EX-99.1 2 a4758159ex991.txt PRESS RELEASE EXHIBIT 99.1 Hecla Releases Third Quarter Financial Results, Advances Exploration and Development Projects; For the Period Ended September 30, 2004 COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Nov. 4, 2004--Hecla Mining Company (NYSE:HL) today reported financial results for the third quarter and first nine months of 2004. Hecla's President and Chief Executive Officer, Phillips S. Baker, Jr., said, "We have begun to make significant investments in our exploration and development programs and we're very pleased with the progress we're making. These expenditures reflect an increased emphasis on growing our resources, and are leading us toward the feasibility stage at projects in Mexico, Nevada and Idaho, as well as development of a new gold mine in Venezuela. Hecla's silver and gold operations continue to have some of the lowest costs in the industry; although, as expected, costs were higher this quarter." Income from operations in the third quarter of 2004 was $3.3 million, before a noncash environmental accrual and before company-wide exploration and pre-development expenditures, compared to $8.2 million in the same period a year ago. Exploration and pre-development expenses in the third quarter were over $6 million, more than double the amount during the same period last year. Including those expenses, as well as a noncash accrual of $8.4 million taken for future environmental costs, Hecla reported a third quarter net loss of $11.3 million, or 10 cents a share. This compares to a net loss of $17.5 million, or 16 cents a share, in the third quarter of 2003. Income before the environmental accruals and exploration and pre-development expenses for the first nine months of 2004 was $19.4 million, compared to $23.3 million in the same period last year. 2004's income reflects expenditures of $13 million on exploration and pre-development in the first nine months of the year. Including the noncash environmental accruals and exploration and pre-development expenses, the net loss for the first nine months of 2004 was $2.4 million, compared to a net loss of $8.2 million during the first nine months of 2003. Baker said, "For 2004, we now expect to produce more than 200,000 ounces of gold at cash costs below $185 per ounce and about 7.7 million ounces of silver at cash costs below $2 per ounce. This year, and particularly this quarter, we are in lower-grade areas of our underground mines which, as expected, has resulted in somewhat lower production and higher costs than last year. This will ebb and flow from year to year, due to the nature of our underground mines. We continue to be in excellent financial and operational shape as the lowest-cost primary silver producer and one of the lower-cost gold producers. We are also debt-free, with more than $93 million in cash and short-term investments on the balance sheet." Baker continued, "Our emphasis now is on expanding our resource and reserve base, which we expect to grow significantly over the next two to three years, leading to increased production in future years." Regarding the company's exploration program, Baker said, "While this level of exploration reduces current earnings, it provides the investment needed to grow our reserves and resources in the future. I'm very pleased with the land positions we have in these great mining districts. The next new mine or deposit could be on any of our properties in the U.S., Mexico or Venezuela - they all have that potential. Meanwhile, our current operations continue to produce gold and silver at our expected production rates and at very low overall costs." FIRST NINE MONTHS 2004 HIGHLIGHTS -- 5.7 million ounces of silver produced at an average total cash cost of $1.81 per ounce -- 154,124 ounces of gold produced, with 102,422 ounces produced from the La Camorra unit at an average total cash cost per ounce of $165 -- $13 million in exploration and pre-development expenditures in the first nine months -- Extended deposit strike length at the Lucky Friday silver mine by more than 10% -- In Mexico, Hugh Zone exploration has been advanced to a scoping study -- Successful advancement of the Noche Buena project in Mexico -- Development of the new, high-grade gold mine in Venezuela is underway -- Commencement of an exploration decline at the Hollister Development Block gold project in Nevada -- Noncash environmental accruals of $8.8 