EX-99.1 2 a4944742ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Hecla Reports Second Quarter 2005 Results, Updates Exploration Progress; For the Period Ended June 30, 2005 COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Aug. 3, 2005--Hecla Mining Company (NYSE:HL) today reported a loss applicable to common shareholders of $6.4 million, or 5 cents per share, for the second quarter of 2005. Second quarter results include exploration and pre-development expenditures of $6.7 million. Hecla President and Chief Executive Officer Phillips S. Baker, Jr., said, "We continued our increased spending on exploration in the second quarter because Hecla's new and intense focus on exploration is aimed at growing our reserve and resource base, with an eye toward future production increases. We have a suite of very promising exploration properties, both for silver and gold, and the talent and financial resources to make new discoveries. Exploration programs are long-term efforts, and I fully expect to see improvements in Hecla's reserve and resource outlook over the next few years." Exploration expenditures during the first six months of 2005 totaled $11.6 million, compared to $6.8 million spent in the same period last year. The loss of $6.4 million for the quarter compares to income of $2.6 million, or 2 cents per share, during the second quarter of 2004. For the first six months of 2005, Hecla recorded a loss applicable to common shareholders of $9.8 million, or 8 cents per share, compared to a loss of $2.4 million, or 2 cents per share, in the first six months of 2004. The Lucky Friday and Greens Creek units both saw increased silver production during the first half of the year. However, Hecla's 2005 results were negatively impacted by a strike at the Mexican operations during the entire first quarter and all but two weeks of the second quarter, resulting in no sales revenue being recorded from San Sebastian for the first six months of the year. Decreased gold production and increased costs due to lower ore grades and longer haul time at the La Camorra unit in Venezuela also impacted 2005 second quarter and first half results. The recently commissioned shaft at the La Camorra mine, which impeded operations somewhat during its construction, is expected to result in decreased costs in the future. "While production was lower and costs were higher than last year, it has not been unexpected. We knew that with the shaft construction, lower grades and labor issues, we would produce less at higher costs than we wanted. We expect to see improving production and costs in the second half of the year," said Baker. Hecla's balance sheet remains strong, with cash and short-term investments on hand of $52.4 million and no debt at the end of the second quarter. In addition to exploration and pre-development expenditures of $11.6 million in the first half of 2005, Hecla spent $24 million in capital, primarily to advance three major projects: the Lucky Friday expansion, development of Mina Isidora and shaft construction at La Camorra. 2005 2nd QUARTER HIGHLIGHTS -- Exploration focused on all fronts: Block B and La Camorra in Venezuela, continued drilling on the Hugh zone at San Sebastian, Noche Buena feasibility, underground drilling near the Gallagher fault at Greens Creek and underground drilling at Lucky Friday -- Strike resolved at the Mexican operations, which is expected to improve operating results in the third quarter -- The new La Camorra shaft was commissioned in July, with expectations of higher production and lower costs in the future -- Entry into a definitive agreement will give Hecla access to mineral rights on concessions in the Guariche gold district in Venezuela -- Continued progress on the Lucky Friday 5900 development project, the development of Mina Isidora gold mine in Venezuela and the ramp development at the Hollister Development Block gold exploration project in Nevada -- Declaration of payment of dividends in arrears on preferred stock -- Silver production of 1.4 million ounces at an average total cash cost of $2.59 per ounce -- Gold production of 34,172 ounces at an average total cash cost of $317 per ounce -- Revised 2005 gold production estimate and unchanged silver production estimate OPERATIONS Baker said, "The second quarter is a continuation of a transition for Hecla that began in 2003, when we made a decision to invest significant capital in order to assure low-cost