Hecla ends year on down note

Denver — After writing down the value of the Lucky Friday silver mine in Idaho and tacking on charges from two reclamation sites, Hecla Mining (HL-N) posted a substantial loss in the fourth quarter, exacerbating an an already disappointing year.

The company reported a net loss of US$58.4 million (or 87 per share) for the last three months of 2000. For the full year, the loss applicable to shareholders reached US$92 million ($1.38 per share), including US$56.7 million in non-cash charges. For 1999, Hecla incurred a fourth-quarter loss of US$8.6 million (13 per share) and a 12-month loss of US$47.6 million (77 per share). The writedown at Lucky Friday amounted to US$31.2 million. The fourth quarter also included environmental accruals of US$15.2 million associated with the Bunker Hill superfund site and the Grouse Creek gold mine, both of which are in Idaho.

Despite the financial difficulty, Hecla produced 8 million oz. silver and 146,038 oz. gold in 2000. Lucky Friday contributed 5 million oz. silver, up from 4.4 million in the previous year, though total cash costs were US$5.02 per oz. silver at a time when the price of the metal was below US$4.50 per oz.

Production at the 30%-owned Greens Creek mine in southeastern Alaska was off 10% last year, to 2.75 million oz. silver, whereas total costs were up to US$2.20 per oz.

The La Camorra mine in Venezuela proved to be one of the bright spots for the company. Gold production in its first full year of operation under Hecla’s management reached 92,848 oz. at a total cost of US$188 per oz. The company acquired the mine and restarted operations in October 1999.

Hecla expects La Camorra to contribute 110,000 oz. in 2001 at a cash cost of less than US$180 per oz. Exploration during the year increased reserves at the underground mine to 591,000 tons grading 0.63 oz. gold per ton.

In Nevada, the Rosebud mine, a 50-50 joint venture with Newmont Mining (NEM-N), produced 23,926 oz. gold as mining and milling operations were completed in August.

In the first quarter, Hecla signed an agreement to sell its industrial minerals subsidiaries, to the U.S. subsidiary of a French company, Imerys. The price tag was US$62.5 million. Proceeds from the sale will allow Hecla to pay off US$55 million in bank debt.

The company is considering a stock consolidation, in accordance with listing requirements for the New York Stock Exchange.