good numbers
Hecla Reports First Quarter Net Income, Increased Gold Production and Lower Costs; For the Period Ended March 31, 2002
COEUR D'ALENE, Idaho, May 2, 2002 (BUSINESS WIRE) -- Hecla Mining Company (NYSE:HL) & (NYSEL:HL-PrB) today reported first quarter 2002 income from continuing operations of $1 million, or 1 cent per share, compared to a loss from continuing operations in the first quarter of 2001 of $3.6 million, or 5 cents per share.
Net income during the first quarter of this year was $0.5 million, or 1 cent per share, compared to net income of $9.5 million, or 14 cents per share, in the first quarter of 2001 due to the gain recognized on the sale of Kentucky-Tennessee Clay Company of $13 million in March 2001.
The "income from continuing operations" comparison accurately reflects the improvement in Hecla's operations because it does not include results from the company's discontinued industrial minerals operations, including the nonrecurring benefit of the sale of the majority of Hecla's industrial minerals operations in 2001. After including a $2 million charge for the unpaid preferred share dividend, a loss to common shareholders of $1.5 million, or 2 cents per share, was recorded for the first quarter of 2002, compared to income of $7.5 million, or 11 cents per share, in the first quarter of 2001.
Arthur Brown, Hecla's Chairman and Chief Executive Officer, said, "Continuing outstanding performance by the La Camorra and Greens Creek mines, coupled with San Sebastian's exceptional ramp-up of underground production, resulted in increased gold production and lower costs in the first quarter. Also contributing to Hecla's improved performance was a higher average gold price. A good measure of our performance is a look at gross profit from silver and gold operations, which more than quadrupled over the same period last year. We were able to achieve this even though the average price of silver was down slightly and the price of zinc, an important by-product for us, was down significantly." Hecla's gross profit from metals operations in the first quarter of 2002 was $3.7 million, compared to gross profit of $0.9 million in the first quarter of last year.
QUARTERLY HIGHLIGHTS
-- 59% increase in gold production
-- 29% decrease in the total cash cost per ounce of silver and a
6% decrease in the total cash cost per ounce of gold
-- Higher-than-expected first quarter production from San
Sebastian and La Camorra
-- Dramatic improvement in gross profit from operations
-- Excellent exploration drilling results
-- Acquisition of Block B exploration rights in Venezuela
-- Sale of a portion of CAC
-- Increased cash and cash equivalents at the end of the quarter
-- Strengthened balance sheet
OPERATIONS
Hecla produced 56,402 ounces of gold in the first quarter of 2002, a 59% increase over the 35,582 ounces produced in the first quarter of 2001. The total cash cost per ounce of gold was $137, compared to $146 per ounce a year ago.
The La Camorra mine in Venezuela contributed to the improvement in gold output, producing 40,217 ounces in the first quarter, compared to 27,740 in the same period last year. The ore grade remained essentially the same, at 0.83 ounce of gold per ton, but tonnage increased significantly due to improvement in mining and milling efficiencies and better utilization of equipment. Brown said, "La Camorra has continued its great performance from 2001 and is on track to meet or exceed 2002 targets. Although the political climate in Venezuela is somewhat uncertain at the moment, we have been monitoring the situation closely and have no reason to believe that La Camorra will be adversely impacted."
Hecla's first quarter 2002 silver production was 2 million ounces, down just slightly from a year ago, when the company produced 2.1 million ounces of silver in the first quarter. The average total cash cost of production per ounce of silver decreased to $2.36 compared to $3.32 a year ago, a 29% improvement. San Sebastian, Hecla's newest silver mine in central Mexico, produced more silver than expected in the first quarter, which largely made up for a planned decrease in silver production from the Lucky Friday mine. San Sebastian's low-cost production significantly improved the company's total cash cost per ounce of silver production. Hecla's estimate for 2002 silver production from all operations has increased to approximately 7.5 million ounces, with an anticipated average total cash cost per ounce of about $3, a 50 cent improvement over last year.
San Sebastian, which commenced operations in May 2001, produced 768,588 ounces of silver and 9,062 ounces of gold during the first quarter of the year, well above expectations. As a result, the estimate for total silver production from San Sebastian in 2002 has been revised upward by 40%, to 2.8 million ounces. The mine is now expected to produce about 32,000 ounces of gold in 2002. San Sebastian's average total cash cost per ounce of silver was only $1.51 during the first quarter, with a rich ore grade of more than 25 ounces of silver per ton and 0.31 ounce of gold per ton.
Brown said, "We are extremely pleased with the performance of this operation, and this is only the beginning for San Sebastian. Our people have done an excellent job at this property by developing a new underground deposit with almost no capital and producing at an outstanding rate of return. We expect continued good performance there."