million -- Debt-free, with $93 million in cash and short-term investments GOLD OPERATIONS & EXPLORATION In the first nine months of 2004, Hecla produced 154,124 ounces of gold. 102,422 ounces came from the La Camorra unit in Venezuela, at an average total cash cost of $165 per ounce. During the third quarter, the La Camorra unit produced 28,290 ounces of gold at a total average cash cost per ounce of $211. Costs are expected to decrease during the fourth quarter. Low costs relative to the industry have been maintained despite the increasing depth of the ramp and rising material costs, particularly steel. To maintain low costs at the La Camorra mine in the longer term, a shaft is being constructed at the property to eliminate the long haul times. The pilot hole for the shaft is complete, and development of the underground levels is underway. The hoist is in place on the surface, and the headframe will be erected during the fourth quarter and into the first quarter of next year. The project is 65% complete, with approximately $5.5 million remaining to be spent. The shaft is expected to be operational in the second quarter of 2005. Development of a new gold mine on Hecla's Block B property in the El Callao gold district of Venezuela is on schedule. Mina Isidora is on track to go into full operation starting in 2006. To date, the decline has been advanced about 135 meters. Temporary surface facilities, the power line and the road access have been completed. Although the main access to the mine will be via a ramp, an old shaft at the Mina Isidora site is undergoing rehabilitation to accelerate mine development, provide some test mining, and allow limited commercial production as early as next year. Once in full operation, the current life-of-mine plan has production ranging from 70,000 to 120,000 ounces of gold per year. Ore from Mina Isidora will be trucked to the mill at the La Camorra mine for processing, eliminating the need to build a new mill on site. Hecla spent approximately $1.8 million on exploration in Venezuela in the third quarter of this year, with about 8,000 meters of core drilling completed. On Block B, the primary exploration drilling target is the Twin Shears, where preliminary drilling has been very encouraging, with several holes assaying at ore grade material over widths of more than five meters and one intercept of 14.2 grams per tonne (0.4 ounce of gold per ton) over a 12.29-meter interval. Drilling is continuing to evaluate continuity of the mineralization and to test the mineralized zone laterally and at depth. In Nevada, Hecla began surface and underground construction at the Hollister Development Block gold exploration project. Only a small amount of pre-development expense was recorded for the third quarter, but the company expects to spend approximately $3 million advancing the project during the fourth quarter of this year. SILVER OPERATIONS & EXPLORATION Hecla produced 5.7 million ounces of silver in the first nine months of 2004, at an average total cash cost of $1.81 per ounce. Production in the third quarter of the year was 1.7 million ounces at an average total cash cost of $2.32 per ounce. Compared to earlier in the year, costs in the third quarter at the silver operations were impacted by lower ore grades and higher diesel and steel costs. At the Lucky Friday mine in Idaho, cash costs per ounce were significantly lower in the third quarter of 2004 than in the same period a year ago, partially due to higher by-product metals prices. The average total cash cost per ounce in the third quarter of this year was $4.53 per ounce, even though the ore grade was lower compared to the same period a year ago. Lucky Friday produced more than 1.5 million ounces of silver in the first three quarters of the year, at a year-to-date average total cash cost per ounce of $4.98. Lucky Friday's new development drift on the 5900 level has advanced approximately 3,700 feet, or about two-thirds of the way to the ore body. When production starts on the new level, cash costs are anticipated to decrease to as low as $4 per ounce. Full production on the new level is expected to begin in early 2006, and annual production is expected to double to about 4 million ounces of silver a year. Exploration drilling to the east of the identified reserve envelope at the Lucky Friday has been excellent, extending the strike length of the vein on the 5900 level by almost 