Hecla Mining moves closer to turnaround

Despite a considerable improvement over the same period of 1994, Hecla Mining’s (NYSE) report for the recent first quarter was marred with red ink.

A US$10-million rise in revenue to US$37 million did not save the company from a loss of US$4.5 million (or 9 cents per share), after a preferred dividend payment of US$2 million. This compares with a loss of US$7.7 million (or 19 cents per share) in last year’s first quarter.

The boost in revenue is attributable to Hecla’s new, 80%-owned Grouse Creek mine in central Idaho, which cranked out 22,000 oz. gold and 131,000 oz. silver. An improved system for feeding ore to the mill is being installed, and full production is anticipated for the second quarter.

Meanwhile, at the Choya mine in northern Mexico, 11,000 oz. gold were produced. Heavy rains diluted gold recovery from the leach pads, which lowered production by about 25%.

Total gold reserves for the company rose a whopping 75%, to 2.1 million oz., since the 1994 first quarter, while silver reserves jumped 52% to 76 million oz. The acquisition last year of the Rosebud project in Nevada accounted for part of the increase in gold reserves.

At Hecla’s 30%-owned Greens Creek mine near Juneau, Alaska, exploration drilling has uncovered 2.3 million tons of new ore rich in silver.

The polymetallic mine, a joint venture with Kennecott and CSX Alaska Mining, is being redeveloped after sitting idle since 1993. The capital cost of developing the new orebody and resuming production at 1,320 tons per day is estimated at US$87 million.

Hecla’s industrial minerals division also performed well in the 3-month period, with sales up 15%, to US$17.4 million, from a year ago.