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SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
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FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): February 16, 1994
Hecla Mining Company
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-8491 82-0126240
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(Commission File Number) (IRS Employer Identification No.)
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
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(Address of principal executive offices) (Zip Code)
(208) 769-4100
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(Registrant's Telephone Number)
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Item 5. Other Events.
On February 16, 1994, the Registrant provided Equinox Resources Ltd.
("Equinox") with information regarding recent developments involving the
Registrant in the form attached hereto as Exhibit 1, which exhibit is
incorporated herein by this reference. Equinox provided the information to
Equinox shareholders in connection with the Extraordinary General Meeting of
Equinox shareholders to be held February 25, 1994, to consider the Arrangement
involving Equinox and the Registrant. Reference is made to Exhibit 1 for the
entire text of such information provided to Equinox shareholders.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
1. Information provided by Registrant to Equinox Resources Ltd.
shareholders regarding Recent Developments.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: February 16, 1994.
HECLA MINING COMPANY
By: /s/ Michael B. White
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Michael B. White
Vice President - General Counsel
& Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Description Pages
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<S> <C> <C>
(c) 1. Information provided by Registrant to 5 - 9
Equinox Resources Ltd. shareholders
regarding Recent Developments.
</TABLE>
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February 16, 1994
Recent Developments
Set forth below is some important information regarding
Hecla Mining Company which should be carefully considered
by the shareholders of Equinox Resources Ltd. in deciding
how to vote with respect to the Arrangement. Information
contained herein should be read together with Equinox's
Management Information Circular dated January 17, 1994.
New York Stock Exchange Approval
On February 16, 1994, Hecla received notice from the New
York Stock Exchange that the shares of Hecla Common Stock
to be issued to Equinox shareholders in the Arrangement had
been approved for listing on the New York Stock Exchange,
subject to approval of the Arrangement by the Equinox
shareholders and the Ontario Court of Justice (General
Division).
Recent Results
On February 3, 1994, Hecla reported its fourth quarter and
year-end results for 1993. A copy of Hecla's press release
announcing these results is enclosed for your information.
Granduc Mines
On January 24, 1994, Hecla sold its entire share holdings in
Granduc Mines Limited, a Vancouver British Columbia based
company, by selling a total of 2,815,300 Granduc Mines
Limited shares to two Toronto based companies.
Sale of Grouse Creek Joint Venture Interest
On February 8, 1994, Great Lakes Minerals Inc. of Toronto
purchased for US$13,280,857 a 20% undivided interest in
Hecla's Grouse Creek Gold Project. Pursuant to the
acquisition and joint venture agreements Great Lakes entered
into with Hecla, Great Lakes is required to fund its 20% pro
rata portion of capital expenditures required to bring the
Grouse Creek Gold Project to commercial production (including
its portion of capital expenditures incurred to date). In
addition, these agreements provide that Great Lakes has the
option at any time prior to 12 months following the
commencement of commercial production at the Grouse Creek
Gold Project to purchase up to an additional 10% undivided
interest in the Project. Under its agreements with Hecla,
Great Lakes would pay Hecla an amount estimated at
approximately US$277,000 for each additional 1% undivided
interest in the Grouse Creek Gold Project, and in addition
fund its increased share of capital expenditures.
Great Lakes funded the purchase of its 20% interest in the
Grouse Creek Gold Project from the sale in an underwritten
public offering of 17,500,000 Great Lakes Common Shares at
a price of C$2.00 per Common Share for gross proceeds of
C$35,000,000. Great Lakes is required to fund its portion
of the capital expenditure requirements for the Grouse Creek
Gold Project with the net proceeds of this offering.
Pursuant to its agreements with Great Lakes, Hecla purchased
825,000 Great Lakes Common Shares at the offering price of
C$2.00 per Common Share, using US$1,229,875 of the proceeds
received by Hecla for the purchase of Great Lakes' interest
in the Grouse Creek Gold Project. In addition, as part of
this transaction, Great Lakes issued Hecla a warrant
entitling Hecla to acquire up to 500,000 additional Great
Lakes Common Shares at C$2.50 per share, subject to
adjustment in certain circumstances.
