Annual-Transition Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10KT405 Hecla Mining Company Form 10-K December 31, 2001 120 494K
2: EX-10.21 Purchase and Sale Agreement 26 86K
3: EX-11 Weighted Average Number of Common Shares 2± 8K
Outstanding
4: EX-12 Ratio of Earnings to Fixed Charges 2± 11K
5: EX-21 Registrant's List of Subsidiaries 1 6K
6: EX-23.1 Consent of Auditors 1 6K
7: EX-23.2 Consent of Auditors 1 6K
10KT405 — Hecla Mining Company Form 10-K December 31, 2001
Document Table of Contents
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 2001
Commission File No. 1-8491
HECLA MINING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 82-0126240
------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6500 Mineral Drive
Coeur d'Alene, Idaho 83815-8788
------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 208-769-4100
--------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
------------------------------------------ which each class is registered
Common Stock, par value $0.25 per share ) ------------------------------
Preferred Share Purchase Rights for )
Series B Cumulative Convertible Preferred ) New York Stock Exchange
Stock, par value $0.25 per share ) ------------------------------
------------------------------------------
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days. Yes XX . No .
---- ----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the Registrant's voting Common
Stock held by nonaffiliates was $108,646,418 as of February 28,
2002. There were 74,163,408 shares of the Registrant's Common
Stock outstanding as of February 28, 2002.
Documents incorporated by reference herein:
To the extent herein specifically referenced in Part III,
the information contained in the Proxy Statement for the 2001
Annual Meeting of Shareholders of the Registrant, which will be
filed with the Commission pursuant to Regulation 14A within 120
days of the end of the Registrant's 2001 fiscal year is
incorporated herein by reference. See Part III.
Part I
Item 1. Business.(1)
General
Hecla Mining Company (Hecla), originally incorporated in
1891, is principally engaged in the exploration, development and
mining of precious and nonferrous metals, including gold, silver,
lead, zinc and certain industrial minerals. The principal
executive offices of Hecla are located at 6500 Mineral Drive,
Coeur d'Alene, Idaho 83815-8788, telephone (208) 769-4100. Hecla
is a Delaware corporation.
Statements made which are not historical facts, such as
anticipated production, potential asset sales, costs 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 or implied. These risks and uncertainties include,
but are not limited to, metals prices and price volatility,
volatility of metals production, costs of production, the
proposed sale of the remaining assets of the Colorado Aggregate
division of MWCA a wholly owned subsidiary of Hecla, the sale of
the Company's corporate office building, remediation,
reclamation, and environmental costs, regulatory matters, cash
flow, revenue calculations, the nature and availability of
financing, and project development risks. (See Investment
Considerations). Hecla does not undertake to update any forward-
looking statements.
Hecla's principal producing metals properties in 2001
included the Lucky Friday silver mine, located near Mullan,
Idaho, the Greens Creek silver mine, located near Juneau, Alaska,
a large polymetallic mine in which Hecla owns a 29.73% interest;
the La Camorra gold mine, located in the State of Bolivar,
Venezuela, and the San Sebastian silver mine, located in the
State of Durango, Mexico, where operations commenced in May 2001.
In 2001, Hecla's attributable gold and silver production was
approximately 195,000 ounces and 7.4 million ounces,
respectively.
1 For definitions of certain mining terms used in this
description, see "Glossary of Certain Mining Terms" at the end of
Item 1, of this Form 10-K, page 29.
The following table presents certain information regarding
Hecla's metal mining properties, including the relative
percentage each contributed to Hecla's 2001 sales:
Name of Date Ownership Percentage of
Property Acquired Interest 2001 Sales
----------- -------- --------- -------------
La Camorra 1999 100.0% 48.6%
Lucky Friday(1) 1958 100.0% 18.4%
Greens Creek 1988 29.73% 23.9%
San Sebastian 1999 100.0% 9.1%
________________________
(1) In July 2001, Hecla announced that operations at the Lucky
Friday mine would be reduced due to low silver and lead
prices. Commencing in the fourth quarter of 2001,
production at the mine was reduced to approximately 30% of
full production. It is estimated the currently developed
areas of the mine can sustain the lower production levels up
to 24 months.
In 2001, Hecla's industrial minerals segment consisted of
Kentucky-Tennessee Clay Company, K-T Feldspar Corporation, K-T
Clay de Mexico, S.A. de C.V. (collectively the K-T Group) and
MWCA, Inc. - Colorado Aggregate division (CAC). On March 27,
2001, Hecla completed a sale of the K-T Group and certain other
minor inactive industrial minerals companies for $62.5 million,
transferring all of its interest in each of the companies subject
to the agreement. On March 4, 2002, Hecla completed a sale of
the pet operations of CAC for approximately $1.5 million in cash.
Hecla continues to pursue the sale of the remaining assets of the
industrial minerals segment and has a signed letter of intent to
sell the briquette operations of CAC. Based upon Hecla's Board
of Directors' decision in November 2000 to sell the remaining
industrial mineral assets including the K-T Group, the industrial
minerals segment was recorded as a discontinued operation as of
December 31, 2001 and 2000, and for each of the three years in
the period ended December 31, 2001.
For the year ended December 31, 2001, Hecla reported net
income of approximately $2.3 million (before undeclared preferred
stock dividends of $8.1 million), or $0.03 per share of common
stock, compared to a net loss of approximately $84.0 million
(before preferred stock dividends of $8.1 million, including $4.0
million in undeclared dividends), or $1.26 per share of common
stock, for the year ended December 31, 2000. The 2001 net income
was due to a variety of factors, the most significant of which
were the sale of the K-T Group for a gain of $12.7 million and
gross profit from continuing operations of $4.7 million.
Hecla's strategy is to focus its efforts and resources on
expanding its gold and silver reserves through exploration
efforts, primarily on properties currently owned. Hecla's
exploration plan for 2002 consists of exploring for additional
reserves at, or in the vicinity of, its San Sebastian mine in
Mexico, the La Camorra mine in Venezuela and the Greens Creek
mine in Alaska.
Hecla's revenues and profitability are strongly influenced
by global prices of silver, gold, lead and zinc. Metals prices
fluctuate widely and are affected by numerous factors beyond
Hecla's control, including inflation and worldwide forces of
supply and demand. The aggregate effect of these factors on
Hecla cannot be accurately predicted.
Sales of metal concentrates and metal products are made
principally to custom smelters and metals traders. The
percentage of sales contributed by each class of product is
reflected in the following table:
Years
-------------------------------
Product 2001 2000 1999
--------------------- ------ ------ ------
Gold 57.5% 44.7% 35.2%
Silver, lead and zinc 42.5% 55.3% 64.8%
For information with respect to export sales, refer to Notes
2 and 11 of Notes to Consolidated Financial Statements forming
part of Hecla's audited Consolidated Financial Statements for the
year ended December 31, 2001.