operations. So we are investing in three major projects that transition Hecla's operations: the shaft at La Camorra; Mina Isidora, which will be operated as part of the La Camorra unit; and the Lucky Friday 5900 development. By the end of the year, we will begin to see operational benefits from all of these projects." In the first half of 2005, Hecla mined 2.9 million ounces of silver at an average total cash cost of $2.59 per ounce, and 62,295 ounces of gold at an average total cash cost of $307. Silver costs were impacted by limited production due to the previously reported strike at the San Sebastian unit in Mexico, now resolved. Gold costs were impacted by decreased production at La Camorra due to lower ore grades, fewer tons and longer haul times associated with mining at greater depths. Gold production was also affected by the construction of the new shaft at La Camorra. Due to these factors, Hecla is revising its estimate of annual gold production for 2005 to approximately 170,000 ounces of gold at an average total cash cost of approximately $240 per ounce. Silver production estimates for 2005 are unchanged, with the company anticipating production of 6.5 million to 7 million ounces of silver at an average total cash cost in the range of $2.50 per ounce. The Lucky Friday silver mine in northern Idaho experienced a 37% increase in tons milled during the second quarter of 2005 compared to the same period a year ago, producing approximately 623,000 ounces of silver, including approximately 55,000 ounces of silver from the development ore on the 5900 level. The Lucky Friday unit's average total cash cost per ounce of $4.69 in the second quarter of 2005 was a 4% improvement over last year's costs during the same period. Costs are expected to continue to improve upon completion of the new access on the 5900 level of the expansion area. Full production of approximately 4 million ounces of silver is anticipated from the Lucky Friday mine in 2006. The Greens Creek unit in Alaska, in which Hecla holds an approximate 30% interest, contributed about 760,000 ounces of silver to Hecla's account for the second quarter of 2005, a 13% improvement over a year ago, primarily due to improved ore grade. The average total cash cost per ounce of silver at Greens Creek during the second quarter was a low $1.11, partially due to by-product credits from gold, zinc and lead. The San Sebastian unit in Mexico showed no silver or gold sales in the second quarter, as a strike at its Velardena mill concluded just two weeks prior to the end of the quarter. Production reported in the second quarter totaled 55,747 ounces of silver at an average total cash cost of $1.49 per ounce. During the majority of the strike, which began in October 2004, the mine continued to operate at a normal rate, stockpiling ore in preparation for future processing. That ore will be processed by the end of the year with mining ceasing in the third quarter. The La Camorra gold mine in Venezuela commissioned its new, 2,000-foot shaft in July. Once in full operation, the shaft is expected to return the mine to lower operating costs, as well as providing additional access to primary exploration target areas. La Camorra produced 27,020 ounces of gold during the second quarter of 2005, compared to 36,584 ounces in the same period a year ago. However, second quarter production increased 24% from the first quarter of this year. The average total cash cost per ounce of gold during the second quarter of 2005 was $317. The decrease in production from last year was caused by lower ore grades from limited access to higher-grade stopes during shaft construction and generally declining grades. Production was also impacted by longer haul times as mining progressed deeper. With the shaft and Mina Isidora operational, the La Camorra unit is expected to have steady production and lower costs by year end. EXPLORATION "For the first time in our history, Hecla has advanced exploration programs in five worldclass mining districts which all have the ability to significantly increase reserves, resources and production in the future," said Baker. SILVER EXPLORATION Mexico - The first phase of drilling in the Hugh zone was completed during the second quarter. This promising exploration prospect is located on Hecla's 200-square-mile property position in central Mexico. The Hugh zone is directly below the mined out workings of the Francine vein at the San