<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, 2000
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
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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, 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.
Class Outstanding July 31, 2000
---------------------------- -------------------------
Common stock, par value 66,797, 641 shares
$0.25 per share
<PAGE> 2
Hecla Mining Company and Subsidiaries
Form 10-Q
For the Quarter Ended June 30, 2000
I N D E X*
Page
PART I. - Financial Information
Item l - Consolidated Balance Sheets - June 30,
2000 and December 31, 1999 3
- Consolidated Statements of Operations and
Comprehensive Income (Loss) - Three Months and
Six Months Ended June 30, 2000 and 1999 4
- Consolidated Statements of Cash Flows - Six
Months Ended June 30, 2000 and 1999 5
- Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 16
PART II. - Other Information
Item 1 - Legal Proceedings 31
Item 4 - Annual Meeting of Shareholders 34
Item 6 - Exhibits and Reports on Form 8-K 35
*Items omitted are not applicable.
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<PAGE> 3
Part I - Financial Information
Hecla Mining Company and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,603 $ 2,719
Accounts and notes receivable 28,704 29,202
Inventories 17,825 24,033
Other current assets 3,116 2,548
---------- ----------
Total current assets 61,248 58,502
Investments 2,247 2,130
Restricted investments 6,087 5,998
Properties, plants and equipment, net 175,123 191,026
Other noncurrent assets 11,400 10,701
---------- ----------
Total assets $ 256,105 $ 268,357
========== ==========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 16,514 $ 12,135
Accrued payroll and related benefits 4,293 4,394
Preferred stock dividends payable 2,013 2,012
Current portion of long-term debt 57,032 782
Accrued taxes 2,318 2,369
Accrued reclamation and closure costs 13,216 8,384
---------- ----------
Total current liabilities 95,386 30,076
Deferred income taxes 300 300
Long-term debt 11,677 55,095
Accrued reclamation and closure costs 35,360 40,941
Other noncurrent liabilities 8,514 9,244
---------- ----------
Total liabilities 151,237 135,656
---------- ----------
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 2000 - 66,852,575 shares, issued 1999 - 66,844,575 shares 16,713 16,711
Capital surplus 400,212 400,205
Accumulated deficit (306,589) (278,533)
Accumulated other comprehensive loss (4,657) (4,871)
Less stock held by grantor trust; 2000 and 1999 - 132,290 common shares (500) (500)
Less treasury stock, at cost; 2000 and 1999 - 62,111 common shares (886) (886)
---------- ----------
Total shareholders' equity 104,868 132,701
---------- ----------
Total liabilities and shareholders' equity $ 256,105 $ 268,357
========== ==========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<PAGE> 4
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)(Unaudited)
(Dollars and shares in thousands, except for per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------ ------------------------------
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales of products $ 41,691 $ 46,058 $ 80,574 $ 87,716
--------- --------- --------- ---------
Cost of sales and other direct production costs 35,123 35,081 67,942 66,427
Depreciation, depletion and amortization 6,253 5,892 12,073 11,944
--------- --------- --------- ---------
41,376 40,973 80,015 78,371
--------- --------- --------- ---------
Gross profit 315 5,085 559 9,345
--------- --------- --------- ---------
Other operating expenses:
General and administrative 2,405 1,802 4,357 3,813
Exploration 1,664 1,018 3,386 2,180
Depreciation and amortization 71 81 144 173
Reduction in carrying value of mining properties 9,072 - - 9,072 - -
Provision for closed operations and
environmental matters 2,632 343 3,498 610
--------- --------- --------- ---------
15,844 3,244 20,457 6,776
--------- --------- --------- ---------
Income (loss) from operations (15,529) 1,841 (19,898) 2,569
--------- --------- --------- ---------
Other income (expense):
Interest and other income 1,843 1,823 2,467 2,519
Miscellaneous expense (917) (282) (2,101) (831)
Interest expense (2,059) (958) (3,727) (1,882)
--------- --------- --------- ---------
(1,133) 583 (3,361) (194)
--------- --------- --------- ---------
Income (loss) before income taxes, extraordinary
item and cumulative effect of change in
accounting principle (16,662) 2,424 (23,259) 2,375
Income tax provision (49) (89) (125) (154)
--------- --------- --------- ---------
Income (loss) before extraordinary item and
cumulative effect of change in accounting
principle (16,711) 2,335 (23,384) 2,221
Extraordinary item, net of income tax - - - - (647) - -
Cumulative effect of change in accounting
principle, net of income tax - - - - - - (1,385)
--------- --------- --------- ---------
Net income (loss) (16,711) 2,335 (24,031) 836
Preferred stock dividends (2,013) (2,013) (4,025) (4,025)
--------- --------- --------- ---------
Income (loss) applicable to common shareholders (18,724) 322 (28,056) (3,189)
--------- --------- --------- ---------
Other comprehensive income (loss), net of income tax:
Unrealized holding gains (losses) on securities (79) 23 214 40
--------- --------- --------- ---------
Other comprehensive income (loss) (79) 23 214 40
--------- --------- --------- ---------
Comprehensive income (loss) applicable to
common shareholders $ (18,803) $ 345 $ (27,842) $ (3,149)
========= ========= ========= =========
Basic and diluted income (loss) per common share
before extraordinary item and cumulative effect
of change in accounting principle $ (0.28) $ 0.01 $ (0.41) $ (0.04)
Extraordinary item - - - - (0.01) - -
Cumulative effect of change in accounting principle - - - - - - (0.02)
--------- --------- --------- ---------
Basic and diluted income (loss) per common share $ (0.28) $ 0.01 $ (0.42) $ (0.06)
========= ========= ========= =========
Cash dividends per common share $ - - $ - - $ - - $ - -
========= ========= ========= =========
Weighted average number of common shares outstanding 66,788 60,687 66,784 57,944
========= ========= ========= =========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<PAGE> 5
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Operating activities:
Net income (loss) $ (24,031) $ 836
Noncash elements included in net income:
Depreciation, depletion and amortization 12,217 12,117
Cumulative effect of change in accounting principle - - 1,385
Extraordinary charge 647 - -
Loss on sale of MWP division of MWCA 929 - -
Gain on disposition of properties, plants and equipment (1,262) (1,347)
Reduction of carrying value of mining properties 9,072 - -
Provision for reclamation and closure costs 1,844 463
Change in assets and liabilities net of effects from
purchase of Monarch Resources Investments Limited:
Accounts and notes receivable 607 (9,214)
Income tax refund receivable - - 1,071
Inventories (1,830) 3,075
Other current and noncurrent assets 174 93
Accounts payable and accrued expenses 3,782 41
Accrued payroll and related benefits (101) 649
Accrued taxes (51) 169
Accrued reclamation and closure costs and other
noncurrent liabilities (3,351) (2,421)
---------- ----------
Net cash provided (used) by operating activities (1,354) 6,917
---------- ----------
Investing activities:
Purchase of Monarch Resources Investments Limited,
net of cash acquired - - (9,183)
Proceeds from sale of MWCA 9,677 - -
Additions to properties, plants and equipment (8,429) (4,617)
Proceeds from disposition of properties, plants and equipment 1,768 1,687
Proceeds from sale of investments - - 311
Decrease (increase) in restricted investments (89) 417
Purchase of investments and change in cash
surrender value of life insurance, net 94 37
Other, net 233 (43)
---------- ----------
Net cash provided (used) by investing activities 3,254 (11,391)
---------- ----------
Financing activities:
Common stock issued under stock and stock option plans 9 20
Common stock issuance, net of offering costs - - 11,860
Preferred stock dividends (4,025) (4,025)
Payments for debt issuance costs (1,811) (487)
Borrowings, net of repayments, against cash surrender
value of life insurance - - 925
Borrowings on long-term debt 79,500 38,040
Repayments on long-term debt (66,689) (32,508)
---------- ----------
Net cash provided by financing activities 6,984 13,825
---------- ----------
Net increase in cash and cash equivalents 8,884 9,351
Cash and cash equivalents at beginning of period 2,719 2,480
---------- ----------
Cash and cash equivalents at end of period $ 11,603 $ 11,831
========== ==========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<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, 1999,
set forth in Hecla Mining Company's (Hecla) 1999 Annual Report on Form 10-K,
substantially apply to these interim consolidated financial statements and are
not repeated here. For additional information, please refer to such notes.
Note 2.
The financial information given in the accompanying unaudited interim
consolidated financial statements reflects all adjustments which, in the opinion
of management, are necessary to a fair statement of the results for the interim
periods reported. All such adjustments are of a normal recurring nature with
the exception of an adjustment recognized in 2000 for the early extinguishment
of debt as described in Note 8 and an adjustment recognized in 1999 for the
cumulative effect of a change in accounting principle. All financial statements
presented are unaudited. However, the balance sheet as of December 31, 1999, was
derived from the audited consolidated balance sheet referenced in Note 1 above.
