<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- ---------------
Commission file number 1-8491
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HECLA MINING COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 82-0126240
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for at least the
past 90 days. Yes XX . No .
---- ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
<TABLE>
<CAPTION>
Class Outstanding July 31, 1995
--------------------------------------- -------------------------
<S> <C>
Common stock, par value $0.25 per share 48,235,858 shares
</TABLE>
<PAGE> 2
HECLA MINING COMPANY and SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1995
I N D E X
---------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. - Financial Information
Item l - Consolidated Balance Sheets - June 30, 1995
and December 31, 1994 3
- Consolidated Statements of Operations -
Three Months and Six Months Ended
June 30, 1995 and 1994 4
- Consolidated Statements of Cash Flows - Six
Months Ended June 30, 1995 and 1994 5
- Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II. - Other Information
Item 1 - Legal Proceedings 26
Item 4 - Annual Meeting of Shareholders 29
Item 6 - Exhibits and Reports on Form 8-K 30
</TABLE>
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<PAGE> 3
PART I - FINANCIAL INFORMATION
HECLA MINING COMPANY and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 6,694 $ 7,278
Accounts and notes receivable 31,276 23,516
Income tax refund receivable 250 247
Inventories 18,398 18,616
Other current assets 1,910 1,597
--------- ---------
Total current assets 58,528 51,254
Investments 2,741 6,476
Restricted investments 13,837 13,553
Properties, plants and equipment, net 266,600 257,908
Other noncurrent assets 5,750 5,391
--------- ---------
Total assets $ 347,456 $ 334,582
========= =========
LIABILITIES
-----------
Current liabilities:
Accounts payable and accrued expenses $ 12,273 $ 13,570
Accrued payroll and related benefits 2,580 2,724
Preferred stock dividends payable 2,013 2,012
Accrued taxes 1,327 925
Accrued reclamation costs 3,829 4,254
--------- ---------
Total current liabilities 22,022 23,485
Deferred income taxes 359 359
Long-term debt 23,057 1,960
Accrued reclamation costs 28,129 27,162
Other noncurrent liabilities 4,748 4,098
--------- ---------
Total liabilities 78,315 57,064
--------- ---------
SHAREHOLDERS' EQUITY
--------------------
Preferred stock, $0.25 par value,
authorized 5,000,000 shares, issued
and outstanding - 2,300,000 shares,
liquidation preference $117,012 575 575
Common stock, $0.25 par value,
authorized 100,000,000 shares;
issued 1995 - 48,298,129;
issued 1994 - 48,144,274 12,075 12,036
Capital surplus 330,169 328,995
Retained deficit (67,684) (63,437)
Net unrealized gain (loss) on investments (207) 3,396
Foreign currency translation adjustment (4,898) (3,158)
Less common stock reacquired at cost;
1995 - 62,265 shares, 1994 - 62,355 shares (889) (889)
--------- ---------
Total shareholders' equity 269,141 277,518
--------- ---------
Total liabilities and shareholders' equity $ 347,456 $ 334,582
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 4
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars and shares in thousands, except for per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------- ----------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales of products $ 42,241 $ 38,048 $ 77,951 $ 64,388
--------- --------- --------- ---------
Cost of sales and other direct
production costs 35,310 30,370 65,540 55,041
Depreciation, depletion and
amortization 5,923 3,657 11,565 6,276
--------- --------- --------- ---------
41,233 34,027 77,105 61,317
--------- --------- --------- ---------
Gross profit 1,008 4,021 846 3,071
--------- --------- --------- ---------
Other operating expenses:
General and administrative 2,134 1,780 4,464 6,339
Exploration 1,165 1,990 2,208 4,099
Depreciation and amortization 85 180 168 362
Provision for closed operations
and environmental matters 171 384 227 624
--------- --------- --------- ---------
3,555 4,334 7,067 11,424
--------- --------- --------- ---------
Loss from operations (2,547) (313) (6,221) (8,353)
--------- --------- --------- ---------
Other income (expense):
Interest and other income 848 2,007 2,291 3,320
Foreign exchange gain 359 - - 162 - -
Gain (loss) on sale of
investments 3,772 (238) 3,893 1,090
Interest expense:
Total interest cost (421) (898) (586) (2,047)
Less amount capitalized 318 786 376 1,751
--------- --------- --------- ---------
4,876 1,657 6,136 4,114
--------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary loss 2,329 1,344 (85) (4,239)
Income tax (provision) benefit (87) 181 (137) 113
--------- --------- --------- ---------
Income (loss) before
extraordinary loss 2,242 1,525 (222) (4,126)
Extraordinary loss on early
retirement of long-term debt - - (823) - - (823)
--------- --------- --------- ---------
Net income (loss) 2,242 702 (222) (4,949)
Preferred stock dividends 2,013 2,013 4,025 4,025
--------- --------- --------- ---------
Net income (loss) applicable
to common shareholders $ 229 $ (1,311) $ (4,247) $ (8,974)
========= ========= ========= =========
Net income (loss) per common share:
Loss applicable to common shareholders
before extraordinary loss $ 0.01 $ (0.01) $ (0.09) $ (0.20)
Extraordinary loss on early retirement
of long-term debt - - (0.02) - - (0.02)
--------- --------- --------- ---------
Net income (loss) per common
share $ 0.01 $ (0.03) $ (0.09) $ (0.22)
========= ========= ========= =========
Cash dividends per common share $ - - $ - - $ - - $ - -
===== ===== ===== =====
Weighted average number of common
shares outstanding 48,236 44,294 48,155 41,487
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE> 5
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
---------------------
June 30, June 30,
1995 1994
--------- ---------
<S> <C> <C>
Operating activities:
Net loss $ (222) $ (4,949)
Noncash elements included in net loss:
Depreciation, depletion and amortization 11,733 6,638
Gain on disposition of properties, plants
and equipment (244) (579)
Gain on sale of investments (3,893) (1,090)
Extraordinary loss on early retirement of
long-term debt - - 823
Accretion of interest on long-term debt - - 1,750
Provision for reclamation and closure costs - - 674
Change in:
Accounts and notes receivable (7,760) (10,146)
Income tax refund receivable (3) (505)
Inventories 218 1,388
Other current assets (313) 23
Accounts payable and accrued expenses (1,297) 843
Accrued payroll and related benefits (144) 46
Accrued taxes 402 401
Noncurrent liabilities 1,192 (138)
--------- ---------
Net cash applied to operating activities (331) (4,821)
--------- ---------
Investing activities:
Additions to properties, plants and equipment (21,575) (32,018)
Proceeds from disposition of properties,
plants and equipment 379 13,281
Proceeds from the sale of investments 4,664 3,548
Purchase of restricted investments (284) - -
Purchase of investments and increase in
cash surrender value of life insurance (639) (2,849)
Proceeds from maturity of short-term investments - - 27,552
Other, net (1,110) (1,216)
--------- ---------
Net cash provided by (applied to) investing activities (18,565) 8,298
--------- ---------
Financing activities:
Proceeds from the exercise of stock warrants 1,239 - -
Common stock issued under stock option plans - - 1,739
Issuance of common stock - - 63,499
Early retirement of long-term debt - - (50,169)
Dividends on preferred stock (4,024) (4,025)
Borrowing on long-term debt 30,000 - -
Repayment of long-term debt (8,903) - -
Decrease in deferred revenue - - (36)
--------- ---------
Net cash provided by financing activities 18,312 11,008
--------- ---------
Change in cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents (584) 14,485
Cash and cash equivalents at beginning of period 7,278 40,031
--------- ---------
Cash and cash equivalents at end of period $ 6,694 $ 54,516
========= =========
Supplemental disclosure of cash flow information:
Cash paid during period for:
Interest (net of amount capitalized) $ 18 $ 16,414
========= =========
Income tax payments (net of refunds) $ 91 $ 262
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE> 6
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The notes to the consolidated financial statements as of
December 31, 1994, as set forth in the Company's 1994
Annual Report on Form 10-K, substantially apply to these
interim consolidated financial statements and are not
repeated here.
Note 2. The financial information given in the accompanying
unaudited interim consolidated financial statements
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results
for the interim periods reported. All such adjustments
are of a normal recurring nature. All financial
statements presented herein are unaudited. However, the
balance sheet as of December 31, 1994, was derived from
the audited consolidated balance sheet included in the
consolidated financial statements referred to in Note 1
above.
Note 3. The components of the income tax (provision) benefit for
the six months ended June 30, 1995 and 1994 are as follows
(in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Current:
State income tax provision $ (137) $ (142)
Federal income tax benefit - - 255
------- -------
Total current (provision) benefit (137) 113
Deferred provision - - - -
------- -------
Total $ (137) $ 113
======= =======
</TABLE>
The Company's income tax provision for the first half of
1995 and 1994 varies from the amount that would have been
provided by applying the statutory rate to the loss before
income taxes primarily due to the non-utilization of net
operating losses.
