COEUR D'ALENE, Idaho–(BUSINESS WIRE)–Feb. 18, 2015– Hecla Mining Company (NYSE:HL) today announced 2014 sales of $500.8 million and gross profit of $85.2 million, with net income applicable to common stockholders of $17.3 million, or $0.05 per basic share, and an adjusted net income applicable to common stockholders of $5.6 million, or $0.02 per basic share.¹

FULL YEAR 2014 HIGHLIGHTS – comparison to 2013

• Record sales of $500.8 million, a 31% increase.²
• Silver equivalent production of 34.5 million ounces, the highest in the company’s history.³
• A 24% increase in silver production with a 30% decrease in per ounce cash costs, after by-product credits.
• A 56% increase in gold production with 128,244 ounces produced at Casa Berardi at an average cash cost, after by-product credits, per gold ounce of $826, a 13% reduction.⁴
• Adjusted EBITDA of $174.4 million, a 29% increase.⁵
• Operating cash flow of $83.1 million, which includes the final $55.4 million payment to satisfy the Coeur d’Alene Basin litigation settlement, a 212% increase, and the third highest level in the company’s history.
• Highest year-end proven and probable silver reserve levels in the company’s history for the 9th consecutive year.
• Cash and cash equivalents of $209.7 million at December 31, 2014.

“In 2014 Hecla produced the equivalent of 34 million ounces of silver and over $500 million in revenues, both company records,” said Phillips S. Baker Jr., Hecla’s President and CEO. “With the increased production and lower per ounce costs for both gold and silver, Hecla was able to end the year with roughly the same amount of cash we started with, while continuing to invest in capital projects designed to extend mine life and increase production. While spending less on exploration than in 2013, we still maintained reserves, despite using lower price assumptions, after record production, and continued to grow our resource base.”

“In 2015 we expect to once again have our capital and exploration expenditures fully funded by adjusted EBITDA even as we continue the capital expenditures designed to drive returns, growth and mine life,” Mr. Baker added.

SILVER AND GOLD RESERVE GROWTH

Proven and probable silver reserves of 173 million ounces increased by 1.9% over December 31, 2013 levels. Proven and probable gold reserves of 2.1 million ounces decreased by 1.5% overDecember 31, 2013 levels. Please refer to the reserves and resources table at the end of this press release, or to the press release entitled “Hecla Reports Record Silver Reserves,” issued onFebruary 12, 2015 for further information on the new reserve and resource levels as well as a detailed summary of the Company’s exploration programs.

Net income applicable to common stockholders for the fourth quarter and full year 2014, respectively, was $16.8 million and $17.3 million, or $0.05 and $0.05 per basic share, compared to net losses of $3.0 million and $25.7 million, or $0.01 and $0.08 per basic share, for the fourth quarter and full year 2013, respectively. Among items impacting the results for the 2014 periods compared to 2013 were the following:

• Revenue increased by 7% for the fourth quarter and 31% for the year due to higher production from all three mines in spite of lower average silver, gold, and lead prices, partially offset by higher zinc prices in 2014.
• Exploration and pre-development expense decreased by $1.1 million for the quarter and$18.0 million for the year.
• Foreign exchange gains due to the decline in the Canadian dollar versus the USD.
• Increase in the provision for closed operations and reclamation for historic properties.
• Net mark-to-market gains on base metal forward contracts of $11.7 million and $9.1 million for the fourth quarter and full year 2014 compared to net losses of $5.5 million and net gains of $18.0 million for the same periods in 2013.
• Impairment losses of $2.4 million for 2014 for investments in exploration companies.
• Interest expense increase due to senior notes issued in April 2013 being outstanding for the full year in 2014.
• Income tax benefit of $5.2 million in 2014, in spite of reporting positive income before income taxes as a result of book-versus-tax differences for certain items in Canada and the U.S.

