Hecla Reports Dramatic Increase in Second Quarter 2006 Income, Sales, Gross Profit and Cash Flow; For the Period Ended June 30, 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 income applicable to common shareholders of $9.1 million, or 8 cents per common share, for the second quarter of 2006, $15.5 million more than the loss of $6.4 million, or 5 cents per common share, during the second quarter of 2005. Compared to the same quarter last year, Hecla increased: --Sales revenue by 125%, to $56.9 million, a Hecla record --Gross profit by 409%, to $17.7 million --Net cash flow before exploration and pre-development by 378%, to $36.5 million, and --Cash flow provided by operating activities to $28.9 million from $1.0 million Hecla's silver production costs continued to decrease, with an average total cash cost of silver produced in the second quarter of $1.98 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. , which compares very favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to a worldwide industry average cash cost per ounce of silver production in 2005 of $3.28. Second quarter financial results were positively impacted by increased prices for gold, silver, 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. and lead, as well as from the sale of the Noche Buena gold exploration property in northern 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. , which resulted in a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain of $4.4 million. This gain was partially offset by a charge of $1.2 million for stock option expense. Income applicable to common shareholders for the first half of 2006 was $47.3 million, or 40 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared to a loss of $9.8 million, or 8 cents per share in the first half of 2005. Included in 2006 results is a first quarter gain of $35.6 million, net of income taxes, on the sale of investment securities. Hecla produced 1.3 million ounces of silver at an average total cash cost per ounce of $1.98 and 42,234 ounces of gold, including 38,399 ounces in 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 per ounce of $340 during the second quarter. For the first six months of 2006, Hecla produced 2.5 million ounces of silver at an average total cash cost per ounce of $2.01, and 84,653 ounces of gold, including production of 76,019 ounces in Venezuela, at an average cash cost per ounce of $348. 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, "This continues to be a great year, with the most quarterly revenues in our 115-year history. Hecla is the lowest-cost, lowest-risk primary silver producer in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , and these metals prices have allowed us to generate significant earnings and 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. after funding our aggressive exploration program. This program is expected to deliver more reserves or resources at almost every property this year. Given our successes on both the operating and exploration fronts, I believe the market is not yet recognizing the low-risk profile of our silver assets, the cash-generating power of our operations and the growth in our reserve/resource base." 2ND QUARTER HIGHLIGHTS --Significant increase in net income, sales, gross profit and cash flow compared to the same period one year ago --24% decrease in average total cash cost for silver to $1.98 per ounce, with production of 1.3 million ounces of silver --42,234 ounces of gold produced, including 38,399 ounces attributed to 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 Unit at an average total cash cost of $340 per ounce --Successful sale of all gold ounces inventoried in Venezuela and establishing buyers for in-country sales going forward --Exploration success, with anticipated resource increases by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. at Lucky Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , Greens Creek and 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. 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 --Sale of Noche Buena gold exploration property for $4.4 million --No debt; 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 $80.8 million OPERATIONS Hecla's Lucky Friday Unit, located 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). , produced 742,125 ounces of silver during the second quarter of 2006, at an average total cash cost of $4.97 per ounce. In the first six months of the year, Lucky Friday produced 1.4 million ounces of silver at an average total cash cost per ounce of $5.13. Production costs at Lucky Friday decreased compared to the first quarter of the year as mining transitioned from the 4900 level to the newly developed 5900 level. That transition was completed early in the third quarter of 2006 and most of the production is now coming from the 5900 level, with anticipated production of about 3 million ounces of silver in 2006 and close to 4 million ounces in 2007. The Lucky Friday mine is the deepest underground precious metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. mine 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. and has been operating for 60 years. Hecla holds a 29.73% interest in the Greens Creek silver mine, a joint venture with Rio Tinto Rio Tinto may refer to:
A mountainous, heavily forested island of southeast Alaska in the Alexander Archipelago southwest of Juneau. Noun 1. near Juneau, Alaska “Juneau” redirects here. For other uses, see Juneau (disambiguation). The City and Borough of Juneau (pronounced [ˈdʒu. . Hecla's share of second quarter Greens Creek production included 520,750 ounces of silver at the low average total cash cost of negative $2.28 per ounce, made possible by high prices 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. metals: zinc, gold and lead. The mine also contributed 3,750 ounces of gold for Hecla's account during the second quarter of 2006. For the first six months of the year, Hecla's share of Greens Creek production was 1.1 million ounces of silver and 8,478 ounces of gold, at an average total cash cost of silver of negative $1.74 per ounce, compared to 1.7 million ounces of silver in the first half of 2005 at an average total cash cost of $1.07 per ounce. Silver production has decreased at Greens Creek from a year ago primarily because of a 25% lower silver 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 , a rehabilitation rehabilitation: see physical therapy. work program completed on major underground intersections in the mine, as well as less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. timing for accessing higher-grade workfaces due to development work. Mine production was hampered in the second quarter by significant waste haulage and power outages This is a list of famous wide-scale power outages. 1965
