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Hecla to reopen Lucky Friday

Mine closed for safety renovations after two deaths

Miners will return to the Lucky Friday Mine early next year, capping a yearlong shutdown at one of the Silver Valley’s largest private employers.

Hecla Mining Co. said Tuesday it will resume mining in the first quarter of 2013 and anticipates producing more than 2 million ounces of silver there next year.

Company officials said they’ve recalled all the workers needed to return to full production at the Mullan, Idaho, mine. Between mining and mine-expansion work, the total employment is expected to reach nearly 400 next year, which is more than double the highest number of workers on the payroll this year, President and CEO Phillips Baker Jr. said.

After a series of accidents at the Lucky Friday last year that included two fatalities, work stopped and more than 200 employees and contractors were laid off in January in response to an order from federal regulators to clean the mine’s main shaft to improve safety.

The suspension of mining has been the single biggest factor in Hecla’s financial performance this year. On Tuesday, the Coeur d’Alene-based company reported a loss of $885,000 in the third quarter, missing the forecast of analysts. Hecla’s net income was $55.9 million, or 19 cents per share, in the third quarter of 2011.

Silver production in the third quarter 2012 was up 19 percent from the previous quarter, to 1.6 million ounces. Operating cash flow for the quarter was $35.2 million, and revenue fell 32 percent to $81.9 million from the same quarter a year ago.

Hecla’s stock price Tuesday fell 6.5 percent, to $5.92.

Baker said he anticipates about 90 percent of the workers who were laid off are returning to work at the Lucky Friday. They have received safety training, including new techniques in risk assessment and accident prevention designed to improve safe work practices, the company said.

The closure followed a troubled year at the mine, which is in the midst of a $200 million expansion. Two men died in separate accidents – Larry “Pete” Marek, 53, in April 2011 and Brandon Gray, 26, last November – and seven workers were briefly trapped 5,900 feet underground by a rock burst last December.

Hecla has spent about $80 million at the Lucky Friday Mine this year, including about $25 million to clean and upgrade the main shaft.

The work included power-washing a buildup of sand and cement on the walls of the mile-deep shaft, which is used to transport workers and materials in and out of the mine.

The deposits were in danger of breaking off and falling thousands of feet down the shaft, according to the Mine Safety and Health Administration.

Cleanup of the main shaft advanced on schedule in the past three months and should be finished by the end of the year, Hecla said Tuesday.

Work crews are just 400 feet from the bottom of the 6,100-foot-deep shaft.

Hecla also is building a bypass around the area where a rock burst trapped miners in December 2011, the company said.

It will take several months to return to full production, officials said. The 2 million ounce target for 2013 is about 1 million ounces less than what the mine normally produces, Baker said.

Hecla also will resume work early next year on its No. 4 shaft project, expected to be completed in early 2016. The company has spent $90 million so far on the estimated $200 million expansion, which will extend to depths of 8,800 feet to reach richer silver deposits.

Coupled with other projects, the company’s goal is to produce 15 million ounces of silver a year by 2016.

Hecla also operates the Greens Creek mine in Alaska and has exploration properties in four silver mining districts in the U.S. and Mexico.

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