Hecla Reports Second Quarter 2013 Results

Hecla Reports Second Quarter 2013 Results

Silver production up 64%, gold production up 68%;

Significant capital and operating cost reductions

For the Period Ended June 30, 2013

COEUR D'ALENE, Idaho--(BUSINESS WIRE)-- Hecla Mining Company (NYSE:HL) today announced a second quarter net loss applicable to common shareholders of $25.0 million, or $0.08 per basic share, and a loss after adjustments applicable to common shareholders of $10.2 million, or $0.03 per basic share.1 Second quarter silver production was 2.2 million ounces at a Total Cash Cost, Net of By-product Credits, per Silver Ounce of $5.56.2

The Company reported a 64% increase in second quarter silver production to 2.2 million ounces compared to a year ago, with strong production from Greens Creek and the re-opening of the Lucky Friday silver mine. In addition, gold production increased by 68% to 22,226 ounces, following the June 1 acquisition of Aurizon, the owner of the Casa Berardi gold mine in Quebec.

HIGHLIGHTS AND SIGNIFICANT ITEMS

  • Completed the acquisition of Aurizon Mines Ltd. on June 1, 2013.
  • Issued $500 million of 6 7/8% Senior Notes due in 2021.
  • Produced 2.2 million ounces of silver, a 64% increase over the same period in 2012 and an 18% increase over the first quarter of 2013.
  • Produced 22,226 ounces of gold, a 68% increase over the same period in 2012, with only one month of production from Casa Berardi.
  • Total Cash Cost, Net of By-product Credits, per Silver Ounce was $5.56, a 21% decrease over the first quarter, and Total Cash Cost, Net of By-product Credits, per Gold Ounce was $1,1522 at Casa Berardi for June (the first month following the acquisition).
  • Sales of $85.3 million, a 27% increase over the same period in 2012.
  • Negative provisional price adjustment of $15.1 million, of which $12.90 was due to silver, resulting in a $16.27 realized silver price.
  • Expenses related to the Aurizon acquisition totaled $20.3 million.
  • Net loss applicable to common shareholders of $25.0 million, or $0.08 per basic share.
  • Loss after adjustments applicable to common shareholders of $10.2 million, or $0.03 per basic share.
  • Adjusted EBITDA of $31.5 million3, about $4.0 million more than the same period in 2012.
  • Reduced capital, exploration and pre-development expenditures 13%, 28% and 35%, respectively, from original 2013 budgets.
  • Cash and cash equivalents of $296 million at June 30, 2013.

(1)

 

Earnings (loss) after adjustments applicable to common shareholders is a non-GAAP measure; a reconciliation of which to net income applicable to common shareholders (GAAP) can be found at the end of the release.

 

(2)

Total Cash Cost, Net of By-product Credits, per Silver and Gold Ounce is a non-GAAP measurement; a reconciliation of which to total cash costs, before by-product credits, to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found at the end of this release.

 

(3)

Adjusted EBITDA is a non-GAAP measurement; a reconciliation of which to net income (GAAP) can be found at the end of this release.

 

"The acquisition of Aurizon and associated financing was a pivotal event for Hecla, despite the associated costs resulting in a loss for the second quarter. With Greens Creek operating well, the Lucky Friday ramping up and Casa Berardi in the final quarters of completing major improvements, we are in a strong operating and financial position," said Hecla's President and Chief Executive Officer Phillips S. Baker, Jr. "However, in response to lower precious metals prices we have significantly scaled back capital, exploration and pre-development expenditures from original plans this year. As we plan for next year, we will continue to monitor metals prices and further adjust our plans accordingly with the goal of spending within EBITDA. With mines that have operated as long as 70 years and a company that has been in existence over 120 years, we have operated in significantly lower price environments than we have today. Our operations are low cost and have significant revenue from lead and zinc that we have largely hedged. This hedging is approximately the equivalent of one year's operating costs, and we are now hedging all metals once they have been shipped, to reduce the variability in our realized price. In addition, our balance sheet is strong with almost $300 million of cash.

"The combination of our properties' locations in great mining jurisdictions, their long lives and low costs along with our financial strength we believe positions Hecla to be among the few precious metals mining companies that can prosper in lower price environments. We will look for opportunities to not only deliver value for shareholders in the short term but position the company for long term success," Mr. Baker added.

FINANCIAL OVERVIEW

Net loss applicable to common shareholders for the second quarter was $25.0 million, or $0.08 per share, compared to net income applicable to common shareholders of $2.4 million, or $0.01 per basic share, for the same period a year ago, and was impacted by the following items:

  • Costs expensed related to the acquisition of Aurizon were $20.3 million during the quarter excluding a foreign exchange gain of $0.5 million and a mark to market inventory adjustment resulting from the purchase price allocation of $0.5 million.
  • A $6.8 million tax benefit compared to a $0.7 million provision in the same period in 2012, as a result of higher pre-tax income in 2012.
  • Losses of $15.1 million on provisional price adjustments compared to losses of $1.5 million in the same period of 2012.
  • Interest expense, net of amount capitalized, increased to $6.5 million in the second quarter, compared to $0.5 million in the same period of 2012, as a result of the $500 million 6 7/8% Senior Notes.

      Second Quarter Ended     Six Months Ended
HIGHLIGHTS       June 30, 2013     June 30, 2012     June 30, 2013     June 30, 2012
FINANCIAL DATA                          
Sales (000) $ 85,330     $ 67,019 $ 161,780     $ 158,172
Gross profit (000) $ 5,111 $ 23,968 $ 30,729 $ 72,170
Income (loss) applicable to common shareholders (000) $ (24,996 ) $ 2,386 $ (14,040 ) $ 14,820
Basic income (loss) per common share $ (0.08 ) $ 0.01 $ (0.05 ) $ 0.05
Diluted income (loss) per common share $ (0.08 ) $ 0.01 $ (0.05 ) $ 0.05
Net income (loss) (000) $ (24,858 ) $ 2,524 $ (13,764 ) $ 15,096
Cash provided by (used in) operating activities (000) $ (1,085 ) $ (10,186 ) $ 10,275 $ 31,240
 

During the quarter, operating cash flow was ($1.1 million), due primarily to the unusual factors impacting net income this quarter, as described above.

Capital expenditures (including non-cash capital lease additions) at the operations totaled $34.2 million for the second quarter. Expenditures were $12.7 million at the Lucky Friday, $15.6 million at Greens Creek and $5.9 million at Casa Berardi. With the acquisition of Aurizon, Hecla's total capital expenditures for 2013 (excluding capitalized interest) are expected to be approximately $178 million, including $62.0 million at the Lucky Friday, $67.0 million at Greens Creek and $48.0 million at Casa Berardi. Planned capital expenditures have been reduced at the Lucky Friday and Greens Creek by about 13% for the year. The planned $26.0 million open pit expenditure at Casa Berardi has been deferred.

Exploration expenditures were $6.2 million in the second quarter. Most of the exploration was concentrated on surface and underground at Greens Creek ($2.3 million, or 40%) andSan Sebastian($1.1 million, or 19%). Year-to-date expenditures are $12.7 million, which is about the same as last year. Expected exploration expenditures for the year have been reduced about 28% to $22.0 million with about $9.0 million remaining for the second half of the year.

Pre-development expenses were $4.5 million in the second quarter with $3.5 million at the Bulldog Declineproject in Colorado. Expected pre-development expenditures for 2013 have been revised downward by 35% to about $16.0 million, with about $7.0 million remaining for the second half of the year.

For 2014, the Company expects capital, exploration and pre-development expenditures to be within Adjusted EBITDA.

Metals Prices

The average realized silver price in the second quarter was $16.27 per ounce, compared with an average realized price in the second quarter of 2012 of $27.05 per ounce.

Overall second quarter 2013 realized metals prices were lower than those in the first quarter of 2013 and the second quarter of 2012, as a result of lower metals prices that led to negative adjustments to provisional settlements of $15.1 million compared to net negative price adjustments to provisional settlements of $1.5 million in the second quarter of 2012. The adjustment to provisional settlements is largely due to a decrease in silver prices in the time period between the shipment of concentrate and the final settlement. Compounding this effect was the fact that about 40% of the Company's silver production was sold in June, the month with a lower average silver price than the second quarter's. The provisional price adjustments were applied to 2.3 million silver ounces representing an approximate $6.00 per ounce adjustment. The provisional price adjustment related to zinc and lead contained in our concentrate shipments was largely offset by net gains on forward contracts of $0.4 million in the second quarter of 2013 for those metals.