250 feet. Drilling to test the westerly strike extension of the deposit is now underway. Hecla anticipates adding additional reserves to the mine next year. Hecla is currently evaluating metallurgical improvements in the mill at the Lucky Friday unit. Preliminary results indicate excellent potential to improve metal recovery and concentrate grades, as well as some potential for additional capacity. Work will commence in the first quarter of next year to evaluate the ability of the current infrastructure to support an increased level of production above current peak capacity. The mine has been in operation for nearly 50 years and still has more reserves and resources than at most times in its history. The Greens Creek mine in Alaska, in which Hecla holds an approximate 30% interest, produced 2.2 million ounces of silver for Hecla's account in the first nine months of 2004, at a low average total cash cost of $1.04 per ounce. In the third quarter alone, Hecla's share of Greens Creek production was about 767,000 ounces of silver, at an average total cash cost of $1.55 per ounce. Exploration drilling and drifting continues to evaluate targets to the west of the known ore bodies on the west side of the Gallagher fault. Drift access to this area is being developed and should be completed early next year, which will establish a new exploration platform to test the significant new target area. Additional surface exploration is also continuing to define and test targets in this under-explored, world-class mining district. The San Sebastian silver mine in Mexico continues to produce silver at a very low cost, with nearly 2 million ounces of silver mined in the first nine months of the year at a total average cash cost of just 22 cents per ounce. San Sebastian also produced 31,850 ounces of gold as a by-product in the first three quarters. In the third quarter of 2004, the mine produced about 471,809 ounces of silver and 10,305 ounces of gold, at a total average cash cost per ounce of silver of $1.20. As expected, the ore grade has been decreasing as the operation reaches the last year of its reserve life. Toward the end of October, mill employees went on strike after presenting a list of what the company believes are unfounded grievances relating to the labor agreement. The strike is expected to be relatively short-lived with a favorable outcome to the company, and is not expected to affect the company's long-term production or cost targets. Depending upon the length of the strike, fourth quarter 2004 production could be impacted. The mine is stockpiling ore until the strike is resolved. Exploration efforts are in full swing on the prospective Mexican property in the Saladillo Valley, where the San Sebastian mine is located. The focus is primarily in the Francine and Don Sergio areas, where nearly 12,000 meters of reverse circulation and core drilling were completed in the third quarter. Deep drilling below the current workings on the Francine vein, known as the Hugh Zone, has been encouraging and is now being evaluated in terms of metallurgy, hydrology and resource potential. Assuming results from the current scoping study remain positive, Hecla anticipates commencement of a full underground feasibility study in 2005. In addition, work on the Don Sergio deposit has indicated the potential for another Francine-type deposit at depth. Follow-up drilling is in progress to test this target. Generative exploration work on the Saladillo concessions has outlined a number of large, consistent, multi-element geochemical anomalies to the west and north of the Francine vein at San Sebastian. Hecla will be systematically drill testing the targets beginning in the fourth quarter. Also in Mexico, but in the state of Sonora, a drilling program on the Noche Buena gold property has been completed, with encouraging results. This program was intended to confirm the currently known resource at the area and provide additional geological, metallurgical and hydrogeological data for a feasibility study, which is now underway. A decision on whether to mine the deposit could be made as early as next summer. ENVIRONMENTAL In the third quarter of 2004, Hecla recorded a noncash accrual of $8.4 million as a provision for closed operations and future environmental matters. Periodically, the company reviews environmental matters to determine whether the accrual for future environmental issues is adequate. Most