The Greens Creek silver mine in Alaska, in which Hecla holds a 29.73% interest, produced 829,198 ounces of silver for Hecla's account during the first quarter of 2002, at an average total cash cost of $1.91 per ounce. Greens Creek is on track to produce about 3 million ounces of silver for Hecla during 2002.
The Lucky Friday silver mine continues to struggle with a higher cost of production, due to the depth of the mine and the grade of the ore. The mine has been cut back to about 30% of its previous production levels, and produced 412,211 ounces of silver in the first quarter of 2002 at a total cash cost of $4.83 per ounce. Hecla is maintaining operations at the mine so it could be ramped up quickly to full production with an appropriate increase in the price of silver.
EXPLORATION
"Hecla has multiple exploration targets in the pipeline," said Brown. "We've been getting excellent results from our drilling programs at our current operations in Mexico and Venezuela, which is where our main focus is right now."
Recent definition drilling at San Sebastian resulted in the 40% increase in estimated silver production for 2002 mentioned earlier. In addition, extremely encouraging preliminary results have been received from the first phase of drilling on the Cerro Pedernalillo area, located four miles south of the current mining operation.
La Camorra's underground exploration program also continues to return excellent results from drilling on the Main and Betzy veins. With about 25% of the mid-level drilling program completed, all holes show good vein material, confirming the continuance of the geologic structure. One hole on each vein has intercepted high-grade gold ore, ranging from 0.94 ounce of gold per ton to 3.3 ounces of gold per ton. The mid-level drilling program at La Camorra should be completed in the third quarter of this year.
In March, Hecla announced it had been awarded the lease on Block B in Venezuela's prolific El Callao gold mining district, subject to a definitive agreement with CVG-Minerven, the Venezuelan government-owned gold mining company. Brown said, "This is an area that has already proven it can produce high-grade gold. The historic workings produced millions of ounces in the past. However, it has lain idle for the past 50 years, and we believe it holds much greater potential. Recent drilling by CVG-Minerven has identified a continuation of the Chile mine structure, which historically produced gold at a grade of 1.34 ounces of gold per ton. With our status as the largest gold miner in Venezuela and our demonstrated ability to work with the Venezuelan government, this exploration lease enhances our prospects to increase our gold production in the future."
FINANCIAL CONDITION
Hecla's financial condition continues to improve, with a current ratio at the end of the quarter of 1.2:1 and a cash position of $8.6 million. In March, Hecla completed the sale of a portion of the operations of Colorado Aggregate Company for approximately $1.6 million. In addition, Hecla closed on the sale of its corporate headquarters building on April 9 at a sales price of $5.6 million. Proceeds from this sale are not included in the first quarter results or cash position. Hecla is leasing half of the building for about the same amount it paid for annual maintenance as the owner, so Hecla's headquarters will remain at the same location.
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. A 111-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.
Statements made which are not historical facts, such as anticipated payments, production, sales of assets, exploration results, costs, 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 project development risks. 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.
Hecla Mining Company news releases can be accessed on the Internet at: hecla-mining.com
HECLA MINING COMPANY
(dollars in thousands, except per share,
per ounce and per pound amounts -- unaudited)
First Quarter Ended
------------------------
March 31, March 31,
2002 2001
------------------------
HIGHLIGHTS
FINANCIAL DATA
Total revenue $23,792 $17,045
Gross profit 3,734 852
Net income 486 9,535
Income (loss) from continuing
operations 970 (3,610)
Income (loss) applicable to common
shareholders (1,526) 7,523
Basic and diluted income (loss)
per common share (0.02) 0.11
Cash flow provided by operating
activities 523 257
SALE OF PRODUCTS BY SEGMENT
Gold operations $11,273 $6,698
Silver operations 12,110 9,719
------------------------
Total sales $23,383 $16,417
GROSS PROFIT (LOSS) BY SEGMENT
Gold operations $3,070 $1,620
Silver operations 664 (768)
------------------------
Total gross profit $3,734 $852
OTHER DATA
EBITDA BY SEGMENT(1)
Gold operations $5,779 $3,477
Silver operations 3,513 1,768
------------------------
Total EBITDA $9,292 $5,245
PRODUCTION SUMMARY -- TOTALS
Gold - Ounces 56,402 35,582
Silver - Ounces 2,009,997 2,128,395
Lead - Tons 4,021 9,029
Zinc - Tons 6,315 5,889
Average cost per ounce of gold produced:
Cash operating costs ($/oz.) 137 146
Total cash costs ($/oz.) 137 146
Total production costs ($/oz.) 207 215
Average cost per ounce of silver produced:(2)
Cash operating costs ($/oz.) 2.29 3.31
Total cash costs ($/oz.) 2.36 3.32
Total production costs ($/oz.) 3.91 4.61
AVERAGE METAL PRICES
Gold - Realized ($/oz.) 296 279
Gold - London Final ($/oz.) 290 263
Silver - Handy & Harman ($/oz.) 4.51 4.56
Lead - LME Cash (cents/pound) 22.3 22.3
Zinc - LME Cash (cents/pound) 36.0 46.2
(1) EBITDA represents earnings before interest, income taxes,
depreciation, depletion, amortization and items classified as other
operating expenses not occurring at the operating sites. The company
believes EBITDA is helpful in understanding cash flow generated from
operations that is available for income taxes, debt service, capital
expenditures and other nonsite operating expenses.