Common Stock Issuances Related to Hecla LYONs
As described on pages A-29 to A-30 and page A-36 of
Equinox's Management Information Circular, Hecla currently
has outstanding US$109,950,000 aggregate principal amount of
Liquid Yield Option Notes due 2004 ("LYONs"), which are
currently convertible into 20.824 shares of Hecla Common
Stock per US$1,000 principal amount of LYONs. Pursuant to
the terms of the indenture governing the LYONs, on June 14,
1994, holders of LYONs may require Hecla to purchase LYONs
held by them (the "Put Feature") at a purchase price of
US$456.39 per US$1,000 principal amount of LYONs. The
purchase price may be paid, at the option of Hecla, in cash,
in shares of Hecla Common Stock (valued at the market price
of the Common Stock) or in Hecla Subordinated Extension
Notes due 2004. Due to Hecla's need to utilize cash for
planned capital expenditures, it is probable that, absent
any action by Hecla, Hecla will pay for any LYONs delivered
to it pursuant to the Put Feature by issuing Hecla Common
Stock. Hecla is unable to predict how many LYONs it may be
required to purchase pursuant to the Put Feature and Hecla
cannot predict what effect the Put Feature will have on the
market price of Hecla Common Stock.
Hecla, with the assistance of its financial and legal
advisors, is currently considering several alternatives
with respect to how to best deal with the Put Feature.
Among the alternatives being examined by Hecla are the sale
of additional shares of Hecla Common Stock (or other Hecla
securities) with the proceeds of such an offering being used
to pay cash for LYONs delivered to Hecla pursuant to the Put
Feature (and any remaining proceeds would be used for Hecla
capital expenditures). Hecla is also considering amending
certain terms of the LYONs in order to make it less likely
that the Put Feature will be exercised on June 14, 1994,
including changing the conversion ratio to increase the
number of shares of Hecla Common Stock that would be issuable
upon conversion of each LYON. If either of these
alternatives is pursued, then additional shares of Hecla
Common Stock could be issued, although Hecla's intent with
respect to these alternatives is to issue less shares of
Hecla Common Stock (other than any securities sold to raise
additional funds for capital expenditures) than would be the
case if Hecla was required to repurchase all of the
outstanding LYONs pursuant to the Put Feature on June 14,
1994. However, as described on page A-36 of the Equinox
Management Information Circular, if Hecla takes no action
with respect to the Put Feature and Hecla is required to
purchase all of the outstanding LYONs on June 14, 1994,
based upon current market prices (US$12.25 on February 15,
1994), Hecla would have to issue approximately 4,100,000
shares of Hecla Common Stock. There can be no assurance
that Hecla will determine to pursue, or be successful in
pursuing, any alternative (including and in addition to the
alternatives discussed above) to reduce the likelihood that
the Put Feature will result in the issuance of a significant
amount of Hecla Common Stock.
For additional information with respect to the Put Feature,
see pages A-29 to A-30 and A-36 of Equinox's Management
Information Circular.
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[HECLA MINING COMPANY LETTERHEAD]
FOURTH QUARTER REPORT TO SHAREHOLDERS
FOR THE QUARTER ENDING DECEMBER 31, 1993
FEBRUARY 3, 1994
HECLA REPORTS FOURTH QUARTER AND YEAR-END RESULTS
COEUR D'ALENE, IDAHO -- Hecla Mining Company (HL:NYSE) today reported a
net loss of $3.8 million on revenue of $19.5 million for the fourth quarter of
1993. After a $2 million dividend to preferred shareholders, the Company's
loss for the 1993 quarter amounted to $5.8 million, or 17 cents per common
share. This is in contrast to a net loss of $51.1 million, or $1.65 per common
share, for the same period of 1992.
For the year, Hecla reported a net loss of $11.7 million on revenue of
$84.8 million. After preferred dividends of $4.1 million, the Company's loss
for 1993 amounted to $15.8 million, or 48 cents per common share. This
compares with a loss of $49.3 million, or $1.60 a share, on revenue of $113.1
million for 1992. In 1992, noncash asset write-downs and reclamation accruals
of $41 million made up the bulk of the loss. In 1993, similar charges to
earnings accounted for $2.5 million of the loss. Total revenue for 1993
declined 25 percent compared with 1992 mainly as the result of curtailed metals
production at the silver operations and lower grade ore being mined at the
Republic mine. Lead and zinc, important byproducts of Hecla's silver
operations, were affected by severely depressed prices with lead at an
eight-year low. Reduced production and low lead and zinc prices offset the
fourth quarter improvement in precious metals prices. "We are encouraged by
the recent strength of the precious metals market, and that lead and zinc
prices have also begun to trend upward," said Arthur Brown, chairman, president
and chief executive officer.