The table below summarizes Hecla's production and average
cash operating cost, average total cash cost and average total
production cost per ounce for gold and silver, as well as average
metals prices for each period indicated:
[Download Table]
Years
-------------------------------------
2001 2000 1999
--------- --------- ---------
Gold (ounces)(1) 194,742 146,038 110,110
Silver (ounces)(2) 7,434,290 7,998,677 7,617,362
Lead (tons)(2) 28,378 39,430 35,195
Zinc (tons)(2) 23,664 25,054 23,299
Average cost per ounce of gold produced:
Cash operating cost $ 133 $ 208 $ 195
Total cash cost $ 133 $ 211 $ 205
Total production cost $ 200 $ 275 $ 298
Average cost per ounce of silver produced:
Cash operating cost(3) $ 3.55 $ 4.02 $ 3.72
Total cash cost(3) $ 3.57 $ 4.02 $ 3.72
Total production cost(3) $ 5.09 $ 5.49 $ 5.25
Industrial minerals
(tons shipped)(4) 260,716 1,268,579 1,192,281
Average metals prices:
Gold - Realized ($/oz.) $ 280 $ 284 $ 286
Gold - London Final ($/oz.) $ 272 $ 279 $ 279
Silver - Handy & Harman ($/oz.) $ 4.36 $ 5.00 $ 5.25
Lead - LME Cash ($/pound) $ 0.216 $ 0.206 $ 0.228
Zinc - LME Cash ($/pound) $ 0.402 $ 0.512 $ 0.488
(1) The increase in gold production from 2000 to 2001 was
principally due to increased production at the La
Camorra mine of 59,455 ounces, due to an average higher
gold grade and an 18% increase in tons processed during
2001, and production at the San Sebastian mine, due to
the commencement of operations in May 2001. These
increases were partly offset by decreased production of
23,926 ounces at the Rosebud mine, due to completion of
operations during the third quarter 2000. The increase
in gold production from 1999 to 2000 was principally due
to increased production at the La Camorra mine of 75,508
ounces due to operating a full year in 2000 as compared
to three months in 1999. This increase was partly
offset by decreased production of 32,403 ounces at the
Rosebud mine, where mining operations were completed in
August 2000, and at the La Choya mine, where mining
activities were completed in December 1998 and gold
production was essentially completed in 1999.
(2) The decrease in silver, lead and zinc production from
2000 to 2001 was principally due to decreased tons mined
at Lucky Friday, resulting from the curtailment of
operations during 2001, partly offset by an increase in
tons mined at the Greens Creek mine and at the San
Sebastian mine, where operations commenced in May 2001.
The increase in silver, lead and zinc production from
1999 to 2000 was principally due to increased tons mined
and increased silver grade from the Lucky Friday
expansion area in 2000.
(3) During the fourth quarter of 2001, approximately $0.4
million of costs at the Lucky Friday mine were
classified as care-and-maintenance costs and included in
the determination of the cost per ounce at Lucky Friday.
Excluding the $0.4 million in costs, the cash operating,
total cash and total production costs per ounce total
$3.49, $3.52 and $5.04, respectively, for 2001.
(4) The decrease in the industrial minerals tons from 2000
to 2001 is principally due to the sale of the K-T Group
on March 27, 2001.
Silver Properties
Lucky Friday Mine - Idaho
The Lucky Friday mine, a deep underground silver and lead
mine, located in northern Idaho and 100% owned by Hecla, has been
a producing mine for Hecla since 1958.
The principal ore-bearing structure at the Lucky Friday mine
through 1997 was the Lucky Friday Vein, a fissure vein typical of
many in the Coeur d'Alene Mining District. The orebody is
located in the Revett Formation which is known to provide
excellent host rocks for a number of orebodies in the
Coeur d'Alene District. The Lucky Friday Vein strikes
northeasterly and dips steeply to the south with an average width
of six to seven feet. Its principal ore minerals are galena and
tetrahedrite with minor amounts of sphalerite and chalcopyrite.
The ore occurs as a single continuous orebody in and along the
Lucky Friday Vein. The major part of the orebody has extended
from the 1200-foot level to and below the 6020-foot level.
During 1991, Hecla discovered several mineralized structures
containing some high-grade silver ores in an area known as the
Gold Hunter property about 5,000 feet northwest of the then
existing Lucky Friday workings. A final feasibility study was
completed in 1997, and Hecla's Board of Directors approved a
$16.0 million development plan. Initial production from the
project was achieved in 1997, and full production was reached on
schedule in the second quarter of 1998.
Hecla controls the Gold Hunter property under a long-term
operating agreement which entitles Hecla, as operator, to a
79.08% interest in the net profits from operations from the Gold
Hunter properties. Hecla will be obligated to pay a royalty
after it has recouped its costs to explore and develop the
properties. As of December 31, 2001, unrecouped costs totaled
approximately $31.3 million.
The principal mining method at the Lucky Friday mine is ramp
access, cut and fill. This method utilizes rubber-tired
equipment to access the veins through ramps developed outside of
the orebody. Once a cut is taken along the strike of the vein,
it is backfilled with cemented tailings and the next cut is
accessed, either above or below, from the ramp system.
The ore produced from the mine is processed in a 1,100-ton-
per-day conventional flotation mill. In 2001, ore was processed
at a rate of approximately 855 tons per day at the Lucky Friday
mine site. The flotation process produces both a silver-lead
concentrate and a zinc concentrate. During 2001, approximately
94% of the silver, 92% of the lead and 45% of the zinc were
economically recovered.
In the fourth quarter of 2000, due to continuing low silver
and lead prices, the Company's management and Board of Directors
deferred the decision to approve additional capital expenditures,
which are needed to develop the next area of the mine, and
recorded an adjustment of $31.2 million to reduce the carrying
value of the Lucky Friday mine plant, property and equipment. In
2001, due to low metals prices, the Company made the decision to
reduce the level of mining activity at the Lucky Friday mine to
approximately 30% of full production. It is estimated that the
currently developed area of the mine can sustain the lower
production levels for up to 24 months. It is currently
anticipated that reduced operations will continue until prices
recover as long as the cost of operating is less than putting the
property on care and maintenance.
Ultimate reclamation activities contemplated include
stabilization of tailings ponds and waste rock areas. There were
no final reclamation activities performed in 2001.
Historically, the Lucky Friday silver-lead concentrate has
been shipped primarily to the ASARCO, Inc., smelter in East
Helena, Montana. With the increased production starting in 1998
from the Gold Hunter orebody, the silver-lead concentrates have
been shipped to several different smelters in Canada, the United
States, Mexico and Europe. On February 2, 2001, ASARCO's East
Helena smelter informed Lucky Friday it was closing down and that
ASARCO would no longer accept shipments. Lucky Friday
concentrate that was scheduled for East Helena was diverted to
the remaining three smelters with no adverse impact to the Lucky
Friday operation. In 2002, it is anticipated that the Lucky
Friday silver-lead concentrate production will be shipped to
Cominco's smelter in Trail, British Columbia, Canada.
The Lucky Friday zinc concentrates are shipped to Cominco's
smelter in Trail, British Columbia, Canada.
Information with respect to the Lucky Friday mine's
production, average cost per ounce of silver produced and Proven
and Probable ore reserves for the past three years is set forth
in the table below:
Years
-----------------------------------
Production 2001 2000 1999
------------------------ --------- --------- ----------
Ore milled (tons) 239,330 321,719 309,953
Silver (ounces) 3,224,373 5,011,507 4,441,250
Gold (ounces) 415 537 655
Lead (tons) 20,984 31,946 27,613
Zinc (tons) 2,789 3,107 2,926
Average Cost per Ounce
of Silver Produced
------------------------
Cash operating costs(1) $ 5.27 $ 5.02 $ 4.90
Total cash costs(1) $ 5.27 $ 5.02 $ 4.90
Total production costs(1) $ 6.05 $ 5.83 $ 5.85
Proven and Probable
Ore Reserves(2,3,4) 12/31/01 12/31/00 12/31/99
----------------------- --------- --------- ----------
Total tons 1,205,180 1,322,270 1,669,450
Silver (ounces per ton) 14.2 16.7 15.1
Lead (percent) 9.4 10.7 9.6
Zinc (percent) 1.6 1.4 1.6
Contained silver (ounces) 17,092,128 22,089,451 25,179,141
Contained lead (tons) 112,881 141,380 160,693
Contained zinc (tons) 19,410 18,546 26,895
--------------------------
(1) During the fourth quarter of 2001, approximately $0.4
million of costs were classified as care-and-maintenance
costs and included in the determination of the cost per
ounce at Lucky Friday. Excluding the $0.4 million in costs,
the cash operating, total cash and total production costs
per ounce total $5.14, $5.14 and $5.92, respectively, for
2001.