Note 4. Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
-------- --------
<S> <C> <C>
Concentrates and metals in transit
and other products $ 3,793 $ 5,568
Industrial mineral products 5,266 5,995
Materials and supplies 9,339 7,053
-------- --------
$ 18,398 $ 18,616
======== ========
</TABLE>
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<PAGE> 7
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Note 5. In July 1991, the Coeur d'Alene Indian Tribe (the "Tribe")
brought a lawsuit, under the Comprehensive Environmental
Response Liability Act of 1980 (CERCLA), in Idaho Federal
District Court against the Company and a number of other
mining companies asserting claims for damages to natural
resources located downstream from the Bunker Hill
Superfund Site located at Kellogg, Idaho, over which the
Tribe alleges some ownership or control. The Company has
answered the Tribe's complaint denying liability for
natural resource damages and asserted a number of defenses
to the Tribe's claims, including a defense that the Tribe
has no ownership or control over the natural resources
they assert have been damaged. In July 1992, in a
separate action between the Tribe and the State of Idaho,
the Idaho Federal District Court determined that the Tribe
does not own the beds, banks and waters of Lake
Coeur d'Alene and the lower portion of its tributaries,
the ownership of which is the primary basis for the
natural resource damage claims asserted by the Tribe
against the Company. Based upon the Tribe's appeal of the
July 1992 District Court ownership decision to the 9th
Circuit U.S. Court of Appeals, the court in the natural
resource damage litigation issued an order on October 30,
1992, staying the court proceedings in the natural
resource damage litigation until a final decision is
handed down on the question of the Tribe's title. On
December 9, 1994, the 9th Circuit Court reversed the
decision of the Idaho District Court and remanded the case
of the Tribe's ownership for trial before the District
Court. The Company has been advised that the State will
seek an appeal of the 9th Circuit Court decision to the
U.S. Supreme Court. In July 1994, the United States, as
Trustee for the Coeur d'Alene Tribe, initiated a separate
suit in Idaho Federal District Court seeking a
determination that the Coeur d'Alene Tribe owns
approximately the lower one-third of Lake Coeur d'Alene.
The State has denied the Tribe's ownership of any portion
of Lake Coeur d'Alene and its tributaries. The legal
proceedings related to the Tribe's natural resource
damages claim against the Company and other mining
companies continue to be stayed.
On July 18, 1995, the Department of Interior (DOI)
notified the Company and six other companies (several with
assets and resources greater than the Company) that the
federal natural resource trustees (Fish and Wildlife
Service and U.S. Forest Service) identified the Company
and the other six companies as potentially responsible
parties (PRPs) for damages resulting from injury to
federal natural resources with respect to the
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<PAGE> 8
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Coeur d'Alene Basin in North Idaho. The DOI letter
further notifies the Company that the federal trustees
intend to bring suit against these companies to recover
the alleged damages under CERCLA. The Company is
currently analyzing such letter and determining what
actions, if any, should be taken in response thereto.
In 1991, the Company initiated litigation in the Idaho
State District Court in Kootenai County, Idaho, against a
number of insurance carriers which provided comprehensive
general liability insurance coverage to the Company and
its predecessors. The Company believes that the insurance
companies have a duty to defend and indemnify the Company
under their policies of insurance relating to claims
asserted against the Company by the EPA and the Tribe. In
two separate decisions issued in August 1992 and March
1993, the court ruled that the primary insurance companies
had a duty to defend the Company in the Tribe's lawsuit,
but that no carrier had a duty to defend the Company in
the EPA proceeding. In January 1995, the Company entered
into settlement agreements with four of the insurance
carriers named in the litigation. The Company received a
total of $2.425 million under the terms of the settlement
agreements. A portion of this settlement amount will be
payable to the EPA to reimburse the U.S. Government for
past costs under the Bunker Hill Consent Decree. The
Company has initiated a separate legal proceeding in
Federal District Court in Idaho seeking a clarification of
its obligation to pay a portion of the insurance proceeds
to the EPA. Litigation is still pending against other
insurers. At June 30, 1995, the Company has not reduced
its environmental accrual to reflect any anticipated
additional insurance proceeds.
In June 1994, a judgment was entered against the Company
in Idaho State District Court in the amount of $10.0
million in compensatory damages and $10.0 million in
punitive damages based on a jury verdict rendered in late
May 1994 with respect to a lawsuit previously filed
against the Company by Star Phoenix Mining Company ("Star
Phoenix"), a former lessee of the Star Morning Mine, over
a dispute between the Company and Star Phoenix concerning
the Company's November 1990 termination of the Star
Phoenix lease of the Star Morning Mine property. A number
of other claims by Star Phoenix and certain principals of
Star Phoenix against the Company in the lawsuit were
dismissed by the State District Court. The Company's
post-trial motions were denied by the State District
Court, and the Company has appealed the District Court
judgment to the Idaho State Supreme Court. Post-judgment
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<PAGE> 9
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
interest will accrue during the appeal period; the current
interest rate is 10.875%. In order to stay the ability of
Star Phoenix to collect on the judgment during the pending
of the appeal, the Company has posted an appeal bond in
the amount of $27.2 million representing 136% of the
District Court judgment. The Company pledged U.S.
Treasury Notes totaling $10.0 million as collateral for
the appeal bond. This collateral amount is included in
restricted investments at December 31, 1994 and June 30,
1995. On May 3, 1995, the District Court issued its final
opinion and order on a number of post-trial issues pending
before the Court. The Opinion and Order included the
Court's denial of the post-trial motions filed by Star
Phoenix and certain of its principals regarding claims
which had been previously dismissed by the Court during
trial. The Court also awarded Star Phoenix approximately
$300,000 in attorneys' fees and costs out of the $1.6
million claimed by the Plaintiffs. The Company intends to
vigorously pursue its appeal to the Idaho Supreme Court
and it has been the Company's position, and at the current
time it remains the Company's position, that it will not
enter into a settlement with Star Phoenix for any material
amount. Although the ultimate outcome of the appeal of
the Idaho District Court judgment is subject to the
inherent uncertainties of any legal proceeding, based upon
the Company's analysis of the factual and legal issues
associated with the proceeding before the Idaho District
Court and based on the opinions of outside counsel, as of
the date hereof, it is management's belief that the
Company should ultimately prevail in this matter, although
there can be no assurance in this regard. Accordingly,
the Company has not accrued any liability associated with
this litigation.
The Company is subject to other legal proceedings and
claims which have arisen in the ordinary course of its
business and have not been finally adjudicated. Although
there can be no assurance as to the ultimate disposition
of these matters and the proceedings disclosed above, it
is the opinion of the Company's management, based upon the
information available at this time, that the expected
outcome of these matters, individually or in the
aggregate, will not have a material adverse effect on the
results of operations and financial condition of the
Company and its subsidiaries.
Note 6. At June 30, 1995, there was $22.0 million outstanding
under the Company's revolving and term loan facility
classified as long-term debt.
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<PAGE> 10
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Note 7. Statement of Financial Accounting Standard No. 52, Foreign
Currency Translation (SFAS No. 52), requires that once the
functional currency of a foreign operation is determined,
that determination shall be used consistently, unless
significant changes in economic facts and circumstances
clearly indicate that the functional currency has changed.
During the second quarter of 1995, the Company's wholly
owned subsidiary, K-T Clay de Mexico, S.A. de C.V.,
commenced invoicing its customers in U.S. dollars instead
of the Mexican peso. This change clearly indicated a
change in the functional currency to the U.S. dollar from
the Mexican peso. The change in the functional currency
has been accounted for prospectively commencing in the
second quarter of 1995. In accordance with SFAS No 52,
translation adjustments from prior periods have not been
removed from equity and translated amounts for nonmonetary
assets prior to the change have become the accounting
basis for those assets from this point forward. During
the second quarter of 1995, the Company recorded a foreign
exchange gain totaling approximately $349,000, or $0.01
per common share, in connection with the change in
functional currency.
Note 8. On August 2, 1995, the Company executed a definitive
Purchase and Sale Agreement with Mooney Chemicals, Inc.,
a subsidiary of OM Group, Inc., for the sale of the
Company's Apex Unit cobalt processing facility near the
town of St. George, Washington County, Utah, in
consideration of $8.0 million to be paid in increments of
$3.0 million at closing, $3.0 million plus interest one
year after closing, and $2.0 million plus interest two
years after closing. A gain of approximately $4.0 million
will be recognized upon closing, which is expected in the
third quarter of 1995. There are a number of conditions
to closing which remain unsatisfied. The Company
purchased the Apex Unit in 1988 and processed ores from
the nearby gallium and germanium mine during 1990. The
Company retooled the Apex Unit processing facilities for
production of cobalt compounds from byproduct feedstocks
and developed markets for its new products. The gallium
and germanium mine is not included in the sale of Apex
Unit assets.
Note 9. In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" (SFAS No.
121). This Statement requires that long-lived assets and
certain identifiable intangibles to be held and used by
the Company be reviewed for impairment whenever events or
-10-
<PAGE> 11
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. In performing the
review for recoverability, the Company is required to
estimate the future cash flows expected to result from the
use of the asset and its eventual disposition. If the sum
of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount
of the asset, an impairment loss is recognized.