        Second Quarter Ended     Six Months Ended
            June 30, 2013     June 30, 2012     June 30, 2013     June 30, 2012
AVERAGE METAL PRICES                        
Silver - London PM Fix ($/oz) $ 23.11     $ 29.42 $ 26.59     $ 31.02
Realized price per ounce $ 16.27 $ 27.05 $ 21.41 $ 32.37
Gold - London PM Fix ($/oz) $ 1,414 $ 1,611 $ 1,522 $ 1,651
Realized price per ounce $ 1,245 $ 1,588 $ 1,362 $ 1,675
Lead - LME Cash ($/pound) $ 0.93 $ 0.90 $ 0.99 $ 0.92
Realized price per pound $ 0.93 $ 0.87 $ 0.98 $ 0.94
Zinc - LME Cash ($/pound) $ 0.83 $ 0.88 $ 0.88 $ 0.90
Realized price per pound $ 0.84 $ 0.87 $ 0.88 $ 0.91
 

The Company has an active base metals hedging program in place to help manage the exposure to changes in prices of zinc and lead. To reduce the impact of changing metals prices on earnings in future quarters, the company is hedging all its metals exposure once the metal is shipped. The following table summarizes the quantities of base metals committed under financially settled forward sales contracts at June 30, 2013:

      Metric Tonnes     Average Price
Under Contract per Pound
Zinc     Lead Zinc     Lead
Contracts on provisional sales        
2013 settlements 19,786 9,314 $ 0.85 $ 0.92
 
Contracts on forecasted sales
2013 settlements 15,046 14,936 $ 0.96 $ 1.05
2014 settlements 60,516 47,619 $ 0.99 $ 1.05
2015 settlements 26,896 39,628 $ 0.98 $ 1.07
 

OPERATIONS OVERVIEW

Second quarter Total Cash Cost, Net of By-product Credits, per Silver Ounce was $5.56, compared to $1.03 in the same period in 2012. The following table provides the production summary on a consolidated basis for the second quarter and six months ended June 30, 2013 and 2012:

    Second Quarter Ended     Six Months Ended
      June 30, 2013     June 30, 2012     June 30, 2013     June 30, 2012
PRODUCTION SUMMARY                  
Silver -     Ounces produced 2,237,845     1,365,093 4,138,861     2,693,797
Payable ounces sold 2,314,025 1,133,764 3,907,774 2,560,951
Gold - Ounces produced 22,226 13,257 35,915 25,909
Payable ounces sold 22,018 10,252 32,010 22,112
Lead - Tons produced 7,204 4,873 12,745 9,727
Payable tons sold 6,960 3,629 11,317 7,798
Zinc - Tons produced 16,129 16,073 30,400 32,016
Payable tons sold 12,309 14,283 20,344 25,970
Total Cash Cost, Net of By-product Credits, per Silver Ounce (1) $ 5.56 $ 1.03 $ 6.23 $

1.63

Total Cash Cost, Net of By-product Credits, per Gold Ounce (1), (2) $ 1,152 N/A $ 1,152 N/A
 

(1)

 

Total Cash Cost, Net of By-product Credits, per Silver and Gold Ounce represents a non-GAAP measurement; a reconciliation of which to total cash costs, before by-product credits to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found at the end of this release.

 

(2)

Cost of gold production at the Casa Berardi mine only. Total Cash Cost, Net of By-product Credits, per Gold Ounce represents a non-GAAP measurement; a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found at the end of this release.

 

Greens Creek Mine – Alaska

The performance of Greens Creek was very strong in the second quarter of 2013. A total of 2.0 million ounces of silver was produced at Greens Creek, a 48% increase over the 1.4 million ounces in the same period in 2012 and a 13% increase over the first quarter of 2013. Second quarter Total Cash Cost, Net of By-product Credits, per Silver Ounce was $2.71, a 54% reduction over the first quarter of 2013. The increase compared to $1.03 in the same period in 2012 was due in part to lower zinc grades as well as lower average gold and base metals prices. Mining costs per ton were up by 6% and milling costs per ton were up by 17% in the second quarter compared to the same period in 2012 due to higher power generation costs resulting from low availability of hydroelectric power. Production of gold, lead and zinc were up 13%, 19.5% and 10% over the first quarter, respectively.

Greens Creek is expected to produce between 6.0 and 7.0 million ounces of silver in 2013.

Lucky Friday Mine – Idaho

The Lucky Friday mine, which re-opened in February after a year of rehabilitation and enhancement work, produced 217,096 ounces of silver during the second quarter at a Total Cash Cost, Net of By-product Credits, per Silver Ounce of $32.19. These expected elevated costs were due to start-up costs and low silver production during ramp-up. A total of 23,226 tons of ore was milled during the second quarter. All production stopes that were previously operating are now in operation and the mill ran at 760 tons per day in July. The Company expects the mine to ramp up to its expected throughput rate of 900 tons per day in September and that Total Cash Cost, Net of By-product Credits, per Silver Ounce will decline significantly to approximately $9.50 per ounce by year end as a result.

Work continued in the second quarter on the No. 4 Shaft project, which is expected to help increase production levels beginning in 2017.

Lucky Friday is expected to produce approximately 1.3 million ounces in the second half of 2013.

Casa Berardi – Quebec

With the completion of the acquisition of Aurizon on June 1, only one month of gold production from Casa Berardi is recorded in the second quarter. Production of gold totaled 6,740 ounces of gold at a Total Cash Cost, Net of By-product Credits, per Gold Ounce of approximately $1,152 per ounce, which was impacted by lower grades and tons due to mine sequencing in June.

The mine is currently undergoing a shaft deepening project, designed to increase production and extend mine life, which is expected to be completed in the first quarter of 2014. Additional mine enhancements this year include the now completed and commissioned concrete plant and a new paste fill facility, both of which are expected to increase the efficiency of operations.

Casa Berardi is expected to produce approximately 60,000 ounces of gold in the second half of 2013, of which 2/3 is expected in the fourth quarter, within its expected long-term run rate of 125,000 to 150,000 ounces per year.

Aurizon Acquisition

The acquisition of Aurizon Mines Ltd. was completed on June 1, 2013. Funding of the acquisition included the issuance of $500 million of 6 7/8% Senior Notes due on April 12, 2021. Under the terms of the transaction, Hecla acquired all the outstanding common shares of Aurizon for total consideration of approximately CAD$514 million and 56,997,790 common shares for a total cost of $714.5 million. The acquisition brought to Hecla the producing Casa Berardi gold mine, as well as various other exploration and development projects also located in Quebec, that could potentially generate future production growth.

EXPLORATION AND PRE-DEVELOPMENT

Greens Creek – Alaska

Greens Creek exploration made significant progress in defining three stacked high-grade folds that comprise the mineralization at 200 South. This resource has been drilled for over 700 feet of strike length and is open down dip and to the southwest along strike. Significant intersections include 32.4 oz/ton silver, 0.57 oz/ton gold, 4.3% zinc and 2.4% lead over 10.8 feet; 47.4 oz/ton silver, 0.12 oz/ton gold, 16.4% zinc and 7.5% lead over 7.5 feet; 41.1 oz/ton silver, 0.08 oz/ton gold, 11.2% zinc and 12.9% lead over 7.0 feet; and 43.0 oz/ton silver, 0.09 oz/ton gold, 8.3% zinc and 3.5% lead over 3.5 feet. (See additional drill assay highlights in tables at the end of the release.)

Surface drilling is being conducted on the Killer Creek area at Greens Creek, which is about 1.5 miles west-northwest of the mine portal. The five completed holes show broad zones up to 400 feet with stringer veins containing copper, zinc, lead and silver mineralization in the footwall rocks. In general the northern holes are more copper-rich with veins up to 7.0 feet wide.

