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Hecla Reports Second Quarter Net Income of $13.7 Million and Operating Cashflow of $54.0 Million: Lowering Full-Year Cash Cost Guidance to $1.00-$1.50 Per Ounce1


For the Period Ended June 30, 2010

COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Hecla Mining Company (NYSE:HL) today reported second quarter financial and operating results for 2010.

"Improved grades at both operations compared to the first quarter of 2010 helped to underpin another strong operating quarter for Hecla. Despite some price weakness associated with base metals in the quarter, our cost structure remains low and is one of the lowest amongst the primary silver producers."

SECOND QUARTER 2010 HIGHLIGHTS

  • Silver production of 2.6 million ounces
  • Gold production of 17,880 ounces
  • Cash costs of negative $1.82 per ounce of silver after by-product credits in the second quarter of 2010 and cash costs of negative $2.41 per ounce of silver in the first half of 2010
  • Net income of $13.7 million, or 6 cents per basic share, applicable to common shareholders
  • Cash flow from operations of $54.0 million
  • Second highest gross profit and cash flow from operating activities in Hecla's 119-year history
  • Strong balance sheet with more than $197 million in cash, up from $116 million at March 31, 2010
Hecla Mining Company President and Chief Executive Officer Phillips S. Baker, Jr., said, "Our mines, operating management and orebodies combined with current prices allowed Hecla to generate an extraordinary amount of cash flow for the amount of production. With very low operating costs per ounce, our margin was in excess of $20 per ounce of silver which drove cash flow of $54 million in the quarter, the second highest in Hecla's history. This cash flow enabled Hecla to deploy financial resources to support larger exploration and development programs to build for the future. Importantly, we increased our cash balance during the recent quarter by more than $80 million to almost $200 million."

FINANCIAL

Hecla reported net income of $17.1 million in the second quarter of 2010, compared with net income of $2.5 million in the second quarter of 2009. After dividends to holders of its preferred stock, Hecla reported net income applicable to common shareholders of $13.7 million, or 6 cents per basic share, in the second quarter of 2010, compared to a loss of $0.9 million in the second quarter of 2009. Hecla's mandatory convertible preferred stock will be converted into common stock in January 2011.

Cash flow from operating activities in the second quarter of 2010 was $54.0 million compared with $20.0 million in cash flow from operating activities in the same prior year period. In the second quarter of 2010, the company also received $45.6 million from the exercise of common stock purchase warrants and stock options. During the quarter, capital expenditures were $18.2 million compared to $7.3 million in the same prior year period. The increase is primarily the result of a ramp-up in capital expenditures, particularly with deep development at the Lucky Friday mine.

(1) Cash cost per ounce is a non-GAAP measure, see Reconciliation of Net Income at end of this release.

During the second quarter of 2010, Hecla recorded a gain totaling $8.4 million associated with its base metals hedging program which was implemented to reduce the company's exposure to both provisional price adjustments and to reduce the impact of base metals price volatility. Of the total, $6.4 million was related to its hedging of base metals exposure on provisionally priced metal shipments and a gain of $2.0 million is associated with its longer-dated hedging program. The company reported negative price adjustments of $5.7 million during the second quarter of 2010. During the second quarter of 2010, the company also recorded a loss on impairment of investments of $0.7 million associated with marketable securities held in another mining company.

Baker said, "Our newly implemented hedging program is achieving our objectives to first avoid swings in earnings and cash flow on provisional pricing and second, to build longer term price protection ensuring our cost structure."

At June 30, 2010, Hecla had $197.4 million in cash and cash equivalents and no debt. Hecla has approximately 255.5 million shares of common stock outstanding.

METALS PRICES

During the second quarter of 2010, Hecla realized $18.96 and $1,246 per ounce of silver and gold, respectively, and $0.89 and $0.93 per pound, respectively, for zinc and lead.

Average prices for silver and gold in the second quarter of 2010 were 33% and 30% higher, respectively, compared to the same 2009 period. Average prices for lead and zinc in the second quarter of 2010 were 29% and 37% higher, respectively, compared with the same prior year period.