Otherwise, an impairment loss is not recognized.
Additionally, the Statement requires that long-lived
assets and certain identifiable intangibles to be disposed
of be reported at the lower of carrying amount or fair
value less cost to sell. SFAS No. 121 is effective for
financial statements for fiscal years beginning after
December 15, 1995. The Company has not adopted the
Statement for reporting at June 30, 1995. It is the
opinion of the Company's management that the adoption of
SFAS No. 121 will not have a material effect on the
results of operations or financial condition of the
Company and its subsidiaries.
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<PAGE> 12
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
The Company is primarily involved in the exploration,
development, mining and processing of gold, silver, lead,
zinc and industrial minerals. As such, the Company's
revenues and profitability are strongly influenced by
world prices of gold, silver, lead and zinc, which
fluctuate widely and are affected by numerous factors
beyond the Company's control, including inflation and
worldwide forces of supply and demand. The aggregate
effect of these factors is not possible to accurately
predict. In the following descriptions, where there are
changes that are attributable to more than one factor, the
Company presents each attribute in descending order
relative to the attribute's importance to the overall
change.
The Company reported net income (loss) applicable to
common shareholders in the second quarter of 1995 and 1994
totaling $0.2 million and $(1.3) million, respectively.
If the average metals prices for the first six months of
1995 remain constant for the balance of the year, the
Company is anticipating net income (loss) applicable to
common shareholders in the range of $(3.0) to $3.0 million
after the expected dividends to preferred shareholders
totaling approximately $8.0 million for the year. Due to
the volatility of metals prices and the significant impact
metals price changes have on the Company's operations,
there can be no assurance that the actual results of
operations for the year ending December 31, 1995 will be
as forecasted.
The volatility of metals prices requires that the Company,
in assessing the impact of prices on recoverability of its
assets, exercise judgment as to whether price changes are
temporary or are likely to persist. The Company performs
a comprehensive evaluation of the recoverability of its
assets on a periodic basis. The evaluation includes a
review of future cash flows against the carrying value of
the assets. Moreover, a review is made on a quarterly
basis to assess the impact of significant changes in
market conditions and other factors. Asset write-downs
may occur if the Company determines that the carrying
values attributed to individual assets are not recoverable
given reasonable expectations for future market
conditions.
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<PAGE> 13
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
In 1995, the Company expects to produce between 179,000
and 189,000 ounces of gold compared to actual 1994 gold
production of 128,000 ounces of gold. The 1995 revised
estimated production includes between 79,000 and 89,000
ounces from the Company's 80% interest in the Grouse Creek
mine, 68,000 ounces from the La Choya mine, 25,000 ounces
from the Company's interest in the American Girl mine and
an additional 7,000 ounces from other sources. The
Company's expected gold production increase in 1995
compared to 1994 reflects the anticipated production
levels at the Grouse Creek and La Choya mines, which
offset the decrease in gold production due to the
completion of operations at the Republic mine in February
1995.
The Company's share of silver production for 1995 is
expected to be approximately 2.1 million ounces compared
to actual 1994 silver production of 1.6 million ounces.
The expected increase in silver production in 1995
compared to 1994 is primarily due to new production at the
Grouse Creek mine and resumption of operations at the
Lucky Friday mine in December 1994, after the ore-
conveyance accident suspended operations beginning August
30, 1994.
The Company's production of industrial minerals is
expected to increase slightly in 1995 to 1,027,000 tons
from 986,000 tons in 1994. Additionally, the Company
expects to ship 783,000 cubic yards of landscape material
from Mountain West Products compared to 655,000 cubic
yards in 1994.
RESULTS OF OPERATIONS
FIRST SIX MONTHS 1995 COMPARED TO FIRST SIX MONTHS 1994
The Company reported a net loss of approximately $0.2
million, or $0.01 per share, in the first six months of
1995 compared to a net loss of approximately $4.9 million,
or $0.12 per share, in the same period of 1994. After
$4.0 million in dividends to shareholders of the Company's
Series B Cumulative Convertible Preferred Stock, the
Company's net loss applicable to common shareholders for
the first six months of 1995 was $4.2 million, or $0.09
per common share, compared to $9.0 million, or $0.22 per
common share, in the comparable 1994 period. The loss in
the first six months of 1995 was due to a variety of
factors, the most significant of which are discussed below
in descending order of magnitude.
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<PAGE> 14
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Sales of the Company's products increased by approximately
$13.6 million, or 21.1%, in the first six months of 1995
as compared to the same period in 1994, principally the
result of increased product sales totaling approximately
$24.3 million, most notably from the Grouse Creek mine
where production commenced in December 1994 and the La
Choya mine, as well as from the Company's industrial
minerals operations. These factors were partially offset
by decreased sales at other mines in the metals segment,
the impact of which is approximately $12.1 million,
attributable to (1) decreased gold and silver production
at the Republic mine which completed mining operations in
February 1995; (2) decreased gold production at the
American Girl mine due to the completion of underground
mining operations in January 1995; and (3) decreased
production of silver, lead and zinc at the Lucky Friday
mine in 1995 as personnel worked to achieve normal
production levels, after resuming operations in December
1994, that were suspended because of the August 30, 1994
ore-conveyance accident.
Comparing the average metal prices for the six months of
1995 with the comparable 1994 period, gold increased by
0.2% to $383.52 per ounce from $382.87 per ounce, silver
decreased by 4.5% to $5.09 per ounce from $5.33 per ounce,
lead increased by 27.8% to $0.276 per pound from $0.216
per pound, and zinc increased by 10.1% to $0.478 per pound
from $0.434 per pound.
Cost of sales and other direct production costs increased
approximately $10.5 million, or 19.1%, from the first six
months of 1994 to the comparable 1995 period primarily due
to (1) production costs incurred at the Grouse Creek mine
where production commenced in December 1994 totaling
approximately $14.6 million; (2) production cost increases
at Mountain West Products and Colorado Aggregate totaling
approximately $2,478,000 and $963,000, respectively, due
to increased production in 1995; (3) production cost
increases at the La Choya mine totaling approximately
$870,000 due to increased production in 1995 (the La Choya
mine was in a start-up mode during the comparable 1994
period); (4) production cost increases at Kentucky-
Tennessee Clay Company (K-T Clay) - Ball Clay and - Kaolin
divisions totaling approximately $733,000 and $645,000,
respectively, due to increased production in 1995; (5)
production cost increases at the Apex unit due to
increased cost of feed stock totaling $500,000 and (6)
increases in operating costs at various other operations
totaling approximately $200,000. These increases in cost
of sales and other direct production costs were partially
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<PAGE> 15
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
offset by decreases in operating costs at other operations
totaling $10.5 million. These decreases are primarily due
to (1) decreased production costs at the Republic mine
totaling approximately $5.0 million which is the result of
the completion of operations in February 1995; (2) the
receipt of insurance proceeds and decreased production
costs incurred at the Lucky Friday mine totaling
approximately $2.6 million due to decreased production as
the mine ramped back up to normal production levels in the
1995 period after the temporary suspension of operations
as discussed above; (3) decreased cost of sales in the
1995 period at the American Girl mine totaling $1.4
million; and (4) decreased standby costs at the Greens
Creek mine totaling $1.1 million also in the 1995 period,
directly the result of management's decision to further
develop the mine and recommence production.
Cost of sales and other direct production costs as a
percentage of sales decreased from 85% in the first half
of 1994 to 84% in the comparable 1995 period, primarily
due to increased sales and production at the La Choya
mine.
Cash and full production cost per gold ounce increased
from $314.59 and $372.26 for the first six months of 1994
to $329.98 and $440.55 for the comparable 1995 period,
respectively. The increase in both the cash and full
production cost per gold ounce is primarily attributable
to increased unit production costs at the American Girl
and Grouse Creek mines in the 1995 period.
Cash and full production cost per silver ounce decreased
from $6.15 and $7.40 in the first six months of 1994 to
$4.85 and $6.11 in the comparable 1995 period,
respectively. The decreases in the cost per silver ounce
are due primarily to decreased production costs in the
1995 period at the Lucky Friday mine.
Depreciation, depletion and amortization increased by
approximately $5.3 million, or 84.3%, from the 1994 period
to the 1995 period, primarily the result of (1) production
commencing at the Grouse Creek mine in December 1994,
where significant depreciable assets are depreciated on a
units-of-production basis, the impact of which increased
depreciation expense approximately $6.1 million and (2)
increased production at the La Choya mine where
significant depreciable assets are depreciated on a units-
of-production basis, which increased depreciation expense
by approximately $664,000. These increases in
depreciation, depletion, and amortization were partially
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<PAGE> 16
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
offset by a decrease in the depreciation expense at the
Republic mine totaling $1.2 million. Republic mine assets
were written down to their net realizable value at
December 31, 1994 due to the closure of the mine in
February 1995.
