Hecla Mining tightens belt

In an effort to conserve cash, Hecla Mining (HL-N) has deferred payment of its quarterly dividend to holders of its Series B convertible preferred stock.

It is the first time the company has skipped a dividend payment since the stock was issued, in 1993.

Meanwhile, the company has cut general and administrative expenses and deferred most discretionary spending. Hecla is also proceeding with the sale of its industrial minerals division, Kentucky-Tennessee Clay, for which there are two bidders.

“Although a final decision has not been made, K-T Clay is a sought-after property and should command a good price,” says Hecla Chairman Arthur Brown.

Hecla will use proceeds from the sale to repay bank debt due next spring and provide cash to focus on precious metals, its core business.

The New York Stock Exchange recently notified the company that its stock price had fallen below the minimum US$1 price. Hecla has at least six months to increase the stock price or face de-listing. The sale of K-T Clay is expected to improve liquidity and enhance the value of the stock.

Meanwhile, Hecla has received favourable results from exploration carried out at the Saladillo silver-gold property in central Mexico. Assays from the San Sebastian vein have reached as high as 41 oz. silver and 0.1 oz. gold per ton over a 6-ft. interval. In addition, the company expects to generate US$1.5 million in cash as a result of milling bulk-surface samples from the Francine vein.