of these estimated expenditures are expected to take place over a long period of time, and are not expected to change Hecla's operations or plans. The bulk of the accrual relates to issues concerning historic mining activities in northern Idaho's Coeur d'Alene Basin. In the third quarter, $5.6 million was accrued for past response costs that are claimed by the federal government for its litigation and related costs, although there is not likely to be a final determination of those costs for some time. Hecla has estimated a range of liability for the past response cost component in the range of $5.6 million to $13.6 million, with $5.6 million being accrued in accordance with accounting principles that require that if no amount within the range of estimate is more likely than other amounts, the lower end of the range shall be accrued. The majority of the remainder of the accrual in the third quarter, about $2.9 million, was allotted to the Grouse Creek mine in central Idaho, which is currently undergoing reclamation and closure. FINANCIAL In addition to the environmental accrual and increased exploration expenditures, Hecla's financial results for the first nine months of 2004 were impacted by a noncash dividend of approximately $11 million taken in the first quarter of the year. The charge was a result of Hecla exchanging common shares for preferred shares. Hecla has reduced preferred shares outstanding to approximately 160,000. Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. A 113-year-old company, Hecla has long been well known in the mining world and financial markets as a quality silver and gold 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, litigation outcome, production, sales of assets, exploration results and plans, 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, exploration risks and results, political risks, project development risks 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. Cautionary Note to Investors - The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this news release, such as "resource," that the SEC guidelines strictly prohibit us from including in our filing with the SEC. 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. Hecla Mining Company news releases can be accessed on the Internet at: http://www.hecla-mining.com HECLA MINING COMPANY (dollars in thousands, except per share, per ounce and per pound amounts - unaudited) Third Quarter Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, HIGHLIGHTS 2004 2003 2004 2003 FINANCIAL DATA Sales of products $ 33,718 $ 28,079 $ 102,080 $ 84,723 Gross profit 6,905 10,390 30,384 26,990 Net loss (11,292) (17,460) (2,364) (8,187) Basic loss per common share (1) (0.10) (0.16) (0.12) (0.09) Cash flow provided by operating activities before exploration and pre-development expenses (2) 6,691 7,180 30,299 25,941 Cash flow provided by operating activities 517 4,618 17,282 17,608 SALE OF PRODUCTS Silver operations (3) $ 22,290 $ 19,485 $ 65,453 $ 55,681 Gold operations 11,476 8,611 36,730 28,522 Other (48) (17) (103) 520 ---------- ---------- ---------- ---------- Total sales $ 33,718 $ 28,079 $ 102,080 $ 84,723 GROSS PROFIT (LOSS) Silver operations (3) $ 5,099 $ 7,202 $ 20,176 $ 16,099 Gold operations 1,854 3,236 10,311 10,961 Other (48) (48) (103) (70) ---------- ---------- ---------- ---------- Total gross profit $ 6,905 $ 10,390 $ 30,384 $ 26,990 PRODUCTION SUMMARY - TOTALS Silver - Ounces 1,749,681 2,643,429 5,650,402 7,485,737 Gold - Ounces 44,814 47,176 154,124 152,367 Lead - Tons 5,040 4,989 14,789 16,023 Zinc - Tons 6,425 4,811 18,868 18,815 Average cost per ounce of silver produced (3): Cash operating costs ($/oz.) 2.16 1.20 1.66 1.41 Total cash costs ($/oz.) (4) 2.32 1.33 1.81 1.52 Total production costs ($/oz.) 3.89 2.64 3.39 2.76 Average cost per ounce of gold produced (5): Cash operating costs ($/oz.) 204 161 162 145 Total cash costs ($/oz.) (4) 211 161 165 145 Total production costs ($/oz.) 310 228 259 212 AVERAGE METAL PRICES Silver - Handy & Harman ($/oz.) 6.50 5.03 6.50 4.78 Gold - Realized ($/oz.) 378 337 375 332 Gold - London Final ($/oz.) 401 363 401 354 Lead - LME Cash (cents/pound) 42.3 23.2 39.1 21.6 Zinc - LME Cash (cents/pound) 44.4 37.2 46.5 36.0 (1) For the quarters and nine months ended September 30, 2004 and 2003, preferred stock dividends for $0.1 million and $11.5 million, respectively, and $0.7 million and $2.0 million, respectively, were