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. mined is expected to improve in the third and fourth quarters of the year. Baker said, "We are anticipating total silver production company-wide for Hecla to be in the range of 6 million ounces for 2006, and are seeing the improvement in production levels that we expected at the Lucky Friday mine as more stopes Stopes , Marie Carmichael 1880-1958. British social reformer who opened England's first birth control clinic (1924) in London and later promoted family planning in east Asia. come on line on the new level. However, while tonnage is expected to improve at Greens Creek during the second half of the year and there are no 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. issues, the ore grade would need to show significant improvement for the mine to achieve its earlier projected level of production for the year." The La Camorra Unit, consisting of the La Camorra mine and Mina Isidora, produced 38,399 ounces of gold in Venezuela during the second quarter of 2006, a 42% increase in production over the same period a year ago, now that Mina Isidora is in operation. All the ounces required to be sold locally for the second quarter were sold, as well as the gold held in inventory at the end of March. There was no gold inventory held for local sales at the end of the quarter. The sale of the gold inventory held at the end of March contributed an additional $7.2 million in revenue for the quarter, and buyers have been identified for future in-country gold sales. The average gold ore grade for the two deposits increased to 0.699 ounce of gold per ton compared to 0.581 ounce per ton a year ago, due to the startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. of Mina Isidora and its 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. reserve. However, the mining cost per ton has increased primarily due to the mining process at Mina Isidora, unfavorable currency exchange controls and higher labor costs. The average total cash cost of production increased 7% from the same period a year ago, to $340 per ounce, and the average full cost of production increased to $502 per ounce of gold during the second quarter of 2006, primarily due to depreciation of the shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. completed last year at the La Camorra mine. EXPLORATION Lucky Friday "We currently have a mine plan that takes us through 2013 with more than 60 million ounces in silver resources beyond that. Our exploration is designed to confirm the resource into the next decade," said Baker. "Although the potential increase in total resource for the year is not yet known, we would anticipate an increase in both proven and probable reserves as well as resources for Lucky Friday later this year." The Lucky Friday currently has about 90 million ounces of silver reserve and resources identified. In 2005, underground exploration work doubled the proven and probable reserve at Lucky Friday and had considerable success on the eastern side of the deposit. Additional drilling on the east side this year looks very encouraging, and favorable host lithology li·thol·o·gy n. 1. The gross physical character of a rock or rock formation. 2. The microscopic study, description, and classification of rock. at depth shows that the eastern economic limit may be increasing for the area below the 5900 level and has the potential to again increase the strike length of the deposit. Drilling on the west side of the deposit began this year down to the 6400 level and four out of five holes showed mineable ore grade up to 12 ounces of silver per ton, which is comparable to the current production ore grade being milled, but not as high grade as on the east side, where the average grade is close to 18.5 ounces of silver per ton. The bottom of the currently known resource is already about 1,000 feet deeper than the current mining level. A drilling program is now exploring 1,800 feet below the current mining level, to 7,700 feet below the surface at the shaft. Other recent in-fill drilling has yielded numerous vein intercepts. In addition to this drilling, exploration is occurring to the east, west and above the current mining level -- all of it previously untested. There is good potential for an untested, contiguous Adjacent or touching. Contrast with fragmentation. See contiguous file. deposit in the 2,450-foot gap between the currently identified resource and where the historic deposit was mined nearer the surface. Baker said, "Even though there's been mining at the Lucky Friday for 60 years, there is still significant unexplored ground. Our exploration program will start to scratch the surface of those targets over the next year or so." Greens Creek At Greens Creek, a successful 2006 exploration program has defined a new resource in the West Gallagher Gallagher may refer to: People
adj. 1. Not restrained by definite limits, restrictions, or structure. 2. Allowing for or adaptable to change. 3. resource. In addition, ore-grade intercepts have been intersected approximately 750 feet and 1,000 feet updip from the mining faces in the area known as the 5250 zone. If the ore proves to be continuous between the current work area and the new intercepts, significant new tonnage could be added to reserves, extending the life of the already long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. Greens Creek mine even further. Mexico At the Hugh Zone exploration project on Hecla's San Sebastian property in central Mexico, additional success was achieved during the quarter. Work on a new resource estimate is underway and is expected to result in a significant increase in the current resource estimate of 4.1 million ounces of silver. Holes drilled during the second quarter show ore-grade intercepts on the western side of the deposit over a two-meter diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. width having net smelter return values of more than $300 per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. . Two deeper holes have also been completed along the inflection point Inflection Point An event that changes the way we think and act. -Andy Grove, Founder of Intel. Notes: For example, the fall of the Berlin Wall was an inflection point in global politics and the commercialization of the Internet was an inflection point in technology. of the deposit, which intersected narrow veining vein·ing n. Distribution or arrangement of veins or veinlike markings. containing argentite ar·gen·tite n. A valuable silver ore, Ag2S, with a lead-gray color and metallic luster that is often tarnished a dull black. Noun 1. , the dominant silver sulfide Silver sulfide (or Silver sulphide in British