Hecla struggles:
HECLA MNG CO
Symbol HL
Hecla Reports Third Quarter Results, Increases Silver Production by 88%
2008-11-04 08:00 ET - News Release
For the Period Ended September 30, 2008
Company Website: hecla-mining.com
COEUR D'ALENE, Idaho -- (Business Wire)
Hecla Mining Company (NYSE:HL) today reported a net loss of $3.8 million for the third quarter of 2008 compared to net income of $13 million for the same period of 2007. Hecla reported a loss applicable to common shareholders of $7.2 million, or 5¢ per share, for the third quarter of 2008, compared to income applicable to common shareholders of $12.3 million, or 10¢ per share, for the third quarter of 2007. Third quarter 2008 results were impacted by higher cash costs per ounce due to increased smelter costs and diesel fuel prices, provisional price adjustments due to decreased metals prices, and increased interest expense resulting from Hecla’s acquisition earlier this year of the remaining 70.27% of the Greens Creek joint venture in Alaska. Hecla has $161 million in debt remaining after completing the $750 million purchase of Greens Creek. The company remains on track to meet the estimate of approximately 9 million ounces of silver production in 2008, at an average total cash cost in the range of $3.50 per ounce.
For the first nine months of 2008, Hecla recorded a loss applicable to common shareholders of $39.5 million, or 31¢ per share, compared to income of $44.6 million, or 37¢ per share, for the first nine months of 2007. In addition to higher operating costs, provisional price adjustments and interest expense, results for the first nine months of 2008 were impacted by Hecla’s acquisition of the remainder of the Greens Creek joint venture, as well as the loss on the sale of Hecla’s Venezuelan properties.
Hecla Mining Company President and Chief Executive Officer, Phillips S. Baker, Jr., said, “Over the quarter we have seen a dramatic decline in the price of silver. The prices of lead and zinc, important by-product metals which impact our cash costs per ounce of silver, have also declined not only over this quarter, but since last year. At the same time, production costs have increased, which affects our cash margins and lowers our income, cash flow and liquidity. So, as we have done numerous times in our long history, we are aggressively focusing on reducing costs throughout the company and deferring discretionary capital investments and exploration expenses. Fortunately, the Greens Creek and Lucky Friday mines are two U.S. operations that are among the world’s lowest-cost silver mines. Both have survived in even tougher price environments, and we will draw upon that experience in these market conditions. Despite the stress in the financial markets, we have repaid the majority of the bridge loan facility, and are pleased our lenders have extended the maturity date on the $40 million still outstanding. We are considering all of our options to retire the financing obligations of the bridge and term debt, while reducing our costs to improve liquidity.”
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