Casa Berardi – Quebec

At Casa Berardi, five underground drills have been targeting the 113, 118, 123 and 124 Zones. Eleven holes have been completed and the most significant results include 1.7 oz/ton gold over 9.8 feet, 1.13 oz/ton gold over 16.4 feet, and 1.25 oz/ton gold over 26.6 feet. In-fill drilling on the 550 m level confirmed the ore continuity for the lenses 118-06 and 124-03.

At the 124 Zone Principale, eight definition holes have been completed to better define the continuity of the mineralization of the lenses 127-16 and 127-17 and have confirmed the continuity of the 27-116 lenses above the 280 m level. Drill results include 0.42 oz/ton gold over 12.1 feet, 0.24 oz/ton gold over 16.4 feet, 0.31 oz/ton gold over 23.0 feet, and 0.32 oz/ton gold over 16.4 feet. Only one drill was active on surface where extensions to two holes are in progress to evaluate a 42-foot thick quartz vein intersected in last year's drilling below the 123 Zone.

Lucky Friday – Idaho

At Lucky Friday, the first drill has begun definition drilling from the 6200-56 Ramp station on the east side of the resource. Strong intersections have been drilled in the 30, 80 and 90 Veins including 35.2 oz/ton silver, 10.5% lead and 3.4% zinc over 7.5 feet (30 Vein); 31.4 oz/ton silver, 24.0% lead and 2.3% zinc over 3.6 feet (80 Vein) and 12.1 oz/ton silver, 11% lead and 5.7% zinc over 6.7 feet (40 Vein). Diamond drilling from the 6400-55 Ramp is focused on upgrading the resource on the western-central region of the 30 Vein, above the 7300 level, from inferred to indicated categories.

San Sebastian – Mexico

Exploration

Drilling continued along the Middle Vein, which is currently defined for over 3,000 feet along strike and to a depth of 1,000 feet and appears to be open for extension along strike to the southeast. A combination of in-fill drilling to refine and upgrade the resource and exploration drilling that extended the very high-grade resource to the southeast was conducted in the quarter. Recent drill intersections include 65.2 oz/ton silver and 0.07 oz/ton gold over 1.6 feet; 33.6 oz/ton silver and 0.05 oz/ton gold over 2.6 feet and 16.0 oz/ton silver and 0.03 oz/ton gold over 2.4 feet. (See additional drill assay highlights in tables at the end of the release.)

Pre-Development

Pre-development expenditures were primarily directed towards scoping studies to determine the production viability, rate and sequencing of mining with the addition of the newly discovered Middle Vein to the Hugh Zone and Andrea Vein. Drilling for metallurgical samples is complete and results are being analyzed to refine the metallurgical processing and mill design plans. A decision to develop a ramp for definition drilling on both the Hugh Zone and Middle Vein is expected by year-end.

San Juan Silver – Colorado

Pre-Development

Development of the Bulldog infrastructure is continuing with the 2800-foot long decline now advanced over 2,000 feet. The expected fourth quarter 2013 completion of the decline will access old workings and the ore body for the confirmation of the resource and potential drill platforms for exploration. Scoping studies, resource updates and economic models for the Bulldog continue to be advanced.

Heva and Hosco – Quebec

The former Joanna Project is now called the Heva and Hosco Projects, and they were included in the acquisition of Aurizon, along with a number of other exploration and pre-development projects in Quebec.

Heva and Hosco host a development-stage gold project encompassing over 10 kilometers along the Cadillac break, one of the most prolific structures for large gold producers in the Abitibi greenstone belts in Quebec.

The Heva deposit represents a continuous free-milling mineralized system that extends over 2 kilometers along the Cadillac break. The new metallurgical tests performed on the ore from the Heva Zones suggest the ore is not refractory and that over 95% recovery may be achievable with conventional cyanide treatment.

The Company expects to evaluate Heva, Hosco, and the other projects it now controls in Quebec in the context of the new larger and more diversified Hecla to determine which projects have the potential to generate the most value for shareholders.

Junior Exploration Investment Program

Typhoon Exploration Inc.

On June 18, Hecla announced that it had acquired 5.5 million common shares of Typhoon Exploration Inc. for CDN$500,000 pursuant to an option agreement entered into between Typhoon and Aurizon dated May 17, 2010. This acquisition is the fourth of four CDN$500,000 tranches, the first three of which were made by Aurizon prior to its acquisition by Hecla. Upon completion of the subscription, Hecla controls approximately 29.4% of the issued and outstanding common shares of Typhoon. Typhoon has exploration properties located in Quebec, Canada, including the Fayolle property which is located 35 kilometres north of the Heva and Hosco properties.

Dividends

Common

TheBoard of Directors declared a quarterly dividend of $0.0025 per share of common stock, payable on or about September 3, 2013, to shareholders of record on August 26, 2013. The realized silver price was $16.27 in the second quarter and therefore did not trigger a larger dividend under the Company's dividend policy.

Preferred

The Board of Directors also declared the regular quarterly dividend of $0.875 per share on the outstanding Series B Cumulative Convertible Preferred Stock, on a total of 157,816 shares outstanding. This represents a total amount to be paid of approximately $138,000. The cash dividend is payable October 1, 2013, to shareholders of record on September 13, 2013.

2013 Guidance

For the full year 2013, based on current metals prices, the Company expects:

  • Silver production of between 8.0 and 9.0 million ounces at Total Cash Cost, Net of By-product Credits, per Silver Ounce of approximately $5.00.
  • Gold production from Casa Berardi of approximately 60,000 ounces in the second half of 2013 at an estimated Total Cash Cost, Net of By-product Credits, per Gold Ounce of $900.
  • 2013 capital expenditures (excluding capitalized interest) expected to be about $178 million.
  • 2013 pre-development expenditures expected to be about $16.0 million.
  • 2013 exploration expenditures expected to be about $22.0 million.

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held Thursday, August 8, at 10:00 a.m. Eastern Time to discuss these financial and operating results. You may join the conference call by dialing toll-free 1-866-318-8618 or for international calls 1-617-399-5137. The participant passcode is HECLA. Hecla's live and archived webcast can be accessed at www.hecla-mining.com under Investors or via Thomson StreetEvents Network.

ABOUT HECLA

Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska and Idaho, and is a growing gold producer with an operating mine in Quebec, Canada. The Company also has exploration and pre-development properties in five world-class silver and gold mining districts in the U.S., Canada, and Mexico, and an exploration office and investments in early-stage silver exploration projects in Canada.

Qualified Person (QP) Pursuant to Canadian National Instrument 43-101

Dean McDonald, P.Geo., Senior Vice President - Exploration of Hecla Mining Company, who serves as a Qualified Person under National Instrument 43-101, supervised the preparation of the scientific and technical information concerning Hecla’s mineral projects in this news release. Information regarding data verification, surveys and investigations, quality assurance program and quality control measures and a summary of analytical or testing procedures for the Greens Creek Mine are contained in a technical report titled “Technical Report for the Greens Creek Mine” dated March 28, 2013, for the Lucky Friday Mine are contained in a technical report titled “Technical Report for the Lucky Friday Mine Shoshone County, Idaho, USA” dated March 28, 2013, for Casa Berardi are contained in a technical report titled "Technical Report on the mineral resource and mineral reserve estimate for Casa Berardi Mine, Northwestern Quebec, Canada" dated March 28, 2013 and in a technical report titled "Feasibility Study of the Hosco deposit - Joanna Gold project" dated June 5, 2012. Also included in these four technical reports is a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors. Copies of these technical reports are available under Hecla and Aurizon's profiles on SEDAR at www.sedar.com.

Cautionary Statements

Statements made which are not historical facts, such as anticipated payments, litigation outcome (including settlement negotiations), production, sales of assets, exploration results and plans, costs, and prices or sales performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “expects,” “intends,” “projects,” “believes,” “estimates,” “targets,” “anticipates” and similar expressions are used to identify these forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, litigation, regulatory and environmental risks, operating risks, project development risks, political risks, labor issues, ability to raise financing and exploration risks and results. Refer to the company's Form 10-K and 10-Q reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements other than as may be required by law.

Cautionary Statements to Investors on Reserves and Resources

Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in the SEC's Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (“Guide 7”). However, the Company is also a "reporting issuer" under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (“NI 43-101”). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is being included here to satisfy the Company's “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.