Sebastian mine. Assays for eight of the nine holes completed have been received, with results ranging from 8 to 150 grams of silver per tonne, zero to 1.19 grams of gold per tonne, and up to 1.7% copper, 5.98% zinc and 1.24% lead. Drilling shows that Hugh zone mineralization is open to the west and to the east at depth. Based on results from this phase of drilling of the Hugh zone, additional drilling will be carried out in the third quarter to identify sufficient tonnage to proceed into an underground definition exploration program. Elsewhere on Hecla's Mexican concessions, drill testing of five high-priority soil geochemical anomalies to the west of San Sebastian was started. Eleven holes have been completed and have intercepted vein material, which may represent westerly extensions of the Profesor and Francine veins. Assays are pending. Other targets that underwent geologic mapping, soil sampling and evaluation of soil results included El Gato and La Roca, with drill testing planned later in the third quarter. In addition, Hecla is evaluating regional generative exploration opportunities in the district. United States - At the Lucky Friday silver mine, exploration diamond drilling continued through the second quarter, testing the down dip projection of the Gold Hunter mineralization on the 5900, 6200 and 6400 levels. Some mining is currently occurring on the 5900 level, although the majority of Lucky Friday production year-to-date has been from the 4900 level. Four holes tested the projection of the primary vein at the 6200 level and all returned good results with ore-grade intercepts, with assays ranging up to 18.9 ounces of silver per ton, 14.3% lead and 8.8% zinc. Numerous other veins were also encountered with grade ranges both below and above an economic mining cutoff. More holes are planned to test the 6400 level. At the Greens Creek silver mine, the underground exploration drift successfully crossed the Gallagher Fault zone during the second quarter, and exploration and definition platforms for exploring the new Gallagher zone are being opened up. The planned completion date of the exploration platform is during the third quarter. Once the drift is completed, two diamond drills will be mobilized to commence underground exploration and definition drilling in the Gallagher zone. Results from drilling into the Gallagher zone prior to driving the drift reported last quarter are very encouraging. GOLD EXPLORATION Venezuela - Hecla entered into a definitive agreement with Triumph Gold Corporation in July 2005, that will give Hecla access to mineral rights on concessions in the Guariche gold district in Venezuela's Bolivar State. The closing is expected to take place this quarter. Baker said, "The completion of this agreement gives us some of the best gold targets in three separate gold districts in Venezuela." The Guariche project has many of the same high-grade vein characteristics as the other two prolific gold districts where Hecla has operations. In the second quarter, the deep directional drilling program at La Camorra continued to test continuity at depth. Three holes were completed, with one intercepting 38.53 grams of gold per tonne (over a 2-meter mining width) 75 meters deeper than any previous ore-grade intercept. No significant mineralized zones were encountered in the other two holes, although assay results are pending. A fourth hole is currently underway and additional drilling is planned to test the area to the west of the current intercepts at approximately the minus-900-meter elevation. Drilling during the second quarter also took place on the Isbelia structure, located within the El Dorado Block of concessions. Seven holes were completed and although the Isbelia structure was intersected in all holes, only a short strike length of about 150 meters contained any appreciable mineralization. A total of 43 holes have now tested the Isbelia structure to a depth of 350 meters, indicating little potential for a mineralized shoot that could be developed by Hecla. However, the small miners will continue to exploit the ore body. Elsewhere on the El Dorado property, generative work was conducted on three concessions in the northern part of the land package. A number of targets have been defined that will be drill tested as soon as the necessary permits are obtained. On Hecla's Block B property in Venezuela, drilling on Mina Isidora--which has mineralization on two separate