Hecla Mining Reports Silver Production Increased 60%

  COEUR D'ALENE, ID --Hecla Mining Company reported silver production of 2.4 million ounces for the second quarter of 2008, a 60% increase over the same period a year ago. Phillips S. Baker, Jr., Hecla Mining Company's President and Chief Executive Officer  said, "The second quarter has been a transformational quarter for Hecla. We acquired the remainder of the Greens Creek Joint Venture and sold our Venezuelan interests. Over the past 100 years Hecla has materially changed itself before, but this year's transformation is unique. Hecla now controls 100% of the two largest silver mines in the U.S. that will produce more than 35% of all U.S. silver production, and has large exploration programs in the historic southern Colorado (Creede) mining district, the historic Silver Valley (Idaho), and the world-class Mexican silver belt. We expect our mines' strong cash flow to continue to fund growth in production, margins and resources. We've added considerable mining and exploration expertise through our acquisition of the Greens Creek Joint Venture, and we've retained some talented people from our Venezuelan interests, so we are even better positioned to add value to both internal and newly acquired assets."
  Hecla has increased its 2008 annual exploration budget to a range of $23 million to $27 million as it incorporates 100% of the Greens Creek exploration program and commences activities at the San Juan Silver Joint Venture project in southern Colorado. In the first six months of the year, approximately $12.9 million was spent on exploration, including approximately $6.5 million at Lucky Friday and in North Idaho's Silver Valley, $3.5 million at the San Sebastian and Rio Grande projects in Mexico and $1.1 million at Greens Creek.
  A major underground drilling campaign during the second quarter at Greens Creek focused on the Gallagher zone, where drilling pinpointed the location and extent of the resource that dips to the west and plunges to the south. The mineralization is now better defined for over 200 feet and transitions from two bands of mineralization with widths totaling 63 feet to one thick band of mineralization with a 105-foot width. This adds 200 feet to the Gallagher zone that earlier was 700 feet in strike length, potentially adding 20% to the existing resource. Targets in the SW and East zones are the focus for the remaining 2008 exploration program at Greens Creek. Exploration drilling will focus on historic underground higher-grade intercepts in the SW zone and on results from recent surface drilling in the vicinity of the East zone.
  The 2008 surface exploration program began May 17 with two drill rigs. Drilling targeted a prospective area known as the 'Northeast Contact', which represents an extension of the mine contact rocks into an area northeast of the current mine workings. The drilling shows that these newly defined mine contacts are relatively flat-lying, can be correlated for over 800 feet and are still open in both directions. Assays are pending on all of these holes, but additional targets along this trend will be evaluated by drilling during the summer.
  Baker said, "Greens Creek's underground exploration program is exciting because we expect it to continue to add to the resource base, just as it has done over the past 20 years. The surface program has defined new mine 'contact' rocks to the northeast of the current workings. This new area has the potential to host new ore zones, which could result in a dramatic increase in resources in the future."
    At Lucky Friday, exploration drilling off the 5900 level (where mining is currently taking place) to the east of the current resource returned significant grades from several intermediate veins. These results show the potential for additional resources to be developed between the 6100 and 6400 levels, east of previous resource boundaries, and indicate the possibility for extending the mining area farther east. The drilling to the west, past a fault that previously limited the resource, has encountered mineralization.
  The Gap drilling program, which tests the mineralized structure above the current mine resource at Lucky Friday, is being evaluated. All seven holes have intersected multiple vein zones and assay results from this drilling are still pending. An analysis of this program is expected to be completed by the end of the third quarter.
  Elsewhere in northern Idaho's Silver Valley, the three-dimensional (3D) modeling and resource assessment has defined nine new, separate target areas for expansion of known mineralization. Baker said, "These targets are what we expected when we combined more than 100 years of historical data with 3D computer exploration techniques. It's now possible that these new target areas could be incorporated into next year's drilling program."
  Hecla's 500-square-mile San Sebastian land package is located in central Mexico, in the middle of the world's most prolific silver trend. Drilling, surface trenching and sampling are ongoing at this recently expanded property. The highlight of this quarter's exploration program is the identification of the Penascote target area that contains a strongly anomalous silver-in-soil anomaly, similar to the one observed over the past-producing Francine vein. In addition, three new vein systems were discovered northeast of Penascote. The Fernanda, Guadalupe, and Alto Guadalupe vein systems strike northwest and have been mapped for over 2.5 miles of strike length and range in width from 1.6 feet to more than 29 feet.
  At the Rio Grande project, located 31 miles south of San Sebastian, the 11-hole drilling program targeted the San Martin, El Leon, Jessica and Sacramento vein systems. Initial assay information has been returned, which includes a significant intercept in the San Martin vein. El Leon drilling consisted of five drill holes, with assays pending. Assays are also pending for drill holes in the Jessica and Sacramento veins.
  The San Juan Silver Joint Venture project in southern Colorado has received all approvals from the state and the U.S. Forest Service to begin exploration drilling. The first drill is moving into place, with two additional drills expected in the future. The intent of the program is to confirm the remaining reserves and resources in the Bulldog Vein system that were reported in prior estimates by the previous operator, and add new resources in the Bulldog Vein.
  Baker said, "It has been encouraging to receive widespread public support for this project in the Creede area and the cooperation from the various regulatory agencies. If the drilling is successful in this highly mineralized mining camp, we could quickly add meaningful resources to our account."
  From continuing operations in the second quarter of 2008, Hecla produced approximately 2.4 million ounces of silver, 15,257 ounces of gold, 16,000 tons of zinc, and 9,000 tons of lead at an average cash cost of $3.43 per ounce of silver, after by-product credits. Hecla anticipates producing a total of 9 million ounces of silver in 2008, at an average cash cost of approximately $3.25 per ounce, given current metals prices. The anticipated increase in cash costs per ounce for 2008 is the result of higher smelter charges and lower by-product metals prices. Even with increased costs, Hecla expects to maintain its position as a low-cost silver producer relative to its peers and continues to benefit from a wide margin between costs and current metals prices.
The company's address is 6500 N. Mineral Drive, Suite 200, Coeur d'Alene, ID 83815, 208.769.4100, fax: 208.769.7612, email: [email protected].