English), Ag2S, is the sulfide of silver. It is black and constitutes the tarnish that forms on silver when exposed to the hydrogen sulfide of the atmosphere. . The Hugh Zone, a stacked Stacked is an American television sitcom that premiered on Fox on April 13, 2005. On May 18, 2006, Stacked was cancelled, leaving five episodes unaired in the United States. The last episode aired on January 11, 2006. system discovered beneath where Hecla has already mined, is a polymetallic deposit containing silver, copper, zinc, lead and gold. Elsewhere on the San Sebastian property, the first hole drilled into a new target area, located 1.2 kilometers northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. from the Hugh Zone, encountered strong alteration Modification; changing a thing without obliterating it. An alteration is a variation made in the language or terms of a legal document that affects the rights and obligations of the parties to it. and a 2.5-meter horizontal width, moderately banded quartz quartz, one of the commonest of all rock-forming minerals and one of the most important constituents of the earth's crust. Chemically, it is silicon dioxide, SiO2. vein with nearly ore grade gold and silver 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. . This vein intercept intercept in mathematical terms the points at which a curve cuts the two axes of a graph. is very encouraging because it is a strong, banded vein structure containing silver and gold mineralization that has a long strike length potential. The San Sebastian exploration program has also identified several other soil anomalies that will be future exploration targets in this highly prospective silver district. Baker said, "This year we have increased our land package at San Sebastian more than 50%, because we now have multiple targets that indicate the large size of this rich geologic ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. environment. So, for the rest of 2006 and in 2007, we expect to add resource, drill additional targets and identify even more targets." Venezuela Hecla's exploration in Venezuela is focused in three areas: the area adjacent to the La Camorra mine, resource additions at Mina Isidora and continued exploration on the Block B property 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. Mina Isidora. At the La Camorra mine, the Southern vein system was identified as a result of sampling outcrops on the western end of the La Camorra 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. ponds. Five distinct structures were mapped on surface, returning gold values of up to 24 grams per tonne (gpt) (0.7 ounce per ton (opt)). During the second quarter, six holes were drilled to test the system, and all five structures were identified in the drill holes. The structures are pervasive pervasive, adj indicates that a condition permeates the entire development of the individual. , strongly altered and contain anomalous a·nom·a·lous adj. 1. Deviating from the normal or common order, form, or rule. 2. Equivocal, as in classification or nature. gold values, and Hecla is continuing with exploration there. Resource estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. for Mina Isidora is in progress, following completion of the most recent drill program. Fourteen underground and 26 surface drill holes were completed for a total exceeding 9,700 meters to test both the M and S veins. Assays of intercepts include gold values as high as 155 gpt (4.5 opt) and 195 gpt (5.7 opt). Drilling appears to have been successful in confirming and expanding the resources and in identifying a new ore shoot. Drilling of a downdip extension of the historic Panama Panama, country, Central America Panama (păn`əmä'), Span. Panamá, officially Republic of Panama, republic (2005 est. pop. mine, located approximately two kilometers to the northeast of Mina Isidora, is underway. Holes will target the downdip extension of the former Panama mine that historically produced 500,000 tonnes of ore at an average gold grade of 16 gpt (0.47 opt). The first drill hole intersected the vein approximately 50 meters below the old workings at a vertical depth of approximately 150 meters and returned an assay ASSAY. A chemical examination of metals, by which the quantity of valuable or precious metal contained in any mineral or metallic mixture is ascertained. 2. By the acts of Congress of March 3, 1823, 3 Story's L. U. S. 1924; of June 25, 1834, 4 Shars. cont. Story's L. U. S. of 363 gpt gold (10.6 opt) over 0.41 meter meter, unit of measure meter, abbr. m, fundamental unit of length in the metric system. The meter was originally defined as 1/10,000,000 of the distance between the equator and either pole; however, the original survey was inaccurate and the meter was later . Two additional holes have been completed and assays are pending, and the drilling program continues. Other targets in the Block B concessions will be drilled later this year. 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). About 30% of the planned underground drilling has been completed at the Hollister Hollister can refer to: Places in the United States
n. Scots A woman, especially an old one. [Middle English kerling, from Old Norse, from karl, man.] Trend. The project is an earn-in to a 50/50 joint venture with Great Basin Great Basin, semiarid, N section of the Basin and Range province, the intermontane plateau region of W United States and N Mexico. Lying mostly in Nevada and extending into California, Oregon, Idaho, and Utah, it is bordered by the Sierra Nevada on the west, the Gold (GBG GBG Göteborg (Sweden) GBG Guernsey (International Auto Identification) GBG Good Beer Guide (UK pub guidebook published annually by the Campaign for Real Ale) ). The exploration program is on track to allow a decision early next year on whether the deposit is 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: mineable. The East lateral lateral /lat·er·al/ (-il) 1. denoting a position farther from the median plane or midline of the body or a structure. 2. pertaining to a side. lat·er·al adj. 1. 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 completed in the second quarter, with the West lateral drift scheduled for completion in the fourth quarter. Total project-to-date underground development totals 6,139 feet. About 160 feet of drifting was completed on the Gwenivere vein, where the mineralized min·er·al·ize 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. structure averaged approximately 0.8 ounce of gold per ton and 12 ounces of silver per ton over an average width of 3.8 feet (undiluted). Additional drifting on the Gwenivere vein and both the South and Central Clementine Clementine forty-niner’s drowned daughter; “lost and gone forever.” [Am. Music: Leach, 236] See : Grief veins is planned in the fourth quarter to generate a bulk sample for metallurgical met·al·lur·gy n. 1. The science that deals with procedures used in extracting metals from their ores, purifying and alloying metals, and creating useful objects from metals. 