veins--has confirmed the presence of a significant mineralized zone in the upper northeastern part of the S vein. The zone is generally narrow but has numerous high-grade intercepts in an area that was thought to be only moderately mineralized, returning assays up to 1,217 grams of gold per tonne over 0.76 meter. The veining shows significant pinch and swell varying from 0.27 meter at 100.72 grams of gold per tonne to 2.54 meters at 6.25 grams of gold per tonne. Drilling to the west and down dip on the S vein appears to be defining the limits of the S vein. On Hecla's Block B property in El Callao, drilling along the projected eastern extension of the Twin/Conductora Shear has been successful. The shear was intersected in all three holes and hosts quartz-vein-style mineralization. The structure is still present, quite strong and contains gold mineralization, with the best intercept being 7.83 grams of gold per tonne over 4.39 meters. There still remains about one kilometer of untested strike to the eastern boundary of Block B. In addition, drilling is continuing in the central part of the zone to delineate the down plunge extension of the main mineralized zone. Elsewhere on Block B, five main geochemical trends have been identified by the soil geochemical program, which covered the entire concession. Additional sampling and mapping is in progress to prioritize targets for drilling later this year. United States - Total project advance on the decline at the Hollister Development Block gold exploration project, an earn-in to a joint venture with Great Basin Gold, stood at 2,200 feet at the end of July. Ground conditions have improved slightly, but continue to be soft and extremely clay-rich, requiring extensive shotcreting. Depending upon underground conditions, the decline should be completed in the second or third quarter of 2006. Meanwhile, the first underground diamond drill is expected to be mobilized in the third quarter of this year. Construction of facilities within the confines of the East Pit is essentially completed, despite the inclement spring weather in northern Nevada. Mexico - Feasibility work continues on the Noche Buena gold deposit in Mexico's Sonora State, and completion of the feasibility study is expected in the third quarter. However, the project is not a high priority at this time compared to better prospects available for Hecla's exploration dollars. PERSONNEL Hecla says goodbye to Thomas F. Fudge, Jr., Vice President - Operations, who left his position August 1 to pursue other personal and career interests. Fudge also completed his expected two-year term as President of Minera Hecla Venezolana. Baker said, "Tom has helped the company grow significantly with its acquisition of Block B in Venezuela and greatly improved our relationships with the Venezuelan government and communities where we operate. We wish him the best of luck in his future endeavors." Operating activities in Venezuela will continue to be managed by Russell Alley, Executive Vice President - Venezuelan Operations, and Dave Howe, Vice President - Venezuelan Operations. CORPORATE MATTERS During the second quarter, the Board of Directors authorized payment of outstanding Series B Cumulative Convertible Preferred Stock dividends in arrears, which have now been paid, amounting to a total of approximately $2.3 million. There are approximately 157,000 shares of the preferred stock still outstanding. At its annual meeting in May, Hecla's Board of Directors appointed Anthony P. Taylor and David J. Christensen to fill positions on the board for common shareholders. Both Taylor and Christensen were directors previously elected by the Series B preferred stockholders during the period when the dividends were in arrears. On July 1, 2005, Hecla announced it had filed a shelf registration statement with the Securities and Exchange Commission (SEC), allowing Hecla to sell up to $275 million of its common stock, debt securities, preferred stock and/or warrants. The registration statement has been declared effective by the SEC. The shelf registration statement provides Hecla with the flexibility of raising capital in a short time frame when opportunities become available. Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. A 114-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 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, labor issues, 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) Second Quarter Ended Six Months Ended HIGHLIGHTS June 30, June 30, June 30, June 30, 2005 2004 2005 2004 ---------- ---------- ---------- ---------- FINANCIAL DATA Sales: Silver operations (1) $ 15,598 $ 18,212 $ 30,342 $ 43,108 Gold operations 9,657 13,500 19,347 25,254 ---------- ---------- ---------- ---------- Total sales $ 25,255 $ 31,712 $ 49,689 $ 68,362 ========== ========== ========== ========== Gross Profit: Silver operations (1) $ 2,163 $ 5,445 $ 5,325 $ 15,021 Gold operations 1,317 4,626 3,620 8,459 ---------- ---------- ---------- ---------- Total gross profit $ 3,480 $ 10,071 $ 8,945 $ 23,480 ========== ========== ========== ========== Income (loss) from operations $ (6,455) $ 3,650 $ (9,729) $ 10,507 Net income (loss) (6,245) 2,748 (9,541) 8,928 Income (loss) applicable to common shareholders (6,383) 2,610 (9,817) (2,398) Basic income (loss) per common share (0.05) 0.02 (0.08) (0.02) Cash flow provided by (used in) operating activities 823 11,855 (6,300) 16,498 PRODUCTION SUMMARY - TOTALS Silver - Ounces 1,438,806 1,815,236 2,857,069 3,900,721 Gold - Ounces 34,172 53,433 62,295 109,197 Lead - Tons 5,584 5,188 10,480 9,748 Zinc - Tons 6,557 6,371 12,503 12,443 Average cost per ounce of silver produced (1): Cash operating costs ($/oz.) 2.45 1.67 2.46 1.41 Total cash costs ($/oz.) (2) 2.59 1.72 2.59 1.57 Total production costs ($/oz.) 4.22 3.38 4.15 3.14 Average cost per ounce of gold produced (3): Cash operating costs ($/oz.) 310 158 299 150 Total cash costs ($/oz.) (2) 317 162 307 152 Total production costs ($/oz.) 373 251 366 242 AVERAGE METAL PRICES Silver - London Fix ($/oz.) 7.15 6.25 7.06 6.46 Gold - Realized ($/oz.) 432 368 430 373 Gold - London Final ($/oz.) 427 394 427 401 Lead - LME Cash (cents/pound) 44.7 36.8 44.6 37.5 Zinc - LME Cash (cents/pound) 57.7 46.6 58.7 47.6 (1) Includes gold produced at silver operations, which is treated as a by-product credit and included in the calculation of silver costs per ounce. (2) 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. (3) 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) Second Quarter Ended Six Months Ended June 30, June 30, June 30, June 30, 2005 2004 2005 2004 -------- -------- -------- -------- Sales of products $ 25,255 $ 31,712 $ 49,689 $ 68,362 -------- -------- -------- -------- Cost of sales and other direct production costs 17,896 15,556 33,039 32,404 Depreciation, depletion and amortization 3,879 6,085 7,705 12,478 -------- -------- -------- -------- 21,775 21,641 40,744 44,882 -------- -------- -------- -------- Gross profit 3,480 10,071 8,945 23,480 -------- -------- -------- -------- Other operating expenses General and administrative 2,287 2,319 4,929 4,098 Exploration 4,565 3,405 7,357 5,819 Pre-development expenses 2,100 728 4,234 1,024 Depreciation and amortization 138 74 283 149 Other operating expenses (income) 492 (783) 1,184 427 Provision for closed operations and environmental matters 353 678 687 1,456 -------- -------- -------- -------- 9,935 6,421 18,674 12,973 -------- -------- -------- -------- Income (loss) from operations (6,455) 3,650 (9,729) 10,507 -------- -------- -------- -------- Other income (expense): Interest and other income 386 379 788 766 Interest expense (3) (179) (8) (377) -------- -------- -------- -------- 383 200 780 389 -------- -------- -------- -------- Income (loss) from operations before income taxes (6,072) 3,850 (8,949) 10,896 Income tax provision (173) (1,102) (592) (1,968) -------- -------- -------- -------- Net income (loss) (6,245) 2,748 (9,541) 8,928 Preferred stock dividends (1) (138) (138) (276) (11,326) -------- -------- -------- -------- Income (loss) applicable to common shareholders $ (6,383) $ 2,610 $ (9,817) $ (2,398) ======== ======== ======== ======== Basic and diluted income (loss) per common share after preferred dividends (2) $ (0.05) $ 0.02 $ (0.08) $ (0.02) ======== ======== ======== ======== Basic weighted average number of common shares outstanding (2) 118,429 118,262 118,396 117,790 ======== ======== ======== ======== Diluted weighted average number of common shares outstanding 118,429 118,813 118,396 117,790 ======== ======== ======== ======== (1) During the first quarter of 2004, the company recorded a noncash dividend of approximately $10.9 million related to exchanges of preferred stock for common stock and is included in preferred stock dividends for the six months ended June 30, 2004. (2) For the quarter and six months