Other operating expenses decreased by $4.4 million, or
38.1%, from the 1994 period to the 1995 period, due
principally to (1) decreased exploration expenses totaling
approximately $1.9 million relating principally to the
Greens Creek, Grouse Creek and La Choya units and (2)
decreased general and administrative costs of $1.9 million
attributable primarily to nonrecurring costs totaling
approximately $2.2 million incurred in connection with the
March 11, 1994 acquisition of Equinox Resources Ltd.
partially offset by a $312,000 decrease in general and
administrative expense.
Net other income reported was approximately $6.1 million
in the 1995 period compared to other income of $4.1
million in the 1994 period. The 1995 other income was
primarily a result of the $3.4 million gain recognized on
the sale of certain common stock investments. Total
interest cost decreased $1.5 million in the 1995 period
principally due to the June 1994 retirement of long-term
debt. Capitalized interest cost decreased $1.4 million in
the 1995 period due principally to the completion of the
Grouse Creek project and the lower debt level.
THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1994
The Company had net income of approximately $2.2 million
($0.05 per share) in the second quarter of 1995 compared
to net income of approximately $0.7 million, or $0.02 per
share, in the same period of 1994. After $2.0 million in
dividends to shareholders of the Company's Series B
Cumulative Convertible Preferred Stock, the Company's net
income applicable to common shareholders for the second
quarter of 1995 was $0.2 million, or $0.01 per common
share. Net income in the second quarter 1995 was due to
a variety of factors, the most significant of which are
discussed below in descending order of magnitude.
Sales of the Company's products increased by approximately
$4.2 million, or 11.0%, in the second quarter of 1995 as
compared to the same period in 1994, principally the
result of (1) increased product sales totaling
approximately $10.8 million, most notably from the Grouse
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<PAGE> 17
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Creek gold mine where production commenced in December
1994, Mountain West Products, K-T Clay Kaolin division,
the La Choya gold mine, and the Apex Unit; and (2)
increases in the average prices of lead, gold and silver,
the impact of which is estimated to be approximately $1.5
million in the 1995 period compared to the 1994 period.
These two factors were partially offset by decreased sales
at other mines in the metals segment, the impact of which
is approximately $7.6 million, attributable to (1)
decreased gold and silver production in the 1995 period at
the Republic mine, which completed mining operations in
February 1995, totaling $3.9 million; (2) decreased gold
production at the American Girl mine due to the completion
of the underground mining operations in January 1995
totaling 2.2 million; and (3) the decreased production of
silver, lead and zinc at the Lucky Friday mine in the 1995
period totaling $1.3 million. Personnel at the Lucky
Friday mine worked to achieve normal production levels
during the 1995 period, after resuming operations in
December 1994, which had been temporarily suspended due to
the August 30, 1994 ore-conveyance accident.
Comparing the average metals prices for the second quarter
of 1995 with the comparable 1994 period, gold increased by
1.7% to $387.94 per ounce from $381.44 per ounce, silver
increased by 1.9% to $5.48 per ounce from $5.38 per ounce,
lead increased by 26.7% to $0.275 per pound from $0.217
per pound, and zinc increased by 9.3% to $0.470 per pound
from $0.430 per pound.
Cost of sales and other direct production costs increased
by approximately $4.9 million, or 16.3%, from the second
quarter of 1994 to the comparable 1995 period primarily
due to (1) production costs incurred at the Grouse Creek
mine totaling approximately $7.2 million; (2) production
costs incurred at Mountain West Products totaling $2.0
million; and (3) increases in operating costs at various
other operations totaling approximately $2.1 million.
These increases in cost of sales and other direct
production costs were partially offset by decreases in
operating costs at other operations totaling $6.4 million.
These increases are primarily attributable to (1)
decreased production costs at the Republic mine totaling
approximately $2.6 million which is the result of the
completion of operations in February 1995; (2) decreased
production costs at the Lucky Friday mine totaling
approximately $1.5 million due to decreased production as
the mine ramped back up to normal production levels in
1995 after the temporary suspension of operations as
discussed above; and (3) decreased production costs at the
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<PAGE> 18
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
American Girl mine due to decreased production in 1995
totaling $1.2 million.
Cost of sales and other direct production costs as a
percentage of sales from products increased from 80% in
the second quarter of 1994 to 84% in the comparable 1995
period, primarily due to substantial increases in this
percentage at the Republic and American Girl mines.
Cash and full production cost per gold ounce increased
from $277.96 and $341.43 for the second quarter of 1994 to
$348.50 and $465.57 for the second quarter of 1995,
respectively. The increase in both the cash and full
production cost per gold ounce is mainly attributed to the
initial start-up costs at the Grouse Creek gold mine and
decreased production from the Republic and American Girl
gold mines.
Cash and full production cost per silver ounce decreased
from $6.19 and $7.44 in the second quarter of 1994 to
$4.94 and $6.20 in the second quarter of 1995,
respectively. The decreases in the cost per silver ounce
are due primarily to decreased production costs in the
1995 period at the Lucky Friday mine.
Depreciation, depletion and amortization increased by
approximately $2.3 million, or 62.0%, from the 1994 period
to the 1995 period, primarily the result of the
commencement of operations of the Grouse Creek mine in
December 1994 totaling approximately $3.1 million,
partially offset by the termination of operations at the
Republic mine in February 1995 totaling $549,000.
Other operating expenses decreased by $779,000, or 18.0%,
from the 1994 period to the 1995 period, due principally
to decreased exploration expenditures totaling
approximately $603,000 million at the Greens Creek mine
and $460,000 at the Republic mine; partially offset by a
$341,000 increase in foreign metals exploration in the
1995 period.
Net other income was $4.9 million in the 1995 period
compared to $1.7 million in the 1994 period. The $3.2
million increase was primarily due to (1) gains on the
sale of various investments totaling approximately $4.0
million and (2) a decrease in interest cost related to the
LYON's retirement in 1994 totaling $477,000. The increase
in net other income was partially offset by (1) a decrease
in the Bluebird royalty income totaling $965,000 and (2)
a $468,000 decrease in interest capitalized at Grouse
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<PAGE> 19
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Creek due to the commencement of operations in December
1994.
FINANCIAL CONDITION AND LIQUIDITY
A substantial portion of the Company's revenue is derived
from the sale of products, the prices of which are
affected by numerous factors beyond the Company's control.
Prices may change dramatically in short periods of time
and such changes have a significant effect on revenues,
profits and liquidity of the Company. The Company is
subject to many of the same inflationary pressures as the
U.S. economy in general. The Company continues to
implement cost-cutting measures in an effort to reduce per
unit production costs. Management believes, however, that
the Company may not be able to continue to offset the
impact of inflation over the long term through cost
reductions alone. However, the market prices for products
produced by the Company have a much greater impact than
inflation on the Company's revenues and profitability.
Moreover, the discovery, development and acquisition of
mineral properties are in many instances unpredictable
events. Future metals prices, the success of exploration
programs, changes in legal and regulatory requirements,
and other property transactions can have a significant
impact on the need for capital.
At June 30, 1995, assets totaled approximately $347.5
million and shareholders' equity totaled approximately
$269.1 million. Cash and cash equivalents decreased by
$0.6 million to $6.7 million at June 30, 1995 from $7.3
million at the end of 1994.
Operating activities used approximately $0.3 million of
cash during the first half of 1995. The primary uses were
(1) a $7.8 million increase in accounts and notes
receivable and (2) a $1.3 million decrease in accounts
payable and accrued expenses, partially offset by an
increase in accrued reclamation and other noncurrent
liabilities of $1.2 million. Non-cash charges included
depreciation, depletion, and amortization of $11.7
million. Depreciation, depletion and amortization charges
during the first half of 1995 were $5.1 million higher
than the first half of 1994, principally due to the
commencement of operations at the Grouse Creek mine in
December 1994, partially offset by decreased depreciation,
depletion and amortization at the Republic mine where
operations were substantially complete at December 31,
1994.
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<PAGE> 20
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
The $7.8 million increase in accounts and notes receivable
during the first half of 1995 is primarily due to
increased accounts and notes receivable at Colorado
Aggregate and Mountain West Products resulting from the
seasonal nature of sales at these locations, and the Lucky
Friday unit principally resulting from the resumption of
operations in December 1994; all of which were offset by
a decrease in accounts and notes receivable at the La
Choya mine.
The Company's investing activities used $18.6 million of
cash during the first half of 1995. The most significant
use of cash was $21.6 million of property, plant and
equipment additions, partially offset by proceeds from the
sales of investments totaling $4.7 million. During the
first half of 1995, significant additions occurred at the
K-T Clay Ball and Kaolin industrial minerals projects, the
Greens Creek mine, the Grouse Creek mine, the La Choya
Mine, Mountain West Products, and the Rosebud project
totaling $7.5 million, $3.8 million, $2.2 million, $2.0
million, $1.9 million, and $1.8 million, respectively. On
May 31, 1995, the Company purchased the property, plant
and equipment of J.M. Huber Corporation's kaolin operation
in Langley, South Carolina, for approximately $6.3
million.
During the first half of 1995, $18.3 million was provided
from financing activities. The major source of cash was
proceeds from borrowings on long-term debt of $30.0
million, partially offset by repayments on long-term debt
of $8.9 million and payment of the preferred stock
dividend of $4.0 million. An additional source of cash
was proceeds from the exercise of stock warrants totaling
$1.2 million.