2. and mill testing. To date, 42 drill holes have been completed for a total of 15,440 feet, out of the 55,000 feet planned for the total program. A second drill has arrived and is operating underground at the site, and diamond drilling Diamond Drilling is a highly specialized industry used for mineral exploration around the world. Most commonly using wireline and core bits with diamond encrusted matrix. To drill holes to max depths of twelve thousand feet, for the recovery of core used in verifying mineral is slated for completion by the end of the year. Intercepts have returned gold and silver grades generally ranging from mildly anomalous up to 8 ounces of gold per ton and 200 ounces of silver per ton. While there is not enough information yet to determine the economic viability of the deposit, drilling in some areas is generally verifying ver·i·fy tr.v. ver·i·fied, ver·i·fy·ing, ver·i·fies 1. To prove the truth of by presentation of evidence or testimony; substantiate. 2. the grades, thicknesses and variability expected from previous drilling. The feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. for the project is on schedule for completion in the second quarter of 2007. NEW EXPLORATION V.P. Hecla is pleased to announce that Dr. Dean McDonald 2. ^ BBC Sport Inverness Caledonian Thistle F.C. (current squad) 1 Fraser • 2 Tokely • 3 McGuire • 4 Watt • 5 McCaffrey • will be joining the company as Vice President -- Exploration, effective September September: see month. 1, 2006. McDonald, a senior corporate executive with 24 years of experience in exploration and project evaluation, will provide direction for Hecla's aggressive exploration program and help develop overall strategy for the company as part of the executive management team. Baker said, "Dean brings to Hecla a wide experience with projects and deposits in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , the U.S. and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . In addition to focusing on Hecla's substantial gold and silver exploration programs 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, he will also lend additional strength to our generative gen·er·a·tive adj. 1. Having the ability to originate, produce, or procreate. 2. Of or relating to the production of offspring. generative pertaining to reproduction. exploration efforts." Since 2003, McDonald has been Vice President Exploration and Business Development for Committee Bay Resource Ltd. in Vancouver Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography , where he managed gold projects in Nunavut Nunavut (n  `nəvt') [Inuktituk,=our land], territory (2001 pop. 26,745), 772,260 sq mi (2,000,671 sq km), NE Canada. and Western
Australia Western Australia, state (1991 pop. 1,409,965), 975,920 sq mi (2,527,633 sq km), Australia, comprising the entire western part of the continent. It is bounded on the N, W, and S by the Indian Ocean. Perth is the capital. , including grassroots Adj. 1. grassroots - fundamental; "the grassroots factor in making the decision"basic - pertaining to or constituting a base or basis; "a basic fact"; "the basic ingredients"; "basic changes in public opinion occur because of changes in priorities" 2. exploration, in-fill drilling and resource estimation with related scoping and feasibility studies. Prior work includes exploration management for Miramar Miramar (mĭr`əmär'), city (1990 pop. 40,663), Broward co., SE Fla.; inc. 1955. It is a residential community in the rapidly growing I-75 corridor between Miami and Fort Lauderdale. Mining Corporation, Nerco Exploration Company and Northern Orion Orion, in Greek mythology Orion (ōrī`ən), in Greek mythology, Boeotian hunter. When Oenopion delayed giving his daughter Merope to him, Orion, when drunk, violated her. Explorations. McDonald holds a Ph.D. in Geology geology, science of the earth's history, composition, and structure, and the associated processes. It draws upon chemistry, biology, physics, astronomy, and mathematics (notably statistics) for support of its formulations. from the University of Western Ontario Western is one of Canada's leading universities, ranked #1 in the Globe and Mail University Report Card 2005 for overall quality of education.[2] It ranked #3 among medical-doctoral level universities according to Maclean's Magazine 2005 University Rankings. and an M.Sc. in Structural and Mineral Deposits from the University of New Brunswick The University of New Brunswick (UNB) is a Canadian university located in the province of New Brunswick. The university has two main campuses: the principal campus founded in 1785 in Fredericton and a smaller campus which was opened in Saint John in 1964. . He has received numerous academic and research awards and has been widely published during his career. OTHER Hecla's annual meeting was held in May, with shareholders re-electing George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). R. Nethercutt, Jr., and newly electing John H. Bowles Bowles may refer to: Geographical
tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. Ted Crumley to the position of Chairman of the Board. Mr. Crumley is the former Chief Financial Officer of Boise Cascade Boise Cascade Holdings, LLC, which uses the trade name Boise, is an American pulp and paper company, ranked as the thirteenth largest forest products company in the world. Corporation and a Hecla director since 1995. Cautionary Note Regarding Second Quarter 2006 Results -- Final 2006 second quarter results could be impacted by a provision for potential losses imposed by the effect of foreign currency exchange controls if it is decided in the future to convert funds held in local currency in Venezuela to dollars. The company is assessing whether any such charge must be taken unless or until such an impact is realized. 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. These risks and uncertainties include, but are not limited to, metals price volatility, 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 and legally extract or produce. We use certain terms in this news release, such as "resource," "reserve," and "inferred resource" 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. and Form 10-Q. You can review and obtain copies of these filings from the SEC's website at http://www.sec.gov/edgar.shtml. Hecla Mining Company news releases can be accessed on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at: http://www.hecla-mining.com.