Certain consolidated financial statement amounts have been reclassified to
conform to the 2000 presentation. These reclassifications had no effect on the
net loss or accumulated deficit as previously reported.
Note 3.
On March 15, 2000, Hecla completed the sale of its MWCA - Mountain West
Products (MWP) division for $8.5 million in cash. The sale of MWP resulted in a
loss on disposal of $0.9 million. The proceeds from the sale were used to pay
down amounts outstanding under Hecla's previously existing revolving credit
facility. On June 5, 2000 Hecla completed a sale of the landscape operations of
the Colorado Aggregate Division (CAC) of MWCA for $1.1 million in cash. The
sale of the CAC landscape operations did not result in a gain or loss. Hecla is
currently negotiating with third parties for a potential sale of the remaining
assets of the Colorado Aggregate division of MWCA, although there can be no
assurance that a sales transaction will be completed.
Note 4.
In the second quarter of 2000, Hecla recorded adjustments totaling $10.3
million for asset write-downs and future reclamation and closure costs. This
total includes an asset write-down for the property, plant, and equipment and
supply inventory at the Rosebud mine, in which Hecla owns an approximate 51%
interest, of $4.4 million. The adjustment at Rosebud
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<PAGE> 7
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
was necessitated due to the planned closure of the Rosebud mine previously
announced by Hecla and Newmont, Hecla's joint venture partner. The Rosebud mine
will complete mining activity in July 2000, followed by completion of milling
activities in August 2000. An adjustment for future closure costs and
reclamation activities totaling approximately $0.7 million was also recorded for
the Rosebud mine. An asset write-down of $4.7 million was also recorded for
previously capitalized development costs at the Noche Buena gold property in
Mexico. Development activity at the Noche Buena property was previously
suspended due to low gold prices. The continuation of lower gold prices
resulted in Hecla's decision to reduce the carrying value of Noche Buena.
Additionally, Hecla recorded $0.6 million in accruals for reclamation and
environmental matters at various other properties in the second quarter.
Note 5.
The components of the income tax provision for the six months ended
June 30, 2000 and 1999 were as follows (in thousands):
2000 1999
------ ------
Current:
State income taxes $ 115 $ 135
Federal income taxes - - - -
Foreign income taxes 10 19
------ ------
Total $ 125 $ 154
====== ======
Hecla's income tax provision for the first half of 2000 and 1999 varies
from the amount that would have been provided by applying the statutory rate to
the loss before income taxes primarily due to the inability to use tax losses in
2000 and 1999.
Note 6.
Inventories consist of the following (in thousands):
June 30, Dec. 31,
2000 1999
-------- --------
Concentrates, bullion, metals
in transit and other products $ 6,030 $ 3,947
Industrial mineral products 3,361 9,275
Materials and supplies 8,434 10,811
-------- --------
$ 17,825 $ 24,033
======== ========
-7-
<PAGE> 8
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
At June 30, 2000, Hecla had forward sales commitments through December 31,
2004 for 267,342 ounces of gold at an average price of $288.01 per ounce and
forward sales commitments through December 29, 2000 for 300,000 ounces of silver
at an average price of $5.51 per ounce. Also at June 30, 2000, Hecla had swap
contracts through December 2000 for 3,000 metric tons of zinc at an average
price of $0.519 per pound. All of the aforementioned contracts were designated
as hedges at June 30, 2000. Hecla 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. The London
Final gold price at June 30, 2000 was $288.15 per ounce. The Handy & Harman
silver price at June 30, 2000 was $5.055 per ounce. At June 30, 2000, the LME
cash lead price was $0.200 per pound and the LME cash zinc price was $0.521 per
pound.
Note 7. Contingencies
- Bunker Hill Superfund Site
In 1994, Hecla, as a potentially responsible party under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA),
entered into a consent decree with the Environmental Protection Agency (EPA) and
the state of Idaho, concerning environmental remediation obligations at the
Bunker Hill Superfund site located at Kellogg, Idaho. The consent decree
settled Hecla's response-cost liability under CERCLA at the Bunker Hill site.
As of June 30, 2000, Hecla has estimated and accrued an allowance for liability
for remedial activity costs at the Bunker Hill site of $7.1 million. These
estimated expenditures are anticipated to be made over the next three to five
years. Although Hecla believes the allowance is adequate based upon current
estimates of aggregate costs, Hecla will reassess its obligations under the
consent decree as new information is developed. Depending on the results of any
reassessment, it is reasonably possible that Hecla's estimate of its obligations
may change in the near or longer term.
- Coeur d'Alene River Basin Natural Resource Damage Claims
- Coeur d'Alene Tribe Claims
In July 1991, the Coeur d'Alene Indian Tribe brought a lawsuit, under
CERCLA, in Idaho Federal District Court against Hecla and a number of other
mining companies asserting claims for damages to natural resources downstream
from the Bunker Hill site over which the tribe alleges some ownership or
control. Hecla answered the Tribe's complaint denying liability for natural
resource damages. In October 1996, following a court imposed
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<PAGE> 9
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
four-year suspension of the proceeding, the Tribe's natural resource damage
litigation was consolidated with the United States Natural Resources Damage
litigation described below for discovery and other limited pretrial purposes.
- U.S. Government Claims
In March 1996, the United States filed a lawsuit in Idaho Federal District
Court against certain mining companies that conducted historic mining operations
in the Silver Valley of northern Idaho, including Hecla. The lawsuit asserts
claims under CERCLA and the Clean Water Act and seeks recovery for alleged
damages to or loss of natural resources located in the Coeur d'Alene River Basin
in northern Idaho for which the United States asserts to be the trustee under
CERCLA. The lawsuit asserts that the defendants' historic mining activity
resulted in releases of hazardous substances and damaged natural resources
within the Basin. The suit also seeks declaratory relief that Hecla and other
defendants are jointly and severally liable for response costs under CERCLA for
historic mining impacts in the Basin outside the Bunker Hill site. Hecla
answered the complaint in May 1996, denying liability to the United States under
CERCLA and the Clean Water Act and asserted a counterclaim against the United
States for the federal government's involvement in mining activities in the
Basin which contributed to the releases and damages alleged by the United
States. Hecla believes it also has a number of defenses to the United States'
claims.
In May 1998, the EPA announced that it had commenced a remedial
investigation/feasibility study under CERCLA for the entire Basin, including
Lake Coeur d'Alene, in support of its response cost claims asserted in its March
1996 lawsuit.
On September 30, 1998, the Federal District Court granted Hecla's summary
judgment motion with respect to the applicable statute of limitations and
dismissed the United States' natural resources damage claims due to the failure
of the EPA to comply with federal law and EPA regulations in expanding the
national priority list site boundaries to include the entire Coeur d'Alene
River/Lake Coeur d'Alene Basin which would have the effect of extending the
statute of limitations. In an opinion issued June 15, 2000, the Ninth Circuit
Court of Appeals vacated the District Court's ruling stating that the District
Court did not have jurisdiction to determine the scope of the Bunker Hill
Superfund site. On September 30, 1999, the court issued an order on one of the
defendant's challenges to the constitutionality of the retroactive application
of liability under CERCLA. Although the court held that the statute did not
facially violate the due process or taking clauses of the U.S. Constitution, the
court also stated that the constitutionality of retroactive application
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<PAGE> 10
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
of liability to the defendants in this case cannot be resolved at this stage of
litigation as genuine issues of material fact exist and liability has not been
established.
The Federal District Court case is proceeding through discovery. A number
of Summary Judgement motions filed by both the plaintiffs and the defendants are
currently pending before the court. Trial is currently scheduled for January
2001.
The Company is also involved in settlement negotiations with
representatives of the U.S. Government and the Coeur d'Alene Tribe. The Company
is also participating with certain of the other defendants in the litigation in
a state of Idaho led settlement effort.
