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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): June 25, 1999
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 83815-8788
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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 2. Acquisition or Disposition of Assets
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See Item No. 5.
Item 5. Other Events.
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On June 28, 1999 the Registrant issued the press release attached
hereto as an Exhibit, which is incorporated herein by this reference relating to
the Registrant's closing of the purchase of all outstanding common stock of
Monarch Resources Investments Limited on June 25, 1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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Exhibit 4.1 - Purchase Agreement between Monarch Resources
Limited and Hecla Mining Company dated May 17, 1999 (to
be filed by Amendment)
Exhibit 99 - News Release dated June 28, 1999
SIGNATURE
Pursuant to the requirements of Section 12 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
By: /s/ Michael B. White
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Name: Michael B. White
Title: Vice President - General Counsel
Dated: July 12, 1999
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EXHIBIT INDEX
Exhibit No. Title
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99 News Release dated June 28, 1999
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[Hecla Logo] Exhibit 99
FOR IMMEDIATE RELEASE
June 28, 1999
HECLA CLOSES DEAL ON VENEZUELAN GOLD MINE
AND MEXICAN SILVER PROPERTY
COEUR D'ALENE, IDAHO -- Hecla Mining Company (HL & HL-PrB:NYSE) today
announced closure of the transaction to acquire the La Camorra underground gold
mine in Venezuela and a silver exploration property in Mexico from Monarch
Resources Limited of Bermuda. The acquisition also includes a number of other
precious metals exploration prospects in Venezuela and Mexico.
The purchase price was $25 million, comprised of $9 million in cash and 6.7
million Hecla common shares, which will be subject to certain trading
restrictions. Additionally, Monarch will retain a sliding scale net smelter
royalty on future production if it ultimately exceeds 600,000 ounces at the La
Camorra gold mine. The royalty starts at 1% when the price of gold exceeds $300
per ounce and tops out at 3% when the price of gold reaches $500 per ounce.
Hecla financed the cash portion of the transaction through a combination of
project financing and proceeds of a previous equity offering.
La Camorra is a high-grade, underground gold mine that produced 51,000
ounces of gold in 1998 at a grade of 0.44 ounce per ton. Production is
scheduled to ramp up to 80,000 ounces annually by the year 2001. The life-of-
mine cash cost per ounce of production is estimated at under $200. Hecla will
implement a new operating plan that will allow sustainable production at mill
and mine design rates, which are currently underutilized. The plan calls for an
immediate three-month mill closure to advance mine development and to expand the
tailings impoundment area. The new mine plan provides for better ore access,
which will increase the mining rate, cause less dilution and utilize the mine
and mill equipment more efficiently. These improvements are expected to be
completed by the end of the third quarter. Development costs, tailings pond
improvements and working capital requirements are estimated at $9-$10 million,
which will be funded principally through project financing which is nonrecourse
to Hecla. Full production is expected to resume in the fourth quarter of this
year with improved efficiency and lower costs. Hecla expects the La Camorra
mine to contribute approximately 19,000 ounces of gold to Hecla's account in
1999.
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"The La Camorra mine is an underground, narrow vein, high-grade mine
similar to the type that Hecla has been expertly mining for over one hundred
years," said Arthur Brown, Hecla's chairman, president and chief executive
officer. "We're excited about the potential for increasing production, reducing
costs and expanding reserves at the mine. This acquisition was a strategic move
to help reach the company's growth objective of increasing our gold reserves.
In addition to our gold operations, Hecla operates low-cost silver and
industrial minerals operations, both of which have more than 20 years' worth of
high-quality reserves."
The La Camorra mine, located in Bolivar State in eastern Venezuela,
currently contains more than 600,000 ounces of high-grade gold resource. At
planned production rates, mining is expected to continue for at least the next
six years. Based on deep drilling intercepts, management believes that mine
life can be extended beyond that time.
The purchase also includes Monarch's Mexican interests, including the
Saladillo silver/gold property and other exploration prospects. The Saladillo
property is located 110 kilometers northeast of Durango and is a highly
prospective epithermal, bonanza gold and silver project. It currently contains
a drill-indicated resource of approximately 75,000 ounces of gold at a grade of
0.13 ounce per ton and 8 million ounces of silver at a grade of 14.6 ounces per
ton.
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, is one of the
United States' best-known silver producers. The company also produces gold and
is a major supplier of ball clay, kaolin and other industrial minerals. Hecla's
operations are principally in the U.S. and Mexico.
Statements made which are not historical facts, such as anticipated
production, exploration results, costs or sales performance are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, and involve a number of risks and uncertainties that could cause actual
results to differ materially from those projected, anticipated, expected or
implied. These risks and uncertainties include, but are not limited to, metals
prices volatility, volatility of metals production, exploration project
uncertainties, industrial minerals market conditions and project development
risks. Refer to the company's Form 10-Q and 10-K reports for a more detailed
discussion of factors that may impact expected future results. Hecla undertakes
no obligation to publicly update or revise any forward-looking statements.
Contact: Vicki Veltkamp, director - investor and public relations, 208/769-4144
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