Vancouver — A combination of higher production and lower costs propelled
The Idaho-based miner earned US$1.5 million (or US2 per share), before preferred stock dividends, in the recent 3-month period, compared with a loss of US$2.5 million in the third quarter of 2001. Cash flow between the two periods rose to US$8.1 million from US$1.4 million.
For the first nine months of this year, income totalled US$6.8 million (US9 per share), again, before preferred stock dividends, compared with US$5.5 million a year earlier, when the bottom line was boosted by a US$12.7-million gain from the sale of discontinued operations.
“We are extremely pleased with all results,” says Chief Executive Officer Arthur Brown. “Improvements in net income, gross profit, cash flow, production and costs . . . are further evidence of Hecla’s turnaround and future.”
Hecla produced 187,028 oz. gold during the first nine months of 2002 at a total cash cost of $130 per oz. Most of this, 134,000 oz., came from the La Camorra mine in Venezuela. The mine produced a record 47,814 oz. in the third quarter.
“La Camorra continues to be an excellent, low-cost gold producer with six quarters of more than 39,000 oz. of production at an average cash cost of less than US$140 per oz. gold,” says Hecla President Phil Baker. “This solid foundation makes us enthusiastic about continuing to develop La Camorra and surrounding concessions.”
Delineation drilling is under way on the Canaima prospect, which has a mineralized shear zone that hosts several high-grade sub-parallel veins. Drill results confirm the target’s high-grade potential, with hole 56 intercepting the major footwall vein and returning 54 grams gold over 6.5 metres.
In terms of silver production, Hecla produced 6.4 million oz. during the nine months at a total cash cost of US$2.22 per oz.
The star performer was the San Sebastian mine in Mexico, which contributed 822,757 oz. silver and 10,112 oz. gold during the third quarter at a cash cost of US$1.11 per oz. silver. Over the first nine months, San Sebastian produced nearly 2.5 million oz. silver and close to 30,000 oz. gold at a cash cost of $1.29 per oz. silver.
“San Sebastian has exceeded our expectations in every way,” adds Baker, “far out-distancing our initial operating plans.”
Meanwhile, the company continues to explore the Cerro Pedernalillo project. During the third quarter, 13 holes were drilled in the Don Sergio vein, five of which returned minable grades. So far, 31 holes have been drilled on the target. Highlights include:
q Hole 3 — 2 metres grading 6.4 grams gold and 69 grams silver per tonne at a down-hole depth of 15.5 metres.
q Hole 7 — 2 metres of 15 grams gold and 34 grams silver at 10.4 metres down-hole.
q Hole 17 — 2 metres of 4.6 grams gold and 147 grams silver at 67.2 metres down-hole.
q Hole 18 — 2.2 metres of 19.2 grams gold and 77 grams silver at 47 metres down-hole.
q Hole 19 — 2 metres of 16.2 grams gold and 106 grams silver at 101.8 metres down-hole.
q Hole 54 — 2 metres of 60 grams gold and 424 grams silver at 110 metres down-hole.
q Hole 55 — 2 metres of 42.6 grams gold and 343 grams silver at 180.6 metres down-hole.
The steeply dipping quartz vein is contained in a zone of silicified and hornfelsed wall rock and hydrothermal breccias.
Francine
At the Francine vein, where mining is under way, 24 holes tested for extensions to the southeast and at depth. To date, five of the holes cut gold-silver mineralization grading more than 7 grams gold-equivalent per tonne over at least 2 metres.
“Hecla has a healthy stable of promising exploration targets, and we’re getting some good results from drilling,” says Baker. “There is good potential that one or more of our targets will be able to supplement production at current mines, or become a new, major producer on its own.”
In Alaska, Hecla’s 30%-owned Greens Creek mine added 2.5 million oz. silver to the company’s output during the first nine months of the year. In the third quarter, 827,201 oz. silver were mined at a total cash cost of US$1.93 per oz.
Closer to home, in northern Idaho, the Lucky Friday mine produced 1.4 million oz. silver in the first nine months of the year at a total cash cost of US$4.65 per oz., slightly better than the US$4.95 per oz. recorded a year earlier.
Based on the company’s solid performance in the recent quarter, Hecla now expects to produce 235,000 oz. gold for the year at an average total cash cost of US$140 per oz., plus 8.2 million oz. silver at US$2.30 per oz.
“Increasing Hecla’s gold and silver resource is a high priority,” says Baker, “and our exploration programs are an important strategy for achieving that objective. We expect to spend approximately US$6 million this year on exploration, with even more planned for next year. In addition, we’ll continue to look at property acquisitions or mergers that will add value and resources.”
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