The Company estimates that remaining capital expenditures
to be incurred in the balance of 1995 will be
approximately $30.4 million. These expenditures consist
primarily of (1) the Company's share of development
expenditures at the Greens Creek project expected to total
approximately $8.1 million and (2) the development
expenditures at the Rosebud project and the Grouse Creek
and American Girl mines totaling approximately $5.7
million, $3.7 million and $2.6 million, respectively. The
Company intends to finance these capital expenditures
through a combination of (1) existing cash and cash
equivalents and (2) cash flow from operating activities.
In addition, the Company may borrow funds from its
revolving and term credit facility (described below)
which, subject to certain conditions, provides for
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<PAGE> 21
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
borrowings up to a maximum of $40.0 million. The Company
had $22.0 million outstanding at June 30, 1995 under the
facility. The Company's estimate of its capital
expenditure requirements assume, with respect to the
Grouse Creek, Greens Creek and Oro Cruz properties, that
the Company's joint venture partners do not default with
respect to their obligations to contribute their
respective portions of development costs and capital
expenditures.
The Company's planned environmental and reclamation
expenditures for the balance of 1995 are expected to be
approximately $4.5 million, principally for environmental
and reclamation activities at the Bunker Hill Superfund
site, Durita mine, the Coeur d'Alene River Basin, and the
Cactus mine.
Exploration expenditures for the balance of 1995 are
estimated to be approximately $4.8 million. The Company's
exploration strategy is to focus further exploration at or
in the vicinity of its currently owned properties.
Accordingly, these exploration expenditures will be
incurred principally at Rosebud, Grouse Creek, American
Girl, Lucky Friday, and Mexican exploration targets.
In the normal course of its business, the Company uses
forward sales commitments and commodity put and call
option contracts to manage its exposure to fluctuations in
the prices of certain metals which it produces. Contract
positions are designed to ensure that the Company will
receive a defined minimum price for certain quantities of
its production. Gains and losses, and the related costs
paid or premium received, for contracts which hedge the
sales prices of commodities are deferred and included in
income as part of the hedged transaction. Revenues from
the aforementioned contracts are recognized at the time
contracts are closed out by delivery of the underlying
commodity or settlement of the net position in cash. The
Company is exposed to certain losses, generally the amount
by which the contract price exceeds the spot price of a
commodity, in the event of nonperformance by the
counterparties to these agreements. At June 30, 1995, the
Company had forward sales commitments through January 31,
1997 for 22,500 ounces of gold at an average price of
$407.38 per ounce. The Company has also purchased options
to put 76,680 ounces of gold to the counterparties at an
average price of $389.46 per ounce. Concurrently, the
Company sold options to allow the counterparties to call
76,680 ounces of gold from the Company at an average price
of $465.31 per ounce. There was no net cost associated
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<PAGE> 22
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
with the purchase and sale of these options which expire,
in tandem, on a monthly basis through December 1997. At
June 30, 1995 the estimated fair value of the Company's
purchased gold put options was approximately $549,000. If
the Company had chosen to close its offsetting short gold
call option positions, it would have incurred a liability
of approximately $168,000. The London Final gold price at
June 30, 1995 was $387.05. In addition, at June 30, 1995,
the Company has sold forward 3,600 metric tons of lead at
an average price of $683.50 per metric ton, or $0.31 per
pound. These commitments extend over the period July 1995
to December 1995. The estimated value of these forward
sales contracts is not significant and the nature and
purpose of them does not presently expose the Company to
any significant net loss. All of the aforementioned
contracts are designated as hedges at June 30, 1995.
The recent decline of the Mexican peso has not and is not
expected to significantly impact results at the La Choya
mine or K-T Clay de Mexico S.A. de C.V. as both funding
for operations and sales are denominated in dollars. In
the first six months of 1995, net foreign exchange gains
totaling $0.2 million have been recorded relating to the
Company's Mexican operations. Continued declines in the
Mexican peso could adversely impact the Company's Mexico
operations.
Statement of Financial Accounting Standard No. 52, Foreign
Currency Translation (SFAS No. 52), requires that once the
functional currency of a foreign operation is determined,
that determination shall be used consistently, unless
significant changes in economic facts and circumstances
clearly indicate that the functional currency has changed.
During 1995, the Company's wholly owned subsidiary, K-T
Clay de Mexico, S.A. de C.V., commenced invoicing its
customers in U.S. dollars instead of the Mexican peso.
This change clearly indicated a change in the functional
currency to the U.S. dollar from the Mexican peso. The
change in the functional currency has been accounted for
prospectively commencing in the second quarter of 1995.
In accordance with SFAS No 52, translation adjustments
from prior periods have not been removed from
shareholders' equity and translated amounts for
nonmonetary assets prior to the change have become the
accounting basis for those assets from this point forward.
During the second quarter of 1995, the Company recorded a
foreign exchange gain totaling approximately $349,000, or
$0.01 per common share, in connection with the change in
functional currency.
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<PAGE> 23
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
As described in Note 5 of Notes to Consolidated Financial
Statements, the Company is a defendant in a legal action
filed in November 1990 by Star Phoenix and certain
principals of Star Phoenix, asserting that the Company
breached the terms of Star Phoenix's lease agreement for
the Company's Star Morning Mine and that the Company
interfered with certain contractual relationships of Star
Phoenix relating to the Company's 1990 termination of such
lease agreement. In June 1994, judgment was entered by
the Idaho State District Court against the Company in the
legal proceeding in the amount of $10.0 million in
compensatory damages and $10.0 million in punitive damages
based on a jury verdict rendered in the case in late May
1994. The Company's post-trial motions were denied by the
District Court, and the Company has appealed the judgment
to the Idaho State Supreme Court. Post-judgment interest
will accrue during the appeal period; the current interest
rate is 10.875%. In order to stay the ability of Star
Phoenix to collect on the judgment during the pending of
the appeal, the Company posted an appeal bond in the
amount of $27.2 million representing 136% of the District
Court judgment. The Company pledged U.S. Treasury Notes
totaling $10.0 million as collateral for the $27.2 million
bond. The Company intends to vigorously pursue its appeal
to the Idaho Supreme Court and it has been the Company's
position, and at the current time it remains the Company's
position, that it will not enter into a settlement with
Star Phoenix for any material amount. Although the
ultimate outcome of the appeal of the judgment is subject
to the inherent uncertainties of any legal proceeding,
based on the Company's analysis of the factual and legal
issues associated with the proceeding before the District
Court and based upon the opinions of outside counsel, as
of the date hereof, it is management's belief that the
Company should ultimately prevail in this matter, although
there can be no assurance in this regard.
Although there can be no assurance as to the ultimate
outcome of these matters and the proceedings disclosed
above, it is the opinion of the Company's management,
based upon the information available at this time, that
the outcome of these matters, individually or in the
aggregate, will not have a material adverse effect on the
results of operations and financial condition of the
Company and its subsidiaries.
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<PAGE> 24
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
OTHER
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" (SFAS No.
121). This Statement requires that long-lived assets and
certain identifiable intangibles to be held and used by
the Company be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. In performing the
review for recoverability, the Company is required to
estimate the future cash flows expected to result from the
use of the asset and its eventual disposition. If the sum
of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount
of the asset, an impairment loss is recognized.
Otherwise, an impairment loss is not recognized.
Additionally, the Statement requires that long-lived
assets and certain identifiable intangibles to be disposed
of be reported at the lower of carrying amount or fair
value less cost to sell. SFAS No. 121 is effective for
financial statements for fiscal years beginning after
December 15, 1995. The Company has not adopted the
Statement for reporting at June 30, 1995. It is the
opinion of the Company's management that the adoption of
SFAS No. 121 will not have a material effect on the
results of operations or financial condition of the
Company and its subsidiaries.
On August 2, 1995, the Company executed a definitive
Purchase and Sale Agreement with Mooney Chemicals, Inc.,
a subsidiary of OM Group, Inc., for the sale of the
Company's Apex Unit cobalt processing facility near the
town of St. George, Washington County, Utah, in
consideration of $8.0 million, to be paid in increments of
$3.0 million at closing, $3.0 million plus interest one
year after closing, and $2.0 million plus interest two
years after closing. A gain of approximately $4.0 million
will be recognized upon closing, which is expected in the
third quarter of 1995. There are a number of conditions
to closing which remain unsatisfied. The Company
purchased the Apex Unit in 1988 and processed ores from
the nearby gallium and germanium mine during 1990. The
Company retooled the Apex Unit processing facilities for
production of cobalt compounds from byproduct feedstocks
and developed markets for its new products. The gallium
and germanium mine is not included in the sale of Apex
Unit assets.
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<PAGE> 25
PART I - FINANCIAL INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
In June 1995, the Company entered into a joint venture
agreement with War Eagle Mining Company, Inc. to explore
and develop War Eagle's La Fortuna silver/gold property in
Sonora, Mexico. The Company will earn a 60% joint venture
interest after spending $5.0 million on the project over
four years.