(2) For Proven and Probable ore reserve assumptions and
definitions, see Glossary of Certain Mining Terms.
(3) Reserves are in-place material that incorporate estimates of
waste dilution and expected mining recovery. Mill
recoveries are expected to be 93% for silver, 90% for lead
and 45% for zinc for the in-place reserves stated above.
(4) Hecla's Lucky Friday mine ore reserves of silver and lead
decreased in 2001 compared to 2000 due to several factors:
a) removal of ore by mining during 2001; b) reassessment of
metal grades and content in the veins; and c) decrease in
forecasted metals prices. Zinc grade and metal content
increased in 2001 compared to 2000 due to modifications in
the mine plan. Ore reserve grades increased and tonnage
decreased in 2000 compared to 1999 due to a 4.38% increase
in cash cutoff grade in 2000, and due to an assessment of
results from diamond drilling performed in 2000.
The net book value of the Lucky Friday mine property and its
associated plant and equipment was approximately $1.9 million as
of December 31, 2001. At December 31, 2001, there were 68
employees at the Lucky Friday mine. The United Steelworkers of
America is the bargaining agent for the Lucky Friday hourly
employees. The current labor agreement expires on June 1, 2002.
Avista Corporation supplies electrical power to the Lucky Friday
mine.
Greens Creek Mine - Admiralty Island, Alaska
At December 31, 2001, Hecla held a 29.73% interest in the
Greens Creek mine, located on Admiralty Island, near Juneau,
Alaska, through a joint-venture arrangement with Kennecott Greens
Creek Mining Company (KGCMC), the manager of the mine, and
Kennecott Juneau Mining Company (KJMC), both wholly owned
subsidiaries of Kennecott Corporation. The Greens Creek mine is
a polymetallic deposit containing silver, zinc, gold and lead.
Greens Creek lies within the Admiralty Island National
Monument, an environmentally sensitive area. The Greens Creek
property includes 17 patented lode claims and one patented
millsite 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 mine 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 ship-loading facility, camp facilities and a
ferry dock.
Currently, Greens Creek is mining approximately 2,000 tons
per day underground from the 200 South, the Southwest and West
ore zones. Ore from the underground trackless mine is milled at
the mine site. The mill produces gold/silver dore and lead, zinc
and bulk concentrates. The dore is marketed to a precious metal
refiner and the three concentrate products are predominantly 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 mine uses electrical
power provided by diesel-powered generators located on-site.
Pursuant to a 1996 land exchange agreement, the joint
venture transferred private property equal to a value of $1.0
million to the U.S. Forest Service and received access to
approximately 7,500 acres of land with potential mining resources
surrounding the existing mine. Production from new ore
discoveries on the exchange lands will be subject to the federal
royalties included in the land exchange agreement. The federal
royalties are based on a defined calculation that is similar to
the calculation of net smelter return and are equal to 0.75% or
3% of the calculated amount depending on the value of the ore
extracted.
As of December 31, 2001, there were 269 employees at the
Greens Creek mine. The employees at the Greens Creek mine are
not represented by a bargaining agent. At December 31, 2001,
Hecla's interest in the net book value of the Greens Creek mine
property and its associated plant and equipment was $61.6
million.
The Greens Creek deposit consists of zinc, lead, and iron
sulfides and copper-silver sulfides and sulfosalts with
substantial contained gold and silver values. The deposit has a
vein-like to blanket-like form of variable thickness. The ore is
thought to have been laid down by an "exhalative" process (i.e.,
volcanic-related rifts or vents deposited base and precious
metals onto an ocean floor). Subsequently, the mineralization
was folded and faulted by multiple generations of tectonic
events.
Kennecott Greens Creek Mining Company's geology and
engineering staff computes the estimated ore reserves for the
Greens Creek mine with technical support from Kennecott
Corporation. Hecla reviews geologic interpretation and reserve
methodology, but the reserve compilation is not independently
confirmed by Hecla in its entirety. Information with respect to
Hecla's 29.73% share of production, average cost per ounce of
silver produced and Proven and Probable ore reserves is set forth
in the following table.
Years (reflects 29.73% interest)
--------------------------------------
Production 2001 2000 1999
---------------------- ---------- ---------- ----------
Ore milled (tons) 195,646 184,178 171,946
Silver (ounces) 3,259,915 2,754,067 3,050,849
Gold (ounces) 26,041 24,882 23,802
Zinc (tons) 20,875 21,947 20,373
Lead (tons) 7,394 7,484 7,582
Average Cost per Ounce
of Silver Produced
-----------------------
Cash operating costs $ 2.41 $ 2.20 $ 1.99
Total cash costs $ 2.41 $ 2.20 $ 1.99
Total production costs $ 4.79 $ 4.87 $ 4.37
Proven and Probable
Ore Reserves(1,2,3,4) 12/31/01 12/31/00 12/31/99
----------------------- ---------- ---------- ----------
Total tons 2,256,663 2,977,198 2,977,960
Silver (ounces per ton) 16.7 15.7 16.2
Gold (ounces per ton) 0.13 0.13 0.14
Zinc (percent) 11.6 11.9 11.9
Lead (percent) 4.6 4.4 4.5
Contained silver (ounces) 37,627,765 46,663,068 48,324,528
Contained gold (ounces) 299,456 396,891 403,552
Contained zinc (tons) 262,455 353,698 354,657
Contained lead (tons) 103,220 131,515 133,194
----------------------
(1) For Proven and Probable ore reserve assumptions and
definitions, see Glossary of Certain Mining Terms.
(2) Ore reserves represent in-place material, diluted and
adjusted for expected mining recovery. Payable recoveries
of ore reserve grades by smelters and refiners are expected
to be 66% for silver, 57% for gold, 67% for zinc and 62% for
lead.
(3) The changes in reserves in 2001 versus 2000 were due to
production, downward revisions of reserves due to lower
assumed metals prices and reassessment of reserves based on
new drilling and a new mine plan for the Central West
orebody.
(4) The changes in reserves in 2000 versus 1999 were due to
production and a property-wide reassessment of the ore
zones. KGCMC made new estimates of reserves based on drill
programs for the West and Southwest ore zones. All ore
reserves were retabulated based on a new net smelter return
model. The decrease in silver ounces in 2000 versus 1999 is
primarily attributable to a downward revision in estimated
silver grade in the Southwest zone.
San Sebastian Mine - Durango, Mexico
The San Sebastian mine is located in the State of Durango,
Mexico, and 100% owned by Hecla through a Mexican subsidiary,
Minera Hecla S.A. de C.V. The mine is 56 miles northeast of the
city of Durango on concessions acquired through Hecla's
acquisition of Monarch Resources Investments Limited in 1999.
The processing plant is located near Velardena, Durango, Mexico,
and was acquired in April 2001. Concession holdings cover
approximately 160 square miles including the mine site and
multiple outlying active exploration areas.
Ore production during 2001 has consisted of surface mining
and bulk sampling from four vein systems and underground mine
development of the Francine vein. Underground development
started in May 2001, and surface mining ceased during the fourth
quarter of 2001. Limited underground ore production from
development started in September and increased gradually as
stopes were developed during the remainder of 2001. Underground
mining production is expected to ramp up to full production
(approximately 450 short tons per day) during the second quarter
of 2002. The current mine plan for the Francine vein produces
ore through the first half of 2004. Exploration is active on
nearby vein systems to expand ore reserves. There are also
downdip exploration targets beneath the current mine plan on the
Francine vein.
