With profits up, Hecla ponders mine expansion
Hecla Mining Co., which Tuesday announced what one analyst called “stellar results,” could decide next spring whether to proceed with a $150 million to $200 million expansion of its Lucky Friday Mine.
President Phillips Baker Jr. said he is “highly confident” the company will launch the project, which would exploit mineral deposits below the existing mine works at Mullan, Idaho. Executives are working on cost estimates for the four- to five-year expansion, he said.
Test drilling indicates mineralization richer than deposits that in the third quarter produced 930,258 ounces of silver, as well as zinc and lead, Baker said.
That output, combined with the 1.8 million ounces of silver produced at the Greens Creek Mine in Alaska, made Hecla the largest silver producer in the United States, the second largest producer of zinc, and the third largest producer of lead.
The result was a third-quarter profit of $22.5 million, a sharp reversal of the $7.2 million lost during the same period a year ago.
Per common share, the profit equals 9 cents compared with a 5-cent loss in 2009.
Quarterly revenues of $95.2 million were a record for the company, as was net cash flow from operations of $32.3 million.
Hecla finished the quarter with $85 million in cash. On Oct. 14, Baker said, the company used some of that money to retire $38.3 million in debt associated with the purchase in 2008 of the 70 percent of Greens Creek it did not own.
“Hecla is now an incredibly strong cash-generating facility,” said Baker, adding that the third quarter might have been the strongest in Hecla’s 118-year history.
He predicted metals prices will continue to strengthen.
The Lucky Friday Mine employs 253.
Hecla’s stock price jumped 74 cents, or 18 percent, to $4.85 Tuesday.