Hecla Reports 2005 Year-End Results and Reserves, Looks Forward to 2006.COEUR D'ALENE, Idaho Coeur d'Alene (IPA: [kɚ də liːn]) is the county seat and largest city of Kootenai County, Idaho, United States. -- Hecla Mining Company (NYSE NYSE See: New York Stock Exchange :HL) today reported a loss applicable to common shareholders in 2005 of $26 million, or $0.22 per share, largely as a result of exploration and pre-development expenditures totaling $26.2 million. Sales during 2005 were $110.2 million, with gross profit of $14.5 million. This compares to a 2004 loss of $17.7 million, or $0.15 per share, on sales of $130.8 million and gross profit of $37.4 million. In addition to the exploration and pre-development expenditures, the 2005 loss reflects the impact of a work slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. and 18% lower ore grade Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly at the Venezuelan gold operation, a strike during the first half of the year at the Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum silver operation, increased fuel, steel and cement cement, binding material used in construction and engineering, often called hydraulic cement, typically made by heating a mixture of limestone and clay until it almost fuses and then grinding it to a fine powder. expenses at most operations and a stronger Venezuelan currency. Hecla President and Chief Executive Officer, Phillips S Phil·lips A trademark used for a screw with a head having two intersecting perpendicular slots and for a screwdriver with a tip shaped to fit into these slots. . Baker, Jr., said, "Many of the operational challenges we faced in 2005 have been met and overcome, and we're we're Contraction of we are. we're we are looking forward to improvements that will positively impact us as we move through 2006. The year has certainly started on the right foot, with a $36 million gain on the sale of investments that will be recorded in the first quarter financial statements." Baker added, "Although we unfortunately did not achieve the operational goals we had set for ourselves at the beginning of 2005, we did make a great deal of progress during the year, especially in the areas of exploration and development." Exploration highlights in 2005 included expanded ore ore, metal-bearing mineral mass that can be profitably mined. Nearly all rock deposits contain some metallic minerals, but in many cases the concentration of metal is too low to justify mining the ore. reserves at the Lucky Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant mine, discovery of the Hugh Hugh (pronunced hyuu) is a male given name. It is Germanic and means "Bright in Mind and Spirit" or "Thoughtful". It is related to the name Hugin( one of Odin's ravens, who represented Thought.) The following medieval rulers were named Hugh. Zone on the San Sebastian Sebastian, 1554–78, king of Portugal (1557–78), grandson and successor of John III. He was under the regency first of his grandmother (until 1562) and then of his uncle Henry (a cardinal and later king) until declared of age in 1568. property, a bulk tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. discovery on Block B and the first evidence of high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. gold from underground assays at the Hollister Hollister can refer to: Places in the United States
shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. at the La Camorra La Camorra is the name of a three-movement suite for tango ensemble composed by Ástor Piazzolla. It was inspired by the Neapolitan criminal organization Camorra and represents Piazzolla's most ambitious compositional statement in length and large-scale musical form, though mine. For the fourth quarter of 2005, Hecla reported a loss applicable to common shareholders of $7.4 million, or $0.06 per share, compared to a loss of $4 million, or $0.03 per share in 2004. The increased loss in 2005's fourth quarter was primarily due to higher gold production costs and increased depreciation related to the La Camorra shaft. 2005 HIGHLIGHTS --6 million ounces of silver produced at an average total cash cost of $2.96 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. --140,559 ounces of gold produced, the majority of it from Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. at an average total cash cost of $337 per ounce --Successful exploration progress at San Sebastian, Lucky Friday, Greens Creek and Hollister Development Block --Development projects included completion of the shaft construction Shafts Construction: Table of Contents 1.introduction 2.Definitions, applications, shapes 3.Raise driving techniques 4.Shaft sinking 5.Impact on surrounding infrastructures 6.Appropriate soil conditions 7. at La Camorra, further progress on Lucky Friday expansion and development of Mina Isidora --Resolution of the eight-month strike in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. --18% increase in average realized gold price and 10% increase in average silver price from 2004 to 2005 --10% increase in proven and probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. silver reserves year-on-year Hecla's balance sheet as of December December: see month. 31, 2005, remained healthy, with cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments of $47.2 million and long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $3 million. The balance sheet has improved even more with the sale of shares of Alamos The name Álamos can refer to the following:
adj. 1. Almost exact or correct: the approximate time of the accident. 2. $41 million is already included in the balance of cash and short-term investments as of December 31, 2005. In 2005, Hecla funded $45 million in capital improvements, with approximately $37 million slated for capital expenditures in 2006. The company has no silver or gold hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. . With the approval of two shelf registrations during 2005, Hecla has provided itself with the financial flexibility to take timely advantage of development or acquisition opportunities as they arise. EXPLORATION Hecla spent $26.2 million on exploration and pre-development at its properties in five world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. mining districts during 2005 and expects to conduct a similar-sized exploration and pre-development program in 2006. Baker said, "Exploration is a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. process, and we are just beginning to see some real results from our programs over the past year. While it normally takes time to move those results onto a tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. reserve table, we have already quantified some increases at the Lucky Friday silver mine." As a result of the 2005 exploration and delineation programs, last year's reserve at Lucky Friday approximately doubled. After accounting for mine production during the year, proven and probable silver reserves at the Lucky Friday mine in northern Idaho Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). increased by 8.5 million ounces, to 17.2 million ounces of silver. The increase in reserves at the Lucky Friday mine was made possible by increased data from the development of the 5900 level, not from the rise in metals prices. The Lucky Friday mine has been in operation more than 60 years and has a large identified resource beyond the proven and probable reserves. In 2006, tighter-spaced drilling will be conducted in an effort to upgrade some of that resource into reserve below the new 5900 level and to expand along the strike of the vein. Deeper drilling planned between 6,700 and 7,000 feet below the surface will be aimed at increasing the resource even further. In addition, Hecla staff will begin looking at alternatives for mining at depths below the bottom of the Silver Shaft in the decades to come. Baker said, "Many people don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. understand the value of the Lucky Friday. Currently, the mine plan stretches into the year 2013. And right now, we have an identified reserve and resource that equals all the silver mined during the past 33 years of production there." The reserve table below was calculated on prices much more conservative than current market prices. The prices used for the calculations were $6.20 per ounce of silver, $400 per ounce of gold, $0.30 per pound of lead and $0.44 per pound of zinc zinc, metallic chemical element; symbol Zn; at. no. 30; at. wt. 65.38; m.p. 419.58°C;; b.p. 907°C;; sp. gr. 7.133 at 25°C;; valence +2. Zinc is a lustrous bluish-white metal. It is found in Group 12 of the periodic table. .
