Strong revenues, lower costs drive Hecla earnings

COEUR d'ALENE - Hecla Mining Co. profits continue to rise, with earnings in the first quarter of 2010 nearly triple those of the first quarter a year ago.

Hecla reported net income of $21.8 million in the first quarter of 2010, compared to $7.3 million in the first quarter of 2009.

"This quarter's performance is further evidence of the strength of Hecla's mines and people," said Phillips S. Baker Jr., Hecla's president and chief executive officer, in a press release. "Strong revenues and lower unit costs drove the quarter's results. I am confident that Hecla will continue to be the lowest-cost silver producer and the largest U.S. producer. With the strength of our balance sheet and cash flow, we can fund our exploration and capital programs while still considering new opportunities."

Hecla produced 2.5 million ounces of silver in the first quarter of 2010 at a cost of negative $3.03 per ounce after by-product credits. That compares with 2.9 million ounces of silver in the first quarter of 2009 at a cost of $4.67 per ounce and 2.4 million ounces of silver in the fourth quarter of 2009 at a cash cost of negative $2 per ounce.

On March 31 Hecla had $116.3 million in cash and cash equivalents and no debt. Hecla has approximately 242.3 million shares of common stock outstanding. At the close of business on Wednesday, Hecla's stock (NYSE:HL) was up 21 cents to $6.60, with 15.5 million shares traded. The stock's 52-week price ranged from a low of $2.26 to a high of $7.47.

During the first quarter of 2010, Hecla realized $16.92 and $1,107 per ounce of silver and gold, respectively, and 96 cents and 93 cents per pound, respectively, for zinc and lead.

Average prices for all metals in the first quarter of 2010 were higher compared to the same 2009 period. Average prices for silver and lead were lower in the first quarter of 2010 compared with prices in the fourth quarter of 2009, while average prices for zinc and gold were higher in the first quarter of 2010 compared with the fourth quarter of 2009.

The Lucky Friday mine in the Silver Valley produced 882,079 ounces of silver during the first quarter of 2010 at an average total cash cost of $3.21 per ounce of silver after by-product credits, compared to 866,298 ounces of silver during the first quarter of 2009 at an average total cash cost of $8.03 per ounce. The mine is forecast to produce approximately 3 million ounces of silver in 2010.

"That we are achieving record production at the Lucky Friday mine should come as no surprise," Baker said. "We believe that the future looks even better as we continue work on the internal shaft and related infrastructure. This deep development is expected to have a construction period of approximately five years and cost between $150 and $200 million to build. With average expected head grades of approximately 14 ounces of silver per ton, the Lucky Friday mine could produce approximately 5 million ounces of silver per year, with combined lead-zinc production more than 20 percent higher. All of this is on a mine that is celebrating production of its 10 millionth ton of ore."

Hecla plans to spend $17.8 million on exploration in 2010, almost twice the amount for 2009.