OPERATIONS

Hecla produced 2.6 million ounces of silver in the second quarter of 2010 at a total cash cost of negative $1.82 per ounce, after by-product credits. This compares with 3.0 million ounces of silver in the second quarter of 2009 at a total cash cost of $3.38 per ounce and 2.5 million ounces of silver in the first quarter of 2010 at a total cash cost of negative $3.03 per ounce. Cash costs in the second quarter of 2010 were higher compared with cash costs in the first quarter of 2010 because of lower prices for lead and zinc in the period.

By-product metal production totaled 17,880 ounces of gold, 21,623 tons of zinc and 11,582 tons of lead in the second quarter of 2010 compared with 15,925 ounces of gold, 19,410 tons of zinc and 10,650 tons of lead for the second quarter of 2009.

Baker said, "Improved grades at both operations compared to the first quarter of 2010 helped to underpin another strong operating quarter for Hecla. Despite some price weakness associated with base metals in the quarter, our cost structure remains low and is one of the lowest amongst the primary silver producers."

Greens Creek - The Greens Creek mine in Alaska produced 1.8 million ounces of silver during the second quarter of 2010 at an average total cash cost per ounce of negative $4.56, compared to production of 2.1 million ounces at an average total cash cost per ounce of $2.14 for the prior year period. The decrease in cash costs in the second quarter of 2010 compared to the second quarter of 2009, despite lower silver production, is primarily the result of higher prices and volumes for by-product credits. On a year-over-year basis, silver grade in the second quarter of 2010 was 10% lower; however, silver grade improved 14% compared with the first quarter of 2010.

Milled tonnage averaged 2,252 tons per day in the second quarter of 2010, a further step toward our long-term goal of 2,300 tons per day. Good availability of long-hole stopes helped to increase ore production while other development and back-fill activities continue to track well with production in the mine. Currently, the mine is on track to produce 7 million ounces of silver this year.

During the second quarter of 2010, $4.0 million was capitalized for underground development, purchases of new equipment and construction projects at the Greens Creek mine.

Lucky Friday - The Lucky Friday mine in northern Idaho produced 797,385 ounces of silver during the second quarter of 2010 at an average total cash cost of $4.47 per ounce of silver after by-product credits, compared to 868,339 ounces of silver during the second quarter of 2009 at an average total cash cost of $6.41 per ounce. Cash costs in the second quarter of 2010 were lower compared with the second quarter of 2009 due to higher prices for by-product credits. Lower quarterly silver production compared to the second quarter of 2009 is the result of rehabilitation work in the exhaust shaft and secondary escape-way. The mine is forecast to produce approximately 3 million ounces of silver in 2010.

Unit operating costs for mining and milling in the second quarter of 2010 were $71.97 per ton, or 7% lower than in the second quarter of 2009.

Capitalized mine costs in the second quarter were $14.0 million. This included continued detailed engineering work, as well as lateral development for an internal shaft and work at the new #4 tailings facility.

In May 2010, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union on behalf of Local 5114, formalized a six-year collective bargaining agreement with our subsidiary, Hecla Limited, for the Lucky Friday mine. Terms and conditions will not materially change Lucky Friday's cost structure.

EXPLORATION

During the second quarter, $5.8 million was spent on exploration. Hecla's programs consist of underground and surface drill testing at the Greens Creek and Lucky Friday mine properties, as well as surface drill testing at projects in Idaho, Colorado and Mexico. Up to ten drills were active across the project areas during the quarter. Baker said, "We've seen continued success with deeper drilling at Lucky Friday while in-mine drilling at Greens Creek is finding important extensions to current reserves and resources. It's still relatively early in the surface exploration season and programs in our four project areas are just receiving assay data to direct additional drilling. The 2010 program is a ramp-up of our exploration activities and significant for some areas such as Greens Creek where we've had limited surface programs in the past two seasons."

Greens Creek - Good drill results from the NWW and 200 South zones lead Hecla to believe that new reserves and resources could be outlined over time. Definition and exploration drilling of the NWW zone in the northern part of the mine have defined and extended two distinct limbs of a major folded orebody for over 200 feet down dip. Variable widths of massive sulfide up to 42 feet have been intersected on the two limbs of the fold. The drill intercepts contain higher-than-expected grades of precious metals such as: 0.72 ounces per ton gold and 75.6 ounces per ton silver with base metals over 2.6 feet. The closest previous holes above this area grade 0.27 ounces per ton gold and 33 ounces per ton silver plus base metals over 41 feet in the upper limb and 0.28 ounces per ton gold and 4.9 ounces per ton silver with base metals over 7.7 feet on the lower limb. Drilling later this year could expand both limbs further along strike.