San Sebastian is a high-grade silver mine with significant
gold credits. Several low-sulfidation epithermal veins exist
within the San Sebastian Valley and in the mine area. Known veins
include the Francine vein, Profesor vein, Middle vein and North
vein systems. These veins are hosted within a series of shales
with interbedded fine-grained sandstones interpreted to belong to
the Cretaceous Caracol Formation.
The Francine vein strikes NW and dips SW and is located on
the southwestern limb of a doubly plunging anticline. The
Francine vein ranges in true thickness from more than 4.0 meters
to less than 0.5 meters and consists of several episodes of
banded quartz, silica-healed breccias and minor amounts of
calcite. The vein is oxidized to a depth of approximately 100
vertical meters and the wall rocks contain an alteration halo of
less than 2 meters next to the vein. Mineralization within the
oxidized portion of the vein contains limonite, hematite, silver
halides and various copper carbonates. Higher-grade gold and
silver mineralization is associated with disseminated hematite
and limonite after pyrite and chalcopyrite, copper carbonates
including malachite and azurite and hydrous copper silicates
including chrysocolla. Native gold occurs associated with
hematite and limonite. Mineralization in the sulfide portion of
the Francine vein contains pyrite, chalcopyrite, sphalerite,
galena, native silver, argentite and trace amounts of aguilarite.
In 2001, a core-drilling program was initiated to provide
better definition for mining the Francine vein. A second phase of
definition drilling is planned for 2002.
Mining is currently performed by a mining contractor.
Access to the underground workings is through a decline excavated
at a -15% grade. Ore is mined by cut-and-fill stoping. Ore is
extracted from the stopes using rubber-tired equipment and hauled
to the surface in trucks. Subeconomic material is used to
backfill and stabilize mined-out stopes. Electric power is
purchased from Comision Federal de Electridad (federal electric
company). Water is supplied from mine dewatering or hauled from
a local reservoir.
Ore is hauled in trucks by a contractor approximately 70
miles to the processing plant.
The process plant is a conventional leach / counter-current
decantation / Merrill Crowe precipitation circuit. The ore is
crushed in a two-staged crushing plant consisting of a primary
jaw, a secondary cone crusher and a double-deck vibrating screen.
The grinding circuit includes a primary ball mill and cyclone
classifiers. The ground ore is thickened followed by agitated
leaching and four stages of counter-current decantation to wash
solubilized silver and gold from the pulp. The solution bearing
silver and gold is then clarified, deaerated and zinc dust added
to precipitate silver and gold which is recovered in plate and
frame filters. Precipitate is dried and then shipped to a third-
party refiner.
The plant was constructed in 1994 and is capable of
processing approximately 500 short tons per day. Site
infrastructure includes a water supply system, maintenance shop,
warehouse, laboratory and various offices. Electric power is
purchased from Comision Federal de Electridad (federal electric
company).
At December 31, 2001, the net book value of the San
Sebastian mine property and its associated plant and equipment
was $9.1 million.
Minera Hecla operates the San Sebastian mine under valid
permits. The application for extension of the processing plant
operating permit that expired in October 2001 was made in a
timely manner and is in process. No problems are anticipated
with this permit renewal. During 2001, reclamation and closure
accruals of $63,000 were made.
At December 31, 2001, there were 95 hourly and 36 salaried
employees. The National Mine and Mill Workers Union represents
process plant hourly workers. Under the labor law, wage
adjustments are negotiated annually and other contract terms
every two years. The contract is due for renegotiation of wage
and other terms in July 2002.
Information with respect to the San Sebastian mine's
production, average cost per ounce of silver produced and Proven
and Probable ore reserves are set forth in the table below:
Year
---------
Production 2001
---------------------- ---------
Ore milled (tons) 69,779
Silver (ounces) 950,002
Gold (ounces) 15,983
Average Cost per Ounce
of Silver Produced
-----------------------
Cash operating costs $ 1.64
Total cash costs $ 1.81
Total production costs $ 2.89
Proven and Probable
Ore Reserves(1,2) 12/31/01
------------------------ ---------
Total tons 304,222
Silver (ounces per ton) 28.20
Gold (ounces per ton) 0.30
Contained silver (ounces) 8,579,060
Contained gold (ounces) 91,267
---------------------------
(1) For Proven and Probable ore reserve assumptions
and definitions, see Glossary of Certain Mining Terms.
(2) Ore reserves represent in-place material, diluted
and adjusted for expected mining recovery. Payable
recoveries of ore reserve grades by smelters and
refiners are expected to be 97% for silver and 98.5%
for gold.
Gold Properties
La Camorra Mine - Bolivar, Venezuela
The La Camorra mine is located in the eastern Venezuelan
State of Bolivar, approximately 120 miles southeast of Puerto
Ordaz. It is 100% owned by Hecla through a Venezuelan
subsidiary, Minera Hecla Venezolana, C.A., and has been a
producing mine for Hecla since October 1999. Hecla acquired the
La Camorra mine in June 1999 with the acquisition of Monarch
Resources Investments Limited (Monarch).
At the time of acquisition, the tailings impoundment was at
capacity. Processing operations were suspended during the third
quarter of 1999 to allow additional tailings capacity to be
constructed. During this period, mine development was
accelerated and remedial maintenance was carried out on the mine
and process plant equipment. Production under Hecla's control
commenced on October 1, 1999.
La Camorra is a high-grade underground gold mine that
exploits two shear-zone hosted quartz veins. It lies in the
Botanamo greenstone belt of the Precambrian Guayana Shield and is
hosted by the Caballape Group of volcaniclastics. The formations
most likely date from Archean to Proterozoic age and consist
primarily of intermediate volcanics with subordinate
metasediments. Within the La Camorra concession, the gold
mineralization is associated with the near vertical Main and
Betzy quartz veins occurring in a west-northwest, east-southeast
shear zone within medium- to coarse-grained pyroclastics.
Gold occurs both as free particles in quartz and attached to
or included in pyrite. Locally, gold is also seen on chloritic
partings.
In 1998, a core drilling program was initiated by Monarch to
test the depth extension of the ore zones below the -400-meter
level. Hecla believes the results of that program confirm that
ore-grade mineralization extends to depths below the levels to
which the current mine reserves have been delineated.
In addition, Hecla controls nine other exploration
concessions near the La Camorra mine encompassing 8,000 hectares.
Access to the underground workings is through a decline
excavated at a -15% grade. Ore is mined primarily by longhole
stoping, with cut-and-fill stoping used in some areas. Ore is
extracted from the stopes using rubber-tired equipment and hauled
to the surface in mine haulage trucks. Subeconomic material is
used to backfill and stabilize mined-out stopes. The mine is
currently producing approximately 450-500 tons of ore per day.
The process plant uses a conventional carbon-in-leach
process. The ore is crushed in a modular two-staged crushing
plant consisting of a primary jaw, a secondary cone crusher and a
double deck vibrating screen. The grinding circuit includes a
primary and a secondary ball mill. The ground ore is mixed with
a cyanide solution and clarified, followed by countercurrent
carbon-in-leach gold adsorption. The carbon is then stripped and
the gold recovered and poured into gold bars for shipment to a
refiner. Plant recovery averages over 95%.
The plant was constructed in 1994 and is capable of
processing approximately 500 tons per day. Site infrastructure
includes a water supply system, maintenance shop, warehouse,
living quarters, a dining facility, administration building and a
National Guard post. The Company also shares a housing facility
located near the town of El Callao with units for approximately
50 families. Mine electric power is purchased from Eleoriente (a
state-owned electric company). Diesel-powered electric
generators are available on-site for operation of critical
equipment during power outages. At December 31, 2001, the net
book value of the La Camorra mine property and its associated
plant and equipment was $25.7 million.