(2) During the first quarter of 2002, approximately $0.2 million
of costs were classified as care-and-maintenance costs and excluded
from the determination of the cost per ounce of Lucky Friday.
Including the $0.2 million in costs, the cash operating, total cash
and total production costs per ounce total $2.39, $2.47 and $4.02,
respectively, for the first quarter.
HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars and shares in thousands,
except per share amounts -- unaudited)
First Quarter Ended
------------------------
March 31, March 31,
2002 2001
------------------------
Continuing Operations:
Sales of products $23,383 16,417
------------------------
Cost of sales and other direct
production costs 14,091 11,172
Depreciation, depletion and
amortization 5,558 4,393
------------------------
19,649 15,565
------------------------
Gross profit 3,734 852
------------------------
Other operating expenses:
General and administrative 1,877 1,514
Exploration 524 515
Depreciation and amortization 53 68
Provision for closed operations
and environmental matters 109 574
------------------------
2,563 2,671
------------------------
Income (loss) from operations 1,171 (1,819)
------------------------
Other income (expense):
Interest and other income 409 628
Miscellaneous expense (146) (413)
Interest expense (464) (2,006)
------------------------
(201) (1,791)
------------------------
Income (loss) from continuing
operations, net of income tax 970 (3,610)
Discontinued operations:
Income (loss), net of income tax (484) 162
Gain on disposal, net of income tax - - 12,983
------------------------
Net income 486 9,535
Preferred stock dividends(1) (2,012) (2,012)
------------------------
Income (loss) applicable to common
shareholders (1,526) 7,523
Basic and diluted income (loss)
per common share:
Loss from continuing operations after
preferred stock dividends $(0.01) $(0.09)
Income (loss) from discontinued
operations including gain
on disposal (0.01) 0.20
------------------------
Basic and diluted income (loss)
per common share $(0.02) $0.11
========================
Weighted average number of common
shares outstanding 73,840 66,798
========================
(1) For the quarters ended March 31, 2002 and 2001, respectively,
preferred stock dividends of $2 million were not declared, but are
included in income (loss) applicable to common shareholders.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands -- unaudited)
------------------------
March 31, Dec. 31,
2002 2001
------------------------
ASSETS
Current assets:
Cash and cash equivalents $8,619 $7,560
Accounts and notes receivable 9,878 6,648
Inventories 12,037 10,868
Other current assets 2,016 1,426
Net assets of discontinued
operations 821 2,714
------------------------
Total current assets 33,371 29,216
Investments 85 69
Restricted investments 6,375 6,375
Properties, plants and
equipment, net 101,134 104,593
Other noncurrent assets 12,987 12,863
------------------------
Total assets $153,952 $153,116
========================
LIABILITIES
Current liabilities:
Accounts payable and accrued
expenses $7,062 $7,938
Accrued payroll and related
benefits 8,062 7,832
Current portion of
long-term debt 4,283 7,043
Accrued taxes 993 787
Current portion of accrued
reclamation and closure costs 6,892 6,026
------------------------
Total current liabilities 27,292 29,626
Deferred income taxes 300 300
Long-term debt 14,612 11,948
Accrued reclamation and
closure costs 45,432 46,455
Other noncurrent liabilities 6,647 6,823
------------------------
Total liabilities 94,283 95,152
------------------------
SHAREHOLDERS' EQUITY
Preferred stock 575 575
Common stock 18,590 18,267
Capital surplus 405,450 404,354
Accumulated deficit (363,697) (364,183)
Accumulated other comprehensive
income (loss) (55) 173
Stock held by grantor trust (264) (330)
Unearned stock compensation (44) (6)
Treasury stock (886) (886)
------------------------
Total shareholders' equity 59,669 57,964
------------------------
Total liabilities and
shareholders' equity $153,952 $153,116
========================
Common shares outstanding
at end of period 74,294 73,007
========================
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands -- unaudited)
First Quarter Ended
------------------------
March 31, March 31,
2002 2001
------------------------
OPERATING ACTIVITIES
Net income $486 $9,535
Noncash elements included in
net income:
Depreciation, depletion and
amortization 5,611 4,461
Gain on sale of discontinued
operations - - (12,983)
Gain on disposition of properties,