Drilling from the 1147 Drift targeted the projection of the 200 South zone to the south and west. The first three holes completed included a 13-foot section of massive sulfide that graded 0.25 ounces per ton gold, 2.1 ounces per ton silver, 2.1% lead and 23.3% zinc. The second hole intersected a 30-foot interval of baritic ores and silicified argillite with elevated silver grades. Assays are pending on a few holes in this area as drilling continues to the south along the 1147 Drift to define extensions of the 200 South and 5250 South.

The surface drill program began in late May and is designed to systematically evaluate a series of targets including the north and eastern projection of the NE mine contact and the Killer Creek gossans. Disseminated mineralization, near the mine horizon and fault structures, has been observed in each of these target areas and drilling will attempt to expand the mineralized horizon and identify the next new orebody at Greens Creek.

Lucky Friday - Two underground drills continue to test the potential to expand the resource area outwards to the east with one program evaluating the interval between the 6300 and 6800 levels of the mine, and the other is testing below the 7000 level of the mine to about the 7900 level. Drilling to the east of the resource between the 6300 to 6800 levels shows that the 30 Vein continues to be strong. Selected assays from this area include: 12 feet of 30.4 ounces per ton silver and 24.4% combined lead-zinc and 4.6 feet of 16.4 ounces per ton silver and 11.4% combined lead-zinc.

Drilling below the 7000 level 500 feet to the east of the current resource boundary indicates that the 30 Vein locally narrows and contains higher-grade mineralization while secondary vein structures such as the 60, 70 and 90 Veins host wider zones with strong silver-lead-zinc. These results confirm that the vein structures continue at least 500 feet east of the known resources. Selected results include: 2.6 feet of 17.8 ounces per ton silver and 13.5% combined lead-zinc in the 30 Vein, 2.3 feet grading 43 ounces per ton silver plus 18.1% combined lead-zinc in the 60 Vein, 2.3 feet of 57.5 ounces per ton silver plus 33.4% combined lead-zinc in the 130 Vein. In the second quarter of 2010, we continued to have success defining new resources at the Lucky Friday.

Silver Valley - Drill programs east and west of the Lucky Friday mine with three surface rigs are designed to test the Silver Mountain and You Like/30 Vein trends, respectively. Cross veins such as the Lucretia and Gettysburg Veins that parallel the Lucky Friday structures will also be evaluated. Hecla's program in these areas represents the first exploration on these targets in more than 50 years.

Encouraging mineralization and structures have been observed in the Silver Mountain drilling which is interpreted to be the eastern extension of the Lucky Friday veins. Drilling in the You Like target area west of the Lucky Friday Expansion area has intersected multiple vein structures and validated extensions at depth of previously identified shallower mineralization in historic workings. These are the first holes in a program to evaluate a significant exploration target (4,000 foot strike length, 7,000 feet down dip) between the western boundary of the Lucky Friday extension to the past-producing Star and You Like Vein deposits.

Drilling of both cross structures in this area, the Lucretia and Gettysburg, have cut silver-bearing veins along trend of historic vein production. Drilling will continue on all of these structures and veins to better define geometries and potential future resources.

San Juan Silver - In southern Colorado, Hecla is earning a 70% interest in the San Juan Silver Joint Venture from its partners, Emerald Mining & Leasing, LLC, and Golden 8 Mining, LLC. Significantly, the Five-Year Plan of Operations and Environmental Assessment was approved by the U.S. Forest Service on June 15 allowing Hecla to fully access the 25-square-mile, district-controlling land package of the past-producing Creede mining district. Drills are initially targeting on-strike extensions to the Bulldog and Amethyst Vein structures which were prolific silver-bearing veins in the past and also evaluating new areas along the Equity and Amethyst Vein structures where there has been limited historic exploration. Assays are pending on all the drilling.

Mexico - On the San Sebastian property, a systematic evaluation of targets through drilling and surface prospecting continues. At the Pedernalillo target, near the past-producing Don Sergio Vein, assays from the major quartz vein include 5.82 meters at 0.67 grams per tonne gold and 4.8 grams per tonne silver. Assays from a 10.2 meter zone of brecciation with moderate to strong pyrite directly below the vein are pending. Assay modeling and vein textures suggest that the most favorable target for enriched precious metals in the mineral system is at depth.