HECLA MINING COMPANY
(dollars in thousands, except per share, per ounce and per pound
amounts - unaudited)
Second Quarter Ended Six Months Ended
----------------------- -----------------------
HIGHLIGHTS June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------------------------------------------------------------------
FINANCIAL DATA
----------------------------------------------------------------------
Sales:
Silver operations (2) $ 25,875 $ 15,598 $ 50,090 $ 30,342
Gold operations 31,066 9,657 46,641 19,347
---------- ---------- ---------- ----------
Total sales $ 56,941 $ 25,255 $ 96,731 $ 49,689
========== ========== ========== ==========
Gross Profit:
Silver operations (2) $ 11,835 $ 2,163 $ 21,821 $ 5,325
Gold operations 5,866 1,317 7,613 3,620
---------- ---------- ---------- ----------
Total gross profit $ 17,701 $ 3,480 $ 29,434 $ 8,945
========== ========== ========== ==========
Net income (loss) $ 9,215 $ (6,245) $ 47,609 $ (9,541)
Income (loss)
applicable to common
shareholders $ 9,077 $ (6,383) $ 47,333 $ (9,817)
Basic income (loss) per
common share $ 0.08 $ (0.05) $ 0.40 $ (0.08)
Cash flow provided by
(used in) operating
activities $ 28,912 $ 961 $ 28,609 $ (6,024)
Net cash provided by
operating activities
before exploration
and pre-development
expenses (1) $ 36,477 $ 7,626 $ 41,056 $ 5,567
----------------------------------------------------------------------
PRODUCTION SUMMARY - TOTALS
----------------------------------------------------------------------
Silver - Ounces 1,262,875 1,438,806 2,503,761 2,857,069
Gold - Ounces 42,234 34,172 84,653 62,295
Lead - Tons 5,288 5,584 10,497 10,480
Zinc - Tons 5,063 6,557 10,632 12,503
Average cost per ounce
of silver produced(2):
Cash operating costs
($/oz.) 1.65 2.45 1.72 2.46
Total cash costs
($/oz.) (3) 1.98 2.59 2.01 2.59
Total production costs
($/oz.) 3.44 4.22 3.54 4.15
Average cost per ounce
of gold produced (4):
Cash operating costs
($/oz.) 332 310 340 299
Total cash costs
($/oz.) (3) 340 317 348 307
Total production costs
($/oz.) 502 373 505 366
----------------------------------------------------------------------
AVERAGE METAL PRICES
----------------------------------------------------------------------
Silver - London Fix ($/oz.) 12.28 7.15 10.99 7.06
Gold - Realized ($/oz.) 613 432 592 430
Gold - London Final ($/oz.) 627 427 591 427
Lead - LME Cash
(cents/pound) 49.9 44.7 53.1 44.6
Zinc - LME Cash
(cents/pound) 149.3 57.7 125.6 58.7
(1) Net cash provided by operating activities before exploration and
pre-development expenses represents a non-U.S. generally accepted
accounting principle (GAAP) measurement. The following table
presents a reconciliation between cash flow provided by (used in)
operating activities to non-GAAP net cash provided by operating
activities before exploration and pre-development expenses for the
quarters and six months ended June 30, 2006 and 2005:
Cash flow provided by
(used in) operating
activities $ 28,912 $ 961 $ 28,609 $ (6,024)
Add exploration 5,610 4,565 8,998 7,357
Add pre-development
expenses 1,955 2,100 3,449 4,234
-------- --------- --------- ----------
Net cash provided by
operating activities
before exploration and
pre-development
expenses $ 36,477 $ 7,626 $ 41,056 $ 5,567
======== ======== ========= ==========
(2) Includes gold produced at silver operations, which is treated as a
by-product credit and included in the calculation of silver costs
per ounce.
(3) 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. For additional
information, see note (1) in the cash costs per ounce
reconciliation section.
(4) For the quarters and six months ended June 30, 2006 and 2005,
includes gold produced from third-party mining operations located
near the La Camorra mine and Mina Isidora, which is treated as a
by-product credit and included in the calculation of gold costs
per ounce.