ESTIMATED ORE RESERVES
(as of December 31, 2005)
Proven and Probable
----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) Tons (oz/ton) (oz/ton) (%) (%)
----------------------------------------------------------------------
Lucky Friday Unit, USA 1,288,640 - 13.4 7.7 2.9
Greens Creek (29.73%), USA 2,223,872 0.12 14.5 3.9 10.2
La Camorra Unit, Venezuela 592,396 0.75 - - -
----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) (ounces) (ounces) (tons) (tons)
----------------------------------------------------------------------
Lucky Friday Unit, USA - 17,209,268 98,724 37,669
Greens Creek (29.73%), USA 256,959 32,150,190 86,465 227,807
La Camorra Unit, Venezuela 441,392 - - -
------- ---------- ------ --------
TOTAL 698,351 49,359,458 185,189 265,476
------------------------------- --------------------------------------
Mineralized Material (1)
----------------------------------------------------------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) Tons (oz/ton) (oz/ton) (%) (%)
----------------------------------------------------------------------
La Camorra Unit (2) 621,760 0.41 - - -
Lucky Friday Unit (3) 4,800,510 - 8.6 5.0 2.9
----------------------------------------------------------------------
(1) Securities and Exchange Commission guidelines do not allow the
company to complete the calculation of tons multiplied by grade to
equal contained ounces in the "mineralized material" and "other
resources" categories.
(2) In situ resources, Canaima Lower and Middle veins, diluted and
factored for mining recovery (90%) and Isidora Indicated material at
an 8.0 gpt cutoff, factored and diluted for mining.
(3) In situ Measured and Indicated resources from Gold Hunter and
Lucky Friday vein systems, diluted and factored for expected mining
recovery.
Other Resources(1)
------------------
Gold Silver Lead Zinc
Mine - (Hecla interest in %) Tons (oz/ton) (oz/ton) (%) (%)
----------------------------------------------------------------------
San Sebastian Hugh Zone (2) 478,837 0.02 8.6 5.4 6.7
Lucky Friday Unit (3) 3,454,690 - 9.0 5.5 3.0
Greens Creek (29.73%) (4) 654,214 0.14 14.5 4.1 11.2
La Camorra Unit (5) 446,965 0.48 - - -
Noche Buena (6) 21,483,352 0.02 - - -
----------------------------------------------------------------------
(1) Securities and Exchange Commission guidelines do not allow the
company to complete the calculation of tons multiplied by grade to
equal contained ounces in the "mineralized material" and "other
resources" categories.
(2) Inferred resources, Hugh Zone (Deep Francine).
(3) Inferred resources, diluted to assumed mining width and adjusted
for mining recovery.
(4) Inferred resources, East, West, SW, NWW, 9A and 200S orebodies,
factored for dilution and mining recovery.
(5) Inferred resources, diluted and factored for mining recovery.
Isidora material at an 8.0 gpt cutoff.
(6) Indicated and Inferred resources inside dipper pit.