not declared. The preferred dividends are not included in the determination of net loss; however, they are included in determining loss applicable to common shareholders and loss per share. Including the effects of preferred stock dividends, losses applicable to common shareholders totaled $11.4 million and $13.8 million, respectively, for the quarter and nine months ended September 30, 2004, compared to losses applicable to common shareholders of $18.1 million and $10.2 million, respectively, during the comparable periods in 2003. (2) Cash flow provided by operating activities before exploration and pre-development expenses of $6.7 million and $30.3 million, respectively, for the third quarter and first nine months of 2004, and $7.2 million and $25.9 million, respectively, for the third quarter and first nine months of 2003, represent non-U.S. generally accepted accounting principles (GAAP) measurements. The following table presents a reconciliation between cash flow provided by operating activities to non-GAAP cash flow provided by operating activities before exploration and pre-development expenses for the three and nine months ended September 30, 2004 and 2003: Cash flow provided by operating activities $ 517 $4,618 $17,282 $17,608 Add exploration 5,656 2,468 11,476 7,285 Add pre-development 518 94 1,541 1,048 ------ ------ ------- ------- Cash flow provided by operating activities before exploration and pre-development expenses $6,691 $7,180 $30,299 $25,941 ======= ======= ======= ======= (3) Includes gold produced at silver operations, which is treated as a by-product credit and included in the calculation of silver costs per ounce. (4) 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 (GAAP) can be found in the cash costs per ounce reconciliation section of this news release. (5) Includes gold produced from third-party mining operations located near the La Camorra mine, which is treated as a by-product credit and included in the calculation of gold costs per ounce. HECLA MINING COMPANY Consolidated Statements of Operations (dollars and shares in thousands, except per share amounts - unaudited) Third Quarter Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 Sales of products $ 33,718 $ 28,079 $102,080 $ 84,723 Cost of sales and other direct production costs 21,552 12,528 53,957 42,448 Depreciation, depletion and amortization 5,261 5,161 17,739 15,285 -------- -------- -------- -------- 26,813 17,689 71,696 57,733 -------- -------- -------- -------- Gross profit 6,905 10,390 30,384 26,990 -------- -------- -------- -------- Other operating expenses General and administrative 2,071 1,841 6,169 6,103 Exploration 5,656 2,468 11,476 7,285 Pre-development 518 94 1,541 1,048 Depreciation and amortization 89 69 238 268 Other operating expense (income) 1,290 818 1,716 (2,552) Provision for closed operations and environmental matters 8,515 23,284 9,970 23,488 -------- -------- -------- -------- 18,139 28,574 31,110 35,640 -------- -------- -------- -------- Loss from operations (11,234) (18,184) (726) (8,650) -------- -------- -------- -------- Other income (expense): Interest income 446 1,263 1,212 2,227 Interest expense (80) (233) (457) (914) -------- -------- -------- -------- 366 1,030 755 1,313 -------- -------- -------- -------- Income (loss) from operations before income taxes and cumulative effect of change in accounting principle (10,868) (17,154) 29 (7,337) Income tax provision (424) (306) (2,393) (1,922) -------- -------- -------- -------- Loss from operations before cumulative effect of change in accounting principle (11,292) (17,460) (2,364) (9,259) Cumulative effect of change in accounting principle, net of income tax - - - - - - 1,072 -------- -------- -------- -------- Net loss (1) $(11,292) $(17,460) $ (2,364) $ (8,187) ======== ======== ======== ======== Basic income (loss) per common share: Loss from operations after preferred stock dividends $ (0.10) $ (0.16) $ (0.12) $ (0.10) Cumulative effect of change in accounting principle - - - - - - 0.01 -------- -------- -------- -------- Basic loss per common share (2) $ (0.10) $ (0.16) $ (0.12) $ (0.09) ======== ======== ======== ======== Basic weighted average number of common shares outstanding 118,285 110,221 117,955 109,656 ======== ======== ======== ======== (1) As reported on page one of this release, income before environmental accruals and exploration and pre-development expenses