 220 308 248 (171)
Reclamation and other costs 39 6 44 12
--------- -------- --------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $ 11,764 $10,147 $ 23,029 $ 19,326
========= ======== ========= =========
*T
(1) Cash costs per ounce of silver 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.
Hecla Mining Company
Vicki Veltkamp, 208/769-4100
vice president - investor and public relations
FAX 208/769-7612
Copyright Business Wire 2008
