From millions in debt a year ago, Hecla is now an ‘incredibly strong' cash generator

After a difficult couple of years, Hecla Mining now has no debt, $50 million in cash, and is on track to produce 10.5m to 11m ounces of silver this year.

RENO, NV - 

Hecla Mining consecutively reported another record quarter, Hecla CEO Phil Baker told analysts Tuesday the Coeur d'Alene, Idaho-based company has become the top U.S. silver miner, the country's second largest zinc miner and its third biggest lead miner.

In a statement, Baker noted, "We had one of the best quarters in our hundred-year history generating strong cash flow that increased our current cash balance by $27 million to $85 million. The main driver is the record revenue from acquiring the remainder of the Greens Creek mine which doubled Hecla's silver production and almost tripled zinc production and increased lead production.

The company has now reduced its full year guidance for cash costs by 25% to $2.25 per ounce. Meanwhile, the increased availability of hydropower supplied by the Alaska Light and Power Company by its Lake Dorothy project is expected to reduce Greens Creek costs by $2 million annually. The mine had primarily been relying on diesel-generated power.  However, Lake Dorothy is expected to meet 95% to 100% of Green Creek's energy needs.

Hecla produced 2.7 million ounces of silver this quarter, compared to 2.5 million ounces during the third quarter of 21008. The average cash cost was 85-cents per ounce after by-product metal credits. The company remains on track to meet its full year production guidance of 10.5million to 11 million ounces of silver.

The $2.64 decrease in total cash costs per silver ounce during the third quarter was attributed to lower production costs and treatment and freight costs. However, for the first nine months of the year, total cash costs increased $1.34/oz primarily due to lower lead and zinc by-product credit.

During the conference call, Baker called Hecla "an incredibly strong cash generating company," which has $50 million in cash and is now debt free.

Baker estimated the company will spend $10 million for exploration and $32 million in capital costs this year. Next year, he forecast exploration expenditures "will be up substantially" and the company will exceed this year's capex costs.

FINANCIALS

For the third-quarter 2009, Hecla reported a net income of nearly $22.5 million and 9-cents per share, compared to a loss of $7.2 million or negative 5-cents/sh reported during the same period a year ago. Silver production rose from 2,516,784 million ounces during the third-quarter 2008 to 2,731,950 ounces during the third quarter of this year.

For the first nine months of this year, Hecla reported a net income of $$25.5 million or 11-cents per share, up substantially from the loss of $39.5 million or negative 31-cents a share reported during the first nine months of 2008. Silver production rose from 6.2 million ounces for the first nine months of 2008 to 8.6 million ounces for the first nine months of this year. Gold increased from 36,504 ounces to 50,789 ounces during the same time period, as lead jumped from 24,800 tons to 32,675 tons, and zinc rose from 41,860 tons to 58,737 tons.

Disclaimer

MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning,  and concluding, 24 hours later,  in the Vancouver evening.  If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com

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