of $3.3 million and $19.4 million, respectively, for the third quarter and first nine months of 2004, and income before environmental accruals and exploration and pre-development expenses of $8.2 million and $23.3 million, respectively, for the third quarter and first nine months of 2003, represent non-U.S. generally accepted accounting principles (GAAP) measurements. The following table presents a reconciliation between net loss to non-GAAP income before environmental accruals and exploration and pre-development expenses for the three and nine months ended September 30, 2004 and 2003: Net loss $(11,292) $(17,460) $(2,364) $(8,187) Add non-cash adjustment to provision for closed operations and environmental matters 8,379 23,107 8,756 23,107 Add exploration 5,656 2,468 11,476 7,285 Add pre-development 518 94 1,541 1,048 -------- -------- -------- -------- Income before environmental accruals and exploration and pre-development expenses $ 3,261 $ 8,209 $19,409 $23,253 ======== ======== ======== ======== (2) For the quarters and nine months ended September 30, 2004 and 2003, preferred stock dividends for $0.1 million and $11.5 million, respectively, and $0.7 million and $2.0 million, respectively, were not declared. The preferred dividends are not included in the determination of net loss; however, they are included in determining loss applicable to common shareholders and loss per share. Including the effects of preferred stock dividends, losses applicable to common shareholders totaled $11.4 million and $13.8 million, respectively, for the quarter and nine months ended September 30, 2004, compared to losses applicable to common shareholders of $18.1 million and $10.2 million, respectively, during the comparable periods in 2003. HECLA MINING COMPANY Consolidated Balance Sheets (dollars and shares in thousands - unaudited) Sept. 30, Dec. 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $ 71,607 $ 105,387 Short-term investments 21,590 18,003 Accounts and notes receivable 21,748 16,318 Inventories 17,866 16,936 Deferred income taxes 334 1,427 Other current assets 6,371 3,174 --------- --------- Total current assets 139,516 161,245 Investments 1,745 722 Restricted cash and investments 19,528 6,447 Properties, plants and equipment, net 107,961 95,315 Deferred income taxes - - 896 Other noncurrent assets 14,478 13,570 --------- --------- Total assets $ 283,228 $ 278,195 ========= ========= LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 18,102 $ 13,847 Accrued payroll and related benefits 9,440 7,307 Current portion of debt - - 2,332 Accrued taxes 2,576 3,193 Current portion of accrued reclamation and closure costs 8,193 7,400 --------- --------- Total current liabilities 38,311 34,079 Long-term debt - - 2,341 Accrued reclamation and closure costs 66,376 63,232 Other noncurrent liabilities 6,836 7,114 --------- --------- Total liabilities 111,523 106,766 --------- --------- SHAREHOLDERS' EQUITY Preferred stock 39 116 Common stock 29,575 28,886 Capital surplus 506,715 504,858 Accumulated deficit (363,924) (361,560) Accumulated other comprehensive loss (582) (753) Treasury stock (118) (118) --------- --------- Total shareholders' equity 171,705 171,429 --------- --------- Total liabilities and shareholders' equity $ 283,228 $ 278,195 ========= ========= Common shares outstanding at end of period 118,300 115,544 ========= ========= HECLA MINING COMPANY Consolidated Statements of Cash Flows (dollars in thousands - unaudited) Nine Months Ended Sept. 30, Sept. 30, 2004 2003 OPERATING ACTIVITIES Net loss $ (2,364) $ (8,187) Noncash elements included in net loss: Depreciation, depletion and amortization 17,977 15,553 Cumulative effect of change in accounting principle - - (1,072) Gain on disposition of properties, plants and equipment (105) (306) Provision for reclamation and closure costs 9,438 23,530 Deferred income taxes 1,989 1,475 Stock compensation 300 - - Change in assets and liabilities: Accounts and notes receivable (5,430) (5,462) Inventories (930) (3,638) Other current and noncurrent assets (4,219) (1,368) Accounts payable and accrued expenses 4,242 357 Accrued payroll and related benefits 2,389 (82) Accrued taxes (617) 1,184 Accrued reclamation and closure costs and other noncurrent liabilities (5,388) (4,376) -------- -------- Net cash provided by operating activities 17,282 17,608 -------- -------- INVESTING ACTIVITIES Purchase of held-to-maturity