Features of the intersected veins and initial drill results on the first hole at the Cerro Santiago target area are promising. One of several near surface, and partially oxidized veins, graded 117 grams per tonne silver over 4.65 meters, with a narrower zone of 336 grams per tonne silver over 1.48 meters. Assay results from the remainder of the hole are pending. The Cerro Santiago target covers a strong silver and gold soil anomaly. Characteristics of the quartz intersected in the veins at Cerro Santiago have similarities to other parts of the district where high-grade precious metals are known. Drill programs on the Pedernalillo and Cerro Santiago targets will continue over the next few months.

PRODUCTION AND COST OUTLOOK

Hecla is on track to meet its full-year production guidance of 10 to 11 million ounces of silver. Cash costs of negative $1.82 per ounce of silver in the second quarter and cash costs of negative $2.41 per ounce of silver in the first six months of 2010 are lower than full-year guidance of $1.90-$2.25 per ounce. Hecla is revising full-year cash costs per ounce downward to be in a range of $1.00-$1.50 per ounce. Hecla's estimate of cash costs in 2010 is based on by-product prices of $0.80 per pound for zinc and lead.

Hecla Mining Company and its subsidiaries headquartered in Coeur d'Alene, Idaho, mine, process and explore for silver and gold in the United States and Mexico. Hecla has been in business for 119 years and have long been well known in the mining world and financial markets as a quality producer of silver and gold. Hecla's common and preferred shares are traded on the New York Stock Exchange under the symbols HL, HL-PrB and HL-PrC.

Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, costs, and prices or sales performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, exploration risks and results, operating risks, project development risks, political risks, labor issues and ability to raise financing. Refer to the company's Form 10-Q and 10-K reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements other than as may be required by law.

Cautionary Note to Investors - The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this news release, such as "resource," mineralization," "reserve," and "inferred resource" that the SEC guidelines strictly prohibit us from including in our filing with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K. You can review and obtain copies of these filings from the SEC's website at http://www.sec.gov/edgar.shtml.

Hecla Mining Company news releases can be accessed on the Internet at http://www.hecla-mining.com

HECLA MINING COMPANY

(dollars in thousands, except per share, per ounce and per pound amounts - unaudited)






Second Quarter Ended


Six Months Ended HIGHLIGHTS June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009 FINANCIAL DATA








Sales
$ 88,631



$ 74,610



$ 168,506



$ 129,331 Gross Profit
$ 38,066



$ 17,157



$ 65,602



$ 27,026 Income (loss) applicable to common shareholders
$

13,675





$

(910

)




$

32,111





$

2,994

Basic income per common share
$ 0.06



$ 0.00



$ 0.13



$ 0.01 Diluted income (loss) per common share
$ 0.05



$ 0.00



$ 0.12



$ 0.01 Net income
$ 17,084



$ 2,499



$ 38,928



$ 9,811 Cash flow provided by operating activities $

54,041





$

20,043

$

73,354

$

19,587

PRODUCTION SUMMARY - TOTALS (1)













Silver - Ounces produced

2,628,664




2,983,437




5,112,398




5,846,588 Payable ounces sold

2,027,064




2,615,495




4,069,304




4,888,157 Gold - Ounces produced

17,880




15,925




34,742




33,974 Payable ounces sold

13,423




14,492




26,275




27,622 Lead - Tons produced

11,582




10,650




23,763




21,475 Payable tons sold

9,173




8,785




18,781




17,258 Zinc - Tons produced

21,623




19,410




43,834




38,121 Payable tons sold

17,302




18,189




32,956




30,358 Average cost per ounce of silver produced (2):













Total cash costs ($/oz.) (3)

(1.82 )



3.38




(2.41 )