ended June 30, 2005 and for the first six months of 2004, 4,344,599 and 3,061,832 restricted stock units and various outstanding stock options to purchase shares of common stock, respectively, were antidilutive and not included in the calculation of losses per common share. For the quarter ended June 30, 2004, 2,294,050 restricted stock units and various outstanding stock options were included in the calculation of income per common share. HECLA MINING COMPANY Consolidated Balance Sheets (dollars and shares in thousands - unaudited) June 30, Dec. 31, ASSETS 2005 2004 Current assets: --------- --------- Cash and cash equivalents $ 18,315 $ 34,460 Short-term investments and securities held for sale 34,097 46,328 Accounts and notes receivable 20,626 21,936 Inventories 26,181 20,250 Other current assets 2,999 5,607 --------- --------- Total current assets 102,218 128,581 Investments 1,870 1,657 Restricted cash and investments 20,046 19,789 Properties, plants and equipment, net 130,435 114,515 Other noncurrent assets 15,691 14,906 --------- --------- Total assets $ 270,260 $ 279,448 ========= ========= LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 15,627 $ 15,904 Dividends payable 2,486 138 Accrued payroll and related benefits 8,638 9,405 Accrued taxes 2,587 2,379 Current portion of accrued reclamation and closure costs 8,857 9,237 --------- --------- Total current liabilities 38,195 37,063 Accrued reclamation and closure costs 63,571 65,951 Other noncurrent liabilities 8,272 7,107 --------- --------- Total liabilities 110,038 110,121 --------- --------- SHAREHOLDERS' EQUITY Preferred stock 39 39 Common stock 29,613 29,588 Capital surplus 507,338 506,630 Accumulated deficit (379,996) (367,832) Accumulated other comprehensive income 3,346 1,020 Treasury stock (118) (118) --------- --------- Total shareholders' equity 160,222 169,327 --------- --------- Total liabilities and shareholders' equity $ 270,260 $ 279,448 ========= ========= Common shares outstanding at end of period 118,452 118,351 ========= ========= HECLA MINING COMPANY Consolidated Statements of Cash Flows (dollars in thousands - unaudited) Six Months Ended June 30, June 30, 2005 2004 -------- -------- OPERATING ACTIVITIES Net income (loss) $ (9,541) $ 8,928 Noncash elements included in net income (loss): Depreciation, depletion and amortization 7,988 12,881 Gain on disposition of properties, plants and equipment (20) (82) Gain on sale of royalty interests (550) - - Provision for reclamation and closure costs 335 891 Deferred income taxes - - 1,669 Stock compensation 832 (267) Change in assets and liabilities: Accounts and notes receivable 1,310 1,041 Inventories (5,931) (3,049) Other current and noncurrent assets 1,823 (4,271) Accounts payable and accrued expenses 211 1,550 Accrued payroll and related benefits (1,120) 898 Accrued taxes 208 (412) Accrued reclamation and closure costs and other noncurrent liabilities (1,845) (3,279) -------- -------- Net cash provided by (used in) operating activities (6,300) 16,498 -------- -------- INVESTING ACTIVITIES Additions to properties, plants and equipment (23,994) (17,495) Proceeds from disposition of properties, plants and equipment 18 93 Purchase of short-term investments (56,694) (67,379) Maturities of short-term investments 70,826 58,295 Increase in restricted investments (257) (13,409) Other, net - - (201) -------- -------- Net cash used in investing activities (10,101) (40,096) -------- -------- FINANCING ACTIVITIES Common stock issued under stock option plans 256 1,398 Borrowings on debt - - 2,430 Repayments of debt - - (4,349) -------- -------- Net cash provided (used) by financing activities 256 (521) -------- -------- Net decrease in cash and cash equivalents (16,145) (24,119) Cash and cash equivalents at beginning of period 34,460 73,662 -------- -------- Cash and cash equivalents at end of period $ 18,315 $ 49,543 ======== ======== HECLA MINING COMPANY Production Data Second Quarter Ended Six Months Ended June 30, June 30, June 30, June 30, 2005 2004 2005 2004 LA CAMORRA UNIT -------- -------- ---------- ---------- Tons of ore processed 49,269 51,330 99,601 97,070 Days of operation 80 85 163 167 Mining cost per ton $ 68.23 $ 47.91 $ 56.19 $ 44.09 Milling cost per ton $ 14.76 $ 13.50 $ 13.49 $ 12.60 Ore grade milled - Gold (oz./ton) 0.581 0.773 0.514 0.812 Gold produced (oz.) 27,020 36,584 48,881 74,131 Average cost per ounce of gold produced: Cash operating costs $ 310 $ 158 $ 299 $ 150 Total cash costs (1) $ 317 $ 162 $ 307 $ 152 Total production costs $ 373 $ 251 $ 366 $ 242 Capital additions (in thousands) $ 10,961 $ 8,024 $ 18,299 $ 13,560 SAN SEBASTIAN UNIT (2) Tons of ore processed 6,820 40,850 6,820 80,618 Days of operation 19 83 19 159 Mining cost per ton $ 28.81 $ 38.29 $ 28.81 $ 39.46 Milling cost per ton $ 45.01 $ 34.36 $ 45.01 $ 33.42 Ore grade milled - Silver (oz./ton) 16.73 16.44 16.73 20.61 Ore grade milled - Gold (oz./ton) 0.340 0.273 0.340 0.295 Silver produced (oz.) 55,747 626,929 55,747 1,484,029 Gold produced (oz.) 1,125 10,071 1,125 21,545 Average cost per ounce of silver produced (3): Cash operating costs $ 1.12 $ 0.10 $ 1.12 $ (0.38) Total cash costs (1) $ 1.49 $ 0.39 $ 1.49 $ (0.09) Total production costs $ 7.27 $ 1.96 $ 7.27 $ 1.47 Capital additions (in thousands) $ (18) $ 898 $ 222 $ 931 GREENS CREEK UNIT (Reflects Hecla's 29.73% share) Tons of ore processed 58,442 57,886 113,488 117,641 Days of operation 91 91 181 182 Mining cost per ton $ 30.17 $ 26.90 $ 31.73 $ 27.41 Milling cost per ton $ 21.01 $ 18.32 $ 20.71 $ 17.76 Ore grade milled - Silver (oz./ton) 17.74 16.33 19.53 16.51 Silver produced (oz.) 760,193 670,173 1,657,064 1,415,140 Gold produced (oz.) 5,950 6,778 12,150 13,521 Lead produced (tons) 1,828 2,013 3,675 3,738 Zinc produced (tons) 5,377 5,697 10,499 11,134 Average cost per ounce of silver produced (3): Cash operating costs $ 0.87 $ 0.67 $ 0.86 $ 0.65 Total cash costs (1) $ 1.11 $ 0.54 $ 1.07 $ 0.77 Total production costs $ 3.54 $ 3.55 $ 3.43 $ 3.47 Capital additions (in thousands) $ 894 $ 661 $ 1,314 $ 1,625 Second Quarter Ended Six Months Ended June 30, June 30, June 30, June 30, LUCKY FRIDAY UNIT 2005 2004 2005 2004 -------- -------- ---------- ---------- Tons of ore processed (4) 55,380 40,493 98,565 79,590 Days of operation 91 91 180 182 Mining cost per ton $ 54.52 $ 52.70 $ 60.31 $ 54.32 Milling cost per ton $ 8.00 $ 7.76 $ 8.10 $ 7.22 Ore grade milled - Silver (oz./ton) 12.09 13.79 12.49 13.56 Silver produced (oz.) (4) 622,866 518,134 1,144,258 1,001,552 Lead produced (tons) 3,756 3,175 6,805 6,010 Zinc produced (tons) 1,180 674 2,004 1,309 Average cost per ounce of silver produced (3): Cash operating costs $ 4.69 $ 4.87 $ 4.96 $ 5.13 Total cash costs (1) $ 4.69 $ 4.87 $ 4.96 $ 5.14 Total production costs $ 4.84 $ 4.89 $ 5.13 $ 5.16 Capital additions (in thousands) $ 2,291 $ 1,133 $ 4,102 $ 1,739 (1) 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. (2) The mill that processes San Sebastian ore was closed due to a strike by mill workers during most of the first half of 2005, ending in June 2005. (3) Gold, lead and zinc produced have been treated as by-product credits in calculating silver costs per ounce. (4) Production results include approximately 7,600 tons and 55,000 ounces of silver, respectively, for the second quarter of 2005, and approximately 8,000 tons and 58,000 ounces of silver, respectively, for the first six months of 2005, that was mined from the 5900 level development project. 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, 2005 2004 2005 2004 ------- ------- -------- -------- GOLD OPERATIONS Total cash costs $ 8,234 $ 5,982 $ 14,416 $ 11,217 Divided by gold ounces produced 26 37 47 74 ------- ------- -------- -------- Total cash cost per ounce produced $ 317 $ 162 $ 307 $ 152 ======= ======= ======== ======== Reconciliation to GAAP (2): Total cash costs $ 8,234 $ 5,982 $ 14,416 $ 11,217 Depreciation, depletion and amortization 1,449 3,246 2,777 6,681 Treatment & freight costs (515) (575) (927) (1,034) By-product credits 437 51 743 116 Change in product inventory (1,265) 256 (1,313) (146) Reclamation and other costs - - (85) 31 (39) ------- ------- -------- -------- Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 8,340 $ 8,875 $ 15,727 $ 16,795 ======= ======= ======== ======== SILVER OPERATIONS Total cash costs (3) $ 3,587 $ 3,128 $ 7,252 $ 6,111 Divided by silver ounces produced 1,384 1,815 2,800 3,901 ------- ------- -------- -------- Total cash cost per ounce produced $ 2.59 $ 1.72 $ 2.59 $ 1.57 ======= ======= ======== ======== Reconciliation to GAAP: Total cash costs $ 3,587 $ 3,128 $ 7,252 $ 6,111 Depreciation, depletion and amortization 2,430 2,839 4,928 5,797 Treatment & freight costs (5,896) (5,742) (11,907) (11,413) By-product credits 11,862 13,894 23,118 28,378 Strike-related costs 865 - - 1,376 - - Change in product inventory 497 (1,525) 108 (1,132) Reclamation and other costs 90 172 142 346 ------- ------- -------- -------- Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $13,435 $12,766 $ 25,017 $ 28,087 ======= ======= ======== ======== GREENS CREEK UNIT (Reflects Hecla's 29.73% share) Total cash costs $ 841 $ 361 $ 1,780 $ 1,090 Divided by silver ounces produced 760 670 1,657 1,415 ------- ------- -------- -------- Total cash cost per ounce produced $ 1.11 $ 0.54 $ 1.07 $ 0.77 ======= ======= ======== ======== Reconciliation to GAAP: Total cash costs $ 841 $ 361 $ 1,780 $ 1,090 Depreciation, depletion and amortization 1,806 1,929 3,828 3,639 Treatment & freight costs (3,948) (3,769) (8,181) (7,473) By-product credits 7,945 7,336 15,930 14,682 Change in product inventory 916 (2,442) 855 (1,511) Reclamation and other costs 42 89 81 179 ------- ------- -------- -------- Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 7,602 $ 3,504 $ 14,293 $ 10,606 ======= ======= ======== ======== SAN SEBASTIAN UNIT Total cash costs $ 83 $ 244 $ 83 $ (132) Divided by silver ounces produced 56 627 56 1,484 ------- ------- -------- -------- Total cash cost per ounce produced $ 1.49 $ 0.39 $ 1.49 $ (0.09) ======= ======= ======== ======== Reconciliation to GAAP: Total cash costs $ 83 $ 244 $ 83 $ (132) Depreciation, depletion and amortization 535 910 922 2,158 Treatment & freight costs (40) (367) (40) (829) By-product credits 484 3,956 484 8,640 Strike-related costs 865 - - 1,376 - - Change in product inventory (561) 931 (561) 303 Reclamation and other costs 55 73 55 149 ------- ------- -------- -------- Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 1,421 $ 5,747 $ 2,319 $ 10,289 ======= ======= ======== ======== Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2005 2004 2005 2004 LUCKY FRIDAY UNIT ------- ------- -------- -------- Total cash costs $ 2,663 $ 2,523 $ 5,389 $ 5,153 Divided by silver ounces produced (4) 568 518 1,087 1,002 ------- ------- -------- -------- Total cash cost per ounce produced $ 4.69 $ 4.87 $ 4.96 $ 5.14 ======= ======= ======== ======== Reconciliation to GAAP: Total cash costs $ 2,663 $ 2,523 $ 5,389 $ 5,153 Depreciation, depletion and amortization 89 - - 178 - - Treatment & freight costs (1,908) (1,606) (3,686) (3,111) By-product credits 3,433 2,602 6,704 5,056 Change in product inventory 142 (14) (186) 76 Reclamation and other costs (7) 10 6 18 ------- ------- -------- -------- Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 4,412 $ 3,515 $ 8,405 $ 7,192 ======= ======= ======== ======== RECONCILIATION TO GAAP, ALL OPERATIONS Total cash costs $11,821 $ 9,110 $ 21,668 $ 17,328 Depreciation, depletion and amortization 3,879 6,085 7,705 12,478 Treatment & freight costs (6,411) (6,317) (12,834) (12,447) By-product credits 12,299 13,945 23,861 28,494 Strike-related costs 865 - - 1,376 - - Change in product inventory (768) (1,269) (1,205) (1,278) Reclamation and other costs 90 87 173 307 ------- ------- -------- -------- Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $21,775 $21,641 $ 40,744 $ 44,882 ======= ======= ======== ======== (1) Cash costs per ounce of silver or gold 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 conjunction with the Gold Institute 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, is the most comparable financial measure calculated in accordance with GAAP to total cash costs. (2) Costs per ounce of gold are based on the gold produced by the La Camorra mine and Block B concessions only. Gold produced from third-party mining operations located near the La Camorra mine and Block B concessions is treated as a by-product credit and included in the calculation of gold costs per ounce. (3) During the first quarter and for most of the second quarter, ending in June 2005, the mill that processes ore from San Sebastian was closed due to a strike by mill employees. During the second quarter and first six months of 2005, cost of sales and other direct production costs of $0.9 million and $1.3 million, respectively, were not included in the determination of total cash costs for silver operations. (4) Ounces mined from the 5900 level development project at Lucky Friday are not included in the determination of total cash costs. During the second quarter and first six months of 2005, approximately 55,000 ounces and 58,000 ounces, respectively, of silver were excluded from the calculation. CONTACT: Hecla Mining Company Vicki Veltkamp, 208-769-4100 Fax: 208-769-7612