An agreement in principle has been entered into with Santa
Fe Pacific Gold Corporation to explore and develop the
Company's Golden Eagle gold deposit in northeast
Washington State. Under the terms of the agreement, Santa
Fe Pacific Gold Corporation can earn a 70% interest in the
project by spending $7.5 million over a three-year period
and completing a feasibility study.
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<PAGE> 26
PART II - OTHER INFORMATION
HECLA MINING COMPANY and SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
In July 1991, the Coeur d'Alene Indian Tribe (the "Tribe")
brought a lawsuit, under the Comprehensive Environmental
Response Liability Act of 1980 (CERCLA), in Idaho Federal
District Court against the Company and a number of other
mining companies asserting claims for damages to natural
resources located downstream from the Bunker Hill
Superfund Site located at Kellogg, Idaho, over which the
Tribe alleges some ownership or control. The Company has
answered the Tribe's complaint denying liability for
natural resource damages and asserted a number of defenses
to the Tribe's claims, including a defense that the Tribe
has no ownership or control over the natural resources
they assert have been damaged. In July 1992, in a
separate action between the Tribe and the State of Idaho,
the Idaho Federal District Court determined that the Tribe
does not own the beds, banks and waters of Lake
Coeur d'Alene and the lower portion of its tributaries,
the ownership of which is the primary basis for the
natural resource damage claims asserted by the Tribe
against the Company. Based upon the Tribe's appeal of the
July 1992 District Court ownership decision to the 9th
Circuit U.S. Court of Appeals, the court in the natural
resource damage litigation issued an order on October 30,
1992, staying the court proceedings in the natural
resource damage litigation until a final decision is
handed down on the question of the Tribe's title. On
December 9, 1994, the 9th Circuit Court reversed the
decision of the Idaho District Court and remanded the case
of the Tribe's ownership for trial before the District
Court. The Company has been advised that the State will
seek an appeal of the 9th Circuit Court decision to the
U.S. Supreme Court. In July 1994, the United States, as
Trustee for the Coeur d'Alene Tribe, initiated a separate
suit in Idaho Federal District Court seeking a
determination that the Coeur d'Alene Tribe owns
approximately the lower one-third of Lake Coeur d'Alene.
The State has denied the Tribe's ownership of any portion
of Lake Coeur d'Alene and its tributaries. The legal
proceedings related to the Tribe's natural resource
damages claim against the Company and other mining
companies continue to be stayed.
On July 18, 1995, the Department of Interior (DOI)
notified the Company and six other companies (several with
assets and resources greater than the Company) that the
federal natural resource trustees (Fish and Wildlife
Service and U.S. Forest Service) identified the Company
and the other six companies as potentially responsible
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<PAGE> 27
PART II - OTHER INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
parties (PRPs) for damages resulting from injury to
federal natural resources with respect to the
Coeur d'Alene Basin in North Idaho. The DOI letter
further notifies the Company that the federal trustees
intend to bring suit against these companies to recover
the alleged damages under CERCLA. The Company is
currently analyzing such letter and determining what
actions, if any, should be taken in response thereto.
In 1991, the Company initiated litigation in the Idaho
State District Court in Kootenai County, Idaho, against a
number of insurance carriers which provided comprehensive
general liability insurance coverage to the Company and
its predecessors. The Company believes that the insurance
companies have a duty to defend and indemnify the Company
under their policies of insurance relating to claims
asserted against the Company by the EPA and the Tribe. In
two separate decisions issued in August 1992 and March
1993, the court ruled that the primary insurance companies
had a duty to defend the Company in the Tribe's lawsuit,
but that no carrier had a duty to defend the Company in
the EPA proceeding. In January 1995, the Company entered
into settlement agreements with four of the insurance
carriers named in the litigation. The Company received a
total of $2.425 million under the terms of the settlement
agreements. A portion of this settlement amount will be
payable to the EPA to reimburse the U.S. Government for
past costs under the Bunker Hill Consent Decree. The
Company has initiated a separate legal proceeding in
Federal District Court in Idaho seeking a clarification of
its obligation to pay a portion of the insurance proceeds
to the EPA. Litigation is still pending against other
insurers. At June 30, 1995, the Company has not reduced
its environmental accrual to reflect any anticipated
additional insurance proceeds.
In June 1994, a judgment was entered against the Company
in Idaho State District Court in the amount of $10.0
million in compensatory damages and $10.0 million in
punitive damages based on a jury verdict rendered in late
May 1994 with respect to a lawsuit previously filed
against the Company by Star Phoenix Mining Company ("Star
Phoenix"), a former lessee of the Star Morning Mine, over
a dispute between the Company and Star Phoenix concerning
the Company's November 1990 termination of the Star
Phoenix lease of the Star Morning Mine property. A number
of other claims by Star Phoenix and certain principals of
Star Phoenix against the Company in the lawsuit were
dismissed by the State District Court. The Company's
post-trial motions were denied by the State District
-27-
<PAGE> 28
PART II - OTHER INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
Court, and the Company has appealed the District Court
judgment to the Idaho State Supreme Court. Post-judgment
interest will accrue during the appeal period; the current
interest rate is 10.875%. In order to stay the ability of
Star Phoenix to collect on the judgment during the pending
of the appeal, the Company has posted an appeal bond in
the amount of $27.2 million representing 136% of the
District Court judgment. The Company pledged U.S.
Treasury Notes totaling $10.0 million as collateral for
the appeal bond. This collateral amount is included in
restricted investments at December 31, 1994 and June 30,
1995. On May 3, 1995, the District Court issued its final
opinion and order on a number of post-trial issues pending
before the Court. The Opinion and Order included the
Court's denial of the post-trial motions filed by Star
Phoenix and certain of its principals regarding claims
which had been previously dismissed by the Court during
trial. The Court also awarded Star Phoenix approximately
$300,000 in attorneys' fees and costs out of the $1.6
million claimed by the Plaintiffs. The Company intends to
vigorously pursue its appeal to the Idaho Supreme Court
and it has been the Company's position, and at the current
time it remains the Company's position, that it will not
enter into a settlement with Star Phoenix for any material
amount. Although the ultimate outcome of the appeal of
the Idaho District Court judgment is subject to the
inherent uncertainties of any legal proceeding, based upon
the Company's analysis of the factual and legal issues
associated with the proceeding before the Idaho District
Court and based on the opinions of outside counsel, as of
the date hereof, it is management's belief that the
Company should ultimately prevail in this matter, although
there can be no assurance in this regard. Accordingly,
the Company has not accrued any liability associated with
this litigation.
The Company is subject to other legal proceedings and
claims which have arisen in the ordinary course of its
business and have not been finally adjudicated. Although
there can be no assurance as to the ultimate disposition
of these matters and the proceedings disclosed above, it
is the opinion of the Company's management, based upon the
information available at this time, that the expected
outcome of these matters, individually or in the
aggregate, will not have a material adverse effect on the
results of operations and financial condition of the
Company and its subsidiaries.
-28-
<PAGE> 29
PART II - OTHER INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
ITEM 4. ANNUAL MEETING OF SHAREHOLDERS
At the annual meeting of shareholders held on May 5, 1995,
the following matters were voted on by the Company's
shareholders:
Election of Two Directors:
Votes Votes
For Withheld
----- --------
Charles L. McAlpine 34,925,223 -0-
---------- ----------
Jorge E. Ordonez 34,920,424 -0-
---------- ----------
Approval of Hecla Mining
Company 1995 Stock Incentive
Plan:
Votes Votes
For Against Abstentions
----- ------- -----------
31,313,326 3,763,862 321,433
---------- --------- ----------
Approval of Hecla Mining
Company Stock Plan for
Nonemployee Directors:
Votes Votes
For Against Abstentions
----- ------- -----------
32,683,193 2,378,018 337,210
---------- --------- -----------
Approval of selection of
Coopers & Lybrand L.L.P. as
the Company's Auditors for 1995:
Votes Votes
For Against Abstentions
----- ------- -----------
34,974,952 241,110 182,559
---------- ---------- -----------
-29-
<PAGE> 30
PART II - OTHER INFORMATION (Continued)
HECLA MINING COMPANY and SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
13.1 - Second Quarter Report to Shareholders for the
quarter ending June 30, 1995, for release
dated August 3, 1995.
27 - Financial Data Schedule
(b) Reports on Form 8-K
Report on Form 8-K dated May 17, 1995 related to
Kennecott Minerals Company and Hecla Mining Company
approval of the redevelopment of the Greens Creek
mine.
Report on Form 8-K dated June 5, 1995 related to Hecla
Mining Company's acquisition of J.M. Huber Corporation
effective May 31, 1995.
Items 2, 3 and 5 of Part II are omitted from this report as
inapplicable.
-30-
<PAGE> 31
HECLA MINING COMPANY and SUBSIDIARIES
SIGNATURES
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.