- Insurance Coverage Litigation
In 1991, Hecla initiated litigation in the Idaho State District Court in
Kootenai County, Idaho, against a number of insurance companies which provided
comprehensive general liability insurance coverage to Hecla and its
predecessors. Hecla believes that the insurance companies have a duty to defend
and indemnify Hecla under their policies of insurance for all liabilities and
claims asserted against Hecla by the EPA and the tribe under CERCLA related to
the Bunker Hill site and the Basin in northern Idaho. In 1992, the Idaho State
District Court ruled that the primary insurance companies had a duty to defend
Hecla in the Tribe's lawsuit. During 1995 and 1996, Hecla entered into
settlement agreements with a number of the insurance carriers named in the
litigation. Hecla has received a total of approximately $7.2 million under the
terms of the settlement agreements. Thirty percent of these settlements were
paid to the EPA to reimburse the U.S. government for past costs under the Bunker
Hill site consent decree. Litigation is still pending against one insurer with
trial suspended until the underlying environmental claims against Hecla are
resolved or settled. The remaining insurer in the litigation with a second
insurer not named in the litigation are providing Hecla with a partial defense
in all Basin environmental litigation. As of June 30, 2000, Hecla had not
reduced its accrual for reclamation and closure costs to reflect the receipt of
any anticipated insurance proceeds.
- Other Claims
In 1997, Hecla's subsidiary, Kentucky-Tennessee Clay, terminated shipments
of 1% of annual ball clay production, sold to animal feed producers, when the
Food and Drug Administration determined trace elements of dioxin were present in
poultry. Dioxin is inherently present in ball clays generally. Hecla
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<PAGE> 11
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
believes $11.0 million of insurance coverage is available for approximately $9.2
million in claims to date. On September 22, 1999, Riceland Foods (the primary
purchaser of ball clay from K-T Clay used in animal feed) commenced litigation
against K-T Clay in State Court in Arkansas to recover their losses and their
insurance company's payments to downstream users of their animal feed. The
complaint alleges negligence, strict liability and breach of implied warranties.
Legal counsel retained by the insurance company for K-T Clay has had the case
removed to Federal Court in Arkansas and has answered the complaint denying
liability. In July 2000, a second complaint was filed against K-T Clay and
Hecla by a purchaser of animal feed containing ball clay sold by K-T Clay. The
complaint alleges damages included in the total claim set forth above. The
defense of this lawsuit is also expected to be covered by insurance. Although
the outcome of the litigation or insurance coverage cannot be assured, Hecla
currently believes that there will be no material adverse effect on Hecla's
results of operations, financial condition or cash flows from this matter.
Hecla 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 Hecla's
management that the outcome of these matters will not have a material adverse
effect on the financial condition of Hecla. However, it is possible that these
matters could have a material effect on quarterly or annual operating results
and cash flows, when they are resolved, in future periods.
Note 8.
On March 31, 2000, Hecla entered into a new $55.0 million term loan
facility due on April 10, 2001. Proceeds from the term loan facility were
utilized to repay amounts outstanding under the previous bank credit agreement,
to fund a restricted account to repay revenue bonds, to repay the subordinated
debt, and to fund general corporate purposes. As security for the loan, Hecla
pledged the common stock of certain of Hecla's subsidiaries and certain other
assets. Interest rates are to be based on LIBOR plus 2.25%. At June 30, 2000,
$55.0 million was outstanding under the new term loan facility and classified as
current portion of long-term debt.
As part of the refinancing, $9.9 million of the proceeds from the new term
loan credit facility were placed into a restricted investment account to repay
the $9.8 million in outstanding revenue bonds. On May 1, 2000, the revenue
bonds were repaid.
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<PAGE> 12
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
In connection with refinancing the previously existing debt, Hecla recorded
a $0.6 million extraordinary charge in the first quarter of 2000 to write-off
capitalized issuance costs associated with the extinguished debt. Due to the
availability of net operating losses, there was no tax effect associated with
the charge.
On June 30, 2000, Hecla entered into a new $3.0 million subordinated debt
facility. Proceeds from the subordinated debt are available for general
corporate purposes. Interest rates are to be based on LIBOR plus a margin of
4.0%. The loan is to be repaid in equal installments on June 30, 2003, December
31, 2003, and June 30, 2004.
At June 30, 2000, Hecla's wholly owned subsidiary, HRIL, had $10.6 million
outstanding under a credit agreement utilized to finance the acquisition of the
La Camorra gold mine in Venezuela. At June 30, 2000, HRIL was in compliance
with restrictive covenants related to the available ore reserves and financial
performance of the La Camorra mine. At June 30, 2000, $8.6 million of the
project financing debt was classified as long-term debt, with the remaining $2.0
million classified as current portion of long-term debt.
At June 30, 2000, Hecla had a working capital deficit of $34.1 million. In
order to improve its financial condition, Hecla is considering alternatives
available to it to repay or restructure the $55.0 million in indebtedness due in
April 2001, including refinancings, public offerings of equity and/or debt
securities and possible asset sales. There can be no assurance that Hecla will
be successful in refinancing its debt, issuing equity, or selling assets. If
Hecla is unsuccessful in these efforts, there can be no assurance that Hecla
will be able to repay its debt and fund continuing operations.
Note 9.
The following table presents a reconciliation of the numerators (net income
or net loss) and denominators (shares) used in the basic and diluted loss per
common share computations. Also shown is the effect that has been given to
preferred stock dividends in arriving at loss applicable to common shareholders
for the three months and six months ended June 30, 2000 and 1999 in computing
basic and diluted loss per common share (dollars and shares in thousands, except
per-share amounts).
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<PAGE> 13
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------------------------------------------------
2000 1999
--------------------------------- ---------------------------------
Net Per-Share Net Per-Share
Income (Loss) Shares Amount Income (Loss) Shares Amount
------------- ------ ------ ------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) before preferred
stock dividends $ (16,711) $ 2,335
Less: Preferred
stock dividends (2,013) (2,013)
--------- --------
Basic income (loss) applicable to
common shareholders (18,724) 66,788 $ (0.28) 322 60,687 $ 0.01
Effect of dilutive
securities - - - - - - - - - - - -
--------- ------ ------- -------- ------ -------
Diluted income (loss) applicable
to common shareholders $ (18,724) 66,788 $ (0.28) $ 322 60,687 $ 0.01
========= ====== ======= ======== ====== =======
Six Months Ended June 30,
---------------------------------------------------------------------
2000 1999
--------------------------------- --------------------------------
Net Per-Share Net Per-Share
Income Shares Amount Income (Loss) Shares Amount
--------- ------ ------ ------------- ------ ------
Net income (loss) before preferred
stock dividends $ (24,031) $ 836
Less: Preferred
stock dividends (4,025) (4,025)
--------- --------
Basic loss applicable
to common shareholders (28,056) 66,784 $ (0.42) (3,189) 57,944 $ (0.06)
Effect of dilutive
securities - - - - - - - - - - - -
--------- ------ ------- -------- ------ -------
Diluted loss applicable
to common shareholders $ (28,056) 66,784 $ (0.42) $ (3,189) 57,944 $ (0.06)
========= ====== ======= ======== ====== =======
</TABLE>
These calculations of diluted earnings per share for the three months and
six months ended June 30, 2000 and 1999 exclude the effects of $115,000,000 of
convertible preferred stock as such conversion would be antidilutive. Also
excluded from these calculations are the effects of common stock issuable upon
exercise of stock options as of June 30, 2000 and 1999, as their exercise would
be antidilutive, as follows:
Three Months Ended Six Months Ended
---------------------- -----------------------
June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
2,546,500 2,316,000 2,546,500 2,316,000
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<PAGE> 14
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
The calculations of diluted earnings per share for the three months and six
months ended June 30, 2000, also exclude 1,506,998 warrants to purchase common
stock, as their exercise would be antidilutive.
Note 10.
Hecla is organized and managed primarily on the basis of the principal
products being produced from its ten operating units. Three of the operating
units have been aggregated into the Metals-Gold segment, two of the operating
units have been aggregated into the Metals-Silver segment, and six operating
units have been combined to form the Industrial Minerals segment. On March 15,
2000, Hecla sold the MWCA - Mountain West Products division. Following the
sale, the Industrial Minerals segment consists of five operating units. General
corporate activities not associated with operating units as well as idle
properties are presented as Other.
The following tables present information about reportable segments for the
three months and six months ended June 30 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ---------------------
June 30, June 30,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales to unaffiliated customers:
Metals-Gold $ 8,575 $ 5,600 $ 14,753 $ 11,991
Metals-Silver 12,430 11,790 23,880 24,359
Industrial Minerals 20,686 28,668 41,941 51,366
--------- --------- --------- ---------
$ 41,691 $ 46,058 $ 80,574 $ 87,716
========= ========= ========= =========
Three Months Ended Six Months Ended
---------------------- ---------------------
June 30, June 30,
2000 1999 2000 1999
--------- --------- --------- ---------
Income (loss) from operations:
Metals-Gold $ (11,682) $ (763) $ (14,001) $ (1,175)
Metals-Silver (961) 784 (1,406) 1,659
Industrial Minerals 1,554 4,046 2,840 6,681
Other (4,440) (2,226) (7,331) (4,596)
--------- --------- --------- ---------
$ (15,529) $ 1,841 $ (19,898) $ 2,569
========= ========= ========= =========
</TABLE>
-14-
<PAGE> 15
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
The following table presents identifiable assets by reportable segment as of
June 30, 2000, and December 31, 1999 (in thousands):
June 30, December 31,
2000 1999
----------- -----------
Identifiable assets:
Metals-Gold $ 46,253 $ 56,018
Metals-Silver 116,363 121,814
Industrial Minerals 60,525 65,580
Other 32,964 24,945
--------- ---------
$ 256,105 $ 268,357
========= =========
Note 11.