In 2006, Hecla plans exploration and pre-development expenditures of approximately $12 million in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , $4.5 million in Mexico, and $4.5 million in Venezuela, with potential for another $4 million in Mexico if a decision is made to pursue underground exploration on San Sebastian's Hugh Zone. Exploration drilling in 2005 on the Hugh Zone, located on Hecla's 200-square-mile San Sebastian property in central Mexico, has identified a large silver-polymetallic resource, which appears to be a deeper extension of the Francine
Francine is a female given name. vein that Hecla finished mining at the end of last year. The Hugh Zone mineralization Mineralization The process by which the body uses minerals to build bone structure. Mentioned in: Rickets mineralization, n the bioprecipitation of an inorganic substance. remains open to the northwest For names and places containing the slightly longer word 'northwestern' (or variants), see . Northwest or north west is the ordinal direction halfway between north and west on a compass. It is the opposite of southeast. and at depth to the southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. program could be made before the end of the year. Baker said, "There is increasing optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. that the Hugh Zone could be our next mine in Mexico. It could be that what we've we've Contraction of we have. we've have mined previously at San Sebastian was just the upper expression of this deeper, possibly very large deposit." During the fourth quarter of 2005, a decision was made to sell the Noche Buena gold exploration property in northern Mexico. A letter of agreement has been signed for the sale of the property, subject to customary conditions of closing. The first underground drilling at the Hollister Development Block gold exploration project in northern Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). is expected to begin this month. The fourth quarter of 2005 brought the good news at Hollister that the decline ramp had intersected vein material and returned high-grade gold assays, and Hecla expects to complete a feasibility study "A Feasibility Study" is an episode of the original The Outer Limits television show. It first aired on 13 April, 1964, during the first season. It was remade in 1997 as part of the revived The Outer Limits series with a minor title change. in early 2007 on whether the deposit will be economic to mine. The West Gallagher Gallagher may refer to: People
v. min·er·al·ized, min·er·al·iz·ing, min·er·al·iz·es v.tr. 1. To convert to a mineral substance; petrify. 2. To transform a metal into a mineral by oxidation. 3. results. In addition to extensive drilling, an exploration drift drift, deposit of mixed clay, gravel, sand, and boulders transported and laid down by glaciers. Stratified, or glaciofluvial, drift is carried by waters flowing from the melting ice of a glacier. was driven into the West Gallagher Zone from the mine's current workings in order to further define the deposit. Greens Creek already has more than eight years of proven and probable reserves identified, and this new underground deposit strengthens its potential for years of valuable production. In Venezuela, proven and probable ore reserves decreased as the La Camorra mine deposit exhibits lower ore grades. No significant results were returned from drilling on the La Camorra veins during 2005. However, there has been some promising, early stage exploration conducted on the properties surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the mine in the El Dorado El Dorado, legendary country of South America El Dorado (ĕl`dərä`dō, –rā`–) [Span.,=the gilded man], legendary country of the Golden Man sought by adventurers in South America. gold district, and drilling will commence there as the appropriate permits are granted. Meanwhile, to the north on Hecla's Block B property in the El Callao Callao (käyou`), city (1993 pop. 376,165), capital of the constitutional prov. of Callao, W Peru, on Callao Bay of the Pacific Ocean. It is Peru's major seaport. The harbor is sheltered by an island and a small peninsula. gold district, exploration results included further definition of the Twin/Conductora Shear shear: see strength of materials. Shear A straining action wherein applied forces produce a sliding or skewing type of deformation. system. The property, which is a lower-grade, higher-tonnage type of bulk deposit than the La Camorra and Isidora deposits, is still in the early stages of exploration but is showing signs of potential. OPERATIONS In 2005, Hecla produced 6 million ounces of silver at an average total cash cost of $2.96 per ounce and 140,559 ounces of gold, primarily from Venezuela at an average total cash cost of $337 per ounce. Costs at all operations were impacted by significant increases in supply and labor expenses during 2005. In 2006, Hecla anticipates production of approximately 6 million ounces of silver, keeping cash costs below $3.00 per ounce. Silver production could be slightly lower in order to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the benefit from high base metals prices. The company expects to produce about 150,000 ounces of gold and reduce the average total cash cost per ounce to below $300 per ounce. Currency fluctuation Fluctuation A price or interest rate change. in Venezuela could increase or decrease this estimate. The Lucky Friday Unit produced 2.4 million ounces of silver during 2005, at an average total cash cost of $5.27 per ounce, compared to 2 million ounces of silver in 2004, at an average total cash cost of $5.12 per ounce. Costs at the Lucky Friday are anticipated to decrease significantly by the second half of 2006, as the new 5900 level comes on line and haulage distances are decreased. For the full year 2006, average total cash costs are expected to be less than $4.50 per ounce of silver, with anticipated production of more than 3 million ounces of silver, ramping up to 4 million ounces of silver in 2007. During the fourth quarter of 2005, production costs were impacted by increased haulage distances on the 4900 level, as well as downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. at the mill while startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. of newly installed mill components took place. As the mill comes fully on line and production increases from the 5900 level during the first half of 2006, these cost pressures are expected to be alleviated al·le·vi·ate tr.v. al·le·vi·at·ed, al·le·vi·at·ing, al·le·vi·ates To make (pain, for example) more bearable: a drug that alleviates cold symptoms. See Synonyms at relieve. . Additions to the mill included a third-stage crushing crushing deaths of newborn animals, especially those in litters, caused by the mother lying on them accidentally. Contributed to by weakness of the neonate or awkward accommodation. A problem in piglets and puppies. Called also overlying. system, increased flotation flotation or froth flotation Most widely used process for extracting many minerals from their ores. The method separates and concentrates ores by altering their surfaces so that they are either repelled or attracted by water. capacity and a new flash cell, new column cells and tailings Tailings (also known as tailings pile, tails, leach residue, or slickens[1]) are the materials left over[2] after the process of separating the valuable fraction from the worthless fraction of an ore. thickeners thickeners, n.pl See binder. . During 2005, Lucky Friday miners drove the new 5900 level drift