Gold and silver producer Hecla Mining (NYSE) received a blow when it was revealed that the lack of grade continuity at its Grouse Creek gold mine in central Idaho would lead to a significantly shorter mine life and fewer ounces produced.
After realizing that the operation would not return its investment, the company decided to write down, in its third-quarter financial statement, the US$97 million associated with the mine.
The non-recurring asset resulted in a net loss of US$104.7 million (or US$2.17 per share) for the quarter. The loss also included US$5.1 million in accruals and writedowns for environmental remediation, at other properties.
Before these writedowns and accruals, Hecla experienced a loss of US$2.6 million (5 cents per share) for the quarter on revenue of US$45.4 million.
Hecla will now revise the mine plan at Grouse Creek in order to minimize the loss.
On a bright note, the Choya mine in Mexico’s Sonora state has performed better than expected. Production was slightly under 22,000 oz. gold at a cash cost of US$187 per oz. Also, the industrial minerals division of Hecla reported record sales for the first nine months of the year.
Meanwhile, redevelopment continues at the Greens Creek polymetallic mine near Juneau, Alaska, where startup is anticipated in early 1997. Hecla owns a 29.7% interest in the mine, which is operated by Kennecott.
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