Hecla Cuts 1996 Loss To $40 Million

Hecla Mining Co. reported smaller losses than in the previous year, but still lost $40 million in 1996 due to another large write-down of a once-promising gold mine.

The loss was smaller than 1995’s loss of $110 million. In both years, significant write-downs for the company’s failed Grouse Creek mine damaged earnings for the silver and gold producer.

Hecla took a $38 million charge in the third quarter of last year to help clean up the Grouse Creek gold mine in central Idaho. In 1995, Grouse Creek cost the company $97 million when the grade of gold there fell well short of expectations.

For the fourth quarter of 1996, Hecla lost $1.9 million, or 4 cents a share, compared with a loss of $786,000, or 2 cents a share, for the same period in 1995.

Lower silver prices hurt earnings in the fourth quarter, but for the year Hecla received about the same price for silver as it did in 1995 and slightly more for gold.

The company’s costs for producing metals dropped 4.1 percent for gold and 7.2 percent for silver. The good news for Hecla, said corporate communications manager Vicki Veltkamp, is that costs will continue to drop for both silver and gold.

Hecla’s share of the Greens Creek mine in Alaska provides very low-cost silver and gold. With high-cost mines such as Grouse Creek and American Girl out of the company’s portfolio for the upcoming year, Hecla’s costs will continue to drop, she said.

Hecla is encouraged by results at its Lucky Friday expansion project in Mullan, Idaho.

The company hopes to make a final decision on whether or not to go ahead with the expansion in the coming months, Veltkamp said.

Hecla continues to search for more gold in Mexico to replace the gold properties that it has shut down. Hecla’s low-cost La Choya mine in Mexico has a little over a year of reserves left, and the company is looking for a way to replace those ounces, she said.

Hecla’s stock finished Thursday unchanged at $5.88 a share.

, DataTimes