securities (24,619) (12,258) Maturities of held-to-maturity securities 21,032 - - Additions to properties, plants and equipment (30,893) (12,618) Proceeds from disposition of properties, plants and equipment 98 486 Increase in restricted investments (13,427) (14) Other, net - - 50 -------- -------- Net cash used by investing activities (47,809) (24,354) -------- -------- FINANCING ACTIVITIES Common stock issued under warrants and stock option plans 1,420 3,377 Issuance of common stock, net of offering costs - - 91,235 Borrowings on debt 2,430 1,350 Repayment on debt (7,103) (5,938) -------- -------- Net cash provided (used) by financing activities (3,253) 90,024 -------- -------- Net increase (decrease) in cash and cash equivalents (33,780) 83,278 Cash and cash equivalents at beginning of period 105,387 19,542 -------- -------- Cash and cash equivalents at end of period $ 71,607 $102,820 ======== ======== HECLA MINING COMPANY Production Data Third Quarter Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 LA CAMORRA UNIT Tons of ore processed 49,937 51,387 147,815 145,040 Days of operation 85 82 258 244 Mining cost per ton $ 41.19 $ 38.96 $ 41.38 $ 36.08 Milling cost per ton $ 13.38 $ 10.81 $ 13.03 $ 13.05 Ore grade milled - Gold (oz./ton) 0.685 0.576 0.779 0.689 Gold produced (oz.) (1) 28,290 27,732 102,422 94,785 Average cost per ounce of gold produced (2): Cash operating costs $ 204 $ 161 $ 162 $ 145 Total cash costs (3) $ 211 $ 161 $ 165 $ 145 Total production costs $ 310 $ 228 $ 259 $ 212 Capital additions (in thousands) $ 9,867 $ 3,825 $ 23,427 $ 7,284 SAN SEBASTIAN UNIT Tons of ore processed 40,675 40,422 121,293 111,397 Days of operation 83 82 265 241 Mining cost per ton $ 43.67 $ 27.45 $ 40.87 $ 29.24 Milling cost per ton $ 40.11 $ 34.46 $ 35.66 $ 35.77 Ore grade milled - Silver (oz./ton) 13.27 29.07 18.15 29.66 Ore grade milled - Gold (oz./ton) 0.275 0.322 0.288 0.342 Silver produced (oz.) 471,809 1,103,809 1,955,838 3,135,438 Gold produced (oz.) 10,305 11,988 31,850 35,047 Average cost per ounce of silver produced (4): Cash operating costs $ 0.83 $ (0.43) $ (0.08) $ (0.24) Total cash costs (3) $ 1.20 $ (0.22) $ 0.22 $ (0.04) Total production costs $ 3.63 $ 0.80 $ 1.99 $ 0.84 Capital additions (in thousands) $ 24 $ 885 $ 955 $ 3,558 GREENS CREEK UNIT (Reflects Hecla's 29.73% share) Tons of ore milled 59,796 60,542 177,437 174,416 Days of operation 92 92 274 273 Mining cost per ton $ 28.22 $ 26.06 $ 27.68 $ 27.38 Milling cost per ton $ 17.31 $ 15.76 $ 17.61 $ 16.09 Ore grade milled - Silver (oz./ton) 18.05 22.29 17.03 19.73 Silver produced (oz.) 766,967 1,046,154 2,182,107 2,619,519 Gold produced (oz.) 6,154 7,401 19,676 22,355 Lead produced (tons) 1,788 2,047 5,527 6,158 Zinc produced (tons) 5,550 4,163 16,684 16,980 Average cost per ounce of silver produced (4): Cash operating costs $ 1.40 $ 1.03 $ 0.92 $ 1.18 Total cash costs (3) $ 1.55 $ 1.14 $ 1.04 $ 1.25 Total production costs $ 3.58 $ 3.35 $ 3.51 $ 3.74 Capital additions (in thousands) $ 1,235 $ 329 $ 2,860 $ 897 LUCKY FRIDAY UNIT Tons of ore milled 42,580 35,444 122,170 116,137 Days of operation 92 92 274 273 Mining cost per ton $ 55.35 $ 52.67 $ 54.69 $ 48.29 Milling cost per ton $ 8.16 $ 6.83 $ 7.54 $ 6.58 Ore grade milled - Silver (oz./ton) 12.85 14.89 13.32 15.85 Silver produced (oz.) 510,905 493,466 1,512,457 1,730,780 Lead produced (tons) 3,252 2,942 9,262 9,865 Zinc produced (tons) 875 648 2,184 1,835 Average cost per ounce of silver produced (4): Cash operating costs $ 4.53 $ 5.20 $ 4.98 $ 4.75 Total cash costs (3) $ 4.53 $ 5.20 $ 4.98 $ 4.75 Total production costs $ 4.59 $ 5.22 $ 5.02 $ 4.77 Capital additions (in thousands) $ 1,646 $ - - $ 3,385 $ - - (1) During the third quarter and first nine months of 2004, a total of 1,658 ounces and 2,949 ounces, respectively, were produced from third-party operations located near the La Camorra mine and included in our total ounces produced for the La Camorra unit. (2) Includes gold produced from third-party mining operations located near the La Camorra mine, which is treated as a by-product credit and included in the calculation of gold 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 (GAAP) can be found in the cash costs per ounce reconciliation section of this news release. (4) Gold produced is treated as a by-product credit in calculating silver costs per ounce. HEDGED POSITIONS As of September 30, 2004 Sold forward: 11,330 gold ounces @ average price of $288 6,075 metric tons of lead @ average price of $0.364 per pound 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 Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 GOLD SEGMENT Total cash costs $ 5,684 $ 4,496 $ 16,380 $ 13,736 Divided by gold ounces produced 27 28 99 95 -------- -------- -------- -------- Total cash cost per ounce produced $ 211 $ 161 $ 165 $ 145 ======== ======== ======== ======== Reconciliation to GAAP (2): Total cash costs $ 5,684 $ 4,496 $ 16,380 $ 13,736 Treatment & freight costs (427) (370) (1,462) (1,175) By-product credits 652 - - 1,146 - - Change in product inventory 1,096 (586) 951 (1,428) Reclamation and other costs - - (8) 105 53 -------- -------- -------- -------- Costs of sales and other direct production costs (GAAP) $ 7,005 $ 3,532 $ 17,120 $ 11,186 ======== ======== ======== ======== SILVER SEGMENT Total cash costs $ 4,068 $ 3,515 $ 10,249 $ 11,371 Divided by silver ounces produced 1,750 2,643 5,650 7,486 -------- -------- -------- -------- Total cash cost per ounce produced $ 2.32 $ 1.33 $ 1.81 $ 1.52 ======== ======== ======== ======== Reconciliation to GAAP: Total cash costs $ 4,068 $ 3,515 $ 10,249 $ 11,371 Treatment & freight costs (4,715) (4,498) (14,280) (13,753) By-product credits 13,291 11,452 39,747 33,674 Change in product inventory 1,674 (1,640) 544 (1,012) Reclamation and other costs 229 143 577 415 -------- -------- -------- -------- Costs of sales and other direct production costs (GAAP) $14,547 $ 8,972 $ 36,837 $ 30,695 ======== ======== ======== ======== GREENS CREEK UNIT (Reflects Hecla's 29.73% share) Total cash costs $ 1,190 $ 1,196 $ 2,280 $ 3,264 Divided by silver ounces produced 767 1,046 2,182 2,620 -------- -------- -------- -------- Total cash cost per ounce produced $ 1.55 $ 1.14 $ 1.04 $ 1.25 ======== ======== ======== ======== Reconciliation to GAAP: Total cash costs $ 1,190 $ 1,196 $ 2,280 $ 3,264 Treatment & freight costs (3,063) (2,940) (9,341) (9,008) By-product credits 6,272 5,771 19,759 17,458 Change in product inventory 1,541 (406) 32 383 Reclamation and other costs 59 57 237 170 -------- -------- -------- -------- Costs of sales and other direct production costs (GAAP) $ 5,999 $ 3,678 $ 12,967 $ 12,267 ======== ======== ======== ======== SAN SEBASTIAN UNIT Total cash costs $ 565 $ (247) $ 432 $ (112) Divided by silver ounces produced 472 1,104 1,956 3,135 -------- -------- -------- -------- Total cash cost per ounce produced $ 1.20 $ (0.22) $ 0.22 $ (0.04) ======== ======== ======== ======== Reconciliation to GAAP: Total cash costs $ 565 $ (247) $ 432 $ (112) Treatment & freight costs (208) (578) (1,037) (1,594) By-product credits 4,133 4,347 12,773 12,383 Change in product inventory 53 (1,067) 356 (1,292) Reclamation and other costs 118 75 268 216 -------- -------- -------- -------- Costs of sales and other direct production costs (GAAP) $ 4,661 $ 2,530 $ 12,792 $ 9,601 ======== ======== ======== ======== LUCKY FRIDAY UNIT Total cash costs $ 2,313 $ 2,566 $ 7,537 $ 8,219 Divided by silver ounces produced 511 493 1,512 1,731 -------- -------- -------- -------- Total cash cost per ounce produced $ 4.53 $ 5.20 $ 4.98 $ 4.75 ======== ======== ======== ======== Reconciliation to GAAP: Total cash costs $ 2,313 $ 2,566 $ 7,537 $ 8,219 Treatment & freight costs (1,444) (980) (3,902) (3,151) By-product credits 2,886 1,334 7,215 3,833 Change in product inventory 80 (167) 156 (103) Reclamation and other costs 52 11 72 29 -------- -------- -------- -------- Costs of sales and other direct production costs (GAAP) $ 3,887 $ 2,764 $ 11,078 $ 8,827 ======== ======== ======== ======== (1) Cash costs per ounce of silver or gold represent non-U.S. generally accepted accounting principles (GAAP) measurements that management uses to monitor and evaluate the performance of its mining operations. We believe cash costs per ounce of silver or gold provide an indicator of profitability at each location and on a consolidated total, as well as a meaningful basis for which to compare other mining companies and other mining operating properties. (2) Costs per ounce of gold are based on the gold produced by the La Camorra mine only. Gold produced from third-party mining operations located near the La Camorra mine is treated as a by-product credit and included in the calculation of gold costs per ounce. CONTACT: Hecla Mining Company, Coeur d'Alene Vicki Veltkamp, 208-769-4100 Fax: 208-769-7612