Reporting requirements in the United States for disclosure of mineral properties under Guide 7 and the requirements in Canada under NI 43-101 standards are substantially different. This document contains a summary of certain estimates of the Company, not only of proven and probable reserves within the meaning of Guide 7, which requires the preparation of a “final” or “bankable” feasibility study demonstrating the economic feasibility of mining and processing the mineralization using the three-year historical average price for any reserve or cash flow analysis to designate reserves and that the primary environmental analysis or report be filed with the appropriate governmental authority, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. The terms “measured resources,” "indicated resources," and "inferred resources" are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are not normally not permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. Still, investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into proven or probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a "resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a "resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.

HECLA MINING COMPANY

Condensed Consolidated Statements of Income

(dollars and shares in thousands, except per share amounts - unaudited)

 
      Second Quarter Ended     Six Months Ended
June 30, 2013     June 30, 2012 June 30, 2013     June 30, 2012
Sales of products $ 85,330   $ 67,019   $ 161,780   $ 158,172  
Cost of sales and other direct production costs 60,008 33,172 96,833 66,462
Depreciation, depletion and amortization 20,211   9,879   34,218   19,540  
80,219   43,051   131,051   86,002  
Gross profit 5,111   23,968   30,729   72,170  
 
Other operating expenses:
General and administrative 7,482 5,527 14,421 10,028
Exploration 6,221 7,146 12,714 12,757
Pre-development 4,512 3,471 9,303 6,837
Other operating expense 205 1,605 1,229 2,549
Provision for closed operations and reclamation 1,845 2,235 3,639 4,413
Aurizon acquisition costs 20,308 25,600
Lucky Friday suspension-related costs (income) (2,840 ) 6,465   (1,342 ) 12,631  
37,733   26,449   65,564   49,215  
Income (loss) from operations (32,622 ) (2,481 ) (34,835 ) 22,955  
Other income (expense):
Gain on sale or impairment of investments 197 197
Gain on derivative contracts 6,541 6,171 28,080 940
Interest and other income (expense) 685 32 572 181
Interest expense, net of amount capitalized (6,454 ) (505 ) (7,158 ) (972 )
969   5,698   21,691   149  
Income (loss) before income taxes (31,653 ) 3,217 (13,144 ) 23,104
Income tax benefit (provision) 6,795   (693 ) (620 ) (8,008 )
Net income (loss) (24,858 ) 2,524 (13,764 ) 15,096
Preferred stock dividends (138 ) (138 ) (276 ) (276 )
Income (loss) applicable to common shareholders $ (24,996 ) $ 2,386   $ (14,040 ) $ 14,820  
Basic income (loss) per common share after preferred dividends $ (0.08 ) $ 0.01   $ (0.05 ) $ 0.05  
Diluted income (loss) per common share after preferred dividends $ (0.08 ) $ 0.01   $ (0.05 ) $ 0.05  
Weighted average number of common shares outstanding - basic 303,566   285,312   294,317   285,303  
Weighted average number of common shares outstanding - diluted 303,566   295,160   294,317   296,100  
 

HECLA MINING COMPANY

Condensed Consolidated Balance Sheets

(dollars and share in thousands - unaudited)

 
        June 30, 2013     December 31, 2012
ASSETS              
Current assets:          
Cash and cash equivalents $ 296,375 $ 190,984
Accounts receivable:
Trade 8,306 17,555
Other, net 20,228 7,466
Inventories 38,830 28,637
Current deferred income taxes 16,485 29,398
Other current assets 18,893   8,858  
Total current assets 399,117 282,898
Non-current investments 8,766 9,614
Non-current restricted cash and investments 5,287 871
Properties, plants, equipment and mineral interests, net 1,742,696 996,659
Non-current deferred income taxes 99,144 86,365
Other non-current assets and deferred charges 17,445   1,883  
Total assets $ 2,272,455   $ 1,378,290  
               
LIABILITIES              
Current liabilities:
Accounts payable and accrued liabilities $ 60,864 $ 43,162
Accrued payroll and related benefits 16,796 10,760
Accrued taxes 5,312 12,321
Current portion of capital leases 7,128 5,564
Other current liabilities 8,110 3,335
Current portion of accrued reclamation and closure costs 19,845   19,845  
Total current liabilities 118,055 94,987
Capital leases 13,671 11,935
Accrued reclamation and closure costs 105,462 93,370
Long-term debt 490,104
Non-current deferred tax liability 169,030
Other noncurrent liabilities 41,407   40,047  
Total liabilities 937,729   240,339  
               
SHAREHOLDERS’ EQUITY              
Preferred stock 39 39
Common stock 85,890 71,499
Capital surplus 1,424,198 1,218,283
Accumulated deficit (141,627 ) (123,288 )
Accumulated other comprehensive loss (28,694 ) (23,918 )
Treasury stock (5,080 ) (4,664 )
Total shareholders’ equity 1,334,726   1,137,951  
Total liabilities and shareholders’ equity $ 2,272,455   $ 1,378,290  
Common shares outstanding 342,638   285,210  
 

HECLA MINING COMPANY

Condensed Consolidated Statements of Cash Flows

(dollars in thousands - unaudited)

 
      Six Months Ended
        June 30, 2013     June 30, 2012
OPERATING ACTIVITIES              
Net income (loss) $ (13,764 )     $ 15,096
Non-cash elements included in net income:
Depreciation, depletion and amortization 34,834 22,799
Gain on sale of investments (195 )
(Gain) loss on disposition of properties, plants, equipment and mineral interests (125 ) 660
Provision for reclamation and closure costs 1,190 2,908
Stock compensation 1,870 1,495
Deferred income taxes (1,610 ) 3,697
Amortization of loan origination fees 397 201
(Gain) loss on derivative contracts (21,528 ) 9,376
Other non-cash charges, net (25 ) 604
Change in assets and liabilities:
Accounts receivable 9,117 (16,838 )
Inventories 3,601 3,013
Other current and non-current assets 4,254 1,756
Accounts payable and accrued liabilities 5,790 389
Accrued payroll and related benefits (1,577 ) (3,696 )
Accrued taxes (7,518 ) (6,618 )
Accrued reclamation and closure costs and other non-current liabilities (4,436 )     (3,602 )
Cash provided by operating activities 10,275      

31,240

 
               
INVESTING ACTIVITIES              
Additions to properties, plants, equipment and mineral interests (60,291 ) (51,535 )
Acquisition of Aurizon, net of cash acquired (321,117 )
Proceeds from sale of investments 1,771
Proceeds from disposition of properties, plants and equipment 126 116
Purchases of investments (5,738 )
Changes in restricted cash and investment balances 55        
Net cash used in investing activities (385,194 )    

(51,419

)

               
FINANCING ACTIVITIES              
Acquisition of treasury shares (286 ) (203 )
Dividends paid to common shareholders (4,277 ) (9,986 )
Dividends paid to preferred shareholders (276 ) (276 )
Debt issuance fees (1,426 )
Borrowings on debt 490,000
Repayments of capital leases (3,425 )     (2,492 )
Net cash provided by (used in) financing activities 480,310      

(12,957

)

Net increase (decrease) in cash and cash equivalents 105,391 (33,136 )
Cash and cash equivalents at beginning of period 190,984       266,463  
Cash and cash equivalents at end of period $ 296,375       $ 233,327  
 