Hecla's reclamation plan has been approved by the Ministry
of Environment and Natural Resources. Planned activities include
regrading and revegetation of disturbed areas. A reclamation and
closure accrual of $0.9 million had been established as of
December 31, 2001.
At December 31, 2001, there were 339 hourly and 51 salaried
employees. Most hourly workers are represented by the Mine
Workers union. The present contract will expire in March 2004.
Information with respect to the La Camorra mine's
production, average costs per ounce of gold produced and Proven
and Probable ore reserves is set forth in the table below:
Year
--------------------------------------
Production 2001 2000 1999
----------------- ---------- ---------- ----------
Ore processed (tons)(1) 163,139 138,216 39,048
Gold (ounces)(1) 152,303 92,848 17,340
Average Cost per Ounce
of Gold Produced
----------------------
Cash operating costs $ 133 $ 188 $ 208
Total cash costs $ 133 $ 188 $ 208
Total production costs $ 200 $ 246 $ 260
Proven and Probable
Ore Reserves(2,3,4) 12/31/01 12/31/00 12/31/99
----------------- ---------- ---------- ----------
Total tons 482,238 591,464 577,003
Gold(ounces per ton) 0.867 0.634 0.544
Contained gold (ounces) 418,050 375,200 313,616
-----------------------------
(1) Production data for 1999 only include three months
of operations since the recommencement of the mine in
October 1999.
(2) For Proven and Probable ore reserve assumptions,
including assumed metals prices, see Glossary of
Certain Mining Terms.
(3) The decrease in tons of Proven and Probable ore
reserves in 2001 compared to 2000 is due to mining,
offset by: 1) conversion of inferred resources to
reserves based on new development and drilling; and 2)
addition of new resources from development and drilling
to reserve. Ore grade and contained metal improvements
in reserve are attributable to a change in reserve
methodology in 2001 compared to 2000 based on very
favorable mill/model reconciliation and operations
experience with the orebodies.
(4) The increase in tons of Proven and Probable ore
reserves in 2000 compared to 1999 is attributable to:
a) increasing the mining width of the Betzy vein in
2000 to 2.0 meters from 1.4 meters; b) new in-house
resource estimates for both the Betzy and Main veins
using information from 103 new drill holes and mine
production samples; and c) reclassification of some
resources to reserves, offset by mining. Hecla's
experience of 18 months mining the La Camorra veins
indicated an increase in grade in the reserve estimate
for 2000 compared to 1999, attributable both to higher
production sample grades and higher realized mill
grades than previously encountered. Ore reserves
represent in-situ material, diluted and adjusted for
expected mining recovery. Mill recoveries are expected
to be 95%. Ore reserves are estimated in-house using
geostatistical methods based on drill holes,
underground mine sampling and operations experience.
Discontinued Operations
In 2001, Hecla's principal industrial minerals assets
consisted of its ball clay operations in Kentucky, Tennessee and
Mississippi; its kaolin operations in South Carolina and Georgia;
its feldspar operations in North Carolina; its clay slurry plant
in Monterrey, Mexico; and its specialty aggregate operations
(primarily scoria) in southern Colorado. Hecla conducted these
operations through four wholly owned subsidiaries: (1) Kentucky-
Tennessee Clay Company, which operates its ball clay and kaolin
divisions; (2) K-T Feldspar Corporation, which operates the
feldspar business; (3) K-T Clay de Mexico, S.A. de C.V., which
operates the clay slurry plant business; and (4) MWCA, Inc.,
which operates Hecla's specialty aggregate business. On March
27, 2001, Hecla completed a sale of Kentucky-Tennessee Clay
Company, K-T Feldspar Corporation, K-T Clay de Mexico, S.A. de
C.V. and certain other minor industrial minerals companies
(collectively the K-T Group), transferring all of its interest in
each of the companies subject to the agreement. On March 4,
2002, Hecla completed a sale of the pet operations of MWCA, Inc.
- Colorado Aggregate division (CAC). Hecla continues to pursue
the sale of the
remaining assets of the industrial minerals segment and has a
signed letter of intent to sell the briquette operations of CAC.
Based upon Hecla's Board of Directors decision in November 2000
to sell the industrial minerals segment, Hecla's Consolidated
Financial Statements set forth in Item 8 below reflect the
industrial minerals segment as a discontinued operation.
MWCA, Inc.
In 1999, Hecla decided to sell MWCA. Hecla completed a
sales transaction for the Mountain West Products division of MWCA
in March 2000. Hecla also completed a sale of the landscape
operations of the Colorado Aggregate division in June 2000. On
March 4, 2002, Hecla completed a sale of the pet operations of
the Colorado Aggregate division. Hecla continues to market the
remaining Colorado Aggregate division assets and has signed a
letter of intent to sell the briquette operations, although there
can be no assurance that a sales transaction will take place.
MWCA, Inc. - Colorado Aggregate Division
MWCA-Colorado Aggregate division (CAC) mines and sells
volcanic rock (scoria) for use as briquettes in gas barbecue
grills. CAC also paints gravel bedding which is used in
aquariums. Volcanic scoria is a lightweight, clinker-like
material produced during gaseous volcanic eruptions that form
cinder cones. These cones occur frequently in the geological
environment but are unique by density, texture and color.
CAC operates a mine at Mesita, Colorado, as well as
processing plants at San Acacio, Colorado, and Neosho, Missouri.
All mining is open pit with minimal requirements for removal of
overburden.
The principal customers for scoria briquettes are
manufacturers and retailers of gas barbecue grills. Pet supply
retailers and discount chain stores are the principal customers
for aquarium gravel. Due to the seasonal nature of CAC's
briquette business, it is usually anticipated that most of its
annual briquette sales and profits from briquette sales will be
generated in the first two quarters of each calendar year.
The Mesita mine is owned by CAC and contains over six years
of mineral reserves. CAC purchases the rock used for aquarium
gravel.
CAC's plants and equipment have been operational in excess
of 25 years. CAC has upgraded and modernized these facilities
over the years and has a continuing maintenance program to
maintain the plants and equipment in good physical and operating
condition. The net book value of CAC's property and its
associated plants and equipment was $0.6 million as of
December 31, 2001. Public Service Company of Colorado, San Luis
Valley Rural Electric Cooperative, and Empire District Electric
Company provide the electric power utilized for operations at
CAC.
CAC had 37 employees as of December 31, 2001. The Teamsters
Union is the bargaining agent for CAC's hourly employees. The
current labor agreement expires on August 31, 2004.
Nonoperating Properties
Rosebud Mine - Nevada
The Rosebud gold mine, in which Hecla has a 50% interest, is
located in the Rosebud Mining District, in Pershing County,
Nevada. The Rosebud property consists of a 100% interest in
three patented lode-mining claims and 125 unpatented lode-mining
claims. The Rosebud mine may be reached from Winnemucca, Nevada,
by travelling west a distance of approximately 58 miles on an all-
weather gravel road.
In June 2000, Hecla and Newmont Gold Company, who holds the
remaining 50% interest, announced the planned closure of the
Rosebud mine when it was recognized that production would cease
during the third quarter. Mining activity was completed in July
2000, and milling activity was completed in August 2000. In
connection with the planned closure, Hecla recorded an adjustment
to the carrying value of its interest in the Rosebud property,
plant, and equipment of $4.4 million in the second quarter of
2000.
The Rosebud property has been reclaimed per the closure
agreement with the Nevada Department of Environmental Protection.
