Wednesday July 18, 2:01 pm Eastern Time
Hecla Reduces Operations At Lucky Friday Mine, Preserves Resource and Cash
biz.yahoo.com
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--July 18, 2001--Due to continued depressed silver and lead prices, Hecla Mining Company (NYSE:HL - news; NYSE:HL-PrB) today announced a reduction in operations at its Lucky Friday silver mine in northern Idaho, effective October 2001.
Production is expected to total approximately 3.5 million ounces of silver this year, with a further decrease to approximately 1.2 million ounces of silver in 2002. Had the mine continued normal operations, it would have been expected to produce close to 4.5 million ounces of silver this year.
The reduced production level will allow the mine to remain ready to increase production within about two to three months of a decision to do so when the price of silver rises. A complete shutdown and placing the mine on care and maintenance would have greatly lengthened the amount of time necessary to put the mine back into full production to as much as 18 months. Hecla's Chairman, Chief Executive Officer and President Arthur Brown said, ``This reduced level of operation at Lucky Friday preserves the resource for a time when the silver price is higher. Being able to ramp up production quickly also maintains Hecla's position as a primary silver producer and silver investment option.''
All currently developed working faces on the Lucky Friday Main Vein and in the expansion area (called the Gold Hunter Vein) will continue to be mined. However, there will be no primary development into new areas, and secondary development will be limited to two working faces in the expansion area. Production is expected to average 24,000 tons per month through September, dropping to 16,000 tons in October and November as the currently developed ore is depleted. Starting in December, production should decrease to about 7,000 tons per month, which will result in estimated production of about 100,000 ounces of silver per month. It is anticipated that production could remain at that level for approximately 24 months, assuming future metals prices do not decrease significantly. Employment during the period will decrease from the current level of 189 people to about 42 employees by January 2002.
The Lucky Friday Unit is a deep, underground hard rock mine and is not profitable at the recent price of silver of around $4.25 per ounce, despite good efforts by employees to control and reduce production costs under difficult conditions. Brown said, ``We've been operating Lucky Friday for over 40 years, and today it has more identified resources than at anytime in its history. Unfortunately, the combination of low metals prices, increasing deep underground development costs and ever-increasing environmental compliance and remediation expenses for our company have made it necessary to cut back operations at Lucky Friday. We have shut it down in the past because of low silver prices, and I'm anticipating that this venerable mine will once again see full activity when the price cycle changes.''
Laid-off employees will be helped through job placement services and standard severance pay. Brown noted that a number of the employees have worked at Lucky Friday for many years. ``This is not an easy decision to make,'' said Brown. ``It is tough on the families and the community. But we'll do what we can to help, and it is my hope that we will someday see many of them back on the payroll in a friendlier precious metals price environment.'' Brown said the metals prices have made belt-tightening the norm at Hecla. He said, ``We're doing all we can to survive this cycle and come out on the other side a winner.''
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. Precious metals production for Hecla during 2001 is expected to be just under 8 million ounces of silver and approximately 160,000 ounces of gold. A 110-year-old company, Hecla has long been well known in the mining world and financial markets as a primary silver producer. Hecla's common and preferred shares are traded on the New York Stock Exchange under the symbols HL and HL-PrB. |
