Vancouver — Higher metal prices and lower production costs helped
The Idaho-based company earned US$6.2 million on sales of US$36.6 million for the first three months of this year, whereas profits a year earlier amounted to US$6.7 million on sales of US$26.4 million. However, last year’s net profits are not directly comparable, as they include a US$4-million legal settlement and a US$1.1-million benefit from accounting changes.
Hecla is one of North America’s oldest mining companies, with roots in Idaho’s historic Silver Valley and a production history dating back to 1891. Today it operates mines in both North and South America.
Hecla’s silver production in the latest quarter was 2.1 million oz. at an average cash cost of US$1.43 per oz. Nearly 56,000 oz. gold were produced in the same period at cash costs of US$142 per oz. and total production costs of US$234 per oz.
Hecla’s silver production comes mostly from three core operations: the San Sebastian silver mine in central Mexico, the 30%-held Greens Creek mine in Alaska, and the Lucky Friday silver mine in northern Idaho.
San Sebastian produced 857,100 oz. silver and 11,474 oz. gold in the latest quarter at a cash cost of negative US44 per oz. silver. Greens Creek contributed 744,967 oz. silver and 6,743 oz. gold to Hecla’s account in the same period at average total costs of just under US$1 per oz. silver plus byproduct credits. And Lucky Friday produced 483,418 oz. silver at an average cash cost of US$5.44 per oz.
Hecla’s main gold producer is now the La Camorra mine in eastern Venezuela. The high-grade operation produced 37,547 oz. gold at an average cost of US$142 per oz. in the latest quarter, comparable to year-earlier figures. Head grades averaged 0.84 oz. per ton, up from 0.82 oz. in the first quarter of 2003.
Hecla is sinking a 2,000-ft. production shaft to allow for more efficient removal of ore, which is currently hauled using a decline ramp and trucks. Construction of the U$12-million shaft is expected to be completed by year-end.
The company is continuing efforts to release about 5,000 oz. gold being withheld from export from Venezuela “pending an administrative review of export documentation.” Hecla says it has provided all necessary documentation to satisfy the review and received a court order directing the release of the gold (valued at about US$2 million), subject to further court proceedings. All subsequent gold shipments have been exported out of the country on schedule.
On the exploration front, Hecla spent US$2.4 million in the first quarter and plans to spend US$12-15 million this year. The company says the Mina Isidora deposit in Venezuela is “especially promising,” with a proven and probable reserve containing 327,000 oz. gold. A decision in favour of developing the deposit is expected later this year. Deep drilling is also taking place at La Camorra and on the surrounding land package.
About US$1.2 million will be spent this year at the San Sebastian mine in Mexico. Hecla’s geologists are convinced of the long-term potential of the property, which is situated along trend with some of the oldest and richest silver mines in the world.
Hecla ended the first three months of this year with US$120 million in cash and short-term investments, plus US$5.4 million in long-term debt.
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