COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Hecla Mining Company (NYSE:HL) today reported silver production of 2.4 million ounces for the second quarter of 2008, a 60% increase over the same period a year ago. Second quarter financial results showed a loss applicable to common shareholders of $44.4 million, or 35 cents per share, on revenue of $64 million. The results include several one-time or transactional items related to the purchase of the Greens Creek Joint Venture, the sale of the Venezuelan operations and the sale of Great Basin Gold stock which resulted in a combined charge of $39.3 million. Absent those items, Hecla would have reported pre-tax net loss of $1.7 million in the second quarter of 2008(1). Income applicable to common shareholders in the second quarter of 2007 was $24.2 million, or 20 cents per share, on revenue of $44.4 million. Second quarter 2007 results also included a number of unusual items, most notably the sale of the Hollister Development Block.

Unusual or one-time items that impacted Hecla’s results from operations during the second quarter of this year included:

• a loss of $30.7 million relating to the recently sold Venezuelan properties which consisted of a loss on impairment of $11.4 million and a loss from operations of $19.3 million (which included a foreign exchange loss of $13.3 million from the repatriation of $38.7 million USD from Venezuela to the United States);
• cost of sales were $17 million higher due to the valuation of in-process inventory associated with the Greens Creek Joint Venture acquisition (received revenue of approximately the same amount related to the sale of the inventory); and
• a gain of $8.1 million from the sale of Great Basin Gold stock previously received in connection with the sale of its interest in the Hollister project.

Other items that impacted second quarter net income included a 42% decrease in the price of zinc from $1.66 per pound in the second quarter of 2007 to $0.96 in the second quarter of 2008, increased smelter treatment and refining charges, and higher energy and steel costs. These factors resulted in increased cash costs per ounce of silver at the Lucky Friday and Greens Creek silver operations compared to a year ago. Additionally, the noncash stock option expense totaled $2.9 million in the second quarter of 2008.

For the first six months of 2008, Hecla recorded a loss applicable to common shareholders of $32.3 million, or 26 cents per common share, compared to income applicable to common shareholders of $32.2 million, or 27 cents per common share, during the same period in 2007.

SECOND QUARTER 2008 HIGHLIGHTS

• Completion of the acquisition of the Greens Creek Joint Venture on April 16, 2008
• Sale of the subsidiaries holding Hecla’s Venezuelan properties for approximately $25 million
• Silver production of 2.4 million ounces, a 60% increase from the second quarter of 2007, at an average cash cost per ounce of $3.43
• Highest quarterly silver production in nearly 5 years
• Record zinc production
• Capital expenditures of $20.3 million, as Hecla invests in the future of the Greens Creek and Lucky Friday mines
• Positive underground exploration drilling results at Greens Creek and Lucky Friday

Hecla Mining Company President and Chief Executive Officer Phillips S. Baker, Jr., said, “The second quarter has been a transformational quarter for Hecla. We acquired the remainder of the Greens Creek Joint Venture and sold our Venezuelan interests. Both transactions had one-time impacts on the second quarter financial results as we completed the transition related to these two assets. In the long term, the Greens Creek acquisition and the Venezuelan disposition provide our shareholders with 100% of the world’s lowest-cost and fifth-largest silver mine, a substantially lower political risk profile, and a 60% increase in 2008 annual silver production to 9 million ounces. We have already seen a 60% increase in silver production for the second quarter compared to the same period a year ago.”