In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" was issued. SFAS
133 establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measures those
instruments at fair value. In June 1999, SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133" was issued. SFAS 137 defers the effective date of
SFAS 133 to all fiscal quarters of all fiscal years beginning after June 15,
2000; however, earlier application is encouraged as of the beginning of any
fiscal quarter. Hecla is presently evaluating the effect the adoption of this
standard will have on Hecla's financial condition, results of operations, and
cash flows.
-15-
<PAGE> 16
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
Hecla Mining Company is involved in the exploration, development, mining
and processing of gold, silver, lead, zinc and industrial minerals. Hecla's gold
and silver segment 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 Hecla's control, including inflation and worldwide
forces of supply and demand for precious and base metals. The aggregate effect
of these factors is not possible to accurately predict. In the current metals
price environment, Hecla's industrial minerals segment has been a significant
contributor to overall revenues, including 52% of total revenue during the first
six months of 2000. In the following descriptions, where there are changes that
are attributable to more than one factor, Hecla presents each attribute in
descending order relative to the attribute's importance to the overall change.
Except for the historical information contained in this Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
matters discussed below are forward-looking statements that involve risks and
uncertainties, including:
- the timely development of existing properties and reserves and future
projects,
- the impact of metal prices and metal production volatility,
- changing market conditions and the regulatory environment,
- limited access to capital markets,
- potential asset sales,
- ability to repay indebtedness, and
- the other risks detailed from time to time in Hecla's Form 10-K and
Form 10-Qs filed with the Securities and Exchange Commission (see also
"Investment Considerations" of Part I, Item 1 of Hecla's 1999 Annual
Report on Form 10-K).
-16-
<PAGE> 17
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
As a result of the above factors and potentially others, actual results may
differ materially from those projected, forecasted or implied. These forward-
looking statements represent Hecla's judgment as of the date of this filing.
Hecla disclaims, however, any intent or obligation to update these forward-
looking statements as circumstances may change or develop.
During the first six months of 2000, Hecla produced approximately 71,000
ounces of gold compared to approximately 55,000 ounces in the first six months
of 1999. The following table displays the actual gold production (in ounces) by
operation for the six months ended June 30, 2000 and 1999, projected gold
production for the year ending December 31, 2000, and actual gold production for
the year ended December 31, 1999:
<TABLE>
<CAPTION>
Actual Actual Projected Actual
June 30, June 30, Dec. 31, Dec. 31,
Operation 2000 1999 2000 1999
--------- --------- -------- --------------- --------
<S> <C> <C> <C> <C>
La Camorra(1) 44,000 - - 79,000-84,000 17,000
Greens Creek(3) 13,000 13,000 21,000-23,000 24,000
Rosebud(3) 14,000 33,000 20,000-22,000 56,000
Other(2) - - 9,000 1,000 13,000
-------- -------- --------------- --------
Totals 71,000 55,000 121,000-130,000 110,000
======== ======== =============== ========
(1) Production commenced under Hecla's ownership in October 1999 at
the La Camorra mine.
(2) Includes production from the La Choya mine, which completed
mining in December 1998, and other sources.
(3) Reflects Hecla's portion.
</TABLE>
In the first six months of 2000, Hecla produced approximately 4.2 million
ounces of silver compared to approximately 3.7 million ounces in the first six
months of 1999. The following table displays the actual silver production (in
ounces) by operation for the six months ended June 30, 2000 and 1999, projected
silver production for the year ending December 31, 2000, and actual silver
production for the year ended December 31, 1999 (in thousands):
-17-
<PAGE> 18
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
<TABLE>
<CAPTION>
Actual Actual Projected Actual
June 30, June 30, Dec. 31, Dec. 31,
Operation 2000 1999 2000 1999
--------- -------- -------- ------------- --------
<S> <C> <C> <C> <C>
Lucky Friday 2,690 2,159 5,200-5,450 4,441
Greens Creek(1) 1,496 1,481 2,950-3,090 3,051
Rosebud(1) 44 81 50-60 124
Other sources - - 1 - - 1
-------- -------- ------------- --------
Totals 4,230 3,722 8,200-8,600 7,617
======== ======== ============= ========
(1) Reflects Hecla's portion.
</TABLE>
In 1999, Hecla shipped approximately 1,072,000 tons of product, which
included ball clay, kaolin and feldspar, from the Kentucky-Tennessee Clay group.
Hecla's shipments of industrial minerals from the Kentucky-Tennessee Clay group
are expected to increase to approximately 1,155,000 tons in 2000. During the
first six months of 2000, Hecla shipped approximately 52,000 tons of specialty
aggregates from the Colorado Aggregate division of Hecla's subsidiary MWCA, and
approximately 130,000 cubic yards of landscape material from the Mountain West
Products (MWP) division of MWCA. On March 15, 2000, Hecla sold substantially
all of the assets of its MWP division of MWCA for $8.5 million in cash. The
sale of MWP resulted in a loss on disposal of $0.9 million. The proceeds from
the sales transaction were used to pay down amounts outstanding under Hecla's
previously existing revolving credit facility. On June 5, 2000 Hecla completed
a sale of the landscape operations of the Colorado Aggregate Division (CAC) of
MWCA for $1.1 million in cash. The sale of the CAC landscape operations did not
result in a gain or loss. Hecla is currently negotiating with third parties for
a potential sale of the remaining assets of the Colorado Aggregate division of
MWCA, although there can be no assurance that a sales transaction will be
completed.
Results of Operations
First Six Months 2000 Compared to First Six Months 1999
Hecla recorded a net loss, before an extraordinary charge and preferred
stock dividend, of $23.4 million, or $0.35 per common share, for the first six
months of 2000 compared to net income of $2.2 million, or $0.04 per common
share, before a cumulative effect of a change in accounting principle and
preferred stock
-18-
<PAGE> 19
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
dividend for the first six months of 1999. After recognizing a $0.6 million
extraordinary charge for the write-off of debt issuance costs related to
extinguished debt, and after $4.0 million in dividends to holders of Hecla's
Series B Cumulative Convertible Preferred Stock, Hecla's loss applicable to
common shareholders for the first six months of 2000 was approximately $28.1
million, or $0.42 per common share, compared to a loss of $3.2 million, or $0.06
per common share, after recognizing a $1.4 million charge to write off
unamortized start-up costs associated with the Greens Creek mine, and after $4.0
million in dividends to holders of Hecla's Series B cumulative convertible
preferred stock. The change in loss applicable to common shareholders during
2000 was attributable to a variety of factors, the most significant which are
discussed below.
Hecla recorded adjustments to the carrying value of mining properties of
$9.1 million in the second quarter of 2000, including $4.4 million for
properties, plants, and equipment and supply inventory at the Rosebud mine, and
$4.7 million for previously capitalized deferred development costs at the Noche
Buena gold property. The $4.4 million adjustment at the Rosebud mine was
necessitated due to the planned closure of the Rosebud mine previously announced
by Hecla and Newmont, Hecla's joint venture partner. The Rosebud mine completed
mining activity in July 2000, to be followed by completion of milling activities
in August 2000. At the Noche Buena property, Hecla suspended activities in 1999
due to a low price for gold. Based upon the continuation of the lower gold
price an adjustment to the carrying value of the Noche Buena property was
recorded.
Hecla's provision for closed operations and environmental matters increased
$2.9 million, from $0.6 million in the first six months of 1999 to $3.5 million
in the 2000 period. The increase resulted principally from increased costs
associated with the Grouse Creek property, combined with reclamation and closure
cost accruals of $668,000 for the Rosebud mine and $590,000 for various other
properties.