The property will be monitored for the next three to five years,
after which it will completely revert to the Bureau of Land
Management.
As of December 31, 2001, there were three employees at the
Rosebud mine. The employees at the mine are not represented by a
bargaining agent.
Republic Mine - Washington
Hecla owns the Republic gold mine located in the Republic
Mining District near Republic, Washington. In February 1995,
Hecla completed operations at the Republic mine and has been
conducting reclamation work in connection with the mine and mill
closure. In August 1995, Hecla entered into an agreement with
Newmont to explore and develop the Golden Eagle deposit on the
Republic mine property. Echo Bay acquired Newmont's interest in
2000 and has been conducting a limited exploration program on the
project.
At December 31, 2001, the accrued reclamation and closure
costs balance totaled $3.0 million, although it is possible that
the estimate may change in the future due to the assumptions and
estimates inherent in the accrual. Reclamation and closure
efforts continued in 2001.
The remaining net book value of the Republic mine property
and its associated plant and equipment was approximately $0.6
million as of December 31, 2001.
Grouse Creek Mine - Idaho
The Grouse Creek gold mine is located in central Idaho, 27
miles southwest of the town of Challis in the Yankee Fork Mining
District. Mining at Grouse Creek began in late 1994 and ended in
April 1997 due to higher-than-expected operating costs and less-
than-expected operating margins primarily because the ore
occurred in thinner, less continuous structures than had been
originally interpreted.
Hecla recorded a write-down of the mine's carrying value
totaling $97.0 million in 1995. Hecla recorded further
adjustments in 1996 for future severance, holding, reclamation
and closure costs totaling $22.5 million, and adjustments to the
carrying value of property, plant and equipment, and inventories
totaling $5.3 million.
Following completion of mining in the Sunbeam pit in April
1997, Hecla placed the Grouse Creek mine on a care-and-
maintenance status. During the care-and-maintenance period,
reclamation had been undertaken to prevent degradation of the
property. During 1997, the milling facilities were mothballed
and earthwork completed to contain and control surface waters.
In 1998, an engineered cap was constructed on the waste rock
storage facility and modifications were made to the water
treatment facility. In 1999 and 2000, activities included
further work on the waste rock storage facility cover and
continued work controlling surface waters.
Hecla increased the reclamation accrual by $23.0 million in
1999 due to anticipated changes to the closure plan, including
increased dewatering requirements and other expenditures. The
changes to the reclamation plan at Grouse Creek were necessitated
principally by the need to dewater the tailings impoundment
rather than reclaim it as a wetland as originally planned.
In May 2000, Hecla notified state and federal agencies that
the Grouse Creek property would proceed to a permanent suspension
of operations. Hecla signed an agreement with the state of Idaho
and a voluntary administrative order on consent with the U.S.
Forest Service and U.S. Environmental Protection Agency in which
the Company agreed to dewater the tailings impoundment, complete
a water balance report and monitoring plan for the site and
complete certain studies necessary for closure of the tailings
impoundment. A work plan for final reclamation and closure of
the tailings impoundment is to be submitted by Hecla no later
than one year prior to estimated completion of the tailings
impoundment dewatering.
Hecla increased the reclamation accrual by $10.2 million in
2000 based upon updated cost estimates in accordance with
Statement of Position 96-1 "Environmental Remediation
Liabilities," due to the requirements of the administrative order
on consent. During 2001, Hecla's activities focused on further
containment of surface and subsurface water along with
development of a dewatering plan for the tailings impoundment.
The reclamation and closure cost accrual for the Grouse Creek
mine totaled $30.5 million as of December 31, 2001, although it
is possible that the estimate may change in the future due to the
assumptions and estimates inherent in the accrual.
Exploration
Hecla conducts exploration activities from its headquarters
in Coeur d'Alene, Idaho. Hecla owns or controls patented and
unpatented mining claims, fee land, mineral concessions and state
and private leases in the United States, Mexico, Venezuela and
other South American countries. Hecla's strategy regarding
reserve replacement is to concentrate its efforts on: (1)
existing operations where an infrastructure already exists; (2)
other properties presently being developed; and (3) advanced-
stage exploration properties that have been identified as having
potential for additional discoveries principally in the United
States, Mexico and Venezuela. Hecla is currently concentrating
its exploration activities at the Greens Creek silver mine, in
which Hecla maintains a 29.73% interest, the La Camorra gold mine
and the San Sebastian silver mine.
Mineral exploration, particularly for gold and silver, is
highly speculative in nature, involves many risks and frequently
is nonproductive. There can be no assurance that Hecla's mineral
exploration efforts will be successful. Once mineralization is
discovered, it may take a number of years from the initial phases
of drilling until production is possible, during which time the
economic feasibility of production may change. Substantial
expenditures are required to establish ore reserves through
drilling, to determine metallurgical processes to extract the
metals from the ore and, in the case of new properties, to
construct mining and processing facilities. As a result of these
uncertainties, no assurance can be given that Hecla's exploration
programs will result in the expansion or replacement of existing
ore reserves that are being depleted by current production.
Properties are continually being added to or dropped from
Hecla's inventory as a result of exploration and acquisition
activities. Exploration expenditures for the three years ended
December 31, 2001, 2000 and 1999, were approximately $2.2
million, $6.3 million and $5.5 million, respectively.
Exploration expenditures for 2002 are estimated to be in the
range of $4.0 to $5.0 million.
Hedging Activities
Information with respect to hedging activities is set forth
in "Hedging Activities" of the "Investment Considerations"
section of this Form 10-K.
Industry Segments and Geographic Areas
Financial information with respect to industry segments and
geographic areas is set forth in Notes 2 and 11 of the Notes to
the Consolidated Financial Statements.
Competition
Information with respect to competition is set forth in
"Competition for Properties" of the "Investment Considerations"
section of this Form 10-K.
Regulation of Mining Activity
The U.S. mining operations of Hecla are subject to
inspection and regulation by the Mine Safety and Health
Administration of the Department of Labor (MSHA) under provisions
of the Federal Mine Safety and Health Act of 1977. MSHA
directives have had no material adverse impact on Hecla's results
of operations or financial condition and Hecla believes that it
is substantially in compliance with the regulations promulgated
by MSHA.
All of Hecla's exploration, development and production
activities in the United States, Mexico and South America are
subject to regulation by governmental agencies under one or more
of the various environmental laws. These laws address emissions
to the air, discharges to water, management of wastes, management
of hazardous substances, protection of natural resources,
protection of antiquities and reclamation of lands which are
disturbed. Hecla believes that it is in substantial compliance
with applicable environmental regulations. Many of the
regulations also require permits to be obtained for Hecla's
activities. These permits normally are subject to public review
processes resulting in public approval of the activity. While
these laws and regulations govern how Hecla conducts many aspects
of its business, management of Hecla does not believe that they
have a material adverse effect on its results of operations or
financial condition at this time. Hecla's projects are evaluated
considering the cost and impact of environmental regulation on
the proposed activity. New laws and regulations are evaluated as
they develop to determine the impact on, and changes necessary
to, Hecla's operations. It is possible that future changes in
these laws or regulations could have a significant impact on some
portion of Hecla's business, causing those activities to be
economically reevaluated at that time. Hecla believes that
adequate provision has been made for disposal of mine waste and
mill tailings at all of its operating and nonoperating properties
in a manner that complies with current federal and state
environmental requirements.
Environmental laws and regulations may also have an indirect
impact on Hecla, such as increased cost for electricity. Charges
by smelters to which Hecla sells its metallic concentrates and
products have substantially increased over the past several years
because of requirements that smelters meet revised environmental
quality standards. Hecla has no control over the smelters'
operations or their compliance with environmental laws and
regulations. If the smelting capacity available to Hecla was
significantly reduced because of environmental requirements or
otherwise, it is possible that Hecla's silver operations could be
adversely affected.
