Hecla holds the line on production costs

Low silver and gold prices are taking their toll on Hecla Mining (HL-N), despite ongoing efforts to reduce production costs at mines in North and South America.

The Idaho-based company reported a net loss of US$2.7 million, or 5 cents per share, for the latest quarter ended Sept. 30, compared with a loss of US$1.1 million a year earlier.

For first nine months of 1998, Hecla posted a loss of US$800,000, compared with a US$1.5-million loss a year earlier.

Hecla’s gold operations turned out 95,403 oz. at a total cash cost of US$185 per oz. during the first nine months of this year. In the latest quarter, the Rosebud mine in Nevada, an underground producer, contributed 18,259 oz. at an average total cash cost of US$178 per oz. Production for the 9-month period was 50,540 oz.

Hecla’s silver production increased 38% over the first nine months of 1997, putting the company on track to mine more than 7 million oz. silver this year. Production costs for the first nine months of this year averaged US$3.88 per oz., compared with US$3.36 a year ago. Total costs were US$5.30 and $5.23 per oz., respectively, for 1997 and 1998.

Hecla noted that cash costs were lower this year at the Lukcy Friday mine in Idaho, though costs at the 29.7%-held Greens Creek silver mine in Alaska were higher, mostly as a result of lower prices for byproduct zinc, gold and lead.

Hecla’s industrial minerals division performed strongly in the 9-month period, providing US$8.5 million in cash flow from operations. The company notes that both sales and gross profit increased in the first nine months of this year, compared with a year ago.

On the exploration front, Hecla has increased the geologic resource at the Noche Buena property near its La Choya mine in northern Mexico. With more than 250,000 contained ounces identified to date, the company plans to incorporate the data being collected into a feasibility study scheduled for completion next year.

In Peru, Hecla has encountered gold mineralization at the Alto Dorado property; more work is planned. And at the Cacique gold project in Chile, work will resume in an effort to test areas where previous drilling returned intercepts of economic interest.