Sales of products decreased by approximately $7.1 million, or 8%, in the
first six months of 2000 as compared to the same period in 1999 primarily due
to:
- decreased sales totaling approximately $9.4 million from Hecla's
industrial minerals segment principally the result of decreased shipments
at the MWCA group of $10.8 million due to the sale of the MWP division of
MWCA on March 15, 2000 and the sale of the landscape operations of CAC on
June 5, 2000. The decreases from MWCA were partly offset by increased
sales of $1.4 million from the K-T Clay group,
-19-
<PAGE> 20
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
- decreased sales totaling approximately $0.5 million from silver
operations primarily due to lower lead and silver prices partly offset
by increased production of silver, lead, and zinc, and
- increased sales of $2.8 million from gold operations principally a
result of the acquisition of the La Camorra mine in June 2000 partly
offset by lower gold production at the Rosebud mine in 2000.
The following table compares the average metal prices for the first six
months of 2000 with the comparable 1999 period:
<TABLE>
<CAPTION>
Metal 2000 1999 $ Change % Change
------------------ ------- ------- -------- ---------
<S> <C> <C> <C> <C>
Gold-Realized ($/oz.) $ 288 $ 294 $ (6) (2)%
Gold-London Final ($/oz.) 285 280 5 2
Silver-Handy & Harman ($/oz.) 5.14 5.23 (0.09) (2)
Lead-LME Cash (cents/pound) 0.198 0.232 (0.034) (15)
Zinc-LME Cash (cents/pound) 0.513 0.457 0.056 12
</TABLE>
Cost of sales and other direct production costs increased approximately
$1.5 million, or 2%, from the first six months of 1999 to the comparable 2000
period primarily due to:
- increased cost of sales from gold operations of $4.6 million due to
the acquisition of the La Camorra mine in June 1999 partly offset by
lower costs of sales at the La Choya mine and the Rosebud mine due to
lower gold production,
- increased cost of sales at from silver operations of $2.1 million
resulting from increased production of silver, lead, and zinc at the
Lucky Friday and Greens Creek mines, and
- decreased cost of sales at the industrial minerals segment of $5.2
million principally due to the partial sale of MWCA.
Cost of sales and other direct production costs as a percentage of sales
from products increased from 76% in the first six months of 1999 to 84% in the
comparable 2000 period. The increase was principally a result of decreased
margins in all three segments. In the gold segment, decreased gold production
and higher unit cash costs at the Rosebud mine negatively impacted
-20-
<PAGE> 21
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
the gross margin. In the silver segment, lower hedging revenues combined with
lower average lead and silver prices led to the reduced margins. The industrial
minerals segment also saw reduced margins due to higher unit costs at the MWCA
and at the K-T Clay group.
Exploration expense increased $1.2 million, or 55%, during the first six
months of 2000 as compared to the same period of 1999 principally due to
increased expenditures at the Saladillo property in Mexico ($0.9 million) and
increased expenditures at the Rosebud mine ($0.9 million). These increases were
partly offset by decreased expenditures at the Cacique property ($0.4 million)
and other targets in Mexico ($0.2 million).
Miscellaneous expense increased $1.3 million, from $0.8 million in the 1999
period to $2.1 million in the 2000 period. The increase in 2000 was principally
the result of a loss on the sale of the Mountain West Products division of MWCA
($0.9 million) and increased severance costs ($0.4 million).
Interest expense increased $1.8 million in the first six months of 2000 as
compared to the same period in 1999. The $1.8 million increase was the result
of increased average borrowings due to the $11.0 million of La Camorra project
financing put in place in June 1999, $3.0 million of subordinated debt that was
outstanding during the first three months of 2000, and the new $55.0 term loan
facility put in place in March 2000 which replaced a revolving $55.0 million
credit facility that was in place in 1999. Higher average interest rates, and
increased loan fees also contributed to the increase in interest expense as
compared to the 1999 period.
The cumulative effect of change in accounting principle totaled $1.4
million in 1999, due to the write off of unamortized start-up costs relating to
Hecla's 29.7% ownership interest in the Greens Creek mine. The adjustment was
the result of application of Statement of Position No. 98-5, "Accounting for
Start-up Activities."
An extraordinary charge of $0.6 million was recorded in 2000 to write off
previously unamortized debt issuance costs associated with the extinguishment of
Hecla's previous $55.0 million credit facility.
General and administrative expense increased $0.6 million, from $3.8
million in the 1999 period to $4.4 million in the 2000 period. The increase in
2000 was principally the result of increased incentive compensation and
increased relocation and recruiting expenses.
-21-
<PAGE> 22
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
Cash operating, total cash, and total production cost per gold ounce
increased from $160, $173, and $273 for the first six months of 1999 to $225,
$228 and $306 for the first six months of 2000, respectively. The increases in
the cash operating and total cash cost per gold ounce were primarily
attributable to higher costs per ounce at the Rosebud mine associated with
mining of lower grade ore in 2000.
Cash operating and total cash cost per silver ounce increased from $3.73
and $3.73 in the first six months of 1999 to $3.77 and $3.77 in the first six
months of 2000, respectively. The increases in the cost per silver ounce are
due primarily to lower average lead prices which negatively impacted by-product
credits, partly offset by increased production and a favorable zinc price. The
total production cost per silver ounce decreased from $5.29 in the first six
months of 1999 to $5.16 in the first six months of 2000 due primarily to lower
per ounce depreciation charges. Gold, lead, and zinc are by-products of Hecla's
silver production, the revenues from which are netted against production costs
in the calculation of production cost per ounce of silver.
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Hecla recorded a net loss, before preferred stock dividends, of $16.7
million, or $0.25 per common share, for the three months ended June 30, 2000
compared to net income of $2.3 million, or $0.04 per common share, before
preferred stock dividends for the three months ended June 30, 1999. After
recognizing a $2.0 million in dividends to holders of Hecla's Series B
Cumulative Convertible Preferred Stock, Hecla's loss applicable to common
shareholders for the second quarter of 2000 was approximately $18.7 million, or
$0.28 per common share, compared to income of $0.3 million, or $0.01 per common
share after $2.0 million in dividends to holders of Hecla's Series B cumulative
convertible preferred stock. The change in income (loss) applicable to common
shareholders during 2000 was attributable to a variety of factors, the most
significant which are discussed below.
Hecla recorded adjustments to the carrying value of mining properties of
$9.1 million in the second quarter of 2000, including $4.4 million for
properties, plants, and equipment and supply inventory at the Rosebud mine, and
$4.7 million for previously capitalized deferred development costs at the Noche
Buena gold property. The $4.4 million adjustment at the Rosebud mine was
necessitated due to the planned closure of the Rosebud mine previously announced
by Hecla and Newmont, Hecla's joint venture partner. The Rosebud mine completed
mining activity in July 2000, to be followed by completion of milling activities
in
-22-
<PAGE> 23
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
August 2000. At the Noche Buena property, Hecla suspended activities in 1999
due to a low price for gold. Based upon the continuation of the lower gold
price an adjustment to the carrying value of the Noche Buena property was
recorded.
Hecla's provision for closed operations and environmental matters increased
$2.3 million, from $0.3 million in the second quarter of 1999 to $2.6 million in
the 2000 period. The increase resulted principally from increased costs
associated with the Grouse Creek property, combined with reclamation and closure
cost accruals of $668,000 for the Rosebud mine and $590,000 for various other
properties.
Sales of products decreased by approximately $4.4 million, or 9%, in the
second quarter of 2000 as compared to the same period in 1999 primarily due to:
- decreased sales totaling approximately $8.0 million from Hecla's
industrial minerals segment principally the result of decreased shipments
at the MWCA group of $8.6 million due to the sale of the MWP division of
MWCA on March 15, 2000 and the sale of the landscape operations of CAC on
June 5, 2000. The decreases from MWCA were partly offset by increased
sales of $0.6 million from the K-T Clay group,
- increased sales totaling approximately $0.6 million from silver
operations primarily due to increased production and shipments from the
Lucky Friday and Greens Creek mines partly offset by lower lead and
silver prices, and
- increased sales of $3.0 million from gold operations principally a
result of the acquisition of the La Camorra mine in June 2000 partly
offset by lower gold production at the Rosebud mine in 2000.
The following table compares the average metal prices for the second
quarter of 2000 with the comparable 1999 period:
<TABLE>
<CAPTION>
Metal 2000 1999 $ Change % Change
------------------ ------- ------- -------- --------
<S> <C> <C> <C> <C>
Gold-Realized ($/oz.) $ 287 $ 288 $ (1) - -%
Gold-London Final ($/oz.) 280 273 7 3
Silver-Handy & Harman ($/oz.) 5.07 5.16 (0.09) (2)
Lead-LME Cash (cents/pound) 0.199 0.233 (0.034) (15)
Zinc-LME Cash (cents/pound) 0.505 0.463 0.042 9
</TABLE>
-23-
<PAGE> 24
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
Cost of sales and other direct production costs remained constant at $35.1
million in the second quarter of 2000 and 1999 primarily due to:
- increased cost of sales from gold operations of $3.1 million due to
the acquisition of the La Camorra mine in June 1999 partly offset by
lower costs of sales at the La Choya mine and the Rosebud mine due to
lower gold production,
- increased cost of sales at from silver operations of $2.2 million
resulting from increased production and shipments of silver, lead, and
zinc at the Lucky Friday and Greens Creek mines, and
- decreased cost of sales at the industrial minerals segment ($5.2
million) principally due to the partial sale of MWCA.