HECLA MINING COMPANY
Consolidated Statements of Operations
(dollars and shares in thousands, except per share amounts
- unaudited)
Second Quarter Ended Six Months Ended
------------------- --------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
--------- --------- --------- --------
Sales of products $ 56,941 $ 25,255 $ 96,731 $ 49,689
-------- -------- -------- --------
Cost of sales and other
direct production costs 30,716 17,896 50,626 33,039
Depreciation, depletion and
amortization 8,524 3,879 16,671 7,705
-------- -------- -------- --------
39,240 21,775 67,297 40,744
-------- -------- -------- --------
Gross profit 17,701 3,480 29,434 8,945
-------- -------- -------- --------
Other operating expenses
General and administrative 3,781 2,287 6,881 4,929
Exploration 5,610 4,565 8,998 7,357
Pre-development expenses 1,955 2,100 3,449 4,234
Depreciation and amortization 238 138 547 283
Other operating expenses 1,024 492 1,264 1,184
Gain on sale of properties,
plants and equipment (4,420) - - (4,420) - -
Provision for closed
operations and environmental
matters 882 353 1,597 687
-------- -------- -------- --------
9,070 9,935 18,316 18,674
-------- -------- -------- --------
Income (loss) from operations 8,631 (6,455) 11,118 (9,729)
-------- -------- -------- --------
Other income (expense):
Gain (loss) on sale of
investments (6) - - 36,416 - -
Interest and other income 1,084 386 1,691 788
Interest expense (236) (3) (363) (8)
-------- -------- -------- --------
842 383 37,744 780
-------- -------- -------- --------
Income (loss) from operations
before income taxes 9,473 (6,072) 48,862 (8,949)
Income tax provision (258) (173) (1,253) (592)
-------- -------- -------- --------
Net income (loss) 9,215 (6,245) 47,609 (9,541)
Preferred stock dividends (138) (138) (276) (276)
-------- -------- -------- --------
Income (loss) applicable to
common shareholders $ 9,077 $ (6,383) $ 47,333 $ (9,817)
======== ======== ======== ========
Basic and diluted income
(loss) per common share
after preferred dividends $ 0.08 $ (0.05) $ 0.40 $ (0.08)
======== ======== ======== ========
Basic weighted average number
of common shares outstanding 119,266 118,429 118,999 118,396
======== ======== ======== ========
Diluted weighted average number
of common shares outstanding 119,673 118,429 119,427 118,396
======== ======== ======== ========
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
June 30, Dec. 31,
2006 2005
----------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 65,567 $ 6,308
Short-term investments and securities held for
sale 15,200 40,862
Accounts and notes receivable 12,903 17,595
Inventories 22,368 25,466
Other current assets 5,065 3,546
--------- ---------
Total current assets 121,103 93,777
Investments 3,567 2,233
Restricted cash and investments 20,855 20,340
Properties, plants and equipment, net 134,843 137,932
Other noncurrent assets 22,788 17,884
--------- ---------
Total assets $ 303,156 $ 272,166
========= =========
----------------------------------------------------------------------
LIABILITIES
----------------------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 18,599 $ 16,684
Dividends payable 138 138
Accrued payroll and related benefits 10,809 10,452
Accrued taxes 3,005 2,529
Current portion of accrued reclamation and
closure costs 6,365 6,328
--------- ---------
Total current liabilities 38,916 36,131
Long-term debt - - 3,000
Accrued reclamation and closure costs 60,928 62,914
Other noncurrent liabilities 8,373 8,791
--------- ---------
Total liabilities 108,217 110,836
--------- ---------
----------------------------------------------------------------------
SHAREHOLDERS' EQUITY
----------------------------------------------------------------------
Preferred stock 39 39
Common stock 29,881 29,651
Capital surplus 513,306 508,104
Accumulated deficit (348,759) (396,092)
Accumulated other comprehensive income 903 19,746
Treasury stock (431) (118)
--------- ---------
Total shareholders' equity 194,939 161,330
--------- ---------
Total liabilities and shareholders' equity $ 303,156 $ 272,166
========= =========
Common shares outstanding at end of period 119,469 118,594
========= =========
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Six Months Ended
-------------------
June 30, June 30,
2006 2005
----------------------------------------------------------------------
OPERATING ACTIVITIES
----------------------------------------------------------------------
Net income (loss) $ 47,609 $ (9,541)
Noncash elements included in net income (loss):
Depreciation, depletion and amortization 17,218 7,988
Gain on sale of investments (36,416) - -
Gain on disposition of properties, plants and