Hecla's U.S. operations are also subject to regulations
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (CERCLA or Superfund), which
regulates and establishes liability for the release of hazardous
substances, and the Endangered Species Act (ESA), which
identifies endangered species of plants and animals and regulates
activities to protect these species and their habitats.
Legislation
From time to time, the U.S. Congress considers proposed
amendments to the General Mining Law of 1872, as amended, which
governs mining claims and related activities on federal lands.
Legislation previously introduced in Congress would have changed
the current patent procedures, imposed certain royalties on
production and enacted new reclamation, environmental controls
and restoration requirements with respect to mining activities on
federal lands. There was no significant activity with respect to
mining law reform in Congress in 2001, but the extent of any such
changes is not known and the potential impact on Hecla as a
result of congressional action is difficult to predict. Although
a majority of Hecla's existing mining operations occur on private
or patented property, changes to the General Mining Law, if
adopted, could adversely affect Hecla's ability to economically
develop mineral resources on federal lands.
Employees
As of December 31, 2001, Hecla and its subsidiaries employed
701 people.
Investment Considerations
The following Investment Considerations, together with other
information set forth in this Form 10-K, should be carefully
considered by current and future investors in Hecla's securities.
Recurring Losses and Liquidity
Although Hecla reported net income before preferred stock
dividends during 2001, in part due to a gain of $12.7 million
from the sale of the K-T Group, the Company has experienced net
losses
for each of the previous ten years. For the year ended
December 31, 2001, Hecla reported net income of approximately
$2.3 million (before preferred stock dividends of $8.1 million),
or $0.03 per share of common stock, compared to a net loss of
approximately $84.0 million (before preferred stock dividends of
$8.1 million), or $1.26 per share of common stock, for the year
ended December 31, 2000. Without improvements from the 2001
average prices of metals, Hecla anticipates that its history of
losses applicable to common shareholders will continue in 2002.
Due to the volatility of metals prices and the significant impact
metals price changes have on Hecla's operations, there can be no
assurance that Hecla will be profitable in the future.
As of December 31, 2001, Hecla had cash and cash equivalents
of $7.6 million and negative working capital of $0.4 million.
Hecla believes cash requirements over the next twelve months will
be funded through a combination of current cash, future cash
flows from operations, proceeds from potential asset sales and/or
future debt or equity security issuances. Hecla's ability to
raise capital is highly dependent upon the commercial viability
of its projects and the associated prices of metals Hecla
produces. Because of the significant impact that changes in the
prices of gold, silver, zinc and lead have on Hecla's financial
condition, declines in these metals prices may negatively impact
short-term liquidity and Hecla's ability to raise additional
funding for long-term projects. In the event that cash balances
decline to a level that cannot support the operations of Hecla,
management will defer certain planned capital expenditures and
exploration expenditures as needed to conserve cash for
operations. If management's plans are not successful, operations
and liquidity may be adversely effected.
Metal Price Volatility
Because a significant portion of Hecla's revenues are
derived from the sale of gold, silver, lead and zinc, Hecla's
earnings are directly related to the prices of these metals.
Gold, silver, lead and zinc prices fluctuate widely and are
affected by numerous factors beyond Hecla's control, including
expectations for inflation, speculative activities, the relative
exchange rate of the U.S. dollar, global and regional demand and
production, political and economic conditions and production
costs in major producing regions. The aggregate effect of these
factors, all of which are beyond Hecla's control, is impossible
for Hecla to predict. If the market price for these metals falls
below Hecla's full production costs and remains at such level for
any sustained period, Hecla will experience additional losses and
may decide to discontinue the development of a project or mining
at one or more of its properties. While Hecla has periodically
used limited hedging techniques to reduce a portion of Hecla's
exposure to the volatility of gold, silver, lead and zinc prices,
there can be no assurance that it will be able to do so
effectively in the future (see Hedging Activities).
The following table sets forth the average daily closing
prices of the following metals for 1980, 1985, 1990, 1995, 1997
and each year thereafter through 2001.
[Enlarge/Download Table]
1980 1985 1990 1995 1997 1998 1999 2000 2001
-------- -------- -------- -------- -------- -------- -------- -------- --------
Gold(1)
(per oz.) $ 612.56 $ 317.26 $ 383.46 $ 384.16 $ 331.10 $ 294.16 $ 278.77 $ 279.03 $ 271.00
Silver(2)
(per oz.) 20.63 6.14 4.82 5.19 4.90 5.53 5.25 5.00 4.39
Lead(3)
(per lb.) 0.41 0.18 0.37 0.29 0.28 0.24 0.23 0.21 0.22
Zinc(4)
(per lb.) 0.34 0.36 0.69 0.47 0.60 0.46 0.49 0.51 0.40
(1) London Final
(2) Handy & Harman
(3) London Metals Exchange -- Cash
(4) London Metals Exchange -- Special High Grade -- Cash
On February 28, 2002, the closing prices for gold, silver,
lead and zinc were $296.85 per ounce, $4.49 per ounce, $0.22 per
pound, and $0.35 per pound, respectively.
Volatility of Metals Production
Hecla's future gold and silver production will be dependent
upon Hecla's success in developing new reserves as well as
exploration efforts (see Project Development Risks and
Exploration). If metals prices remain at current low levels or
continue to decline, Hecla could determine that it is not
economically feasible to continue exploration or development of a
project or continue commercial production at some of its
properties (see Metal Price Volatility).
Project Development Risks
Hecla, from time to time, engages in the development of new
orebodies or the extension of existing orebodies, both at newly
acquired properties and presently existing mining operations
(collectively "Development Projects"). Hecla's ability to
sustain or increase its present level of metals production is
dependent in part on the successful development of such new
orebodies and/or expansion of existing mining operations. The
economic feasibility of any individual Development Project and
all such Development Projects collectively is based upon, among
other things, estimates of reserves, metallurgical recoveries,
capital and operating costs of such Development Projects, and
future metals prices. Development Projects are also subject to
the successful completion of feasibility studies, issuance of
necessary permits and receipt of adequate financing.
Development Projects may have no operating history upon
which to base estimates of reserves, metallurgical recoveries,
future operating costs and capital requirements. Particularly
for Development Projects, estimates of reserves, metal recoveries
and cash operating costs are to a large extent based upon the
interpretation of geologic data obtained from a limited number of
drill holes and other sampling techniques and feasibility
studies. Estimates of cash operating costs are then derived
based upon anticipated tonnage and grades of ore to be mined and
processed, the configuration of the orebody, expected recovery
rates of metals from the ore, comparable facility and equipment
costs, anticipated climate conditions and other factors. As a
result, it is possible that actual cash operating costs and
economic returns of any and all Development Projects may
materially differ from the costs and returns estimated.
Reserves
The ore reserve figures presented in this Form 10-K and in
Hecla's other SEC filings are, in large part, estimates made by
Hecla's technical personnel, and no assurance can be given that
the estimate of the amount of metal or the indicated level of
recovery of these metals will be realized. Reserves estimated
for properties that have not yet commenced production may require
revision based on actual production experience. Market price
fluctuations of the various metals mined by Hecla, as well as
increased production or capital costs or reduced recovery rates,
may render ore reserves containing relatively lower grades of
mineralization uneconomic and may ultimately result in a
restatement of reserves. Moreover, short-term operating factors
relating to the ore reserves, such as the need for sequential
development of orebodies and processing new or different ore
grades, may adversely affect profitability in any particular
accounting period.
