Hecla Acquires 70.3% Of Greens Creek For $750 Million

COEUR D’ALENE, ID – Hecla Mining Company announced an agreement with Kennecott, a subsdidiary of Rio Tinto, to acquire the companies owning 70.3% of the Greens Creek mine near Juneau, Alaska.

Highlights: 1) Hecla will control 100% of the world’s fifth largest silver mine; 2) almost doubles Hecla’s annual silver production to approximately 11 million ounces; 3) increases silver reserves by about 150% and gold reserves by about 140%; 4) Greens Creek is among the lowest cash cost silver mines in North America

Hecla President and Chief Executive Officer, Phillips S. Baker, Jr., said, “We are extremely excited about acquiring the rest of Greens Creek, giving us a tremendous world-class silver asset. We know the operation intimately and believe the operational risks are low. The cash cost per ounce of silver produced at Greens Creek, including by-product credits, is among the lowest in North America. Greens Creek has a strong track record of environmental and safety performance, a long mine life, and an excellent cadre of talented people. And it nearly doubles our silver production while improving our position as the lowest-cost silver producer.”

Baker continued, “The Greens Creek mine has continuously replaced reserves and has excellent exploration potential, not only within the current mining area, but perhaps even more importantly, has the potential for discovery within the highly-prospective 12-square-mile land position in this great mining district.”

Pursuant to the acquisition, Hecla will purchase all of the equity of the Rio Tinto subsidiaries that hold the 70.3% interest in the Greens Creek mine. The $750 million purchase price is comprised of $700 million in cash and $50 million in Hecla common stock. Hecla has received $400 million in committed debt financing from Scotia Capital, which together with available cash will be used to fund the acquisition. Closing is expected to occur in the second quarter and is subject to customary conditions, including expiration of the waiting period under the Hart-Scott-Rodino Act.

In 2007, on a 100% basis, Greens Creek produced approximately 8.6 million ounces of silver, 68,000 ounces of gold, 63,000 tons of zinc and 21,000 tons of lead. Because the by-product metals more than pay for the silver production, the total average cash cost of silver was negative $5.27 per ounce. Even at metals prices significantly lower than they are today, Hecla estimates a 10-year average cash cost of $1.88 per ounce of silver at Greens Creek.

Baker said, “Hecla has 117 years of experience as a precious metals mining company, with a particular expertise in underground mining. We have worked closely with the management of Greens Creek for more than two decades. Rest assured that we fully intend to uphold the strong tradition and great reputation of the Greens Creek mine and its people as we become more involved in the operation and the community of Juneau. Because of our long participation in the joint venture, we anticipate a smooth transition.”

The Greens Creek orebody contains silver, zinc, gold and lead, and lies adjacent to the Admiralty Island National Monument, an environmentally sensitive area. The Greens Creek property includes 17 patented lode claims and one patented mill site claim, in addition to property leased from the U.S. Forest Service. Greens Creek also has title to mineral rights on 7,500 acres of federal land adjacent to the properties. The entire project is accessed and served by 13 miles of road

and consists of the mine, an ore concentrating mill, a tailings impoundment area, a shiploading facility, camp facilities and a ferry dock.

The Greens Creek deposit is a polymetallic, stratiform, massive sulfide deposit. The host rock consists of predominantly marine sedimentary, and mafic to ultramafic volcanic and plutonic rocks, which have been subjected to multiple periods of deformation. These deformational episodes have imposed intense tectonic fabrics on the rocks. Mineralization occurs discontinuously along the contact between a structural hanging wall of quartz mica carbonate phyllites and a structural footwall of graphitic and calcareous argillite. Major sulfide minerals are pyrite, sphalerite, galena, and tetrahedrite/tennanite.

Greens Creek is an underground mine which produces approximately 2,100 tons of ore per day. The primary mining methods are cut and fill and longhole stoping. The ore is processed on-site at a mill, which produces lead, zinc and bulk concentrates, as well as dorÄ containing silver and gold. The dorÄ is sold to a precious metal refiner and the three concentrate products are sold to a number of major smelters worldwide. Concentrates are shipped from a marine terminal located on Admiralty Island about nine miles from the mine site.

The Greens Creek unit has historically been powered completely by diesel generators located on site. However, an agreement was reached during 2005 to purchase excess hydroelectric power from the local power company. Installation of the necessary infrastructure was completed in 2006.

It is estimated that 23% to 35% of the diesel-generated power will be replaced, as a result of this project, through 2008. Construction of a new hydroelectric plant by the local power company is anticipated by 2009, at which time it is estimated that it will have the capacity to supply 95% of Greens Creek power.

The company’s address 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815, 208.769.4100, fax: 208.769.7612, email: [email protected].