On December 29, 1993, the Company signed a definitive agreement to acquire
Equinox Resources Ltd. (EQX:TSE) of Vancouver, British Columbia, for 0.3 of a
share of Hecla common stock for each share of Equinox's outstanding common
stock. Due diligence by both parties has been satisfactorily completed. The
agreement will be presented for approval at a meeting of Equinox shareholders
on February 25, 1994. The acquisition immediately brings Hecla 30,000 ounces
of annual gold production from the American Girl mine in southern California,
plus a suite of promising gold and silver exploration projects. Equinox's
Rosebud deposit in northern Nevada has the potential to add more than 70,000
ounces of annual gold production to Hecla's account.
Hecla's first operation outside the United States and Canada began
production early in 1994. The La Choya mine, located in Sonora, Mexico, is
expected to produce 63,000 ounces of gold in 1994. "This area of Mexico is
drawing intense interest from other gold companies, and we believe our presence
there positions Hecla well to participate in the future growth of mining in
that country," Brown said.
During the fourth quarter, Hecla exchanged 655,000 common shares for all
the outstanding common shares of Mountain West Products in Rexburg, Idaho. The
acquisition will strengthen the Company's position in the landscape products
market with volcanic scoria, pumice and soil additives.
Hecla Mining Company has its headquarters in Coeur d'Alene, Idaho. During
its 103-year history, Hecla has been a leading U.S. producer of silver and
lead, and more recently a significant supplier of gold and industrial minerals.
-HL-
RESULTS IN BRIEF
<TABLE>
<CAPTION>
Fourth Quarter Year Ended
(dollars in thousands, except --------------------------------- ---------------------------------
per-share amounts) Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1993 Dec. 31, 1992
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<S> <C> <C> <C> <C>
Total revenue $ 19,482 $ 19,021 $ 84,812 $ 113,079
Net loss (3,819) (51,131) (11,735) (49,289)
Loss applicable to
common shareholders (5,831) (51,131) (15,805) (49,289)
Loss per common share (0.17) (1.65) (0.48) (1.60)
Sale of products
Gold operations 4,831 5,250 21,375 31,733
Silver operations 2,379 3,971 13,476 25,687
Industrial minerals 10,665 9,197 44,953 43,231
Specialty metals 476 -- 2,043 --
Total sales 18,351 18,418 81,847 100,651
Gross profit (loss)
Gold operations 671 1,064 5,241 6,812
Silver operations (1,795) (3,925) (9,329) (7,954)
Industrial minerals 889 161 5,038 5,012
Specialty metals (210) -- (504) --
Total gross profit (loss) (445) (2,700) 446 3,870
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</TABLE>
AVERAGE METAL PRICES
<TABLE>
<CAPTION>
Fourth Quarter Year Ended
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Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1993 Dec. 31, 1992
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<S> <C> <C> <C> <C>
Gold (dollars/ounce) $ 374 $ 338 $ 360 $ 344
Silver (dollars/ounce) 4.60 3.74 4.30 3.94
Lead (cents/pound) 19 22 18 25
Zinc (cents/pound) 43 49 44 56
</TABLE>
(more)
Contact Bill Booth, Manager - Investor and Public Affairs
6500 Mineral Drive * Coeur d'Alene, Idaho 83814-8788 * 208/769-4100
* FAX 208/769-4159
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HECLA MINING COMPANY
SELECTED FINANCIAL INFORMATION
(in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Fourth Quarter Year Ended
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Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1993 Dec. 31, 1992
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Income Statement Data:
