Hecla Reports Record Silver Production

 

COEUR DALENE, ID - Hecla Mining Company reported record quarterly silver production of 3 million ounces for the second quarter of 2009, a 24% increase compared with the same period a year ago. In spite of lower by-product metal credits in 2009 versus 2008, cash costs in the second quarter of 2009 were $3.38 per ounce of silver after by-product credits or 1.5% lower compared with the second quarter of 2008. Cash costs in the second quarter of 2009 were 28% lower compared with the first quarter of 2009, due to improved prices for by-product credits, increased productivity and lower consumable costs.

Hecla Mining Company President and Chief Executive Officer Phillips S. Baker, Jr., said, We continue to build on the operational success of the first quarter with record silver production at a very low cost per silver ounce produced, record revenue at metal prices significantly below those experienced in the first half of 2008 and one of the strongest quarterly cash flows in our history. This performance is the result of our highly motivated and experienced work force and high quality mine assets. The strong cash flow together with a common share issue has allowed us to reduce debt and shift our attention to growth. Hecla is a different company than it was six months ago with no net debt and long-lived, low-cost operations.

Second quarter production was a record 3 million ounces of silver compared to 2.4 million ounces of silver in the second quarter of 2008. The increase in production is primarily due to higher tonnage throughput at the Greens Creek mine and significantly higher silver grades at the Lucky Friday mine. Year-over-year silver production was also higher since Hecla consolidated 100% ownership in the Greens Creek mine in mid-April 2008; prior to that period, Hecla had a 29.73% ownership interest in the mine. Hecla’s average silver cash cost per ounce remains among the lowest in the industry, with the second quarter total cash cost averaging $3.38 per ounce of silver after by-product metal credits. This compares with cash costs of $3.43 per ounce of silver after by-product credits in the second quarter of 2008 and $4.67 per ounce in the first quarter of 2009. Lower prices for some consumable products including diesel fuel, as well as the higher availability of hydroelectric power at the Greens Creek mine, helped to reduce costs.

By-product metal production totaled 15,925 ounces of gold, 19,409 tons of zinc and 10,650 tons of lead in the second quarter of 2009 compared to 15,257 ounces of gold, 15,988 tons of zinc and 9,162 tons of lead for the second quarter of 2008. Milled tonnage was higher at both operations versus the prior year quarter.

The Greens Creek mine in Alaska produced 2.1 million ounces of silver during the second quarter of 2009 at an average total cash cost per ounce of $2.14, compared to silver production of 1.7 million ounces at an average total cash cost per ounce of $2.10 for the prior year period and $3.21 per ounce in the first quarter of 2009. Milled tonnage averaged 2,254 tons per day, or 32% higher than the same period a year earlier, and 8% more than in the first quarter of 2009. Mine production, back-fill and pre-production activities struck a good balance optimizing output. Improved productivity and the higher-than-expected availability of hydroelectric power lowered unit operating costs to $60.56 per ton, or 26%, compared with the prior year period.

During the second quarter of 2009, $3.3 million was capitalized for purchases of new mobile equipment and underground development.

The Lucky Friday mine in northern Idaho produced 868,339 ounces of silver during the second quarter of 2009, a 31% increase compared with silver production of 665,165 ounces in the second quarter of 2008. Average total cash costs in the second quarter of 2009 were $6.41 per ounce of silver after by-product credits; average total cash costs per ounce of silver in the second quarter of 2008 were $6.93 per ounce. Silver production in the first quarter of 2009 was 866,298 ounces at a cash cost of $8.03 per ounce of silver after by-product credits. Continued implementation of the grade control strategy, better management of product and mill optimization are the key drivers for higher silver production in the second quarter of 2009 compared with the prior year period.

The Lucky Friday mine produced 5,297 tons of lead and 2,536 tons of zinc in the second quarter of 2009. Lead production in the second quarter of 2009 was 19% higher compared with the same period during 2008; zinc production was at similar levels to production in the second quarter of 2008. The mine is forecast to produce approximately 3 million ounces of silver in 2009.

During the second quarter, $1.2 million was spent on exploration. Although work was mostly focused on underground activities at the two mines, preparations were being made for surface drilling programs at all four land packages. Baker said, It is unique for a company Hecla’s size to have four large land packages in districts with a very good production history. Over 500 million ounces of silver have been mined from these properties with most of this amount in the past 25 years; however, modern day exploration has lagged creating a great opportunity to grow resources. Our U.S. properties each measure 20 to 25 square miles in area and have multiple drill-ready targets identified. At San Sebastian, a prior Hecla producer, our land package along the prolific Mexican silver belt is over 300 square miles in size.

Work at the San Juan Silver Joint Venture in southern Colorado during the second quarter of 2009 included completion of the Bulldog resource models, which defined an inferred resource of 37 million ounces of silver. Of this amount, approximately 26 million ounces of silver is accorded to Hecla. A five-year plan was submitted to the USDA Forest Service in early July that outlines a comprehensive evaluation program to evaluate the primary and secondary mineralized structures identified in the district to date.

Hecla’s work during the period in Mexico focused on compiling information and sampling three targets on the large San Sebastian property. Mapping in the target areas has identified alteration characteristic of an acid sulphate system; assay sample results are pending. In addition, new mapping and sampling of the Zapata Norte vein structure shows similarities of the target to the past producing Don Sergio vein that Hecla mined in the earlier part of this decade at San Sebastian. Hecla plans to recommence drilling in the second half of the year on the Pe–ascote and El Garrote targets, which include both bulk mineable open pit and higher-grade underground deposit potential, respectively.

The company’s address is 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, ID 83815, 208.769.4100, fax: 208.769.7612, email: [email protected].