Cost of sales and other direct production costs as a percentage of sales
from products increased from 76% in the second quarter of 1999 to 84% in the
comparable 2000 period. The increase was principally a result of decreased
margins in all three segments. In the gold segment, decreased gold production
and higher unit cash costs at the Rosebud mine negatively impacted the gross
margin. In the silver segment, lower hedging revenues combined with lower
average lead and silver prices led to the reduced margins. The industrial
minerals segment also saw reduced margins due to higher unit costs at MWCA and
at the K-T Clay group.
Exploration expense increased $0.6 million, or 63%, during the second
quarter of 2000 as compared to the same period of 1999 principally due to
increased expenditures at the Saladillo property in Mexico ($0.5 million) and
increased expenditures at the Rosebud Mine ($0.4 million). These increases were
partly offset by decreased expenditures in Peru ($0.1 million) and other targets
in Mexico ($0.1 million).
Miscellaneous expense increased $0.6 million, from $0.3 million in the 1999
period to $0.9 million in the 2000 period. The increase in 2000 was principally
the result of an additional loss on the sale of the Mountain West Products
division of MWCA recorded in the second quarter ($0.2 million) and increased
severance costs ($0.4 million).
Interest expense increased $1.1 million in the second quarter of 2000 as
compared to the same period in 1999. The $1.1 million increase was the result
of increased average borrowings due to the $11.0 million of La Camorra project
financing put in place in June
-24-
<PAGE> 25
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
1999 and the new $55.0 term loan facility put in place in March 2000 which
replaced a revolving $55.0 million credit facility that was in place in 1999.
Higher average interest rates, and increased loan fees also contributed to the
increase in interest expense as compared to the 1999 period.
General and administrative expense increased $0.6 million, from $1.8
million in the 1999 period to $2.4 million in the 2000 period. The increase is
principally due to increased incentive compensation and increased relocation and
recruiting expenses.
Cash operating, total cash, and total production cost per gold ounce
increased from $163, $178, and $277 for the second quarter of 1999 to $210, $213
and $291 for the second quarter of 2000, respectively. The increases in the
cash operating and total cash cost per gold ounce were primarily attributable to
higher costs per ounce at the Rosebud mine associated with mining of lower grade
ore in 2000.
Cash operating, total cash, and total production cost per silver ounce
increased from $3.75, $3.75, and $5.30 in the second quarter of 1999 to $3.85,
$3.86, and $5.32 in the second quarter of 2000, respectively. The increases in
the cost per silver ounce are due primarily to lower average lead prices which
negative impact by-product credits, partly offset by increased production and a
favorable zinc price. Gold, lead, and zinc are by-products of Hecla's silver
production, the revenues from which are netted against production costs in the
calculation of production cost per ounce of silver.
Financial Condition and Liquidity
A substantial portion of Hecla's revenue is derived from the sale of
products, the prices of which are affected by numerous factors beyond Hecla's
control. Prices may change dramatically in short periods of time and such
changes have a significant effect on revenues, profits and liquidity of Hecla.
Hecla is subject to many of the same inflationary pressures as the U.S. economy
in general. Hecla continues to seek and implement cost-cutting measures in an
effort to reduce per unit production costs. Management believes, however, that
Hecla 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 Hecla have a much greater impact than inflation on Hecla'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.
-25-
<PAGE> 26
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
At June 30, 2000, assets totaled approximately $256 million and
shareholders' equity totaled approximately $105 million. Cash and cash
equivalents increased by $8.9 million to $11.6 million at June 30, 2000 from
$2.7 million at December 31, 1999.
During the first six months of 2000, approximately $7.0 million of cash was
provided by financing activities. The major source of cash was borrowings of
long-term debt of $79.5 million. This source was partly offset by repayments of
long-term debt of $66.7 million, payment of preferred stock dividends of $4.0
million and payments for debt issuance costs of $1.8 million.
Hecla's investing activities provided $3.3 million of cash during the first
six months of 2000. The most significant sources of cash were proceeds from the
sale of MWP and the CAC landscape operations of $9.7 million and proceeds from
the sale of other assets of $1.8 million. These sources were partly offset by
additions to properties, plants, and equipment totaling $8.4 million, including
significant additions at the industrial minerals segment, principally for the
Mexican plant expansion project, of $3.3 million, at the La Camorra mine of $2.3
million, at the Greens Creek mine of $2.1 million, and at the Lucky Friday mine
of $0.6 million.
Operating activities used approximately $1.4 million of cash during the
first six months of 2000. Significant uses of cash included (1) cash required
for reclamation activities and other noncurrent liabilities of $3.4 million and
(2) increases in inventories of $1.8 million primarily due to product inventory
increases at La Camorra and Rosebud. These uses of cash were partly offset by
increased accounts payable and accrued expenses of $3.8 million. Principal
noncash charges included depreciation, depletion and amortization of $12.2
million, reduction in carrying value of mining properties for the Rosebud mine
and Noche Buena property of $9.1 million, provisions for reclamation and closure
costs of $1.8 million, an $0.9 million loss on the sale of MWP, and an
extraordinary charge of $0.6 million for the write off of debt issuance costs
related to extinguished debt.
Hecla estimates that capital expenditures to be incurred during the
remainder of 2000 is estimated to range between $4.5 million and $9.0 million.
These capital expenditures consist primarily of:
Property Expenditure
-------------------- -----------
Lucky Friday $1.0-$3.0 million
Greens Creek (29.73% interest) $2.0-$3.0 million
Industrial minerals segment $0.5-$1.0 million
La Camorra $1.0-$2.0 million
-26-
<PAGE> 27
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
These planned capital expenditures will depend, in large part, on Hecla's
ability to obtain the required funds from operating activities, potential asset
sales, and the possible issuance of additional equity. There can be no
assurance that actual capital expenditures will be as projected based upon the
uncertainties associated with the estimates for capital projects, uncertainties
associated with possible development projects, board of director approval, and
Hecla's ability to generate adequate funding for the projected capital
expenditures.
Hecla's estimate of its capital expenditure requirements assumes, with
respect to the Greens Creek mine, that Hecla's joint venture partner will not
default with respect to their portion of development costs and capital
expenditures.
On March 31, 2000, Hecla entered into a new $55.0 million term loan
facility due on April 10, 2001. Proceeds from the term loan facility were
utilized to repay amounts outstanding under the previous bank credit agreement,
to repay revenue bonds, to repay the subordinated debt, and to fund general
corporate purposes. As security for the loan, Hecla pledged the common stock of
certain of Hecla's subsidiaries and certain other assets. Interest rates are to
be based on LIBOR plus a margin of 2.25%. At June 30, 2000, $55.0 million was
outstanding under the new term loan facility and classified as current portion
of long-term debt.
On June 30, 2000, Hecla entered into a new $3.0 million subordinated debt
facility. Proceeds from the subordinated debt are available for general
corporate purposes. Interest rates are to be based on LIBOR plus a margin of
4.0%. The loan is to be repaid in equal installments on June 30, 2003,
December 31, 2003, and June 30, 2004.
At June 30, 2000, Hecla has a working capital deficit of $34.1 million. In
order to improve its financial condition, Hecla is considering alternatives
available to it to repay or restructure the $55.0 million in indebtedness due in
April, 2001, including refinancings, public offerings of equity and/or debt
securities and possible asset sales. On July 18, 2000, Hecla announced that is
has decided to carry out a formal review of its strategic options in regard to
Kentucky-Tennessee Clay Company, its wholly owned subsidiary. Hecla has
received a number of expressions of interest in K-T Clay and has hired an
investment-banking firm to assist management in considering possible strategies,
including the potential sale of K-T Clay. There can be no assurance that Hecla
will be successful in refinancing its debt, issuing equity, or selling assets.
If Hecla is unsuccessful in these efforts, there can be no assurance that Hecla
will be able to repay its debt and fund continuing operations.