HECLA MINING COMPANY
-----------------------------------
(Registrant)
Date: August 14, 1995 By /s/ ARTHUR BROWN
---------------------------------
Arthur Brown, Chairman, President
and Chief Executive Officer
Date: August 14, 1995 By /s/ J. T. HEATHERLY
---------------------------------
J. T. Heatherly,
Vice President - Controller
(Chief Accounting Officer)
-31-
<PAGE> 32
EXHIBIT INDEX
-------------
Exhibit
No. Description
-------- -----------------------
13.1 Second Quarter Report to Shareholders for the
quarter ending June 30, 1995, for release dated
August 3, 1995
27 Financial Data Schedule
-32-
<PAGE> 1
[HECLA LOGO] Exhibit 13.1
HECLA REPORTS SECOND QUARTER EARNINGS
For the Period Ended June 30, 1995
For release: August 3, 1995
COEUR D'ALENE, Idaho -- Hecla Mining Company (HL & HL-B:NYSE) today
reported net income for the second quarter of $0.2 million on revenue of $43.1
million. The results are after $2 million in dividend payments to holders of
preferred stock. The second quarter income of $0.2 million compares to a net
loss of $1.3 million, or 3 cents per common share, during the second quarter of
1994, on revenue of $40 million.
For the first half of 1995, Hecla lost $4.2 million, or 9 cents per
common share, on revenue of $80.2 million, compared to a loss of $9 million, or
22 cents per common share, on revenue of $67.7 million during the same period
in 1994.
Improved results over the same quarter last year are primarily due to a
gain of $3.4 million on the sale of common stock investments. Hecla also
recognized a gain of $1.1 million as the final insurance settlement for business
interruption and property damage that resulted from the Lucky Friday Unit hoist
accident last August. The Lucky Friday Unit successfully resumed normal
production levels during the second quarter of 1995.
A $13.6 million increase in sales revenue for the first half of 1995
compared to the same period last year is primarily due to a 50% increase in gold
production. Hecla produced 75,629 ounces of gold in the first six months of
1995, compared to 50,272 ounces of gold during the first six months of 1994.
The company's La Choya gold mine in Mexico is performing well, with a
$252 cash cost per ounce of gold during the first half of 1995. This compares
to a cash cost of $399 per ounce during the first half of last year, when the
mine was in start-up mode and had not reached full production. During the first
six months of 1995, La Choya produced 23,681 ounces of gold, compared to 12,918
ounces during the same period in 1994. Construction of a new leach pad and an
additional carbon plant was completed in June as planned, which should permit
significantly increased production during the second half of 1995.
The Grouse Creek gold mine in central Idaho, in which Hecla holds an 80%
interest, reached full production during the second quarter and produced 35,197
ounces of gold during the first six months of 1995. An improved feed system to
the mill was installed in May, which should result in increased production and
lower costs per ounce of gold produced during the second half of the year.
In early June, Hecla's industrial minerals subsidiary, Kentucky-Tennessee
Clay Company, acquired kaolin mines and a processing facility in Langley, South
Carolina. This acquisition has expanded K-T Clay's product line to include
surface-modified airfloat kaolin, which is used as a filler in paint and rubber.
The Langley facility has been combined with the company's Aiken, South Carolina,
kaolin operation. During the second quarter, the industrial minerals division
also acquired Western Bark Products, which produces organic products for the
lawn and garden market.
For the first six months of 1995, both revenue and operating costs for
the industrial minerals segment increased compared to the first half of 1994,
principally due to acquisitions of the Western Bark and Langley operations in
the second quarter of 1995.
During the second quarter, Hecla's board of directors approved proceeding
with redevelopment of the Greens Creek silver/gold/zinc/lead mine near Juneau,
Alaska. Production is scheduled to begin in early 1997 at the mine, which is a
joint venture between Kennecott Minerals Company and Hecla. Over the past two
years, a new high-grade ore body was identified and a feasibility study was
completed, showing the new ore body could be mined profitably at existing metals
prices. The mine has been on standby status since 1993 when low metals prices
forced the operation to shut down.
Hecla and War Eagle Mining Company Inc. agreed in June to a joint venture
to explore the La Fortuna silver/gold property in Mexico. Hecla will earn a 60%
joint-venture interest by spending $5 million on the project over four years.
Hecla's chief executive officer, Arthur Brown, said, "The future of a mining
company depends on its exploration prospects, and we feel the La Fortuna project
has good potential for future development."
-HL-
Contact Bill Booth, vice president-investor and public affairs, or Vicki
Veltkamp, manager-corporate communications
6500 Mineral Drive - Coeur d'Alene, Idaho 83814-8788 -
208/769-4100 - FAX 208/769-4159
<PAGE> 2
HECLA MINING COMPANY
(dollars in thousands, except per-share amounts - unaudited)
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
-------------------- ----------------
June 30, June 30, June 30, June 30,
HIGHLIGHTS 1995 1994 1995 1994
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------
FINANCIAL DATA
-------------------------------------------------------------------------------
Total revenue $43,089 $40,055 $80,242 $67,708
Gross profit 1,008 4,021 846 3,071
Net income (loss) 2,242 701 (222) (4,949)
Net income (loss) applicable to
common shareholders 229 (1,311) (4,247) (8,974)
Net income (loss) per common share 0.01 (0.03) (0.09) (0.22)
Cash flow from (to) operating activities 604 8,186 (331) (3,731)
-------------------------------------------------------------------------------
SALE OF PRODUCTS BY SEGMENT
-------------------------------------------------------------------------------
Gold operations $15,135 $13,176 $30,105 $21,035
Silver operations 3,306 3,560 5,733 6,145
Industrial minerals 22,243 20,048 39,645 35,212
Specialty metals 1,557 1,264 2,468 1,996
------- ------- ------- -------
Total sales $42,241 $38,048 $77,951 $64,388
-------------------------------------------------------------------------------
GROSS PROFIT (LOSS) BY SEGMENT
-------------------------------------------------------------------------------
Gold operations $(2,762) $ 1,341 $(4,371) $ 1,206
Silver operations 852 (1,031) 691 (2,838)
Industrial minerals 2,893 3,543 4,497 4,644
Specialty metals 25 168 29 59
------- ------- ------- -------
Total gross profit $ 1,008 $ 4,021 $ 846 $ 3,071
-------------------------------------------------------------------------------
PRODUCTION SUMMARY - TOTALS
-------------------------------------------------------------------------------
Gold - Ounces 36,646 30,459 75,629 50,272
Silver - Ounces 559,278 566,570 1,018,672 1,099,125
Lead - Tons 4,602 4,755 8,251 9,722
Zinc - Tons 811 1,068 1,396 1,845
Average cost per ounce of gold produced:
Cash production costs ($/oz.) 348 278 330 315
Full costs ($/oz.) 466 341 441 372
Average cost per ounce of silver produced:
Cash production costs ($/oz.) 4.94 6.19 4.85 6.15
Full costs ($/oz.) 6.20 7.44 6.11 7.40
-------------------------------------------------------------------------------
AVERAGE METAL PRICES
-------------------------------------------------------------------------------
Gold - Realized ($/oz.) 393 384 389 385
Gold - London Final ($/oz.) 388 381 384 383
Silver - Handy & Harman ($/oz.) 5.48 5.38 5.09 5.33
Lead - LME Cash (cents/pound) 27.5 21.7 27.6 21.6
Zinc - LME Cash (cents/pound) 47.0 43.0 47.8 43.3
</TABLE>
Contact Bill Booth, vice president-investor and public affairs, or Vicki
Veltkamp, manager-corporate communications
6500 Mineral Drive - Coeur d'Alene, Idaho 83814-8788 -
208/769-4100 - FAX 208/769-4159
<PAGE> 3
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(In thousands - unaudited)
<TABLE>
<CAPTION>
Six Months Ended
--------------------
June 30, June 30,
1995 1994
<S> <C> <C>
------------------------------------------------------------------------------
OPERATING ACTIVITIES
------------------------------------------------------------------------------
Net loss $ (222) $ (4,949)
Noncash elements included in net loss:
Depreciation, depletion and amortization 11,733 6,638
Gain on disposition of properties, plants
and equipment (244) (579)
Gain on investments (3,893) - -
Extraordinary loss on early retirement of
long-term debt - - 823
Accretion of interest on long-term debt - - 1,750
Provision for reclamation and closure costs - - 674
Change in:
Accounts and notes receivable (7,760) (10,146)
Income tax refund receivable (3) (505)
Inventories 218 1,388
Other current assets (313) 23
Accounts payable and accrued expenses (1,297) 843
Accrued payroll and related benefits (144) 46
Accrued taxes 402 401
Accrued reclamation and other noncurrent liabilities 1,192 (138)
-------- --------
Net cash applied to operating activities (331) (3,731)
-------- --------
------------------------------------------------------------------------------
INVESTING ACTIVITIES