HECLA MINING COMPANY

Production Data

 
      Three Months Ended     Six Months Ended
        June 30, 2013     June 30, 2012     June 30, 2013     June 30, 2012
GREENS CREEK UNIT                          
Tons of ore milled 211,755     197,432     409,578     362,948
Mining cost per ton $ 65.00 $ 61.23 $ 68.45 $ 62.51
Milling cost per ton $ 32.98 $ 28.13 $ 35.26 $ 30.16
Ore grade milled - Silver (oz./ton) 13.72 9.57 13.24 10.26
Ore grade milled - Gold (oz./ton) 0.12 0.12 0.12 0.12
Ore grade milled - Lead (%) 3.65 3.29 3.49 3.54
Ore grade milled - Zinc (%) 8.81 9.34 8.61 10.10
Silver produced (oz.) 2,018,961 1,365,093 3,799,485 2,693,797
Gold produced (oz.) 15,486 13,257 29,175 25,909
Lead produced (tons) 5,778 4,873 10,613 9,727
Zinc produced (tons) 15,538 16,073 29,610 32,016
Total Cash Cost, Net of By-product Credits, per Silver Ounce (1) $ 2.71 $ 1.03 $ 3.79 $ 1.63
Capital additions (in thousands)       $ 15,581       $ 15,340       $ 26,758       $ 30,053
LUCKY FRIDAY UNIT                          
Tons of ore processed 23,226 37,152
Mining cost per ton $ 140.93 $ $ 134.02 $
Milling cost per ton $ 49.09 $ $ 52.71 $
Ore grade milled - Silver (oz./ton) 10.04 9.82
Ore grade milled - Lead (%) 6.79 6.38
Ore grade milled - Zinc (%) 3.48 2.99
Silver produced (oz.) 217,096 337,588
Lead produced (tons) 1,426 2,132
Zinc produced (tons) 591 790
Total Cash Cost, Net of By-product Credits, per Silver Ounce (1) $ 32.19 $ $ 33.75
Capital additions (in thousands)       $ 12,676       $ 11,040       $ 27,134       $ 22,737
CASA BERARDI UNIT                          
Tons of ore processed 60,480 60,480
Mining cost per ton $ 108.39 $ $ 108.39 $
Milling cost per ton $ 17.91 $ $ 17.91 $
Ore grade milled - Gold (oz./ton) 0.13 0.13
Ore grade milled - Silver (oz./ton) 0.033 0.033
Gold produced (oz.) 6,740 6,740
Total Cash Cost, Net of By-product Credits, per Gold Ounce (1) $ 1,152 $ $ 1,152 $
Capital additions (in thousands) $ 5,938 $ $ 5,938 $
 

(1)

  Total Cash Cost, Net of By-product Credits, per Silver and Gold Ounce represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements. Reconciliations of Total Cash Costs Before By-Product Credit to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the non-GAAP measures reconciliation section of this news release. Gold, lead and zinc produced have been treated as by-product credits in calculating Total Cash Cost, Net of By-product Credits, per Silver Ounce, and silver produced has been treated as a by-product credit in calculating Total Cash Cost, Net of By-product Credits, per Gold Ounce.
 

Non-GAAP Measures

(Unaudited)

This release contains references to non-GAAP measures of Total Cash Cost, Net of By-product Credits, per Silver and Gold Ounce. Total Cash Cost, Net of By-product Credits, per Silver and Gold Ounce represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements that the Company believes provide management and investors an indication of net cash flow. Management also uses this measurement for the comparative monitoring of performance of mining operations period-to-period from a cash flow perspective. They represent a measure developed by gold companies and used by silver companies in an effort to provide a comparable standard; however, there can be no assurance that our reporting of this non-GAAP measure is similar to that reported by other mining companies. Cost of sales and other direct production costs and depreciation, depletion and amortization was the most comparable financial measures calculated in accordance with GAAP to Total Cash Cost, Net of By-product Credits.

The following table calculates Total Cash Cost, Net of By-product Credits, per Silver and Gold Ounce (in thousands, except per-ounce amounts):

      Total, Greens Creek and Lucky Friday
Three Months Ended     Six Months Ended
June 30, June 30,
2013     2012 2013     2012
Total cash cost, before by-product credits (1) $ 61,777 $ 46,762 $ 121,700 $ 96,091
By-product credits (49,324 ) (45,352 ) (95,901 ) (91,705 )
Total cash cost, net of by-product credits 12,453 1,410 25,799 4,386
Divided by silver ounces produced 2,237 1,365 4,137 2,694
Total cash cost, before by-product credits, per silver ounce 27.61 34.25 29.42 35.67
By-product credits per silver ounce (22.05 ) (33.22 ) (23.18 ) (34.04 )
Total Cash Cost, Net of By-product Credits, per Silver Ounce $ 5.56   $ 1.03   $ 6.24   $ 1.63  
 
Reconciliation to GAAP:
Total cash cost, net of by-product credits $ 12,453 $ 1,410 $ 25,799 $ 4,386
Depreciation, depletion and amortization 16,888 9,879 30,895 19,540
Treatment costs (18,972 ) (16,164 ) (37,569 ) (33,859 )
By-product credits 49,324 45,352 95,901 91,705
Change in product inventory 8,436 2,101 3,832 3,906
Reclamation and other costs 536   473   639   324  

Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP)

$ 68,665   $ 43,051   $ 119,497   $ 86,002  
 

      Greens Creek Unit
Three Months Ended     Six Months Ended
June 30, June 30,
2013     2012 2013     2012
Total cash cost, before by-product credits (1) $ 51,342 $ 46,762 $ 105,250 $ 96,091
By-product credits (45,878 ) (45,352 ) (90,844 ) (91,705 )
Total cash cost, net of by-product credits 5,464 1,410 14,406 4,386
Divided by silver ounces produced 2,019 1,365 3,799 2,694
Total cash cost, before by-product credits, per silver ounce 25.43 34.26 27.70 35.67
By-product credits per silver ounce (22.72 ) (33.22 ) (23.91 ) (34.04 )
Total Cash Cost, Net of By-product Credits, per Silver Ounce $ 2.71   $ 1.03   $ 3.79   $ 1.63  
 
Reconciliation to GAAP:
Total cash cost, net of by-product credits $ 5,464 $ 1,410 $ 14,406 $ 4,386
Depreciation, depletion and amortization 14,743 9,879 27,422 19,540
Treatment costs (17,493 ) (16,164 ) (35,306 ) (33,859 )
By-product credits 45,878 45,352 90,844 91,705
Change in product inventory 8,869 2,101 4,707 3,906
Reclamation and other costs 524   473   624   324  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 57,985   $ 43,051   $ 102,697   $ 86,002  
 
      Lucky Friday Unit (2)
Three Months Ended     Six Months Ended
June 30, June 30,
2013     2012 2013     2012
Total cash cost, before by-product credits (1) $ 10,435 $ $ 16,450 $
By-product credits (3,446 ) (5,057 )
Total cash cost, net of by-product credits 6,989 11,393
Divided by silver ounces produced 217 338
Total cash cost, before by-product credits, per silver ounce 48.09 48.67
By-product credits per silver ounce (15.88 ) (14.96 )
Total Cash Cost, Net of By-product Credits, per Silver Ounce $ 32.19   $ $ 33.75   $
Reconciliation to GAAP:
Total cash cost, net of by-product credits $ 6,989 $ $ 11,393 $
Depreciation, depletion and amortization 2,145 3,473
Treatment costs (1,479 ) (2,263 )
By-product credits 3,446 5,057
Change in product inventory (433 ) (875 )
Reclamation and other costs 11   15  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 10,679   $ $ 16,800   $
 

      Casa Berardi Unit (3)
Three Months Ended     Six Months Ended
June 30, June 30,
2013     2012 2013     2012
Total cash cost, before by-product credits (1) $ 7,804 $ $ 7,804 $
By-product credits (37 ) (37 )
Total cash cost, net of by-product credits 7,767 7,767
Divided by gold ounces produced 6,740 6,740
Total cash cost, before by-product credits, per gold ounce 1,158

 

1,158

 

By-product credits per silver ounce (5.49 )

 

(5.49 )

 

Total Cash Cost, Net of By-product Credits, per Gold Ounce $ 1,152   $ $ 1,152   $
Reconciliation to GAAP:
Total cash cost, net of by-product credits $ 7,767 $ $ 7,767 $
Depreciation, depletion and amortization 3,324 3,324
Treatment costs (9 ) (9 )
By-product credits 37 37
Change in product inventory 414 414
Reclamation and other costs 21   21  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 11,554   $ $ 11,554   $
 

(1)

  Includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, net of by-product revenues earned from all metals other than the primary metal produced at each unit.
 

(2)

Production was temporarily suspended at the Lucky Friday Unit during 2012 as work was performed to rehabilitate the Silver Shaft, the primary access from surface to the underground workings at the Lucky Friday mine. Care and maintenance income and expense related to the suspension of production at the Lucky Friday are included in a separate line item under Other operating expenses on the Condensed Consolidated Statement of Operations and Comprehensive Income (Unaudited), and have been excluded from the calculation of Total Cash Cost, Before By-product Credits for the three- and six-month periods ended June 30, 2013 and 2012.
 

