Hecla Executives Look Beyond Bad Year, Set Sights On Future

Shareholders of Hecla Mining Co. seemed more inquisitive than usual at Friday’s annual meeting, as the company reviewed its worst financial year ever.

Hecla lost about $110 million in 1995, mostly from the write-down of the company’s $97 million investment in its Grouse Creek gold mine in central Idaho.

Shareholders quizzed Hecla Chairman and Chief Executive Art Brown for about 15 minutes, whereas no one asked any questions last year.

Art Sachs of Clarkston, Wash., asked Brown whether the company still employed the engineers and consultants used on Grouse Creek. The mine turned out to have far less gold than the company thought, causing the big write-down.

“That’s a complicated question, because we used 11 firms,” Brown said. “But in a word, no.”

Brown admitted the company had made some mistakes in planning Grouse Creek, which the company will still mine for about another year. Brown blamed poor geographic modeling.

Despite the massive write-down in 1995 - the company’s fifth straight year of losses - Brown said at a press conference after the meeting that he did not expect to have his compensation package changed by the board.

Hecla’s bad year didn’t prevent the company from moving forward on exploration projects like the Lucky Friday expansion near Mullan, Brown said. Instead of using expected revenues from Grouse Creek to finance exploration, Hecla raised $22 million through a stock offering in January and reworked its line of credit.

The company looked to the future Friday, as the board of directors met to consider the Rosebud project in southern Nevada. Hecla studies suggest the mine could provide up to 100,000 ounces of gold for five or six years, Brown said.

The board agreed to have the company build the mine after the company’s staff finds a way to pay for the project, which will cost several million dollars, said Vicki Veltkamp, manager of corporate communications.

The board did announce the issuance of preferred share purchase rights for common stockholders. The rights will be exercised if one shareholder acquires 15 percent or more of Hecla’s common stock. The rights protect shareholder equity in the event of a takeover, Brown said.

The new rights replace an older plan that expired this year, Veltkamp said. Hecla is not a takeover target at this time, she said.

, DataTimes