another 2,000 feet, drove an additional 2,200 feet of initial drift laterally lat·er·al adj. 1. Of, relating to, or situated at or on the side. 2. Of or constituting a change within an organization or a hierarchy to a position at a similar level, as in salary or responsibility, to the one being left: along the vein and developed multiple headings for future mining on the 5900 level. The Greens Creek Unit in Alaska produced a total of 2.9 million ounces of silver and 21,631 ounces of by-product by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. by-product Noun 1. gold for Hecla's account in 2005, at the low average total cash cost of $1.46 per ounce of silver. This compares to 2.9 million ounces of silver and 25,624 ounces of gold produced in 2004 at an average total cash cost per ounce of silver of $1.13. In addition to impacts from higher diesel, steel, cement and labor costs, work in the fourth quarter continued on rehabilitating the main haulage drifts at Greens Creek. Impacts on production and costs from the rehabilitation rehabilitation: see physical therapy. should lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. by the second quarter of 2006. Production at Greens Creek in 2006 is estimated to be approximately the same as 2005, with a potential for even lower cash costs per ounce when rehabilitation work concludes. The San Sebastian Unit in central Mexico produced 717,860 ounces of silver and 17,160 ounces of by-product gold in 2005, at an average total cash cost of $2.27 per ounce of silver. The challenges faced, and overcome, at San Sebastian in 2005 were the conclusion of an eight-month strike by mill employees and the mine-out of the veins and closure of the facility, all of which were accomplished in an orderly orderly /or·der·ly/ (or´der-le) an attendant in a hospital who works under the direction of a nurse. or·der·ly n. An attendant in a hospital. fashion. The strike was ended with a satisfactory labor agreement that will not inhibit inhibit /in·hib·it/ (in-hib´it) to retard, arrest, or restrain. in·hib·it v. 1. To hold back; restrain. 2. Hecla's ability to work in the area in the future. San Sebastian's life-of-mine production over four years was 11.2 million ounces of silver and 155,937 ounces of gold. The mill and mine are now on care-and-maintenance while Hecla continues exploration activities on the property, focusing first on the prospective Hugh Zone. The La Camorra Unit in Venezuela produced 101,474 ounces of gold at an average total cash cost of $337 per ounce, compared to 130,437 ounces of gold in 2004 at an average total cash cost per ounce of $180. Costs were impacted by an 18% lower gold grade during the year, from an average grade of 0.684 ounce of gold per ton in 2004 to 0.558 ounce of gold per ton in 2005. Other factors contributing to increased costs included lower tonnage, labor, inflation and Venezuelan currency issues. Baker said, "Even with all these challenges, the La Camorra Unit still provided us with operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . In addition, we see excellent potential for further discovery on our Block B property." In 2006, cost reductions are anticipated as full capacity is reached at Mina Isidora by the middle of the year, where the average gold ore grade is higher, at 0.8 ounce per ton. Hecla's Venezuelan operations are expected to produce approximately 125,000 ounces of gold in 2006, at an average total cash cost of less than $300 per ounce. Progress on the Mina Isidora development included completion of the rehabilitation of a historic incline shaft that serves as secondary access to the mine and has already allowed some production of high-grade gold. The main mine access ramp development continued on schedule, and some ore was extracted from this access during the fourth quarter. In addition, a major shaft construction project at the La Camorra mine was completed in 2005, in order to control costs by cutting down haulage time and to provide adequate ventilation ventilation, process of supplying fresh air to an enclosed space and removing from it air contaminated by odors, gases, or smoke. Proper ventilation requires also that there be a movement or circulation of the air within the space and that the temperature and . Declining ore reserves at a lower ore grade are expected to have an impact on decisions for long-term plans at the La Camorra mine. OTHER Other notable events for Hecla in 2005 included the receipt of the Nevada Governor's Award for Excellence in Mine Reclamation Mine reclamation is the process of creating useful landscapes that meet a variety of goals, typically creating productive ecosystems (or sometimes industrial or municipal land) from mined land. for work accomplished at the reclaimed re·claim tr.v. re·claimed, re·claim·ing, re·claims 1. To bring into or return to a suitable condition for use, as cultivation or habitation: reclaim marshlands; reclaim strip-mined land. Rosebud mine, the election of President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Phil PHIL Philosophy Phil Philippine PHIL Philippians PHIL Philadelphia, PA, USA PHIL Public Health Image Library (US CDC) Baker as President of the Silver Institute, a silver mining industry association, and the addition of former Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. State Congressman George Nethercutt George R. Nethercutt, Jr. (born October 7, 1944) is an American politician. He was a Republican member of the United States House of Representatives from 1995 to 2005, representing Washington's At-large congressional district. to Hecla's Board of Directors. Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines, processes and explores for silver and gold in the United States, Venezuela and Mexico. A 115-year-old company, Hecla has long been well known in the mining world and financial markets as a quality silver and gold producer. Hecla's common and preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. are traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbols HL and HL-PrB. Statements made which are not historical facts, such as anticipated payments, litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. outcome, production, sales of assets, exploration results and plans, costs, and prices or sales performance are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. . These risks and uncertainties include, but are not limited to, metals price volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , volatility of metals production and costs, exploration risks and results, political risks, project development risks, labor issues and ability to raise financing. Refer to the company's Form 10-Q Form 10-Q See 10-Q. and 10-K reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements. Cautionary Note to Investors - The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: and legally extract To decompress. WinZip and other decompression utilities use the term to mean "pulling out" the original files from the compressed archive. See WinZip and data compression. or produce. We use certain terms in this news release, such as "resource," "other resources," and "mineralized material" that the SEC guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. strictly prohibit pro·hib·it tr.v. pro·hib·it·ed, pro·hib·it·ing, pro·hib·its 1. To forbid by authority: Smoking is prohibited in most theaters. See Synonyms at forbid. 2. us from including in our filing with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . You can review and obtain copies of these filings from the SEC's website at http://www.sec.gov/edgar.shtml.
