Hecla posts loss despite improved operating performance

Although gold production was up and cash costs were down at Hecla Mining (HL-N), the company still posted a loss for the three months ended March 31.

Revenues of US$23.8 million translated into net earnings of US$486,000 before a US$2-million charge for undeclared dividends on preferred stock. The company did, however, see US$970,000 in earnings from continuing operations, up from a US$3.6-million loss from those same operations in the first quarter of 2001.

Operating results were substantially better than a year before, when a one-time gain of US$13 million on the sale of the Kentucky-Tennessee Clay Company, an industrial-minerals subsidiary Hecla sold in the first quarter of 2001. In that quarter, Hecla made US$9.5 million on revenues of US$17 million, but booked a loss of US$1.8 million from operations and US$3.6 million from continuing operations.

Hecla’s La Camorra mine in Venezuela produced 40,217 oz. gold at a cash cost of US$137 per oz. in the quarter. Total costs were US$207 per oz. By comparison, last year’s first-quarter production was only 27,740 oz., cash costs were US$9 higher, and total costs US$8 higher.

The gains in gold production offset declines in silver production at the Lucky Friday mine in Idaho. Hecla’s decision last year to drastically cut back production from the mine, which is now exploiting low-grade ore at depth, brought silver production down to 412,211 oz. from 1.1 million oz. in the first quarter of 2001. The mine’s cash costs this past quarter, US$4.83 per oz., were below the average silver spot prices for the period.

Production was slightly lower, and costs steady, at the Greens Creek silver mine in Alaska, in which Hecla owns a 29.7% interest. The rest is held by Kennecott, a unit of Rio Tinto (RTP-N).

The San Sebastian silver and gold mine in Mexico, which was not in commercial production until May of last year, contributed 768,588 oz. silver and just over 9,000 oz. gold, with operating costs (after the gold credit) of US$1.34 per oz. silver.