Sales of products $ 18,351 $ 18,418 $ 81,847 $ 100,651
Gross profit (loss) (445) (2,700) 446 3,870
General & administrative 2,003 2,874 6,961 8,520
Exploration & research 1,492 2,177 4,353 8,976
Depreciation & amortization 167 413 669 819
Reduction in carrying value of mining properties 200 27,928 200 27,928
Provision for closed operations &
environmental matters 1,735 12,173 2,307 12,670
Loss from operations (6,042) (48,265) (14,044) (55,043)
Other income (expense):
Interest and other income 1,131 603 2,965 12,428
Loss on sale of investments -- (2,115) (144) (2,115)
Miscellaneous income (expense) -- (55) 40 34
Interest expense:
Total interest cost (1,186) (2,120) (5,023) (6,905)
Less amount capitalized 1,306 618 3,533 2,070
Loss before income taxes and cumulative effect
of change in accounting principles (4,791) (51,334) (12,673) (49,531)
Income tax benefit (972) (203) (938) (345)
Cumulative effect of change in accounting principles -- -- -- 103
Net loss (3,819) (51,131) (11,735) (49,289)
Dividends on preferred stock 2,012 -- 4,070 --
Loss applicable to common shareholders (5,831) (51,131) (15,805) (49,289)
Loss per common share (0.17) (1.65) (0.48) (1.60)
Weighted average number of common
shares outstanding 34,016 31,587 32,915 30,866
Common shares outstanding at end of period 34,583 31,587
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Cash Flow Data:
Cash flow from operations 6,139 9,481
Cash, cash equivalents and short-term
investments at end of period 65,431 3,287
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Dec. 31, 1993 Dec. 31, 1992
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Selected Balance Sheet Data:
Total current assets $ 97,227 $ 32,968
Properties, plants and equipment, net 222,870 179,827
Total assets 332,878 222,443
Working capital 77,620 20,270
Total current liabilities 19,607 12,698
Long-term debt 49,489 70,382
Total shareholders' equity 240,062 113,719
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</TABLE>
PRODUCTION DATA
<TABLE>
<CAPTION>
Fourth Quarter Year Ended
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Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1993 Dec. 31, 1992
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<S> <C> <C> <C> <C>
REPUBLIC UNIT
Gold (oz.) 11,241 11,240 49,601 58,343
Silver (oz.) 70,541 64,167 276,688 299,957
Cash cost per oz. of gold $ 248 $ 194 $ 207 $ 176
Full cost per oz. of gold $ 308 $ 253 $ 262 $ 220
LUCKY FRIDAY UNIT
Silver (oz.) 474,805 547,040 2,122,738 2,031,779
Gold (oz.) 242 257 972 965
Lead (tons) 3,930 5,460 19,795 21,336
Zinc (tons) 858 1,125 4,385 4,213
Cash cost per oz. of silver $ 6.63 $ 4.47 $ 5.54 $ 4.12
Full cost per oz. of silver $ 7.88 $ 5.64 $ 6.77 $ 5.35
GREENS CREEK UNIT
Silver (oz.) -- 472,793 551,107 1,959,368
Gold (oz.) -- 2,183 2,826 9,094
Lead (tons) -- 1,162 1,298 4,650
Zinc (tons) -- 2,839 3,453 11,385
Cash cost per oz. of silver $ -- $ 5.96 $ 5.11 $ 4.82
Full cost per oz. of silver $ -- $ 7.69 $ 7.16 $ 6.54
OTHER (CACTUS AND MISCELLANEOUS)
Gold (oz.) 1,362 3,645 7,316 29,252
Silver (oz.) 4,339 20,080 24,165 439,744
TOTAL PRODUCTION & AVERAGE COSTS
Silver (oz.) 549,685 1,104,080 2,974,698 4,730,848
Gold (oz.) 12,845 17,325 60,715 97,654
Lead (tons) 3,930 6,622 21,093 25,986
Zinc (tons) 858 3,964 7,838 15,598
Average cash cost per oz. of gold $ 249 $ 191 $ 212 $ 188
Average full cost per oz. of gold $ 310 $ 246 $ 268 $ 258
Average cash cost per oz. of silver $ 6.63 $ 5.16 $ 5.45 $ 4.51
Average full cost per oz. of silver $ 7.88 $ 6.59 $ 6.85 $ 5.89
Contact Bill Booth, Manager - Investor and Public Affairs (208) 769-4100
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