Hecla’s Net Income Doubles in the First Quarter 2011

Hecla’s Net Income Doubles in the First Quarter 2011 

COEUR D’ALENE, ID – Hecla Mining Company reported first quarter financial and operational results. Hecla reported net income applicable to common shareholders of $43.2 million. First quarter silver production was 2.5 million ounces at a total cash cost of $1.03 per ounce, net of by-products.

╥Hecla’s first quarter results were records for revenue, gross profit, and net income reflecting the strong operating performance and metals prices╙

╥Hecla’s first quarter results were records for revenue, gross profit, and net income reflecting the strong operating performance and metals prices,╙ said Hecla╒s President and Chief Executive Officer, Phillips S. Baker, Jr. ╥We expect our balance sheet and growing cash flow will meet our financial obligations, fund capital projects that expand our operations, and advance organic growth projects on our large land packages in the U.S. and Mexico. Notwithstanding these results, we are deeply saddened by the loss of Larry Marek, a family member, friend and colleague. He will be greatly missed. The strength and dedication of the Lucky Friday team during the rescue and recovery efforts was unwavering. I would like to extend my gratitude to all of those who had us in their thoughts and prayers and helped us during this difficult time.╙

Hecla reported strong first quarter 2011 revenues and cash flow from operating activities as a result of Lucky Friday’s and Greens Creek╒s performance and higher metals prices. Net income applicable to common shareholders for the quarter increased by $24.8 million over the same period in 2010. The increase in net income and gross profits in the first quarter was due to higher metals prices.

Hecla╒s cash position at March 31, 2011 was $321.7 million, compared to $116.3 million of cash on hand at March 31, 2010.

Capital expenditures at our operations totaled $21.8 million for the first quarter of 2011. The expenditures incurred at Lucky Friday were $14.4 million, the majority of which was on the #4 Shaft Project. The expenditures incurred at Greens Creek were $4.9 million.

Exploration expenditures during the first quarter were $3.3 million. Drill programs were under way in Mexico, the Silver Valley, Greens Creek, and Lucky Friday (underground), with preparations for drilling at the San Juan Silver JV and Greens Creek (surface) in progress. Because of weather conditions, the first quarter always has the smallest exploration expenditures.

First quarter silver production at the Greens Creek mine in Alaska of 1.7 million ounces was slightly higher than the same period in 2010. The increase is due to higher silver ore grades.

Total cash cost for the first quarter was negative $0.73 per ounce, net of by-products, compared to negative $6.47 per ounce, for the same period in 2010. The increase in total cash cost in the first quarter over the same period in 2010 is due to lower by-product credits, higher mine license tax and profit sharing due to higher metals prices, and increased production costs. Mining and milling costs per ton in the first quarter 2011 increased by 11% and 25%, respectively, due primarily to lower mill throughput, resulting from lower availability of higher-volume longhole stopes, and an increase in power costs, due to higher diesel prices and reduced availability of hydroelectric power.

First quarter silver production at Lucky Friday in Idaho was 0.8 million ounces, which was slightly lower than the same period in 2010. The overall decrease in production quarter-over-quarter is primarily due to lower silver ore grade.

Total cash cost at Lucky Friday was $4.99 per ounce, net of by-product credits, in comparison to $3.21 per ounce, for the same period in 2010. The increase in total cash cost per ounce quarter-over-quarter is mainly due to higher treatment and freight costs, employee profit-sharing due to higher metals prices, and increased production costs. This was partially off-set by higher lead and zinc by-product credits. Mining and milling costs per ton increased in the first quarter 2011 by 10% and 6%, respectively, due to a decrease in tonnage produced, increased fuel costs, and consumable underground materials.

On April 15, 2011, a fatal accident occurred at the Lucky Friday Mine resulting in the decision to immediately halt all operations at the mine (other than rescue efforts) for a period of 10 days. The accident involved a localized fall of ground at 6150 level in the west 15 stope. The Mine Safety Health Administration (╥MSHA╙) had representatives on-site during the rescue and recovery effort.

Lucky Friday’s #4 Shaft Project progressed well during the quarter. Completion of the hoist room at the end of 2010 allowed the associated equipment installation to continue with all major mechanical components installed and operational. Detailed engineering of the shaft and its components are expected to be completed in the second quarter. Drilling of the geotechnical hole is under way. We expect to get final approval from the Board of Directors on this project by mid-2011.

Capital expenditures were $11.6 million for a total of $60.3 million spent to date on the project. Total project capital is expected to be approximately $200 million, which includes $45╩million budgeted for the full year of 2011, for an internal shaft descending from the 4900 level to the 8800 level, with expected completion in 2014.

At Greens Creek, results from underground drilling continue to define high-grade resources at the NWW Zone for over 400 feet strike along two limbs below the current workings. The two mineralized zones remain open along strike in both directions. Drilling from the southern-most section of Deep 200 South intersected white baritic ore with precious and base metals in both zones. This is an 800-foot continuation of a high-grade mineralized trend that does not appear to be weakening in either thickness or grade.

Approval of the 2011 surface exploration work plan at Greens Creek from the U.S. Secretary of Agriculture was received and pad building for drill sites has begun. Road drilling commenced in early May and by mid-May, a second surface drill will be operational. By early June, three drills will be operating on surface at Greens Creek and a program of over 35,000 feet is anticipated for 2011.

At the Lucky Friday, drilling continues to define strong veining in the intermediate veins to the east and below the 4050 Level beyond the current resource boundaries. Drilling from the 4050 Level at the Lucky Friday is improving reserve quality and increasing resources between the 3600 and 4400 elevations. Drill intersections of the 30 Vein are narrow with variable grade; however, a number of intermediate veins have significant intersections that could represent new resources. Exploration drilling also continued from the 5900 #4 Shaft Project station to target the west side of the deposit to about the 8000 Level.

In Mexico recent high-grade, gold-silver drill intersections on the epithermal Andrea Vein have now defined a 1 to 5 meter-wide mineralized vein with a strike length of 1.0 mile that is open in a number of directions. The main Andrea Vein and mineralized splays consist of banded quartz sulfide veins with localized brecciation, with halos containing strong alterations and disseminated sulfides. The consequence of these encouraging results is an expansion of the original drill program to three drills in operation.

At the San Juan Silver JV (Creede, CO district), with partners Emerald Mining and Leasing, LLC and Golden 8 Mining LLC, a new high-grade gold/silver zone was encountered by drilling in late 2010 at the intersection of the Amethyst and Equity Vein. Drill intersections from the program in 2010 included 13.1 ounces per ton silver and 0.18 ounce per ton gold over 7.9╩feet, 10.0 ounces per ton silver and 0.14 ounce per ton gold over 5.5 feet, 31.8 ounces per ton silver and 0.31 ounce per ton gold over 2.5 feet, 2.31 ounces per ton silver and 0.45 ounce per ton gold over 2.0 feet, and 0.32 ounce of silver over 2.0 feet. These intersections will be followed-up with both a surface drill program in June and a plan to re-open the Equity portal and related underground workings to drill this new target from underground later this year in an effort to define a new gold-silver resource.

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].