HECLA MINING COMPANY
(dollars in thousands, except per share, per ounce and
per pound amounts - unaudited)
Fourth Quarter Ended Year Ended
------------------------- ---------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
HIGHLIGHTS ---------- ---------- ---------- ----------
FINANCIAL DATA
Sales:
Silver operations (1) $ 18,876 $ 17,593 $ 71,152 $ 82,942
Gold operations 11,168 11,153 39,009 47,884
---------- ---------- ---------- ----------
Total sales $ 30,044 $ 28,746 $ 110,161 $ 130,826
Gross Profit (Loss):
Silver operations (1) $ 3,932 $ 4,804 $ 12,552 $ 24,875
Gold operations (1,001) 2,218 1,955 12,531
---------- ---------- ---------- ----------
Total gross profit $ 2,931 $ 7,022 $ 14,507 $ 37,406
Net loss $ (7,226) $ (3,770) $ (25,360) $ (6,134)
Loss applicable to
common shareholders $ (7,364) $ (3,908) $ (25,912) $ (17,736)
Basic loss per common
share $ (0.06) $ (0.03) $ (0.22) $ (0.15)
Cash flow provided by
(used in) operating
activities $ 4,019 $ (3,948) $ (5,913) $ 13,334
PRODUCTION SUMMARY -
TOTALS
Silver - Ounces 1,307,698 1,310,178 6,013,929 6,960,580
Gold - Ounces 41,899 35,736 140,559 189,860
Lead - Tons 4,362 4,770 21,075 19,558
Zinc - Tons 5,296 6,776 23,289 25,644
Average cost per ounce
of silver produced
(1):
Cash operating costs
($/oz.) 1.69 2.79 2.83 1.87
Total cash costs
($/oz.) (2) 1.84 2.92 2.96 2.02
Total production
costs ($/oz.) 4.22 4.34 4.85 3.57
Average cost per ounce
of gold produced (3):
Cash operating costs
($/oz.) 356 229 330 176
Total cash costs
($/oz.) (2) 363 237 337 180
Total production
costs ($/oz.) 519 318 437 271
AVERAGE METAL PRICES
Silver - London Fix
($/oz.) 8.05 7.23 7.31 6.66
Gold - Realized ($/oz.) 508 397 446 379
Gold - London Final
($/oz.) 486 434 445 409
Lead - LME Cash
(cents/pound) 47.6 43.5 44.3 40.2
Zinc - LME Cash
(cents/pound) 74.4 50.5 62.7 47.5
(1) Includes gold produced at silver properties, which is treated
as a by-product credit and included in the calculation of silver costs
per ounce.
(2) Total cash costs per ounce of silver and gold represent
non-U.S. Generally Accepted Accounting Principles (GAAP) measurements.
A reconciliation of total cash costs to cost of sales, other direct
production costs and depreciation, depletion and amortization (GAAP)
can be found in the cash costs per ounce reconciliation section of
this news release. For additional information, see note (1) in the
cash costs per ounce reconciliation section.
(3) Includes gold produced from third-party mining operations
located near the La Camorra mine, which is treated as a by-product
credit and included in the calculation of gold costs per ounce.
(4) At December 31, 2005, we had no outstanding forward sales
contracts, commodity put and call options contracts or other hedging
positions.
HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars and shares in thousands, except per share amounts
- unaudited)
Fourth Quarter Ended Year Ended
-------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
--------- ---------- --------- ---------
Sales of products $ 30,044 $ 28,746 $110,161 $130,826
--------- ---------- --------- ---------
Cost of sales and other
direct production costs 19,933 17,911 75,192 71,868
Depreciation, depletion and
amortization 7,180 3,813 20,462 21,552
--------- ---------- --------- ---------
27,113 21,724 95,654 93,420
--------- ---------- --------- ---------
Gross profit 2,931 7,022 14,507 37,406
--------- ---------- --------- ---------
Other operating expenses:
General and administrative 2,553 2,562 10,134 8,731
Exploration 4,321 4,520 16,777 15,995
Pre-development expenses 2,652 2,679 9,420 4,227
Depreciation and
amortization 185 95 621 326
Other operating expense 400 6 2,281 1,723
Provision for closed
operations and environmental
matters 101 1,200 1,618 11,170
--------- ---------- --------- ---------
10,212 11,062 40,851 42,172
--------- ---------- --------- ---------
Loss from operations (7,281) (4,040) (26,344) (4,766)
--------- ---------- --------- ---------
Other income (expense):
Interest and other income 241 711 1,869 1,923
Interest expense (186) (43) (225) (500)
--------- ---------- --------- ---------
55 668 1,644 1,423
--------- ---------- --------- ---------
Loss from operations before
income taxes (7,226) (3,372) (24,700) (3,343)
Income tax provision - - (398) (660) (2,791)
--------- ---------- --------- ---------
Net loss (7,226) (3,770) (25,360) (6,134)
Preferred stock dividends (1) (138) (138) (552) (11,602)
--------- ---------- --------- ---------
Loss applicable to common
shareholders $ (7,364) $ (3,908) $(25,912) $(17,736)
========= ========== ========= =========
Basic and diluted loss per
common share after preferred
stock dividends(2) $ (0.06) $ (0.03) $ (0.22) $ (0.15)
========= ========== ========= =========
Basic weighted average number
of common shares
outstanding 118,574 118,326 118,458 118,048
========= ========== ========= =========
(1) During the first quarter of 2004, the company recorded a
noncash dividend of approximately $10.9 million related to exchanges
of preferred stock for common stock and is included in preferred stock
dividends for the year ended December 31, 2004.