equipment (4,420) (20)
Gain on sale of royalty interests (341) (550)
Provision for reclamation and closure costs 198 335
Stock compensation 1,767 832
Other non-cash charges, net 186 - -
Change in assets and liabilities:
Accounts and notes receivable 1,277 1,310
Inventories 3,098 (5,931)
Other current and noncurrent assets (3,171) 1,823
Accounts payable and accrued expenses 1,915 211
Accrued payroll and related benefits 446 (844)
Accrued taxes 476 208
Accrued reclamation and closure costs and other
noncurrent liabilities (1,233) (1,845)
-------- --------
Net cash provided by (used in) operating
activities 28,609 (6,024)
-------- --------
----------------------------------------------------------------------
INVESTING ACTIVITIES
----------------------------------------------------------------------
Additions to properties, plants and equipment (14,186) (23,994)
Proceeds from sale of investments 57,441 - -
Proceeds from disposition of properties, plants
and equipment 4,368 18
Purchase of short-term investments (37,210) (56,694)
Maturities of short-term investments 22,010 70,826
Increase in restricted investments (515) (257)
-------- --------
Net cash provided by (used in) investing
activities 31,908 (10,101)
-------- --------
----------------------------------------------------------------------
FINANCING ACTIVITIES
----------------------------------------------------------------------
Common stock issued under stock option plans 2,331 256
Dividends paid to preferred shareholders (276) (276)
Purchase of treasury shares (313) - -
Borrowings on debt 4,060 - -
Repayments of debt (7,060) - -
-------- --------
Net cash used in financing activities (1,258) (20)
-------- --------
Net increase (decrease) in cash and cash
equivalents 59,259 (16,145)
Cash and cash equivalents at beginning of period 6,308 34,460
-------- --------
Cash and cash equivalents at end of period $ 65,567 $ 18,315
======== ========
HECLA MINING COMPANY
Production Data
Second Quarter Ended Six Months Ended
-------------------- ----------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------------------------------------------------------------------
LUCKY FRIDAY UNIT
----------------------------------------------------------------------
Tons of ore processed 65,703 55,380 129,427 98,565
Days of operation 70 59 139 104
Mining cost per ton $ 51.89 $ 54.52 $ 51.51 $ 60.31
Milling cost per ton $ 12.07 $ 8.00 $ 11.73 $ 8.10
Ore grade milled - Silver
(oz./ton) 12.29 12.09 11.66 12.49
Silver produced (oz.) 742,125 622,866 1,368,917 1,144,258
Lead produced (tons) 4,092 3,756 7,686 6,805
Zinc produced (tons) 1,374 1,180 2,406 2,004
Average cost per ounce of
silver produced (2):
Cash operating costs $ 4.85 $ 4.69 $ 5.06 $ 4.96
Total cash costs (1) $ 4.97 $ 4.69 $ 5.13 $ 4.96
Total production costs $ 6.08 $ 4.84 $ 6.22 $ 5.13
Capital additions (in
thousands) $ 2,406 $ 2,291 $ 4,507 $ 4,102
----------------------------------------------------------------------
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
----------------------------------------------------------------------
Tons of ore milled 51,506 58,442 103,394 113,488
Days of operation 82 87 166 170
Mining cost per ton $ 35.72 $ 30.17 $ 35.12 $ 31.73
Milling cost per ton $ 25.84 $ 21.01 $ 24.81 $ 20.71
Ore grade milled - Silver
(oz./ton) 13.73 17.74 14.63 19.53
Silver produced (oz.) 520,750 760,193 1,134,844 1,657,064
Gold produced (oz.) 3,750 5,950 8,478 12,150
Lead produced (tons) 1,196 1,828 2,811 3,675
Zinc produced (tons) 3,689 5,377 8,226 10,499
Average cost per ounce of
silver produced (2):
Cash operating costs $ (2.92) $ 0.87 $ (2.30) $ 0.86
Total cash costs (1) $ (2.28) $ 1.11 $ (1.74) $ 1.07
Total production costs $ 1.22 $ 3.54 $ 1.62 $ 3.43
Capital additions (in
thousands) $ 1,966 $ 894 $ 3,953 $ 1,314
----------------------------------------------------------------------
LA CAMORRA UNIT
----------------------------------------------------------------------
Tons of ore processed 60,832 49,269 115,379 99,601
Days of operation 86 80 170 163
Mining cost per ton $ 124.48 $ 68.23 $ 123.87 $ 56.19
Milling cost per ton $ 15.59 $ 14.76 $ 16.06 $ 13.49
Ore grade milled - Gold
(oz./ton) 0.699 0.581 0.700 0.514
Gold produced (oz.) 38,399 27,020 76,019 48,881
Average cost per ounce of
gold produced:
Cash operating costs $ 332 $ 310 $ 340 $ 299
Total cash costs (1) $ 340 $ 317 $ 348 $ 307
Total production costs $ 502 $ 373 $ 505 $ 366
Capital additions (in
thousands) $ 1,847 $ 10,961 $ 5,552 $ 18,299
(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) Gold, lead and zinc produced have been treated as by-product
credits in calculating silver costs per ounce.
