Hecla and Kinross both report record achievements

first_imgHecla has reported the highest revenue and cash flow in its 117-Year History, as well as record low silver cash costs. Kinross has also reported records and declred its first divided.Hecla reported 2007 income applicable to common shareholders of $52.2 million, on revenue of $222.6 million. This compares to 2006 income of $68.6 million, on revenue of $218.9 million. Revenue and cash provided by operations for 2007 set record highs for Hecla. Earnings in 2007 were at their second-highest levels in the company’s 117-year history, just behind 2006 results, despite a significant reduction in gold production from La Camorra unit as mining transitioned to a single deposit. Hecla’s average total cash cost for silver in 2007 was the lowest on record, at negative $2.81/oz, after by-product credits. The 2007 financial results included a non-cash charge in the second quarter of $46 million for environmental accruals, offset by a gain of $63 million on the sale of the Hollister Development Block. In 2006, earnings were positively impacted by a gain of $41 million on sales of investments and other assets.Hecla Mining Company President and Chief Executive Officer Phillips S. Baker, Jr. said, “The resurgence in metals prices, operational excellence at our silver mines, a 25% improvement in safety, and exploration success all contributed to another remarkable year for Hecla in 2007. And, we’re off to a great start in 2008 by announcing the largest acquisition in our company’s history. Last week, we reached agreement with Rio Tinto to acquire the companies that own the remaining 70.27% of the Greens Creek silver mine in Alaska. After the anticipated close of that transaction in the second quarter, we will control 100% of the fifth largest silver mine in the world, and Hecla’s annual production will nearly double to approximately 11 Moz of silver.” The transaction price is $750 million, and the acquisition is accretive to Hecla on most major metrics, including production, cash costs per ounce, cash flow, and increases in silver, gold, zinc and lead reserves and resources. 2007 Hecla highlights also included 5.6 Moz of silver produced at the average total cash cost of negative $2.81/oz, after by-product credits. It was the second best year in Hecla’s long history for earnings; the best year for cash provided by operations and revenue.The company has started surface exploration drilling in the Silver Valley and a prefeasibility study is underway to determine potential for expanding production at Lucky Friday. The company also reported a 10% increase in silver resources.The Kinross highlights included gold equivalent production was 384,598 oz in the fourth quarter of 2007, compared with 362,028 oz for the same period last year. For the full year 2007, gold equivalent production was in line with previously-announced guidance at 1,589,321 oz, an increase of 8 % over full-year 2006. Revenue was $281.4 million in the fourth quarter, a 22% increase over the same period last year, and the average realised gold price was $796/oz. Full-year revenue was a record $1.1 billion, a 21% increase over the same period last year, and the average realized gold price was $697/oz. Cost of sales per ounce was $419 in the fourth quarter on sales of 356,329 oz (gold equivalent), compared with $317/oz on sales of 375,684 oz (gold equivalent) in the fourth quarter 2006.Net earnings for the fourth quarter were $173.1 million, compared with net earnings of $41.0 million in 2006. Full-year net earnings were $334.0 million, compared to $165.8 million for full-year 2006. Earnings for the fourth quarter included a gain relating to the asset swap transaction with Goldcorp. The Board of Directors has declared a dividend of $0.04 per share, payable on March 31, 2008 to shareholders of record on March 24, 2008. The present intention is to pay a dividend semi-annually.Cash flow from operating activities was $72.8 million in the fourth quarter of 2007, compared to $91.2 million for the corresponding period in 2006, and $341.2 million for the full year 2007 compared with $292.0 million for the full-year 2006. Cash balances were $551.3 million at December 31, 2007 compared to $154.1 million at December 31, 2006.Capital expenditures were $184.9 million in the fourth quarter and $601.1 million for the full year. Construction at the Paracatu, Kupol and Buckhorn projects continues to progress well and all three projects are expected to begin commissioning on schedule. The Board of Directors has approved a $270 million heap leach and pit expansion project at the Fort Knox mine which is expected to extend the life of the mine by five years and double life-of-mine production to 2.9 Moz (gold equivalent).Proven and Probable gold reserves increased by 18.7 Moz or 67%, from 27.9 Moz on December 31, 2006 to 46.6 Moz on December 31, 2007.last_img

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