(2) For the fourth quarter and year ended December 31, 2005,
4,060,582 restricted stock units and various outstanding stock options
to purchase shares of common stock, respectively, were antidilutive
and not included in the calculation of losses per common share. For
the fourth quarter and year ended December 31, 2004, 3,154,384
restricted stock units and various outstanding stock options,
respectively, were antidilutive and not included in the calculation of
losses per common share.
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Dec. 31, Dec. 31,
2005 2004
----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 6,308 $ 34,460
Short-term investments and securities
held for sale 40,862 46,328
Accounts and notes receivable 17,595 21,936
Inventories 25,466 20,250
Other current assets 3,546 5,607
----------- ---------
Total current assets 93,777 128,581
Investments 2,233 1,657
Restricted cash and investments 20,340 19,789
Properties, plants and equipment, net 137,932 114,515
Other noncurrent assets 17,884 14,906
----------- ---------
Total assets $ 272,166 $ 279,448
=========== =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 16,684 $ 15,904
Dividends payable 138 138
Accrued payroll and related benefits 10,452 9,405
Accrued taxes 2,529 2,379
Current portion of accrued reclamation and
closure costs 6,328 9,237
----------- ---------
Total current liabilities 36,131 37,063
Long-term debt 3,000 - -
Accrued reclamation and closure costs 62,914 65,176
Other noncurrent liabilities 8,791 7,882
----------- ---------
Total liabilities 110,836 110,121
----------- ---------
SHAREHOLDERS' EQUITY
Preferred stock 39 39
Common stock 29,651 29,588
Capital surplus 508,104 506,630
Accumulated deficit (396,092) (367,832)
Accumulated other comprehensive income 19,746 1,020
Treasury stock (118) (118)
----------- ---------
Total shareholders' equity 161,330 169,327
----------- ---------
Total liabilities and shareholders' equity $ 272,166 $ 279,448
=========== =========
Common shares outstanding at end of year 118,602 118,351
=========== =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Year Ended
----------------------
Dec. 31, Dec. 31,
2005 2004
OPERATING ACTIVITIES ----------- ----------
Net loss $(25,360) $ (6,134)
Noncash elements included in net loss:
Depreciation, depletion and amortization 21,083 21,878
(Gain) loss on disposition of properties,
plants and equipment 984 (222)
Gain on sale of royalty interests (550) - -
Provision for reclamation and closure costs 923 10,086
Deferred incomes taxes - - 2,323
Stock compensation 1,268 495
Change in assets and liabilities:
Accounts and notes receivable 4,341 (5,618)
Inventories (5,216) (3,314)
Other current and noncurrent assets (362) (3,163)
Accounts payable and accrued expenses 1,543 1,690
Accrued payroll and related benefits 1,055 1,859
Accrued taxes 150 (814)
Accrued reclamation and closure costs and other
noncurrent liabilities (5,772) (5,732)
----------- ----------
Net cash provided by (used in) operating
activities (5,913) 13,334
----------- ----------
INVESTING ACTIVITIES
Additions to properties, plants and equipment (44,918) (41,371)
Proceeds from disposition of properties, plants
and equipment 58 352
Purchase of short-term investments (68,694) (118,159)
Maturities of short-term investments 92,128 123,104
Increase in restricted investments (551) (13,433)
Other, net - - (2)
----------- ----------
Net cash used in investing activities (21,977) (49,509)
----------- ----------
FINANCING ACTIVITIES
Common stock issued under stock option plans 262 1,646
Dividends paid to preferred shareholders (2,900) - -
Other financing activities (624) - -
Borrowings on debt 4,000 2,430
Repayment on debt (1,000) (7,103)
----------- ----------
Net cash used in financing activities (262) (3,027)
----------- ----------
Net decrease in cash and cash equivalents (28,152) (39,202)
Cash and cash equivalents at beginning of year 34,460 73,662
----------- ----------
Cash and cash equivalents at end of year $ 6,308 $ 34,460
=========== ==========
HECLA MINING COMPANY
Production Data
(dollars in thousands, except per ounce, and per ton - unaudited)
Fourth Quarter Ended Year Ended
-------------------- -----------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
--------- --------- ----------- -----------
LA CAMORRA UNIT
Tons of ore processed 50,064 51,638 191,900 199,453
Days of operation 84 83 315 334
Mining cost per ton $ 93.21 $ 55.81 $ 71.61 $ 44.79
Milling cost per ton $ 18.02 $ 13.39 $ 14.14 $ 13.12
Ore grade crushed - Gold
(oz./ton) 0.637 0.646 0.558 0.684
Gold produced (oz.) 30,418 28,015 101,474 130,437
Average cost per ounce of
gold produced:
Cash operating costs $ 356 $ 229 $ 330 $ 176
Total cash costs (1) $ 363 $ 237 $ 337 $ 180
Total production costs $ 519 $ 318 $ 437 $ 271
Capital additions $ 5,468 $ 7,136 $ 28,817 $ 31,596
SAN SEBASTIAN UNIT (2)
Tons of ore processed 20,887 - - 71,671 128,711
Days of operation 42 - - 148 256
Mining cost per ton $ 7.42 - - $ 17.67 $ 47.08
Milling cost per ton $ 22.76 - - $ 26.68 $ 38.65
Ore grade milled - Silver