Operating cash flow increased 212% to $83.1 million in 2014 inclusive of the $55.4 million payment to satisfy the Coeur d’Alene Basin litigation settlement. The final settlement was almost entirely funded by proceeds received from the exercise of the remaining outstanding warrants.

Year end 2014 cash and cash equivalents of $209.7 million reduced only $2.5 million over the prior year level even with the Company undertaking the second largest capital program in its history. Hecla’s capital investments at its existing operations were $37.7 million and $131.6 million for the fourth quarter and year ended December 31, 2014, respectively. The capital investment for the year at Lucky Friday was $52.0 million, including $35.2 million for the #4 Shaft Project. AtGreens Creek, capital investment was $29.3 million and was focused on underground mine development, rehabilitation, definition drilling, equipment rebuilds and replacement, concentrator upgrades, and surface infrastructure improvements. At Casa Berardi, capital investment was $50.4 million and was focused on mine development and completion of the shaft deepening project.

Metals Prices

Average realized silver prices in the fourth quarter and full year 2014 were $16.00 and $18.46 per ounce, 21% and 13% lower than the prior periods, respectively. Realized prices for gold for the 2014 periods were $1,195 and $1,262 per ounce, 6% and 4% lower than the prior periods. Realized prices for lead were lower for the 2014 periods than in 2013, while realized prices for zinc were higher.

Base Metals Forward Sales Contracts

The following table summarizes the quantities of base metals committed under financially settled forward sales contracts at December 31, 2014:

The contracts represent 31% of the forecasted payable zinc production for the three-year period 2015-2017 at an average price of $0.98 per pound and 28% of the forecasted payable lead production for the three-year period 2015-2017 at an average price of $1.05 per pound.

OPERATIONS OVERVIEW

Overview

• Greens Creek production of 2.5 million and 7.8 million ounces of silver in the fourth quarter and full year 2014 increased 34% and 5% over the same periods of 2013, as the mine performed at the high end of its expected production range.
• Lucky Friday silver production of 745,766 and 3,239,151 ounces for the fourth quarter and full year 2014 increased 16% and 122% over the same periods of 2013, as the mine benefited from 12 months of full production.
• Casa Berardi gold production of 39,385 and 128,244 ounces for the fourth quarter and full year 2014 represents 22% and 105% increases over production achieved under Hecla’s ownership in the 2013 periods as Hecla benefited from a full year of ownership of the mine.

The following table provides the production and cash cost, after by-product credits, per silver and gold ounce summary for the fourth quarter and twelve months ended December 31, 2014 and 2013:

The following table provides the production summary on a consolidated basis for the fourth quarter and twelve months ended December 31, 2014 and 2013:

Greens Creek Mine – Alaska

Silver production at Greens Creek in 2014 was 2.5 million ounces for the fourth quarter and 7.8 million ounces for the year. The mine demonstrated strong production throughout 2014, producing 3.5 million ounces of silver in the first half of the year and 4.3 million ounces in the second half. The silver production increased over 2013 due to higher silver ore grades, particularly during the fourth quarter of 2014. The mill operated at an average of 2,236 tons per day in 2014, which is the highest daily average since the mine began operations in 1989.

Cash cost, after by-product credits, per silver ounce at Greens Creek was $2.74 and $2.89 for the fourth quarter and full year, respectively, compared to $5.15 and $4.42 for the same periods in 2013. The decrease in cash costs, after by-product credits, per silver ounce for 2014 compared to 2013 was the result of lower milling costs and higher by-product credits and silver production. Milling costs decreased in 2014 compared to 2013 due to increased availability of less expensive hydroelectric power. The value of by-product metals produced increased as a result of higher zinc and gold production and higher zinc prices, partially offset by lower gold prices.

Lucky Friday Mine – Idaho

The Lucky Friday mine produced 745,766 ounces of silver in the fourth quarter and 3,239,151 ounces of silver for the full year 2014, compared to 642,224 ounces and 1,459,000 ounces for the same periods in 2013. The increase in annual production is due to both higher throughput and grades. The grades increased over two ounces per ton due to mine sequencing. With the mine fully operational, throughput increased 77% averaging almost 850 tons per day.