(3)

On June 1, 2013, we completed the acquisition of Aurizon Mines Ltd., which gave us 100% ownership of the Casa Berardi mine in Quebec, Canada. The information presented reflects our ownership of Casa Berardi commencing as of that date.
 

This release also refers to a non-GAAP measure of earnings after adjustments. Earnings After Adjustments and Earnings After Adjustments per share are non-GAAP measures which are indicators of our performance. They exclude certain impacts which are of a nature which we believe are not reflective of our underlying performance. Management believes that earnings after adjustments per common share provides investors with the ability to better evaluate our underlying operating performance. The following table reconciles net income applicable to common shareholders to earnings after adjustments applicable to common shareholders (in thousands, except per share amounts):

      Three Months Ended June 30,     Six Months Ended June 30,
2013     2012     2013     2012
Net income (loss) applicable to common shareholders (GAAP) $ (24,996 )     $ 2,386   $ (14,040 )     $ 14,820
Adjusting items:
Gains on derivatives contracts (6,541 ) (6,171 ) (28,080 ) (940 )
Environmental accruals 330 527 330 1,296
Provisional price losses (gains) 15,095 1,510 17,795 (3,627 )
Lucky Friday suspension-related costs (income) (2,840 ) 6,465 (1,342 ) 12,631
Aurizon acquisition costs 20,308 25,600
Aurizon product inventory fair value adjustment 550 550
Income tax effect of above adjustments (12,106 ) (513 ) (6,684 ) (3,276 )
Earnings (loss) after adjustments applicable to common shareholders $ (10,200 ) $ 4,204   $ (5,871 ) $ 20,904  
Weighted average shares - basic 303,566 285,312 294,317 285,303
Weighted average shares - diluted 303,566 295,160 294,317 296,100
Basic earnings (loss) after adjustments per common share $ (0.03 ) $ 0.01 $ (0.02 ) $ 0.07
Diluted earnings (loss) after adjustments per common share $ (0.03 ) $ 0.01 $ (0.02 ) $ 0.07
 

This release refers to a non-GAAP measure of Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), which is a measure of our operating performance. Adjusted EBITDA is calculated as net income before the following items: interest expense, income tax provision, depreciation, depletion, and amortization expense, exploration expense, pre-development expense, Aurizon acquisition costs, Lucky Friday suspension-related costs, interest and other income (expense), gains and losses on derivative contracts, and provisional price gains and losses. Management believes that, when presented in conjunction with comparable GAAP measures, Adjusted EBITDA is useful to investors in evaluating our operating performance. The following table reconciles net income to Adjusted EBITDA:

Dollars are in thousands

      Three Months Ended     Six Months Ended
June 30, 2013     June 30, 2012     June 30, 2013     June 30, 2012
Net income (loss) $ (24,858 )     $ 2,524     $ (13,764 )     $ 15,096
 
Plus: Interest expense, net of amount capitalized 6,454 505 7,158 972
Plus/(Less): Income taxes (6,795 ) 693 620 8,008
Plus: Depreciation, depletion and amortization 20,123

11,530

34,834 22,799
Plus: Exploration expense 6,221 7,146 12,714 12,757
Plus: Pre-development expense 4,512 3,471 9,303 6,837
Plus: Aurizon acquisition costs 20,308 25,600
Plus: Aurizon product inventory fair value adjustment 550 550
Plus/(Less): Lucky Friday suspension-related costs (income) (2,840 ) 6,465 (1,342 ) 12,631
Plus/(Less): Interest and other (income) expense (685 ) (32 ) (572 ) (181 )
Less: Gains on derivative contracts (6,541 ) (6,171 ) (28,080 ) (940 )
Plus/(Less): Provisional price (gains)/losses 15,095   1,510   17,795   (3,627 )
 
Adjusted EBITDA $ 31,544   $ 27,641   $ 64,816   $ 74,352  
 

Hecla Estimated Ore Reserves and Resources
(As of December 31, 2012 unless otherwise noted)
 
Proven Reserves
                  Tons     Silver     Gold     Lead     Zinc     Silver     Gold     Lead     Zinc
Asset     Location     Ownership     (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     Tons     Tons
Greens Creek (a)     United States     100.0%     12     9.3     0.10     2.7     7.8     112     1     330     940
Lucky Friday (a)     United States     100.0%     2,207     12.1     0.00     7.4     2.7     26,779     --     163     59
Casa Berardi (1)     Canada     100.0%     1,099     --     0.18     --     --     --     192     --     --
Total                 3,318                             26,891     193     493     999
                                                                   
Probable Reserves
                  Tons     Silver     Gold     Lead     Zinc     Silver     Gold     Lead     Zinc
Asset     Location     Ownership     (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)
Greens Creek (a)     United States     100.0%     7,846     12.0     0.09     3.4     9.0     94,481     718     267,410     702,300
Lucky Friday (a)     United States     100.0%     1,932     14.8    

--

    8.7     3.2     28,676     --     167,390     62,300
Casa Berardi (1)     Canada     100.0%     7,950     --     0.16     --     --     --     1,269     --     --
Total                 17,728                             123,157     1,987     434,800     764,600
                                                                   
Proven and Probable Reserves
                  Tons     Silver     Gold     Lead     Zinc     Silver     Gold     Lead     Zinc
Asset     Location     Ownership     (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)
Greens Creek     United States     100.0%     7,857     12.0     0.09     3.4     9.0     94,594     719     267,740     703,230
Lucky Friday     United States     100.0%     4,138     13.5     0.00     8.0     3.0     55,454     --     330,740     120,860
Casa Berardi     Canada     100.0%     9,049     --     0.16     --     --     --     1,461     --     --
Total                 21,044                             150,048     2,180     598,480     824,090
                                           

Measured Resources
            Tons     Silver     Gold     Lead     Zinc     Silver     Gold     Lead     Zinc
Asset     Location     Ownership     (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)
Greens Creek (2)(a)     United States     100.0%     --     --     --     --     --     --     --     --     --
Lucky Friday (3)(a)     United States     100.0%     10,608     5.8     --     3.9     2.4     61,313     --     417,130     259,420
Casa Berardi (4)     Canada     100.0%     1,981     --     0.17     --     --     --     338     --     --
Heva - Hosco (5)     Canada     100.0%     32,465     --     0.04     --     --     --     1,295     --     --
San Sebastian     Mexico     100.0%     --     --     --     --     --     --     --     --     --
San Juan Silver     United States     100.0%     --     --     --     --     --     --     --     --     --
Star     United States     100.0%     --     --     --     --     --     --     --     --     --
Total                 45,054                             61,313     1,633     417,130     259,420
                                                                   
Indicated Resources
Tons Silver Gold Lead Zinc Silver Gold Lead Zinc
Asset     Location     Ownership     (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)
Greens Creek (2)(a)     United States     100.0%     449     5.9     0.12     3.2     7.0     2,650     54     14     32
Lucky Friday (3)(a)     United States     100.0%    

8,420

    5.6     --     3.7     2.2     47,391     --     314,330     181,050
Casa Berardi (4)     Canada     100.0%     10,185     --     0.11     --     --     --     1,129     --     --
Heva - Hosco (5)     United States     100.0%     34,019     --     0.04     --     --     --     1,299     --     --
San Sebastian (6)(a)     Mexico     100.0%     1,297     3.4     0.06     1.1     1.5     4,371     74     14,640     19,080
San Juan Silver (7)(a)     United States     100.0%     515     14.8     --     2.1     1.1     7,619     --     10,760     5,820
Star (8)(a)     United States     100.0%     1,061     3.0     --     6.4     7.5     3,235     --     68,340     80,100
Total                 55,945                             65,266     2,556     408,084     286,082
                                                                   
