Metals price increases, mining cost decline improve Hecla's bottom line

"Much improved" mining operational results, a substantial increase in reserves at the Lucky Friday Mine, and metals price volatility have improved Hecla Mining's 2009 outlook.

RENO, NV - 

Metals price volatility worked to Hecla's favor during the first-quarter 2009 with received silver prices strengthening, gold increasing $186/oz, and lead prices doubling compared with the fourth quarter of 2008.

Meanwhile, Hecla's average cost-per-ounce declined 38% to $7.48/oz from $4.67/oz as silver production increased 128% to 2.86 million ounces, mainly due to the 100% acquisition of the Greens Creek mine in Alaska.

The Idaho-based silver miner reported a net income of $3.9 million or two-cents per share for the first quarter of this year, down from a net income of $12.1 million or 10-cents per share during the first-quarter 2008.

The first-quarter 2009 results include a $6.2 million gain on the sale of Hecla's Velardeña mill in Mexico and a gain of $9 million associated with the curtailment of a corporate non-pension benefit plan. The mill was sold for $8 million in cash and 750,000 shares of ECU Silver Mining. The facility had not been used since 2005.

Hecla also announced it had repaid a $40 million bridge loan and $8 million of term debt, reducing overall debt from $161 million to $113 million.

In a news release, Hecla President and CEO Phil Baker said, "We had a much improved first quarter with all operational benchmarks showing significant improvement compared with the second half of 2008. More tons of higher-grade material coupled with lower costs drove the results combined with some positive one-time items."

"We are clearly on track to hit our production and cost targets reversing the trend of rising costs experienced in 2008. Our outlook is very positive given the solid operational performance, stronger balance sheet, higher prices, and the ongoing exploration success at the Lucky Friday," he added.

The company announced a 59% increase in resources and a 24% increase in reserves at the Lucky Friday Mine for a combined net addition of 35.7 million ounces of silver.

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