-27-
<PAGE> 28
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
At June 30, 2000, Hecla's wholly owned subsidiary, HRIL, had $10.6 million
outstanding under a credit agreement utilized to finance the acquisition of the
La Camorra gold mine in Venezuela. At June 30, 2000, HRIL was in compliance with
restrictive covenants related to the available ore reserves and financial
performance of the La Camorra mine. At June 30, 2000, $8.6 million of the
project financing debt was classified as long-term debt, with the remaining $2.0
million classified as current portion of long-term debt.
As of June 30, 2000, Hecla's unrestricted cash balance totaled $11.6
million. Based upon Hecla's estimate of metals prices and metals production for
the rest of 2000, Hecla believes that its operating cash flows, current
unrestricted cash balance and potential proceeds from asset sales should be
adequate to fund its anticipated cash requirements for the year 2000, including
anticipated capital expenditures, idle property expenditures, and exploration
expenditures. The Company's management continues to evaluate and implement
additional cash conservation measures to better ensure the continued liquidity
of Hecla, as well as continuing to pursue the sale of the remaining assets of
the MWCA - Colorado Aggregate Division, considering other asset sales, and
pursuing equity offerings in order to provide funds for possible expansion
projects, acquisition, or other cash requirements.
Pursuant to a Registration Statement filed with the Securities and Exchange
Commission and declared effective in the third quarter of 1995, Hecla can, at
its option, issue debt securities, common shares, preferred shares or warrants
in an amount not to exceed $100.0 million in the aggregate. As of June 30,
2000, Hecla has issued $62.2 million of Hecla's common shares and warrants under
the Registration Statement. Due to the current market capitalization of the
company, there can be no assurance as to the availability of this Registration
Statement.
Reserves for closure costs, reclamation and environmental matters totaled
$48.6 million at June 30, 2000. Hecla anticipates that expenditures relating to
these reserves will be made over the next several years. Although Hecla
believes the allowance is adequate based on current estimates of aggregate
costs, Hecla plans to periodically reassess its environmental and reclamation
obligations as new information is developed. Depending on the results of the
reassessment, it is reasonably possible that Hecla's estimate of its obligations
may change in the near term.
For information on hedged positions and derivative instruments, see Item 7A
"Quantitative and Qualitative Disclosure About Market Risk."
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<PAGE> 29
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
Hecla is subject to legal proceedings and claims which have arisen in the
ordinary course of its business and have not been finally adjudicated (see Part
II. Item 1. Legal Proceedings and Note 7 of Notes to Consolidated Financial
Statements). Although the ultimate disposition of these matters and various
other pending legal actions and claims is not presently determinable, it is the
opinion of Hecla's management that the outcome of these matters will not have a
material adverse effect on the financial position of Hecla and its subsidiaries.
However, it is possible that these matters could have a material effect on
quarterly or annual operating results and cash flows, when they are resolved,
in the future periods.
New Accounting Pronouncement
In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" was issued. SFAS
133 establishes accounting and reporting standards for derivative instruments,
including certain derivatives embedded in other contracts (collectively referred
to as derivatives), and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. In June 1999,
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133" was issued. SFAS 137
defers the effective date of SFAS 133 to all fiscal quarters of all fiscal years
beginning after June 15, 2000; however, earlier application is encouraged as of
the beginning of any fiscal quarter. Hecla is presently evaluating the effect
the adoption of this standard will have on the Hecla's financial condition,
results of operations and cash flows.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The following discussion about Hecla's risk-management activities includes
"forward-looking statements" that involve risk and uncertainties. Actual
results could differ materially from those projected in the forward-looking
statements.
The following tables summarize the financial instruments and derivative
instruments held by Hecla at June 30, 2000, which are sensitive to changes in
interest rates and commodity prices. Hecla believes that there has not been a
material change in its market risk since the end of its last fiscal year. In
the normal course of business, Hecla also faces risks that are either
nonfinancial or nonquantifiable (See "Investment Considerations" of Part I, Item
1 of Hecla's 1999 Annual Report on Form 10-K).
-29-
<PAGE> 30
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
Interest-Rate Risk Management
At June 30, 2000, Hecla's debt was subject to changes in market interest
rates and was sensitive to those changes. Hecla currently has no derivative
instruments to offset the risk of interest rate changes. Hecla may choose to
use derivative instruments, such as interest rate swaps to manage the risk
associated with interest rate changes.
The following table presents principal cash flows for debt outstanding at
June 30, 2000, by maturity date and the related average interest rate. The
variable rates are estimated based on implied forward rates in the yield curve
at the reporting date.
<TABLE>
<CAPTION>
(in thousands)
2000 2001 2002 2003 2004 Thereafter Total Value
------- ------- ------- ------- ------- ------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bank credit agreement $ - - $ 55,000 $ - - $ - - $ - - $ - - $ 55,000 $ 55,000
Average interest rate 9.22% 9.38% - - - - - - - -
Subordinated debt $ - - $ - - $ - - $ 2,000 $ 1,000 $ - - $ 3,000 $ 3,000
Average interest rate 10.97% 11.13% 11.11% 11.11% 11.17% - -
Project financing debt $ 375 $ 3,250 $ 3,000 $ 3,000 $ 1,000 $ - - $ 10,625 $ 10,625
Average interest rate 9.47% 9.63% 9.61% 9.61% 9.67% - -
</TABLE>
Commodity-Price Risk Management
Hedging
Hecla uses commodity forward sales commitments, commodity swap contracts,
and commodity put and call option contracts to manage its exposure to
fluctuation in the prices of certain metals which it produces. Contract
positions are designed to ensure that Hecla will receive a defined minimum price
for certain quantities of its production. Hecla uses these instruments to
reduce risk by offsetting market exposures. Hecla 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. The instruments held by Hecla are not leveraged and are held for
purposes other than trading. All of these contracts were designated as hedges at
June 30, 2000.
The following table provides information about Hecla's forward sales
commitments and commodity swap contracts at June 30, 2000. The table presents
the notional amount in ounces or tonnes, the average forward sales price, and
the total-dollar contract amount expected by the maturity dates, which occur
between July 31, 2000, and December 31, 2004.
-30-
<PAGE> 31
Part I - Financial Information (Continued)
Hecla Mining Company and Subsidiaries
<TABLE>
<CAPTION>
Expected Expected Expected Expected Expected Estimated
Maturity Maturity Maturity Maturity Maturity Fair
2000 2001 2002 2003 2004 Value
--------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Forward contracts:
Gold sales (ounces) 36,174 62,010 60,428 59,802 48,928
Future price (per ounce) $ 287 $ 288 $ 288 $ 288 $ 288
Contract amount (in $000's) $ 10,362 $ 17,874 $ 17,418 $ 17,238 $ 14,103 $(10,359)
Silver sales (ounces) 300,000 - - - - - - - -
Future price (per ounce) $ 5.51 $ - - $ - - $ - - $ - -
Contract amount (in $000's) $ 1,652 $ - - $ - - $ - - $ - - $ 121
Swap contracts:
Zinc (tonnes) 3,000 - - - - - - - -
Future price (per pound) $ 0.519 $ - - $ - - $ - - $ - -
Contract amount (in $000's) $ 3,435 $ - - $ - - $ - - $ - - $ (23)
</TABLE>
In addition to the above contracts, Hecla has a quarterly Gold Lease Rate
Swap at a fixed rate of 1.5% on 257,242 ounces of the above gold forward
contracts. The ounces covered under the swap are adjusted each quarter,
commencing June 30, 2000, in accordance with the expiration of the gold forward
contracts. The estimated cost to close out the Gold Lease Rate Swap at June 30,
2000 was $503,467.
Trading
On July 30, 1999, Hecla sold call options for 300,000 ounces of silver
through June 30, 2000, at an average strike price of $5.50. Hecla sold the call
options to provide additional cash flow. The sale of the options is designed to
provide some price protection, to the extent of the amount of the call premium
received, in the event of a decline in the price of silver. These contracts
also limit the maximum that Hecla may receive on a portion of Hecla's silver
production to the strike price of the options plus the premium received. Hecla
is exposed to price risk on these call options, and the value of the call
options are marked to market with a gain or loss, if any, recorded in earnings.
During the first six months of 2000, Hecla recognized revenue of $66,000 from
expired call option contracts. There are no call options outstanding as of June
30, 2000.
-31-
<PAGE> 32
Part II - Other Information
Hecla Mining Company and Subsidiaries
Item 1. Legal Proceedings
- Bunker Hill Superfund Site
In 1994, Hecla, as a potentially responsible party under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA),
entered into a consent decree with the Environmental Protection Agency (EPA) and
the state of Idaho, concerning environmental remediation obligations at the
Bunker Hill Superfund site located at Kellogg, Idaho. The consent decree
settled Hecla's response-cost liability under CERCLA at the Bunker Hill site.
