Idaho-based
Hecla says it would “co-operate fully with any review by the Seniat to put these allegations to rest,” although the company says it has not been officially notitfied of such an audit.
“If the Seniat decides to conduct an investigation, I am sure it will be in an attempt to determine the truth,” said Hecla CEO Phillips Baker in a prepared statement. “We have undergone such audits in the past with satisfactory results.”
Baker added: “Hecla has a hundred-year reputation of integrity and we will fully and completely respond to any attempts to tarnish that good reputation.”
Hecla has been operating in Venezuela since 1999 and employs nearly 1,000 people in the country.
Hecla recently cut its 2005 gold production estimate by around 15% to 145,000 oz., while raising cost estimates on fuel, steel and cement. The company’s Venezuelan operations, including the La Camorra mine, are slated to chip in around 105,000 oz. Total cash costs for the year are expected to average US$290 to US$300 per oz.
Baker says the Venezuelan gold operations are currently suffering through higher labour costs, a stronger Venezuelan bolivar, lower grades and tonnages, and a work slowdown by a new union. He figures the currency effect will continue as long as oil prices remain high, while grades and tonnages and workforce productivity are improving.
Meanwhile, the company has also trimmed its silver production forecast by 200,000 oz. to about 6.3 million oz. at an average total cash cost of US$3.10 to US$3.30 apiece.
Hecla warned that its quarterly results would be hit by much higher expenses associated with its aggressive exploration program in 2005.
Shares in Hecla ended off US28, or nearly 8% lower at US$3.35 in New York following the news. The shares are down around 42% so far this year.
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