plants and equipment (122) (119)
Provision for reclamation and
closure costs 340 214
Change in net assets of
discontinued operations 438 1,393
Change in assets and liabilities:
Accounts and notes receivable (3,230) (520)
Inventories (1,169) (2,336)
Other current and noncurrent
assets (839) 12
Accounts payable and accrued
expenses (875) 1,754
Accrued payroll and related benefits 669 1,778
Accrued taxes 206 197
Accrued reclamation and closure costs
and other noncurrent liabilities (992) (3,129)
------------------------
Net cash provided by operating
activities 523 257
------------------------
INVESTING ACTIVITIES
Proceeds from sale of discontinued
operations 1,585 59,761
Additions to properties, plants and
equipment (2,182) (2,096)
Proceeds from disposition of properties,
plants and equipment 138 177
Increase in restricted investments - - (443)
Purchase of investments and change
in cash surrender value of life
insurance, net - - 323
Other, net 108 (87)
------------------------
Net cash provided (used) by
investing activities (351) 57,635
------------------------
FINANCING ACTIVITIES
Common stock issued under warrants
and stock option plans 983 - -
Borrowing on debt 3,300 975
Repayment on debt (3,396) (56,999)
------------------------
Net cash provided (used) by
financing activities 887 (56,024)
------------------------
Net increase in cash and cash
equivalents 1,059 1,868
Cash and cash equivalents at
beginning of period 7,560 1,373
------------------------
Cash and cash equivalents
at end of period $8,619 $3,241
========================
HECLA MINING COMPANY
Production Data
First Quarter Ended
------------------------
March 31, March 31,
2002 2001
------------------------
LA CAMORRA UNIT
Tons of ore milled 50,941 36,452
Days of operation 81 79
Mining cost per ton $36.30 $32.08
Milling cost per ton $15.49 $18.28
Ore grade milled - Gold (oz./ton) 0.827 0.829
Gold produced (oz.) 40,217 27,740
Average cost per ounce of gold produced:
Cash operating costs $137 $146
Total cash costs $137 $146
Total production costs $207 $215
GREENS CREEK UNIT (Reflects Hecla's
29.73% share)
Tons of ore milled 52,600 48,103
Days of operation 90 90
Mining cost per ton $28.99 $31.01
Milling cost per ton $14.96 $17.53
Ore grade milled - Silver (oz./ton) 21.07 26.23
Silver produced (oz.) 829,198 967,038
Gold produced (oz.) 7,076 6,964
Lead produced (tons) 1,946 1,887
Zinc produced (tons) 5,778 5,118
Average cost per ounce of silver
produced:
Cash operating costs $1.90 $1.88
Total cash costs $1.91 $1.89
Total production costs $4.45 $4.03
SAN SEBASTIAN UNIT(1)
Tons of ore processed 33,023 3,378
Days of operation 67 - -
Mining cost per ton $32.68 - -
Milling cost per ton $30.24 - -
Ore grade milled - Silver (oz./ton) 25.50 - -
Ore grade milled - Gold (oz./ton) 0.307 - -
Silver produced (oz.) 768,588 44,730
Gold produced (oz.) 9,062 738
Average cost per ounce of silver
produced:
Cash operating costs $1.34 - -
Total cash costs $1.51 - -
Total production costs $2.49 - -
LUCKY FRIDAY UNIT
Tons of ore processed 31,588 79,404
Days of operation 75 77
Mining cost per ton $45.54 $44.35
Milling cost per ton $8.01 $7.44
Ore grade milled - Silver (oz./ton) 13.99 14.90
Silver produced (oz.) 412,211 1,116,627
Gold produced (oz.) 47 140
Lead produced (tons) 2,075 7,142
Zinc produced (tons) 537 771
Average cost per ounce of silver produced:(2)
Cash operating costs $4.83 $4.56
Total cash costs $4.83 $4.56
Total production costs $5.45 $5.11
(1) Production from the San Sebastian mine commenced operations in
May 2001. Production figures from the first quarter 2001 represent
exploration activities.
(2) During the first quarter of 2002, approximately $0.2 million
of costs were classified as care-and-maintenance costs and excluded
from the determination of the cost per ounce at Lucky Friday.
Including the $0.2 million in costs, the cash operating, total cash
and total production costs per ounce total $5.36, $5.36 and $5.97,
respectively, for the first quarter.
CAPITAL EXPENDITURES
(dollars in thousands)
First Quarter Ended
------------------------
March 31, March 31,
2002 2001
------------------------
Greens Creek (29.73%(a)) $696 $931
La Camorra 969 1,133
San Sebastian 498 - -
Other 19 118
------------------------
Total capitalized $2,182 $2,182
========================
(a) Hecla's share
HEDGED POSITIONS
As of March 31, 2002
Gold: 154,000 ounces hedged @ average price of $288
CONTACT: Hecla Mining Company, Coeur d'Alene
Vicki Veltkamp, 208/769-4100
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