Measured & Indicated Resources
Tons Silver Gold Lead Zinc Silver Gold Lead Zinc
Asset     Location     Ownership     (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)
Greens Creek (2)(a)     United States     100.0%     449     5.9     0.12     3.2     7.0     2,650     54     14     32
Lucky Friday (3)(a)     United States     100.0%     19,029     5.7     --     3.8     2.3     108,704     --     731,460     440,470
Casa Berardi (4)     Canada     100.0%     12,165     --     0.12     --     --     --     1,467     --     --
Heva - Hosco (5)     Canada     100.0%     66,495     --     0.04     --     --     --     2,595     --     --
San Sebastian (6)(a)     Mexico     100.0%     1,297     3.4     0.06     1.1     1.5     4,371     74     14,640     19,080
San Juan Silver (7)(a)     United States     100.0%     515     14.8     --     2.1     1.1     7,619    

--

    10,760     5,820
Star (8)(a)     United States     100.0%     1,061     3.0     --     6.4     7.5     3,235     --     68,340     80,100
Total                 101,011                             126,579     4,190     825,214     545,502
                                                                   

Inferred Resources
            Tons     Silver     Gold     Lead     Zinc     Silver     Gold     Lead     Zinc
Asset     Location     Ownership     (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)
Greens Creek (9)(a)     United States     100.0%     3,785     11.4     0.10     2.4     6.2     42,977     379     92,130     233,110
Lucky Friday (10)(a)     United States     100.0%     6,922     9.1     0.00     5.6     2.3     62,651     --     384,930     158,240
Casa Berardi (4)     Canada     100.0%     5,302     --     0.11     --     --     --     590     --     --
Heva - Hosco (5)     Canada     100.0%     18,569     --     0.04     --     --     --     831     --     --
San Sebastian (11) (a)     Mexico     100.0%     5,696     4.2     0.03     0.5     0.6     23,897     160     25,880     36,040
San Juan Silver (12)(a)     United States     100.0%     3,078     10.7     --     1.3     1.1     33,096     35     40,990     34,980
Star (13)(a)     United States     100.0%     2,972     3.2     --     5.9     5.5     9,378     --     174,080     163,480
Monte Cristo (14)(a)     United States     100.0%     913     0.3     0.14     --     --     271     131     --     --
Total                 46,323                             172,270     2,126     718,010     625,850
 
Note: All estimates are in-situ, Resources are Exclusive of Reserves
* Totals may not represent the sum of parts due to rounding
 

(a)

Underground Mineral Reserves and Mineral Resources are based on $1400 gold, $26.50 silver, $0.85 lead, $0.85 zinc and $3.40 copper

(1)

Underground Mineral Reserves and Resources are based on $1,350 gold and a US$/CAN$ exchange rate of 1:1. Reserve diluted to an average of 23.7% to minimum width of 3 meters

Open pit Mineral Reserves of the East Mine were estimated in February 2009 based on $700 gold and a US$/CAN$ exchange rate of 0.85:1. Reserve diluted to 20%
Open pit Mineral Reserves of the Principal Mine were estimated in February 2011 based on $950 gold and a US$/CAN$ exchange rate of 1:1. Reserve diluted to 10%

(2)

Indicated Resources only in Gallagher orebody, factored for dilution and mining recovery.

(3)

Measured and Indicated resources from Gold Hunter and Lucky Friday vein systems diluted and factored for expected mining recovery.

(4)

Measured, Indicated and inferred resources are based on $1,350 gold and a US$/CAN$ exchange rate of 1:1. Underground resources are diluted to 20% to minimum mining width of 2 to 3 meters

Open pit Mineral Resources of the Principal Mine were estimated based on $950 gold and a US$/CAN$ exchange rate of 1:1
Open pit Mineral Resources of the 160 Zone were based on $1,250 gold and a US$/CAN$ exchange rate of 1:1, Resources diluted to 12%

(5)

Measured & Indicated & Inferred resources are based on $1,000 gold and a US$/CAN$ exchange rate of 1:1. The resources are in-situ (without dilution and ore lost) (Resource completed in 2011)

A subsequent feasibility study in June 2012 converted some of this resource to reserve. Hecla considers the Heva-Hosco mineralization as a resource only.

(6)

Indicated resources diluted to minimum mining width of 2.0 meters for Hugh Zone, 1.5 meters for Andrea Vein.

(7)

Indicated resources diluted to minimum mining width of 6.0 feet for Bulldog.

(8)

Indicated resources, diluted to minimum mining width of 4.3 feet.

(9)

Inferred Resources in East Ore, Gallagher, NWW, 200S orebodies, factored for dilution and mining recovery.

(10)

Inferred Resources from Gold Hunter and Lucky Friday vein systems diluted and factored for expected mining recovery.

(11)

Inferred Resources diluted to minimum mining width of 2.0 meters for Hugh Zone, 1.5 meters for Andrea & Middle veins.

San Sebastian Hugh Zone also contains 29,720 tons of Cu at 1.46% Cu within 1,949,800 tons of ore.

(12)

Inferred Resources diluted to minimum mining width of 6.0 feet for Bulldog, 5.0 feet for Equity & North Amethyst veins.

(13)

Inferred Resources diluted to minimum mining width of 4.3 feet.

(14)

Inferred Resource diluted to minimum mining width of 5.0 feet.

 

Assay Results - Q2 2013
Greens Creek (Alaska)
          True           Depth From
Drill Hole Drill Hole Sample Sample Width Silver Gold Mine Portal
Zone   Number   Azm/Dip   From   To   (feet)   (oz/ton)   (oz/ton)   Zinc (%)   Lead (%)   (feet)
Deep 200 South   GC3587   007/-54   180.60   184.0   3.4   7.48   0.07   9.46   3.78   -1398
        and   398.90   409.7   10.8   32.40   0.57   4.31   2.42   -1569
    GC3588   010/-65   169.90   172.3   2.4   27.43   0.07   8.87   4.35   -1404
        and   173.00   176.9   3.9   29.58   0.09   16.16   6.62   -1407
    GC3589   026/-72   158.80   163.8   5.0   10.33   0.08   7.08   2.54   -1399
        and   536.70   543.0   5.3   26.48   0.39   9.72   4.71   -1758
    GC3591   063/-40   164.60   165.1   0.5   15.93   0.03   8.10   3.00   -1353
        and   177.00   179.0   1.8   53.55   1.02   7.81   3.50   -1360
        and   185.20   198.3   7.5   47.39   0.12   16.42   7.48   -1365
        and   199.40   200.5   1.0   70.52   0.11   18.09   7.48   -1375
        and   201.10   203.5   2.0   178.28   1.16   14.15   7.01   -1376
    GC3594   063/-61   157.70   158.6   0.9   28.75   0.06   11.61   5.37   -1386
        and   159.70   165.3   5.6   35.51   0.07   13.61   6.35   -1390
    GC3596   63/-69   170.00   173.3   3.2   58.18   0.05   1.88   0.92   -1409
        and   Including       1.2   116.10   0.09   3.50   1.82   -1410
        and   336.90   339.5   2.6   22.40   0.11   1.09   0.57   -1566
        and   366.00   378.0   6.0   16.05   0.08   0.64   0.22   -1593
    GC3597   63/-74   172.70   177.1   4.4   28.74   0.04   2.75   1.23   -1415
        and   527.60   534.4   6.8   19.09   0.58   10.78   4.60   -1760
    GC3600   63/-80   174.10   176.8   2.7   28.21   0.28   4.04   1.83   -1421
        and   547.30   555.5   7.0   21.40   0.48   10.44   4.27   -1789
    GC3610   063/-55   158.40   169.0   10.6   14.57   0.04   4.63   2.14   -1381
        and   171.00   178.9   7.9   18.80   0.08   10.78   4.38   -1391
        and   423.20   436.8   13.6   11.36   0.36   14.94   6.80   -1596
        and   469.60   470.6   0.8   19.80   0.15   5.76   4.80   -1633
    GC3611   063/-67   183.20   186.8   3.6   17.24   0.05   1.86   0.86   -1419
        and   221.90   224.4   1.3   28.87   0.23   0.29   0.16   -1455
        and   265.00   276.0   5.5   13.24   0.18   0.35   0.12   -1497
        and   284.20   290.4   3.0   28.27   0.28   0.57   0.27   -1513
    GC3603   44/-79   178.70   200.7   20.0   19.99   0.07   7.82   3.34   -1424
        and   Including       4.0   44.22   0.06   7.20   3.43   -1428
    GC3604   325/-86   180.00   196.2   16.2   24.27   0.09   10.95   4.34   -1421
        and   Including       0.9   65.42   0.05   20.99   9.99   -1423
        and   629.00   667.8   27.0   7.48   0.22   26.19   9.43   -1875
        and   689.70   699.3   6.7   20.46   0.22   6.68   3.30   -1938
        and   Including       0.7   62.21   1.03   23.24   12.00   -1943
        and   925.20   932.8   5.3   25.76   0.75   3.99   3.18   -2170
    GC3608   029/-83   175.10   176.7   1.6   12.57   0.04   17.56   4.24   -1422
        and   182.70   192.0   9.3   25.18   0.06   12.26   5.41   -1430
    GC3621   273/-63   189.80   200.0   7.5   23.16   0.04   2.20   1.28   -1321
        and   205.00   211.0   4.5   77.06   0.35   2.00   1.03   -1336
        and   222.30   227.2   3.5   42.92   0.09   8.27   3.48   -1341
    GC3626   259/-50   237.40   246.0   7.0   41.06   0.01   11.18   12.88   -1383
        and   Including       0.8   188.56   0.08   3.47   1.97   -1434
    GC3585   243/-81   185.20   192.1   4.0   35.60   0.05   7.31   3.27   -1435
    GC3592   243/-63   234.00   254.8   18.5   19.47   0.02   7.77   3.24   -1456
    GC3593   243/-44   280.50   297.9   13.9   28.73   0.06   2.00   0.96   -1443
        and   322.60   324.6   1.6   67.70   0.04   10.10   4.44   -1473
        and   335.80   337.9   1.5   16.29   0.01   4.23   1.92   -1482
        and   339.20   341.60   1.6   29.34   0.01   6.09   2.80   -1485
 