(oz./ton) 8.63 - - 11.40 17.94
Ore grade milled - Gold
(oz./ton) 0.310 - - 0.273 0.287
Silver produced (oz.) 181,514 - - 717,860 2,042,173
Gold produced (oz.) 6,387 - - 17,160 33,563
Average cost per ounce of
silver produced (3):
Cash operating costs $ (1.01) - - $ 1.85 $ (0.10)
Total cash costs (1) $ (0.42) - - $ 2.27 $ 0.21
Total production costs $ 4.11 - - $ 6.14 $ 2.11
Capital additions $ 4 - - $ 229 $ 975
GREENS CREEK UNIT
(Reflects Hecla's 29.73%
share)
Tons of ore milled 49,358 62,020 213,354 239,456
Days of operation 92 92 365 366
Mining cost per ton $ 38.10 $ 29.17 $ 33.65 $ 28.07
Milling cost per ton $ 25.53 $ 18.53 $ 22.67 $ 17.84
Ore grade milled - Silver
(oz./ton) 17.92 15.56 18.17 16.65
Silver produced (oz.) 660,760 704,157 2,873,532 2,886,264
Gold produced (oz.) 5,036 5,949 21,631 25,624
Lead produced (tons) 1,485 1,858 6,515 7,384
Zinc produced (tons) 4,514 5,965 19,209 22,649
Average cost per ounce of
silver produced (3):
Cash operating costs $ (0.76) $ 1.17 $ 1.30 $ 0.98
Total cash costs (1) $ (0.66) $ 1.39 $ 1.46 $ 1.13
Total production costs $ 2.18 $ 3.35 $ 4.02 $ 3.47
Capital additions $ 2,314 $ 775 $ 4,964 $ 3,754
LUCKY FRIDAY UNIT
Tons of ore milled (4) 50,517 44,696 214,158 166,866
Days of operation 92 92 365 366
Mining cost per ton $ 53.36 $ 58.08 $ 58.86 $ 55.60
Milling cost per ton $ 9.82 $ 8.50 $ 8.50 $ 7.80
Ore grade milled - Silver
(oz./ton) 10.08 12.55 12.20 13.11
Silver produced (oz.) (4) 465,424 519,686 2,422,537 2,032,143
Lead produced (tons) 2,877 2,912 14,560 12,174
Zinc produced (tons) 782 811 4,080 2,995
Average cost per ounce of
silver produced (3):
Cash operating costs $ 6.80 $ 5.53 $ 5.26 $ 5.12
Total cash costs (1) $ 6.83 $ 5.51 $ 5.27 $ 5.12
Total production costs $ 7.55 $ 5.59 $ 5.56 $ 5.17
Capital additions $ 5,236 $ 1,675 $ 10,243 $ 5,060
(1) Total cash costs per ounce of silver and gold represent
non-U.S. Generally Accepted Accounting Principles (GAAP) measurements.
A reconciliation of total cash costs to cost of sales and other direct
production costs and depreciation, depletion and amortization (GAAP)
can be found in the cash costs per ounce reconciliation section of
this news release.
(2) The mill that processes San Sebastian ore was closed due to a
strike by mill workers during virtually all of the fourth quarter 2004
and for most of the first half of 2005, ending in June 2005, making
fourth quarter 2004 production statistics not meaningful. During the
fourth quarter of 2005, the mine reached the end of its known mine
life and has been placed on care-and-maintenance status while
exploration activities continue.
(3) Gold, lead and zinc produced have been treated as by-product
credits in calculating silver costs per ounce.
(4) Production results include approximately 6,000 tons and 53,000
ounces of silver, respectively, for the fourth quarter of 2005, and
approximately 35,000 tons and 338,000 ounces of silver, respectively,
for the year ended December 31, 2005, that was mined from the 5900
level development project.
HECLA MINING COMPANY
Reconciliation of Cash Costs per Ounce to Generally Accepted
Accounting Principles (GAAP)(1)
(dollars and ounces in thousands, except per ounce - unaudited)
Three Months Ended Year Ended
------------------ -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
GOLD OPERATIONS -------- --------- --------- ---------
Total cash costs $10,533 $ 6,174 $ 32,648 $ 22,617
Divided by gold ounces produced 29 26 97 126
-------- --------- --------- ---------
Total cash cost per ounce
produced $ 363 $ 237 $ 337 $ 180
======== ========= ========= =========
Reconciliation to GAAP (2):
Total cash costs $10,533 $ 6,174 $ 32,648 $ 22,617
Depreciation, depletion and
amortization 4,495 2,140 9,622 11,439
Treatment & freight costs (1,006) (518) (2,612) (1,980)
By-product credits 591 746 1,914 1,892
Change in product inventory (2,531) 432 (4,605) 1,383
Reclamation, severance and
other costs 87 (39) 87 2
-------- --------- --------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $12,169 $ 8,935 $ 37,054 $ 35,353
======== ========= ========= =========
SILVER OPERATIONS
Total cash costs $ 2,304 $ 3,829 $ 16,807 $ 14,078
Divided by silver ounces
produced 1,255 1,310 5,677 6,960
-------- --------- --------- ---------
Total cash cost per ounce
produced $ 1.84 $ 2.92 $ 2.96 $ 2.02
======== ========= ========= =========
Reconciliation to GAAP:
Total cash costs $ 2,304 $ 3,829 $ 16,807 $ 14,078
Depreciation, depletion and
amortization 2,685 1,673 10,840 10,113
Treatment & freight costs (4,228) (5,804) (22,424) (22,964)
By-product credits 14,150 11,632 50,899 54,260
Change in product inventory (1,454) 851 (939) 1,395
Strike-related costs - - 777 1,341 777
Care and maintenance-related
costs 681 - - 681 - -
Reclamation, severance and
other costs 806 (169) 1,395 408
-------- --------- --------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $14,944 $ 12,789 $ 58,600 $ 58,067
======== ========= ========= =========
GREENS CREEK UNIT (Reflects
Hecla's 29.73% share)
Total cash costs $ (433) $ 977 $ 4,190 $ 3,257