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 Six Months Ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------------------------------------------------------------------
GOLD OPERATIONS
----------------------------------------------------------------------
Total cash costs $ 12,562 $ 8,234 $ 25,771 $ 14,416
Divided by gold ounces produced 37 26 74 47
-------- ------- -------- --------
Total cash cost per ounce
produced $ 340 $ 317 $ 348 $ 307
======== ======= ======== ========
Reconciliation to GAAP (2):
Total cash costs $ 12,562 $ 8,234 $ 25,771 $ 14,416
Depreciation, depletion and
amortization 5,925 1,449 11,456 2,777
Treatment and freight costs (2,088) (515) (3,682) (927)
By-product credits 1,015 437 1,425 743
Change in product inventory 7,822 (1,265) 4,111 (1,313)
Reclamation, severance and
other costs (37) - - (53) 31
-------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 25,199 $ 8,340 $ 39,028 $ 15,727
======== ======= ======== ========
----------------------------------------------------------------------
SILVER OPERATIONS
----------------------------------------------------------------------
Total cash costs $ 2,503 $ 3,587 $ 5,043 $ 7,252
Divided by silver ounces
produced 1,263 1,384 2,504 2,800
-------- ------- -------- --------
Total cash cost per ounce
produced $ 1.98 $ 2.59 $ 2.01 $ 2.59
======== ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ 2,503 $ 3,587 $ 5,043 $ 7,252
Depreciation, depletion and
amortization (3) 2,599 2,430 5,215 4,928
Treatment and freight costs (8,063) (5,896) (15,016) (11,907)
By-product credits 17,387 11,862 32,714 23,118
Strike-related costs (3) - - 865 - - 1,376
Change in product inventory (4) (441) 497 212 108
Reclamation, severance and
other costs 56 90 101 142
-------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 14,041 $13,435 $ 28,269 $ 25,017
======== ======= ======== ========
----------------------------------------------------------------------
GREENS CREEK UNIT (Reflects Hecla's 29.73% share)
----------------------------------------------------------------------
Total cash costs $ (1,186) $ 841 $ (1,974) $ 1,780
Divided by silver ounces
produced 521 760 1,135 1,657
-------- ------- -------- --------
Total cash cost per ounce
produced $ (2.28) $ 1.11 $ (1.74) $ 1.07
======== ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ (1,186) $ 841 $ (1,974) $ 1,780
Depreciation, depletion and
amortization 1,779 1,806 3,722 3,828
Treatment and freight costs (4,396) (3,948) (8,738) (8,181)
By-product credits 11,017 7,945 21,343 15,930
Change in product inventory (250) 916 (467) 855
Reclamation, severance and
other costs 48 42 90 81
-------- ------- -------- --------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 7,012 $ 7,602 $ 13,976 $ 14,293
======== ======= ======== ========
----------------------------------------------------------------------
LUCKY FRIDAY UNIT
----------------------------------------------------------------------
Total cash costs $ 3,689 $ 2,663 $ 7,017 $ 5,389
Divided by silver ounces
produced (5) 742 568 1,369 1,087
-------- ------- -------- --------
Total cash cost per ounce
produced $ 4.97 $ 4.69 $ 5.13 $ 4.96
======== ======= ======== ========
Reconciliation to GAAP:
Total cash costs $ 3,689 $ 2,663 $ 7,017 $ 5,389
Depreciation, depletion and
amortization 820 89 1,493 178
Treatment and freight costs (3,667) (1,908) (6,278) (3,686)
By-product credits 6,370 3,433 11,371 6,704
Change in product inventory (192) 142 (228) (186)
Reclamation and other costs 8 (7) 11 6
--------- ------- -------- ---------
Costs of sales and other
direct production costs and
depreciation, depletion
and amortization (GAAP) $ 7,028 $ 4,412 $ 13,386 $ 8,405
======== ======= ======== ========
----------------------------------------------------------------------
RECONCILIATION TO GAAP, ALL OPERATIONS
----------------------------------------------------------------------
Total cash costs $ 15,065 $ 11,821 $ 30,814 $ 21,668
Depreciation, depletion and
amortization (3) 8,524 3,879 16,671 7,705
Treatment and freight costs (10,151) (6,411) (18,698) (12,834)
By-product credits 18,402 12,299 34,139 23,861
Change in product inventory (4) 7,381 (768) 4,323 (1,205)
Strike-related costs (3) - - 865 - - 1,376
Reclamation and other costs 19 90 48 173
-------- ------- -------- --------
Costs of sales and other direct
production costs and
depreciation, depletion and
amortization (GAAP) $ 39,240 $21,775 $ 67,297 $ 40,744
======== ======= ======== ========
(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, was 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 was treated as a by-product credit and
included in the calculation of gold costs per ounce.
(3) During the first quarter and for most of the second quarter,
ending in June 2005, the mill that processed ore from San
Sebastian was closed due to a strike by mill employees. During the
second quarter and first six months of 2005, cost of sales and
other direct production costs of $0.9 million and $1.4 million,
respectively, were not included in the determination of total cash
costs for silver operations. Additionally during the second
quarter and first six months of 2005, San Sebastian recognized
depreciation, depletion and amortization expense of $0.5 million
and $0.9 million, which is reflected in the total for all
properties and combined silver properties above.
(4) Includes approximately $907,000 related to San Sebastian cost of
sales and other direct production costs during the first quarter
of 2006 for prior period dore shipments.
(5) Ounces mined from the 5900 level development project at Lucky
Friday in 2005 were not included in the determination of total
cash costs. During the second quarter and first six months of
2005, approximately 55,000 ounces and 58,000 ounces, respectively,
of silver were excluded from the calculation.
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