Hecla releases earnings report

COEUR d'ALENE - Hecla Mining Co. announced a second-quarter net loss of $14.5 million, or 4 cents a share.

That compares with a net loss of $25 million, or 8 cents a share, for the same period a year ago for the Coeur d'Alene-based company.

"In the second quarter our stronger revenue and cash flow from operations were driven by production growth, particularly gold, and higher realized metal prices, especially zinc," said Phillips S. Baker Jr., Hecla's president and CEO, in a statement Thursday.

Two items primarily contributed to the quarter's lower earnings numbers.

First, the company recorded a net loss of $11.6 million because metals prices rose above locked-in base metals contracts, Mike Westerlund, a Hecla spokesman, told The Press Thursday.

The company locks in the price on a portion of its base metals, lead and zinc, before they are produced. Hecla doesn't lock prices on silver and gold.

Hecla enjoyed a net gain of $6.5 million because of base metals price hedging in the year-earlier period, when metals prices decreased.

The company also reported a $5.4 million foreign exchange loss in the second quarter of this year because of its ownership of the Casa Berardi gold mine in Quebec.

"It's the deferred income taxes that come along with that ownership," Westerlund said.

In the positive-news column, the company said its operating cash flow was $26.6 million, which was an increase of $27.7 million compared with the year-earlier quarter.

The operating cash flow was in negative territory a year ago because of the acquisition of Casa Berardi, with the one-time associated fees and costs, Westerlund said.

Operating cash flow for the second quarter also was affected by operations at Lucky Friday Mine near Mullan, he said.

Lucky Friday produced 217,000 ounces of silver in the second quarter of last year at a cash cost of $32.19 per ounce.

This year, Lucky Friday in the second quarter produced 821,000 ounces, at a cash cost of $9.10 per ounce.

Revenue for the quarter ended June 30 increased 38 percent compared with the year-earlier quarter. The revenue increase was due to the Casa Berardi, acquired on June 1, 2013, producing for the full quarter. Lucky Friday also was at full production, and higher metals prices contributed to the revenue growth.

Lucky Friday had its highest silver production in 10 quarters, Baker said.

The positive performance of Hecla's three mines - which also includes Greens Creek in Alaska - and rising metals prices enabled the company to end the quarter with $222 million of cash, Baker said.

The No. 4 shaft at Lucky Friday, a key growth project, has been excavated approximately 2,500 feet to below the 7,300-foot level.

The project is now more than 68 percent complete and is expected to be finished in the third quarter of 2016.

The total estimated cost to complete the project is expected to be approximately $215 million, with $148 million spent through the second quarter of this year.