------------------------------------------------------------------------------
Additions to properties, plants and equipment (21,575) (32,018)
Proceeds from disposition of properties, plants
and equipment 379 13,281
Proceeds from the sales of investments 4,664 3,548
Purchase of restricted investments (284) - -
Proceeds from maturity of short-term investments - - 27,552
Purchase of investments and increase in cash surrender
value of life insurance (639) (2,849)
Other, net (1,110) (2,306)
-------- --------
Net cash provided by (applied to) investing activities (18,565) 7,208
-------- --------
------------------------------------------------------------------------------
FINANCING ACTIVITIES
------------------------------------------------------------------------------
Proceeds from exercise of stock warrants 1,239 - -
Common stock issued under stock option plans - - 1,739
Issuance of common stock - - 63,499
Early retirement of long-term debt - - (50,169)
Dividends on preferred stock (4,024) (4,025)
Borrowing on long-term debt 30,000 - -
Repayment on long-term debt (8,903) - -
Decrease in deferred revenue - - (36)
-------- --------
Net cash provided by financing activities 18,312 11,008
-------- --------
Net increase (decrease) in cash and cash equivalents (584) 14,485
Cash and cash equivalents at beginning of period 7,278 40,031
-------- --------
Cash and cash equivalents at end of period $ 6,694 $ 54,516
======== ========
</TABLE>
<PAGE> 4
HECLA MINING COMPANY
Consolidated Balance Sheets
(In thousands - unaudited)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
<S> <C> <C>
-----------------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 6,694 $ 7,278
Accounts and notes receivable 31,276 23,516
Income tax refund receivable 250 247
Inventories 18,398 18,616
Other current assets 1,910 1,597
--------- ---------
Total current assets 58,528 51,254
Investments 2,741 6,476
Restricted investments 13,837 13,553
Properties, plants and equipment, net 266,600 257,908
Other noncurrent assets 5,750 5,391
--------- ---------
Total assets $ 347,456 $ 334,582
========= =========
-----------------------------------------------------------------------------
LIABILITIES
-----------------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 12,273 $ 13,570
Accrued payroll and related benefits 2,580 2,724
Preferred stock dividends payable 2,013 2,012
Accrued taxes 1,327 925
Accrued reclamation costs 3,829 4,254
--------- ---------
Total current liabilities 22,022 23,485
Deferred income taxes 359 359
Long-term debt 23,057 1,960
Accrued reclamation costs 28,129 27,162
Other noncurrent liabilities 4,748 4,098
--------- ---------
Total liabilities 78,315 57,064
--------- ---------
-----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
-----------------------------------------------------------------------------
Preferred stock 575 575
Common stock 12,075 12,036
Capital surplus 330,169 328,995
Retained deficit (67,684) (63,437)
Net unrealized gain (loss) on investments (207) 3,396
Foreign currency translation adjustment (4,898) (3,158)
Treasury stock (889) (889)
--------- ---------
Total shareholders' equity 269,141 277,518
--------- ---------
Total liabilities and shareholders' equity $ 347,456 $ 334,582
========= =========
Common shares outstanding at end of period 48,236 48,074
====== ======
</TABLE>
<PAGE> 5
HECLA MINING COMPANY
Consolidated Statements of Operations
(In thousands, except per-share amounts - unaudited)
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
-------------------- -------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales of products $ 42,241 $ 38,048 $ 77,951 $ 64,388
-------- -------- -------- --------
Cost of sales and other direct
production costs 35,310 30,370 65,540 55,041
Depreciation, depletion and amortization 5,923 3,657 11,565 6,276
-------- -------- -------- --------
41,233 34,027 77,105 61,317
-------- -------- -------- --------
Gross profit 1,008 4,021 846 3,071
-------- -------- -------- --------
Other operating expenses:
General and administrative 2,134 1,780 4,464 6,339
Exploration 1,165 1,990 2,208 4,099
Depreciation and amortization 85 180 168 362
Provision for closed operations and
environmental matters 171 384 227 624
-------- -------- -------- --------
3,555 4,334 7,067 11,424
-------- -------- -------- --------
Loss from operations (2,547) (313) (6,221) (8,353)
-------- -------- -------- --------
Other income (expense):
Interest and other income 848 2,007 2,291 3,320
Foreign exchange gain 359 - - 162 - -
Gain (loss) on sale of investments 3,772 (238) 3,893 1,090
Interest expense:
Total interest cost (421) (898) (586) (2,047)
Less amount capitalized 318 786 376 1,751
-------- -------- -------- --------
4,876 1,657 6,136 4,114
-------- -------- -------- --------
Income (loss) before extraordinary item
and income taxes 2,329 1,344 (85) (4,239)
Income tax (provision) benefit (87) 181 (137) 113
-------- -------- -------- --------
Income (loss) before extraordinary item 2,242 1,525 (222) (4,126)
Extraordinary loss on retirement of
long-term debt - - (823) - - (823)
-------- -------- -------- --------
Net income (loss) 2,242 702 (222) (4,949)
Preferred stock dividends 2,013 2,013 4,025 4,025
-------- -------- -------- --------
Net income (loss) applicable to
common shareholders $ 229 $ (1,311) $ (4,247) $ (8,974)
======== ======== ======== ========
Net income (loss) per common share $ 0.01 $ (0.03) $ (0.09) $ (0.22)
======== ======= ======== ========
Weighted average number of
common shares outstanding 48,236 44,294 48,155 41,487
====== ====== ====== ======
Common shares outstanding at end of period 48,236 48,074
====== ======
</TABLE>
<PAGE> 6
HECLA MINING COMPANY
Production Data
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
-------------------- -----------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------
LA CHOYA UNIT
--------------------------------------------------------------------------------
Tons of ore crushed 497,647 799,025 1,076,852 990,627
Ore grade crushed - Gold (oz./ton) 0.031 0.060 0.029 0.038
Gold produced (oz.) 12,665 11,832 23,681 12,918
Silver produced (oz.) 1,362 1,648 2,426 1,757
Average cost per ounce of gold produced:
Cash production costs $280 $270 $252 $399
Full cost $361 $367 $335 $500
--------------------------------------------------------------------------------
REPUBLIC UNIT (1)
--------------------------------------------------------------------------------
Tons of ore milled 28,892 10,269 56,224
Gold recovered grade (oz./ton) 0.34 0.13 0.37
Gold produced (oz.) 9,059 2,910 18,411
Silver produced (oz.) 70,752 15,058 135,633
Average cost per ounce of gold produced:
Cash production costs $252 $194 $258
Full cost $319 $194 $324
--------------------------------------------------------------------------------
AMERICAN GIRL UNIT (Reflects Hecla's 47% share)
--------------------------------------------------------------------------------
Tons of ore milled 3,361 30,249 23,234 59,454
Tons of ore to heap 299,346 150,876 499,612 239,723
Ore grade milled - Gold (oz./ton) 0.194 0.167 0.194 0.175
Ore grade to heap - Gold (oz./ton) 0.028 0.025 0.028 0.025
Gold produced (oz.) 5,022 7,509 10,549 14,852
Silver produced (oz.) 2,797 4,161 7,268 7,955
Average cost per ounce of gold produced:
Cash production costs $475 $337 $414 $328
Full cost $510 $358 $440 $352
--------------------------------------------------------------------------------
GROUSE CREEK (Reflects Hecla's 80% share)
--------------------------------------------------------------------------------
Tons of ore milled 397,308 643,469
Ore grade milled - Gold (oz./ton) 0.043 0.054
Ore grade milled - Silver (oz./ton) 0.61 0.67
Gold produced (oz.) 17,341 35,197
Silver produced (oz.) 136,009 240,958
Average cost per ounce of gold produced:
Cash production costs $372 $377
Full cost $549 $550
--------------------------------------------------------------------------------
LUCKY FRIDAY UNIT
--------------------------------------------------------------------------------
Tons of ore milled 41,678 45,753 74,018 88,559
Silver recovered grade (oz./ton) 10.33 11.06 10.74 10.89
Silver produced (oz.) 418,409 484,029 751,475 943,216
Lead produced (short tons) 4,602 4,755 8,251 9,722
Average cost per ounce of silver produced:
Cash production costs $4.94 $6.19 $4.85 $6.15
Full cost $6.20 $7.44 $6.11 $7.40
--------------------------------------------------------------------------------
OTHER
--------------------------------------------------------------------------------
Gold produced (oz.) 1,618 2,059 3,292 4,091
Silver produced (oz.) 701 5,980 1,487 10,564
</TABLE>
(1)Republic Unit ceased operations March 31, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 6,694
<SECURITIES> 0
<RECEIVABLES> 31,276
<ALLOWANCES> 0
<INVENTORY> 18,398
<CURRENT-ASSETS> 58,528
<PP&E> 464,673
<DEPRECIATION> 198,073
<TOTAL-ASSETS> 347,456
<CURRENT-LIABILITIES> 22,022
<BONDS> 0
<COMMON> 12,075
0
575
<OTHER-SE> 256,491
<TOTAL-LIABILITY-AND-EQUITY> 347,456
<SALES> 77,951
<TOTAL-REVENUES> 80,242
<CGS> 65,540
<TOTAL-COSTS> 77,105
<OTHER-EXPENSES> 7,067
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 210
<INCOME-PRETAX> (85)
<INCOME-TAX> (137)
<INCOME-CONTINUING> (222)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (222)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