As of June 30, 2000, Hecla has estimated and accrued an allowance for liability
for remedial activity costs at the Bunker Hill site of $7.1 million. These
estimated expenditures are anticipated to be made over the next three to five
years. Although Hecla believes the allowance is adequate based upon current
estimates of aggregate costs, Hecla will reassess its obligations under the
consent decree as new information is developed. Depending on the results of any
reassessment, it is reasonably possible that Hecla's estimate of its obligations
may change in the near or longer term.
- Coeur d'Alene River Basin Natural Resource Damage Claims
- Coeur d'Alene Tribe Claims
In July 1991, the Coeur d'Alene Indian Tribe brought a lawsuit, under
CERCLA, in Idaho Federal District Court against Hecla and a number of other
mining companies asserting claims for damages to natural resources downstream
from the Bunker Hill site over which the tribe alleges some ownership or
control. Hecla answered the Tribe's complaint denying liability for natural
resource damages. In October 1996, following a court imposed four-year
suspension of the proceeding, the Tribe's natural resource damage litigation was
consolidated with the United States Natural Resources Damage litigation
described below for discovery and other limited pretrial purposes.
- U.S. Government Claims
In March 1996, the United States filed a lawsuit in Idaho Federal District
Court against certain mining companies that conducted historic mining operations
in the Silver Valley of northern Idaho, including Hecla. The lawsuit asserts
claims under CERCLA and the Clean Water Act and seeks recovery for alleged
damages to or loss of natural resources located in the Coeur d'Alene River Basin
in northern Idaho for which the United States asserts to be the trustee under
CERCLA. The lawsuit asserts that the defendants' historic mining activity
resulted in releases of hazardous substances and damaged natural resources
-32-
<PAGE> 33
Part II - Other Information (Continued)
Hecla Mining Company and Subsidiaries
within the Basin. The suit also seeks declaratory relief that Hecla and other
defendants are jointly and severally liable for response costs under CERCLA for
historic mining impacts in the Basin outside the Bunker Hill site. Hecla
answered the complaint in May 1996, denying liability to the United States under
CERCLA and the Clean Water Act and asserted a counterclaim against the United
States for the federal government's involvement in mining activities in the
Basin which contributed to the releases and damages alleged by the United
States. Hecla believes it also has a number of defenses to the United States'
claims.
In May 1998, the EPA announced that it had commenced a remedial
investigation/feasibility study under CERCLA for the entire Basin, including
Lake Coeur d'Alene, in support of its response cost claims asserted in its March
1996 lawsuit.
On September 30, 1998, the Federal District Court granted Hecla's summary
judgment motion with respect to the applicable statute of limitations and
dismissed the United States' natural resources damage claims due to the failure
of the EPA to comply with federal law and EPA regulations in expanding the
national priority list site boundaries to include the entire Coeur d'Alene
River/Lake Coeur d'Alene Basin which would have the effect of extending the
statute of limitations. In an opinion issued June 15, 2000, the Ninth Circuit
Court of Appeals vacated the District Court's ruling stating that the District
Court did not have jurisdiction to determine the scope of the Bunker Hill
Superfund site. On September 30, 1999, the court issued an order on one of the
defendant's challenges to the constitutionality of the retroactive application
of liability under CERCLA. Although the court held that the statute did not
facially violate the due process or taking clauses of the U.S. Constitution, the
court also stated that the constitutionality of retroactive application of
liability to the defendants in this case cannot be resolved at this stage of
litigation as genuine issues of material fact exist and liability has not been
established.
The Federal District Court case is proceeding through discovery. A number
of Summary Judgement motions filed by both the plaintiffs and the defendants are
currently pending before the court. Trial is currently scheduled for January
2001.
The Company is also involved in settlement negotiations with
representatives of the U.S. Government and the Coeur d'Alene Tribe. The Company
is also participating with certain of the other defendants in the litigation in
a state of Idaho led settlement effort.
-33-
<PAGE> 34
Part II - Other Information (Continued)
Hecla Mining Company and Subsidiaries
- Insurance Coverage Litigation
In 1991, Hecla initiated litigation in the Idaho State District Court in
Kootenai County, Idaho, against a number of insurance companies which provided
comprehensive general liability insurance coverage to Hecla and its
predecessors. Hecla believes that the insurance companies have a duty to defend
and indemnify Hecla under their policies of insurance for all liabilities and
claims asserted against Hecla by the EPA and the tribe under CERCLA related to
the Bunker Hill site and the Basin in northern Idaho. In 1992, the Idaho State
District Court ruled that the primary insurance companies had a duty to defend
Hecla in the Tribe's lawsuit. During 1995 and 1996, Hecla entered into
settlement agreements with a number of the insurance carriers named in the
litigation. Hecla has received a total of approximately $7.2 million under the
terms of the settlement agreements. Thirty percent of these settlements were
paid to the EPA to reimburse the U.S. government for past costs under the Bunker
Hill site consent decree. Litigation is still pending against one insurer with
trial suspended until the underlying environmental claims against Hecla are
resolved or settled. The remaining insurer in the litigation with a second
insurer not named in the litigation are providing Hecla with a partial defense
in all Basin environmental litigation. As of June 30, 2000, Hecla had not
reduced its accrual for reclamation and closure costs to reflect the receipt of
any anticipated insurance proceeds.
- Other Claims
In 1997, Hecla's subsidiary, Kentucky-Tennessee Clay, terminated shipments
of 1% of annual ball clay production, sold to animal feed producers, when the
Food and Drug Administration determined trace elements of dioxin were present in
poultry. Dioxin is inherently present in ball clays generally. Hecla believes
$11.0 million of insurance coverage is available for approximately $9.2 million
in claims to date. On September 22, 1999, Riceland Foods (the primary purchaser
of ball clay from K-T Clay used in animal feed) commenced litigation against K-T
Clay in State Court in Arkansas to recover their losses and their insurance
company's payments to downstream users of their animal feed. The complaint
alleges negligence, strict liability and breach of implied warranties. Legal
counsel retained by the insurance company for K-T Clay has had the case removed
to Federal Court in Arkansas and has answered the complaint denying liability.
In July 2000, a second complaint was filed against K-T Clay and Hecla by a
purchaser of animal feed containing ball clay sold by K-T Clay. The complaint
alleges damages included in the total claim set forth above. The defense of
this lawsuit is
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<PAGE> 35
Part II - Other Information (Continued)
Hecla Mining Company and Subsidiaries
also expected to be covered by insurance. Although the outcome
of the litigation or insurance coverage cannot be assured, Hecla currently
believes that there will be no material adverse effect on Hecla's results of
operations, financial condition or cash flows from this matter.
Hecla 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 Hecla's
management that the outcome of these matters will not have a material adverse
effect on the financial condition of Hecla. However, it is possible that these
matters could have a material effect on quarterly or annual operating results
and cash flows, when they are resolved, in future periods.
-35-
<PAGE> 36
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, 2000 the following
matters were voted on by Hecla's shareholders:
Election of Three Directors:
Votes Votes
For Withheld
--------- --------
Arthur Brown 49,292,946 824,037
---------- -------
John E. Clute 49,292,547 824,436
---------- -------
Joe Coors, Jr. 49,291,826 825,157
---------- -------
Approval of selection of
PricewaterhouseCoopers LLP as
Hecla's Auditors for 2000
Votes Votes
For Against Abstentions
----- -------- -----------
49,482,979 453,972 227,601
---------- ---------- -----------
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<PAGE> 37
Part II - Other Information (Continued)
Hecla Mining Company and Subsidiaries
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 - Subordinated Loan Agreement between Hecla Mining
Company and Standard Bank London Limited dated June 29, 2000
10.2 - Subordination Agreement between Hecla Mining
Company and Standard Bank London Limited dated June 29, 2000
12 - Fixed Charge Coverage Ratio Calculation
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
-37-
<PAGE> 38
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 9, 2000 By /s/ Arthur Brown
---------------------------------
Arthur Brown, Chairman, President
and Chief Executive Officer
Date: August 9, 2000 By /s/ Lewis E. Walde
---------------------------------
Lewis E. Walde,
Controller (Chief Accounting Officer)
-38-
<PAGE> 39
Exhibit Index
Exhibit
No. Description
--------- -----------------
10.1 Subordinated Loan Agreement between Hecla Mining Company and
Standard Bank London Limited dated June 29, 2000
10.2 Subordination Agreement between Hecla Mining Company and Standard
Bank London Limited dated June 29, 2000
12 Fixed Charge Coverage Ratio Calculation
27 Financial Data Schedule
-39-