4.01 Total production costs ($/oz.) 4.00 8.92 3.68 9.48 AVERAGE METAL PRICES













Silver - London PM Fix ($/oz.)
$

18.32



$

13.73



$

17.62



$

13.17 Realized price per ounce
$

18.96



$

14.15



$

17.94



$

14.04 Gold - London PM Fix ($/oz.)
$

1,196



$

922



$

1,152



$

915 Realized price per ounce
$

1,246



$

970



$

1,178



$

954 Lead - LME Cash ($/pound)
$

0.88



$

0.68



$

0.95



$

0.60 Realized price per pound
$

0.93



$

0.77



$

0.93



$

0.69 Zinc - LME Cash ($/pound)
$

0.92



$

0.67



$

0.98



$

0.60 Realized price per pound


$

0.89



$

0.77



$

0.92



$

0.71













(1)  Quantities produced are amounts recovered in our milling processes and contained in concentrate and doré shipped by us, while payable quantities are net of deductions taken by smelters and refiners to which we ship our products. Differences between the two values also include inventory variations.















(2)  Total cash costs per ounce of silver represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements. A reconciliation of total cash costs to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the cash costs per ounce reconciliation section of this news release. For additional information, see the cash costs per ounce reconciliation section.















(3)  Includes gold, lead and zinc produced at silver operations, which is treated as a by-product credit and included in the calculation of silver costs per ounce.

















HECLA MINING COMPANY

Consolidated Statements of Operations

(dollars and shares in thousands, except per share amounts - unaudited)






Second Quarter Ended


Six Months Ended

June 30, 2010 June 30, 2009


June 30, 2010 June 30, 2009













Sales of products
$ 88,631


$ 74,610


$ 168,506


$ 129,331 Cost of sales and other direct production costs



35,545




41,526




71,815




71,160
Depreciation, depletion and amortization
15,020


15,927


31,089


31,145

50,565


57,453


102,904


102,305 Gross profit
38,066


17,157


65,602


27,026













Other operating expenses (income)













General and administrative

4,664




4,604




8,777




9,328
Exploration

5,820




1,236




9,249




2,264
Other operating expenses

1,601




1,348




2,565




2,624
Gain on sale of properties, plants and equipment



--




--




--




(6,228 ) Termination of employee benefit plan

--




--




--




(8,950 ) Provision for closed operations and environmental matters
1,389




1,029




4,765




1,906



13,474


8,217


25,356


944 Income from operations
24,592


8,940


40,246


26,082













Other income (expense):













Gain on sale of investments

--




--




588




--
Gain on derivative contracts

1,999




--




1,999




--
Loss on impairment of investments

(739 )



(3,018 )



(739 )



(3,018 ) Interest and other income

16




136




67




346
Debt-related fees

--




(464 )



--




(5,739 ) Interest expense
(529 )


(2,750 )


(1,207 )


(7,430 )

747


(6,096 )


708


(15,841 ) Income before income taxes

25,339




2,844




40,954




10,241
Income tax provision
(8,255 )


(345 )


(2,026 )


(430 )













Net income

17,084




2,499




38,928




9,811
Preferred stock dividends
(3,409 )


(3,409 )


(6,817 )


(6,817 )













Income (loss) applicable to common shareholders


$ 13,675


$ (910 )


$ 32,111


$ 2,994













Basic income per common share after preferred dividends


$

0.06




$

0.00




$

0.13




$

0.01















Diluted income per common share after preferred dividends


$

0.05




$

0.00




$

0.12




$

0.01















Basic weighted average number of common shares outstanding
248,549




222,417




245,371




209,659















Diluted weighted average number of common shares outstanding
266,374




222,417




263,868




210,475

















HECLA MINING COMPANY

Consolidated Balance Sheets

(dollars and shares in thousands - unaudited)




June 30, 2010 Dec. 31, 2009 ASSETS Current assets:





Cash and cash equivalents
$ 197,378



$ 104,678
Short-term investments and securities available for sale

--




1,138
Accounts and notes receivable

23,401




27,427
Inventories

24,673




21,466
Deferred taxes

7,134




7,176
Other current assets
5,468


4,578 Total current assets

258,054




166,463
Investments

1,262




2,157
Restricted cash and investments

9,468




10,945
Properties, plants and equipment, net

815,331




819,518
Deferred taxes

38,250




38,476
Other noncurrent assets
7,370


9,225





Total assets
$ 1,129,735


$ 1,046,784 LIABILITIES Current liabilities:





Accounts payable and accrued expenses
$ 23,325



$ 13,998
Accrued payroll and related benefits

6,832




14,164
Accrued taxes

4,984




6,240
Current portion of accrued reclamation and closure costs

5,815




5,773
Current portion of capital leases
1,760


1,560 Total current liabilities

42,716




41,735
Capital leases

2,899




3,281
Accrued reclamation and closure costs

122,000




125,428
Other noncurrent liabilities
11,390


10,855





Total liabilities
179,005


181,299 SHAREHOLDERS' EQUITY Preferred stock

543




543
Common stock

63,967




59,604
Capital surplus

1,172,006




1,121,076
Accumulated deficit

(268,803 )



(300,915 ) Accumulated other comprehensive loss

(14,932 )



(14,183 ) Treasury stock
(2,051 )


(640 )





Total shareholders' equity
950,730


865,485





Total liabilities and shareholders' equity
$ 1,129,735


$ 1,046,784





Common shares outstanding at end of period
255,480


238,416







HECLA MINING COMPANY

Consolidated Statements of Cash Flows

(dollars in thousands - unaudited)





Six Months Ended June 30, 2010 June 30, 2009 OPERATING ACTIVITIES Net income
$ 38,928
$ 9,811
Noncash elements included in net income (loss):





Depreciation, depletion and amortization

31,177




31,145
Gain on sale of investments

(588 )



--
Gain on disposition of properties, plants and equipment

--




(6,228 ) Provision for reclamation and closure costs

2,502




822
Stock compensation

2,473




1,911
Preferred shares issued for bank fees

--




4,262
Deferred income taxes

268




--
Amortization of loan origination fees

320




2,264
Gain on curtailment of employee benefit plan

--




(8,950 ) Loss on impairment of investments

739




3,018
(Gain) loss on derivative contract

(2,202 )



1,230
Other, net

328




773
Change in assets and liabilities:





Accounts and notes receivable

4,023




(13,154 ) Inventories

(3,207 )



62
Other current and noncurrent assets

2,517




(1,578 ) Accounts payable and accrued expenses

10,018




(8,657 ) Accrued payroll and related benefits

(7,332 )



1,595
Accrued taxes

(1,256 )



417
Accrued reclamation and closure costs and other noncurrent liabilities
(5,354 )


844 Net cash provided by operating activities
73,354


19,587 INVESTING ACTIVITIES Additions to properties, plants and equipment

(26,427 )



(9,267 ) Proceeds from sale of investments

1,138




--
Proceeds from disposition of properties, plants and equipment

--




8,017
(Increase) decrease in restricted cash
1,476


(215 ) Net cash used in investing activities
(23,813 )


(1,465 ) FINANCING ACTIVITIES Proceeds from exercise of stock options and warrants

45,562




--
Proceeds from issuance of stock, net of related cost

--




128,316
Acquisition of treasury shares

(693 )



--
Dividends paid to preferred shareholders

(966 )



--
Payments on interest rate swap

--




(1,946 ) Repayments of debt
(744 )


(123,605 ) Net cash provided by financing activities
43,159


2,765





Net increase in cash and cash equivalents

92,700




20,887
Cash and cash equivalents at beginning of period
104,678


36,470 Cash and cash equivalents at end of period
$ 197,378


$ 57,357







HECLA MINING COMPANY

Production Data






Second Quarter Ended


Six Months Ended June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009 GREENS CREEK UNIT Tons of ore milled

204,972

205,122



403,096

396,606 Mining cost per ton
$ 41.30



$ 40.43


$ 41.65



$ 42.28 Milling cost per ton
$ 22.28



$ 20.13


$ 22.17



$ 21.64 Ore grade milled - Silver (oz./ton)

12.4




13.8



11.7




14.0 Silver produced (oz.)

1,831,279




2,115,098



3,432,934




4,111,951 Gold produced (oz.)