Cash cost, after by-product credits, per silver ounce at Lucky Friday was $10.65 and $9.44 in the fourth quarter and full year, respectively, compared to $13.59 and $19.21 for the same periods in 2013. The per ounce costs declined almost $10 per ounce for the year due to higher production. These 2014 per ounce costs were slightly higher in the fourth quarter compared to the third quarter due primarily to lower silver production as a result of limitations on backfill that typically occur once or twice a year.

The #4 Shaft Project is a key growth project that is currently excavated to the 7580 level, with work continuing on the station at that level. The #4 Shaft Project is more than 75% completed, and is expected to be finished in 2016, allowing access to higher-grade zones beginning in 2018 once the associated development is concluded. The #4 Shaft Project is expected to cost approximately$215 million, with about $50 million left to be spent over the next two years.

Casa Berardi Gold Mine – Quebec

The Casa Berardi mine, acquired from Aurizon Mines Ltd. on June 1, 2013, produced 39,385 ounces of gold in the fourth quarter and 128,244 ounces for the full year 2014, compared to 32,386 and 62,532 for the same 2013 periods. The increased gold production during the periods was due in part to higher grades and higher recoveries as well as operating the mine for the full year in 2014. The mill throughput rate averaged 2,421 tons per day in the fourth quarter.

Cash cost, after by-product credits, per gold ounce was $635, for the fourth quarter and $826 for 2014, a 23% and 13% decrease from 2013 periods. The lower costs during the year were due in part to higher production as well as changes in the CAD/USD exchange rate.

The West Mine shaft deepening project, which included construction of loading pockets and other related infrastructure, was completed in the fourth quarter of 2014, and is expected to improve mine operations by providing additional access to the 118 and 123 zones for transporting ore and waste from underground. Excavation of the 985 drift (previously referred to as 1010) from the deepened shaft is expected to begin in 2015. This drift is expected to improve ventilation and material handling and also provide a platform for deeper exploration drilling.

2015 GUIDANCE

For the full year 2015, based on current metals prices, the Company expects:

DIVIDEND

The Board of Directors declared a quarterly dividend of $0.0025 per share of common stock, payable on or about March 23, 2015, to shareholders of record on March 13, 2015. The Company’s realized silver price was $16.00 in the fourth quarter and therefore did not satisfy the criteria for a larger dividend under the Company’s dividend policy.

The Board of Directors also declared the regular quarterly dividend of $0.875 per share on the 157,816 outstanding shares of Series B Cumulative Convertible Preferred Stock. This represents a total amount to be paid of approximately $138,000. The cash dividend is payable April 1, 2015, to shareholders of record on March 13, 2015.

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held today, Wednesday, February 18, at 10:00 a.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-877-703-6103 or for international by dialing 1-857-244-7302. The participant passcode is HECLA. Hecla’s live and archived webcast can be accessed at www.hecla-mining.com under Investors or via Thomson StreetEvents Network.

ABOUT HECLA

Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska and Idaho, and is a growing gold producer with an operating mine in Quebec, Canada. The Company also has exploration and pre-development properties in five world-class silver and gold mining districts in the U.S., Canada and Mexico, and an exploration office and investments in early-stage silver exploration projects in Canada.