Divided by silver ounces
produced 661 704 2,874 2,886
-------- --------- --------- ---------
Total cash cost per ounce
produced $ (0.66) $ 1.39 $ 1.46 $ 1.13
======== ========= ========= =========
Reconciliation to GAAP:
Total cash costs $ (433) $ 977 $ 4,190 $ 3,257
Depreciation, depletion and
amortization 1,713 1,413 7,067 6,594
Treatment & freight costs (2,708) (4,066) (15,090) (15,218)
By-product credits 8,163 7,915 30,200 29,486
Change in product inventory (2,605) (263) (330) (231)
Reclamation, severance and
other costs 163 (79) 286 158
-------- --------- --------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $ 4,293 $ 5,897 $ 26,323 $ 24,046
======== ========= ========= =========
SAN SEBASTIAN UNIT
Total cash costs $ (77) $ (11) $ 1,631 $ 421
Divided by silver ounces
produced 182 86 718 2,042
-------- --------- --------- ---------
Total cash cost per ounce
produced $ (0.42) $ (0.13) $ 2.27 $ 0.21
======== ========= ========= =========
Reconciliation to GAAP:
Total cash costs $ (77) $ (11) $ 1,631 $ 421
Depreciation, depletion and
amortization 680 426 3,180 3,659
Treatment & freight costs (65) (32) (328) (1,069)
By-product credits 3,017 720 7,737 13,493
Change in product inventory 601 1,120 (614) 1,476
Strike-related costs (3) - - 777 1,341 777
Care and maintenance-related
costs 681 - - 681 - -
Reclamation, severance and
other costs 638 (44) 1,096 224
-------- --------- --------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 5,475 $ 2,956 $ 14,724 $ 18,981
======== ========= ========= =========
LUCKY FRIDAY UNIT
Total cash costs $ 2,814 $ 2,863 $ 10,986 $ 10,400
Divided by silver ounces
produced (4) 412 520 2,085 2,032
-------- --------- --------- ---------
Total cash cost per ounce
produced $ 6.83 $ 5.51 $ 5.27 $ 5.12
======== ========= ======== ========
Reconciliation to GAAP:
Total cash costs $ 2,814 $ 2,863 $ 10,986 $ 10,400
Depreciation, depletion and
amortization 292 (166) 593 (140)
Treatment & freight costs (1,453) (1,706) (7,006) (6,677)
By-product credits 2,970 2,997 12,962 11,281
Change in product inventory 550 (6) 5 150
Reclamation, severance and
other costs 3 (46) 13 26
-------- --------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion and
amortization (GAAP) $ 5,176 $ 3,936 $ 17,553 $ 15,040
======== ========= ======== ========
RECONCILIATION TO GAAP, ALL
OPERATIONS
Total cash costs $12,837 $10,003 $ 49,455 $ 36,695
Depreciation, depletion and
amortization 7,180 3,813 20,462 21,552
Treatment & freight costs (5,234) (6,322) (25,036) (24,944)
By-product credits 14,741 12,378 52,813 56,152
Strike-related costs - - 777 1,341 777
Care and maintenance-related
costs 681 - - 681 - -
Change in product inventory (3,985) 1,283 (5,544) 2,778
Reclamation, severance and other
costs 893 (208) 1,482 410
-------- --------- -------- --------
Costs of sales and other direct
production costs and
depreciation, depletion and
amortization (GAAP) $27,113 $21,724 $ 95,654 $ 93,420
======== ========= ======== ========
(1) Cash costs per ounce of silver or gold represent non-U.S.
generally accepted accounting principles (GAAP) measurements that the
company believes provide management and investors an indication of net
cash flow, after consideration of the realized price received for
production sold. Management also uses this measurement for the
comparative monitoring of performance of mining operations
period-to-period from a cash flow perspective. "Total cash cost per
ounce" is a measure developed by gold companies in an effort to
provide a comparable standard; however, there can be no assurance that
our reporting of this non-GAAP measure is similar to that reported by
other mining companies. Cost of sales and other direct production
costs and depreciation, depletion and amortization are the most
comparable financial measures calculated in accordance with GAAP to
total cash costs.
(2) Costs per ounce of gold are based on the gold produced by the
La Camorra mine and Block B concessions only. Gold produced from
third-party mining operations located near the La Camorra mine and
Block B concessions is treated as a by-product credit and included in
the calculation of gold costs per ounce.
(3) During virtually all of the fourth quarter 2004 and for most
of the second half of 2005, the mill that processes ore from San
Sebastian was closed due to a strike by mill employees. During the
years ended December 31, 2004 and 2005, these strike-related costs of
sales and other direct production costs of $0.8 million and $1.3
million, respectively, were not included in the determination of total
cash costs for silver operations.
(4) Ounces mined from the 5900 level development project at Lucky
Friday are not included in the determination of total cash costs.
During the fourth quarter and year ended December 31, 2005,
approximately 53,000 ounces and 338,000 ounces, respectively, of
silver were excluded from the calculation, as the revenue associated
with these ounces was offset against capital costs incurred with the
project.
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