Hecla boosts 2002 production estimates

Continued operating success at the La Camorra gold mine in Venezuela and the San Sebastian silver mine in Mexico’s Durango state is allowing Hecla Mining (HL-N) to revise upwards its estimates for gold and silver production in 2002.

Hecla now expects to mine about 215,000 oz. gold and 8 million oz. silver this year, with total cash costs ringing in at about US$145 per oz. gold and below $2.60 per oz. silver.

The company had previously estimated its 2002 production at 195,000 oz. gold and 7.5 million oz. silver at slightly higher cash costs.

Hecla attributes the production boost and the resulting drop in cash costs to higher output and productivity during the first half of the year, as well as continued impressive ore grades.

For 2002, broken down by operation, Hecla will produce: 150,000 oz. gold from its 100%-owned La Camorra mine; 3.2 million oz. silver and 37,000 oz. gold from its 100%-owned San Sebastian mine; 3.1 million oz. silver and 28,000 oz. gold from its 29.7%-owned Greens Creek mine in Alaska’s panhandle (Rio Tinto (RTP-N) subsidiary Kennecott owns the remainder and serves as operator); and 1.7 million oz. silver from the company’s weakest performer, the wholly owned Lucky Friday mine in northern Idaho.

During the first half of the year, Hecla produced about 120,000 oz. gold, up almost 40% from the 86,152 oz. produced during the same period in 2001. Gold production was derived from La Camorra (about 85,000 oz.), San Sebastian (19,000 oz.) and Greens Creek (15,000 oz.).

Silver production during the first half tallied 4.3 million oz., up about 200,000 oz. from last year. Of note, new production from San Sebastian, which began commercial production in May 2001, helping to offset a planned reduction in output from the aging, high-cost Lucky Friday operation.

During the first half of 2002, Hecla’s share of Greens Creek’s silver output was nearly 1.7 million oz., while San Sebastian contributed more than 1.6 million oz. and Lucky Friday produced 1 million oz.

Headquartered in Coeur d’Alene, Idaho, Hecla has been one of the great turnaround stories of the past year. Once heavily in debt and seen as a high-cost producer, Hecla acquired Monarch Resources in 1999 and managed to turn the latter’s underperforming La Camorra mine into a profitable, low-cost operation with an expanding reserve base.

The San Sebastian asset, acquired almost as an afterthought in the Monarch deal, has proved to be a true blessing for Hecla with the discovery of significantly higher-than-expected tonnages and grades at the property. Hecla brought San Sebastian swiftly into production and the mine has quickly taken its place as one of the company’s core assets.

At the exploration level, Hecla recently teamed up with Great Basin Gold (GBG-V) to advance the Ivanhoe property, which is situated in Nevada’s Carlin trend between Barrick Gold’s Goldstrike property and Newmont Mining’s Ken Snyder mine.

Hecla can earn a 50% interest in Ivanhoe by spending US$22 million on a two-stage development program.