Cautionary Statement Regarding Forward-Looking Statements, Including 2015 Outlook

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Such forward-looking statements may include, without limitation: (i) estimates of future production and sales, including as a result of the #4 Shaft Project; (ii) estimates of future costs including the expected cost of the #4 Shaft project and cash cost, after by-product credits per ounce of silver/gold; (iii) guidance for 2015 for silver and gold production, silver equivalent production, cash cost, after by-product credits, capital expenditures and pre-development and exploration expenditures (which assumes metal prices of gold at $1,225/oz., silver at $17.25/oz., zinc at $0.90/lb. and lead at $0.95/lb. and USD/CAD assumed to be at $0.91); (iv) expectations regarding the development, growth and exploration potential of the Company’s projects; (v) the Company’s mineral reserves and resources; (vi) expectations for 2015 capital and exploration expenses to be fully funded by adjusted EBITDA. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political/regulatory developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) the exchange rate for the Canadian dollar to the U.S. dollar, being approximately consistent with current levels; (v) certain price assumptions for gold, silver, lead and zinc; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy of our current mineral reserve and mineral resource estimates; and (viii) the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements.” Such risks include, but are not limited to gold, silver and other metals price volatility, operating risks, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, community relations, conflict resolution and outcome of projects or oppositions, litigation, political, regulatory, labor and environmental risks, and exploration risks and results, including that mineral resources are not mineral reserves, they do not have demonstrated economic viability and there is no certainty that they can be upgraded to mineral reserves through continued exploration. For a more detailed discussion of such risks and other factors, see the Company’s 2014 Form 10-K, filed on February 18, 2015 with the Securities and Exchange Commission (SEC), as well as the Company’s otherSEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.

Qualified Person (QP) Pursuant to Canadian National Instrument 43-101

Dean McDonald, PhD. P.Geo., Senior Vice President – Exploration of Hecla Mining Company, who serves as a Qualified Person under National Instrument 43-101, supervised the preparation of the scientific and technical information concerning Hecla’s mineral projects in this news release. Information regarding data verification, surveys and investigations, quality assurance program and quality control measures and a summary of sample, analytical or testing procedures for the Greens Creek Mine are contained in a technical report prepared for Hecla and Aurizon Mines Ltd. titled “Technical Report for the Greens Creek Mine, Juneau, Alaska, USA” effective date March 28, 2013, and for the Lucky Friday Mine are contained in a technical report prepared for Hecla titled “Technical Report on the Lucky Friday Mine Shoshone County, Idaho, USA” effective date April 2, 2014, and for the Casa Berardi Mine are contained in a technical report prepared for Hecla titled “Technical Report on the Mineral Resource and Mineral Reserve Estimate for the Casa Berardi Mine, Northwestern Quebec, Canada” effective date March 31, 2014 (the “Casa Berardi Technical Report”). Also included in these three technical reports is a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors. Copies of these technical reports are available under Hecla's profile on SEDAR at www.sedar.com.

The current Casa Berardi drill program was performed on core sawed in half and included the insertion of blanks and standards of variable grade in every 24 core samples. Standards were generally provided by Analytical Solutions Ltd and prepared in 30 gram bags. Samples were sent to the Swastika Laboratories in Swastika, Ontario, a registered accredited laboratory, where they were dried, crushed, and split for gold analysis. Analysis for gold was completed by fire assay with AA finish. Gold over-limits were analyzed by fire assay with gravimetric finish. Data received from the lab were subject to validation using in-built program triggers to identify outside limit blank or standard assays that require re-analysis. Over 5% of the original pulps and rejects are sent for re-assay to ALS Chemex in Val d’Or for quality control.

Dr. McDonald reviewed and verified information regarding drill sampling, data verification of all digitally-collected data, drill surveys and specific gravity determinations relating to the Casa Berardi mine. The review encompassed quality assurance programs and quality control measures including analytical or testing practice, chain-of-custody procedures, sample storage procedures and included independent sample collection and analysis. This review found the information and procedures meet industry standards and are adequate for Mineral Resource and Mineral Reserve estimation and mine planning purposes.

Source: Hecla Mining Company

Hecla Mining Company
Mike Westerlund, 1-800-HECLA91 (1-800-432-5291)
Vice President – Investor Relations
[email protected]
www.hecla-mining.com

Original Article: http://investors.hecla-mining.com/phoenix.zhtml?c=63202&p=RssLanding&cat=news&id=2017666