Casa Berardi (Quebec)

                Depth
From
True Mine
Drill Hole Drill Hole Sample Sample Width Gold Surface
Zone   Drill Hole Number   Section   Azm/Dip   From   To   (feet)   (oz/ton)   (feet)
Lower 118 (118-27)   CBP-0790-030A   12,000   179/-42   85.3   187.0   57.1   0.24   -2682.1
    CBP-0790-031   12,000   179/-35   72.2   141.7   50.5   0.25   -2649.6
    CBP-0790-032   12,000   180/-29   70.2   128.0   48.6   0.26   -2635.8
    CBP-0790-033   12,000   180/-21   68.9   114.8   43.3   0.27   -2621.1
    CBP-0790-034   12,000   179/-11   66.3   105.0   37.7   0.24   -2603.7
    CBP-0790-039   11,970   179/-32   74.5   91.9   16.1   0.43   -2630.2
    CBP-0790-053   12,015   177/-34   77.1   156.5   68.9   0.28   -2653.5
    CBP-0790-057   11,970   178/1   67.6   102.7   35.1   0.31   -2584.0
    CBP-0790-078   12,000   181/-55   119.1   210.0   57.4   0.25   -2725.4
    CBP-0790-079   12,015   180/-52   88.6   216.5   80.4   0.31   -2696.5
    CBP-0790-080   12,030   179/-44   81.4   137.8   45.9   0.26   -2668.3
Upper 118 (118-43)   CBP-0530-069   12,150   164/0   160.8   187.0   16.4   1.13   -1723.4
    CBP-0530-069   12,150   and   202.4   232.9   9.8   1.69   -1718.8
    CBP-0530-070   12,165   151/7   168.3   216.5   26.6   1.25   -1708.7
    CBP-0530-071   12,130   139/10   203.1   225.7   16.4   1.00   -1687.3
    CBP-0530-083   12,135   164/0   168.0   177.2   6.6   1.14   -1706.7
    CBP-0530-084   12,150   162/-3   122.4   155.5   19.7   0.55   -1740.2
(118-45)   CBP-0530-094   12,195   152/0   137.8   187.0   27.9   0.47   -1728.3
(118-43)   CBP-0530-094   12,195   and   310.0   372.7   19.7   1.25   -1718.2
    CBP-0530-099   12,180   139/1   191.3   210.0   16.4   0.82   -1725.4
Principal (127-16)   CBP-0300-004   12,630   176/23   107.0   121.4   12.5   0.38   -903.9
(127-16)   CBP-0300-008   12,630   180/42   131.2   145.3   12.1   0.42   -854.3
(127-16)   CBP-0300-009   12,630   181/58   164.0   189.0   16.4   0.24   -796.9
    CBP-0300-012   12,660   178/9   116.5   146.7   29.5   0.30   -929.8
    CBP-0300-013   12,660   178/22   108.3   131.2   23.0   0.31   -903.5
(127-17)   CBP-0300-015   12,645   180/11   82.0   101.7   16.4   0.32   -931.4
(127-17)   CBP-0300-024   12,645   180/-56   157.5   170.6   9.2   0.31   -1088.6
    CBP-0300-031   12,660   180/-47   128.9   140.4   10.5   0.76   -1054.5
 

Lucky Friday (Idaho)

          Core   True          
Drill Hole Drill Hole Sample Sample Length Width Ag Zinc Lead Mine Elevation
Zone   Number   Azm/Dip   From   To   (feet)   (feet)   (oz/ton)   (%)   (%)   Level   (feet)
90   GH70-04   163/-56   375.3   384.5   9.2   4.8   6.47   4.6   9.6   6,668   -3288
81   GH70-04   163/-55   392.0   402.6   10.6   5.6   3.50   0.1   0.2   6,682   -3302
80   GH70-04   163/-55   407.7   414.4   6.7   3.6   31.40   2.3   24.0   6,694   -3314
70   GH70-04   162/-52   508.3   509.3   1.0   0.6   46.15   1.2   29.7   6,772   -3392
50   GH70-04   162/-47   709.0   721.5   12.5   7.8   3.20   2.1   3.9   6,929   -3549
40   GH70-04   162/-46   743.6   753.3   9.7   6.1   12.10   5.7   11.3   6,953   -3573
30   GH70-04   163/-46   758.6   770.4   11.8   7.5   35.23   3.4   10.5   6,964   -3584
5   GH70-04   164/-47   829.7   831.8   2.1   1.3   9.90   6.7   13.1   7,012   -3632
90   GH72-04   154/-64   675.4   687.5   12.1   4.5   6.48   0.2   2.6   6,982   -3589
80   GH72-04   151/-63   787.8   811.3   23.5   8.6   12.45   2.9   7.8   7,107   -3695
41   GH72-04   153/-58   1,186.8   1,194.5   7.7   3.4   22.59   6.4   19.6   7,426   -4037
40   GH72-04   153/-57   1,194.5   1,206.4   11.9   5.3   4.54   6.8   3.3   7,440   -4046
30   GH72-04   153/-57   1,214.4   1,218.7   4.3   2.0   19.38   10.7   12.1   7,440   -4060
 

San Sebastian (Mexico)

        Drilled   True       Drilled   True    
Drill Hole From To Width Width Au Width Width Au Ag
Zone   Number   (meters)   (meters)   (meters)   (meters)   ppm   Ag ppm   (feet)   (feet)   (oz/ton)   (oz/ton)
Middle Vein   SS-462   133.06   133.63   0.6   0.56   0.44   223.14   1.9   1.8   0.013   6.51
Middle Vein   SS-472   246.94   248.38   1.4   1.24   0.63   392.53   4.7   4.1   0.018   11.45
Middle Vein   SS-474   297.70   299.00   1.3   0.80   1.72   1,152.22   4.3   2.6   0.050   33.61
Middle Vein   SS-475   307.89   308.30   0.4   0.34   0.72   569.00   1.3   1.1   0.021   16.60
Middle Vein   SS-476   259.93   260.29   0.4   0.34   0.49   630.00   1.2   1.1   0.014   18.38
Middle Vein   SS-480   298.92   299.84   0.9   0.74   1.15   550.00   3.0   2.4   0.034   16.04
Middle Vein   SS-488   194.23   194.80   0.6   0.49   2.56   2,235.53   1.9   1.6   0.075   65.20



Hecla Mining Company
Mike Westerlund, 800-HECLA91 (800-432-5291)
VP of Investor Relations
hmc-info@hecla-mining.com
www.hecla-mining.com

KEYWORDS:   United States  North America  Canada  Idaho

INDUSTRY KEYWORDS:

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