17,880




15,925



34,742




33,974 Lead produced (tons)

6,535




5,353



13,215




10,539 Zinc produced (tons)

19,481




16,874



39,161




32,994 Average cost per ounce of silver produced (1):













Total cash costs (2)
$ (4.56 )


$ 2.14


$ (5.45 )


$ 2.66 Total costs
$ 2.75



$ 8.76


$ 2.48



$ 9.27 Capital additions (in thousands) $ 4,056 $ 3,318 $ 5,751 $ 6,228 LUCKY FRIDAY UNIT Tons of ore processed

79,428




84,188



171,469




170,634 Mining cost per ton
$ 56.62



$ 61.67


$ 54.71



$ 58.70 Milling cost per ton
$ 15.35



$ 15.70


$ 14.87



$ 14.84 Ore grade milled - Silver (oz./ton)

10.8




11.0



10.5




10.8 Silver produced (oz.)

797,385




868,339



1,679,464




1,734,637 Lead produced (tons)

5,047




5,297



10,548




10,936 Zinc produced (tons)

2,142




2,536



4,673




5,127 Average cost per ounce of silver produced (1):













Total cash costs (2)
$ 4.47



$ 6.41


$ 3.81



$ 7.22 Total costs
$ 6.87



$ 9.29


$ 6.14



$ 9.98 Capital additions (in thousands)
$ 14,048



$ 3,974


$ 20,529



$ 7,223













(1) Gold, lead and zinc produced have been treated as by-product credits in calculating silver costs per ounce.















(2) Total cash costs per ounce of silver represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements. A reconciliation of total cash costs to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the cash costs per ounce reconciliation section of this news release.

















HECLA MINING COMPANY

Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP)(1)

(dollars and ounces in thousands, except per ounce - unaudited)







Three Months Ended


Six Months Ended June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009 RECONCILIATION TO GAAP, ALL OPERATIONS Total cash costs

$ (4,784) $ 10,094


$ (12,317) $ 23,462 Divided by silver ounces produced

2,628


2,983


5,112


5,847 Total cash cost per ounce produced

$ (1.82)


$ 3.38


$ (2.41)


$ 4.01 Reconciliation to GAAP:














Total cash costs

$ (4,784)


$ 10,094


$ (12,317)


$ 23,462 Depreciation, depletion and amortization

15,020


15,927


31,089


31,145 Treatment costs

(21,619)


(17,406)


(46,535)


(34,936) By-product credits

64,066


43,851


133,461


81,726 Change in product inventory

(2,401)


4,811


(2,858)


487 Reclamation, severance and other costs

283


176


64


421 Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP)



$ 50,565






$ 57,453






$ 102,904






$ 102,305

GREENS CREEK UNIT Total cash costs

$ (8,345)


$ 4,530


$ (18,711)


$ 10,941 Divided by silver ounces produced

1,831


2,115


3,433


4,112 Total cash cost per ounce produced

$ (4.56)


$ 2.14


$ (5.45)


$ 2.66 Reconciliation to GAAP:














Total cash costs

(8,345)


4,530


(18,711)


10,941 Depreciation, depletion and amortization

13,108


13,425


27,188


26,357 Treatment costs

(18,063)


(13,359)


(38,000)


(26,663) By-product credits

52,850


34,439


108,776


64,965 Change in product inventory

(2,096)


4,447


(2,430)


361 Reclamation, severance and other costs

278


196


52


435 Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP)



$ 37,732






$ 43,678






$ 76,875






$ 76,396

LUCKY FRIDAY UNIT Total cash costs

$ 3,561


$ 5,564


$ 6,394


$ 12,521 Divided by silver ounces produced

797


868


1,679


1,735 Total cash cost per ounce produced

$ 4.47


$ 6.41


$ 3.81


$ 7.22 Reconciliation to GAAP:














Total cash costs

3,561


5,564


6,394


12,521 Depreciation, depletion and amortization

1,912


2,502


3,901


4,788 Treatment costs

(3,556)


(4,047)


(8,535)


(8,273) By-product credits

11,216


9,412


24,685


16,761 Change in product inventory

(305)


364


(428)


126 Reclamation and other costs

5


(20)


12


(14) Costs of sales and other direct production costs and depreciation, depletion and amortization (GAAP)



$ 12,833






$ 13,775






$ 26,029






$ 25,909
















(1) Cash costs per ounce of silver represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements that the Company believes provide management and investors an indication of net cash flow, after consideration of the realized price received for production sold. Management also uses this measurement for the comparative monitoring of performance of mining operations period-to-period from a cash flow perspective. "Total cash cost per ounce" is a measure developed by gold companies in an effort to provide a comparable standard; however, there can be no assurance that our reporting of this non-GAAP measure is similar to that reported by other mining companies. Cost of sales and other direct production costs and depreciation, depletion and amortization, was the most comparable financial measures calculated in accordance with GAAP to total cash costs.

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