The metals prices used to determine ore reserves are based
on a number of factors Hecla believes likely to influence metals
prices. For Proven and Probable ore reserve assumptions,
including assumed metals prices, see Glossary of Certain Mining
Terms.
Declines in the market price of metals may also render ore
reserves containing relatively lower grades of mineralization
uneconomic to exploit unless the utilization of forward sales
contracts or other hedging techniques is sufficient to offset the
effects of a drop in the market price of the metals expected to
be mined from such reserves. If Hecla's realized price for the
metals it produces, including hedging benefits, were to decline
substantially below the levels set for calculation of reserves
for an extended period, there could be material delays in the
development of new projects, increased net losses, reduced cash
flow, reductions in reserves and asset write-downs.
Joint Development and Operating Arrangements
The Greens Creek mine is operated through a joint-venture
arrangement, and Hecla owns an undivided interest in the assets
of the venture. Hecla's Rosebud mine was similarly operated
through a Limited Liability Company (LLC) with Hecla holding 50%
of the interest in the LLC. Under the joint-venture and LLC
agreements, the joint participants, including Hecla, are entitled
to indemnification from the other participants and are severally
liable only for the liabilities of the participants in proportion
to their interest therein. If a participant defaults on its
obligations under the terms of a joint venture or LLC agreement
(including as a result of insolvency), Hecla could incur losses
in excess of its pro-rata share of the joint venture. In the
event any participant so defaults, each agreement provides
certain rights and remedies to the remaining participants. These
include the right to force a dilution of the percentage interest
of the defaulting participant and the right to utilize the
proceeds from the sale of the defaulting parties' share of
products, or its joint-venture interest in the properties, to
satisfy the obligations of the defaulting participant. Based on
the information available to Hecla, Hecla has no reason to
believe that its joint-venture or LLC participants with respect
to the Greens Creek and Rosebud properties will be unable to meet
their financial obligations under the terms of the respective
agreements.
Competition for Properties
Because mines have limited lives based on proven ore
reserves, Hecla is continually seeking to replace and expand its
reserves. Hecla encounters strong competition from other mining
companies in connection with the acquisition of properties
producing or capable of producing gold, silver, lead and zinc.
As a result of this competition, some of which is with companies
with greater financial resources than Hecla, Hecla may be unable
to acquire attractive mining properties on terms it considers
acceptable. Hecla also competes with other companies both within
and outside the mining industry in connection with the recruiting
and retention of qualified employees knowledgeable in mining
operations. In addition, there are a number of uncertainties
inherent in any program relating to the location of economic ore
reserves, the development of appropriate metallurgical processes,
the receipt of necessary governmental permits and the
construction of mining and processing facilities. Accordingly,
there can be no assurance that Hecla's programs will yield new
reserves to replace and expand current reserves.
Hecla competes with other producers of scoria and with
manufacturers of ceramic briquettes in the production and sale of
briquettes. Hecla has limited information as to the size of the
barbecue briquette industry, but believes that it supplies a
major portion of the scoria briquettes used in gas barbecue
grills. Price and natural product characteristics, such as
color, uniformity of size, and lack of contained moisture and
density are important competitive considerations.
Title to Properties
The validity of unpatented mining claims, which constitute a
significant portion of Hecla's undeveloped property holdings in
the United States, is often uncertain and may be contested.
Although Hecla has attempted to acquire satisfactory title to its
undeveloped properties, Hecla, in accordance with mining industry
practice, does not generally obtain title opinions until a
decision is made to develop a property, with the attendant risk
that some titles, particularly titles to undeveloped properties,
may be defective.
Mining Risks and Insurance
The business of mining is generally subject to a number of
risks and hazards, including environmental hazards, political and
country risks, industrial accidents, labor disputes, encountering
unusual or unexpected geologic formations, cave-ins, rockbursts,
flooding and periodic interruptions due to inclement or hazardous
weather conditions. Such risks could result in damage to, or
destruction of, mineral properties or producing facilities,
personal injury, environmental damage, delays in mining, monetary
losses and possible legal liability. Although Hecla maintains
insurance within ranges of coverage it believes to be consistent
with industry practice, no assurance can be given that such
insurance will be available at economically feasible premiums.
Insurance against environmental risks (including potential for
pollution or other hazards as a result of disposal of waste
products occurring from exploration and production) is not
generally available to Hecla or to other companies within the
industry at reasonable premiums. To the extent Hecla is subject
to environmental liabilities, the payment of such liabilities
would reduce the funds available to Hecla. Should Hecla be
unable to fund fully the cost of remedying an environmental
problem, Hecla might be required to suspend operations or enter
into interim compliance measures pending completion of the
required remedy.
Various laws and permits require that financial assurances
be in place for certain environmental and reclamation obligations
and other potential liabilities. Hecla currently has in place
such financial assurances in the form of surety bonds. As of
December 31, 2001, Hecla also has set aside as restricted
investments approximately $6.4 million as collateral for these
bonds. The amount of the financial assurances and the amount
required to be set aside by the Company as collateral for these
financial assurances are dependent upon a number of factors,
including financial condition of the Company, reclamation cost
estimates, development of new projects, and the total dollar
value of financial assurances in place. There can be no
assurance that Hecla will be able to maintain or add to its
current level of financial assurances.
Foreign Operations
Hecla's San Sebastian mine is located in Durango, Mexico,
and Hecla's La Camorra mine is located in Bolivar State,
Venezuela. Hecla also has exploration projects and mining
investments in Mexico and other countries in South America. Such
projects and investments could be adversely affected by exchange
controls, currency fluctuations, political risks, taxation and
laws or policies of either foreign countries or the United States
affecting foreign trade, investment and taxation, which, in turn,
could affect Hecla's current or future foreign operations.
Hedging Activities
Hedging activities are intended to minimize the effect of
declines in metals prices on results of operations for a period
of time. Although hedging activities may protect a company
against low metals prices, it may also limit the price that can
be received on hedged products, subject to forward sales and
certain options contracts, potentially resulting in Hecla
foregoing the realization of revenues to the extent the market
prices of metals exceed the related metals price in a forward
sale or certain options contracts. Hecla's hedging activities
increase risks to the extent Hecla is unable to deliver metal in
satisfaction of the contract. Hecla is exposed to certain
losses, generally the amount by which the contract price exceeds
the spot price of a commodity, in the event of nonperformance by
the counterparties to these agreements. Hecla's policy
guidelines for hedging gold, silver, lead and zinc production
permit management to utilize various hedging mechanisms and
strategies to assure revenue for 50% of various costs, but
hedging is limited to not more than 75% of the next five years of
planned gold production at any one time, or 50% of the next five
years of planned silver production. In addition, limits are set
as to the amount that can be hedged in any quarter and the credit
quality of the counterparties. Hecla has not added to its hedge
position due in part to lack of credit lines available from
counterparties.
As part of the acquisition of Monarch Resources Investments
Limited and associated project financing completed in 1999,
Hecla's Board of Directors approved a gold hedging program for
the La Camorra mine totaling 306,045 gold ounces over the period
December 1999 to December 2004, at a flat forward price of
$288.25 per ounce. As of December 31, 2001, 169,158 ounces of
gold remained hedged associated with the La Camorra project
financing. None of the aforementioned activities have been
entered into for speculative purposes as of December 31, 2001.
For additional information regarding hedging activities, see
Notes 1 and 3 of Notes to Consolidated Financial Statements,
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations, and Item 7A Quantitative and
Qualitative Disclosure About Market Risk of this Form 10-K.
Environmental Liabilities
Reserves for closure costs, reclamation and environmental
matters totaled $52.5 million and $58.7 million at December 31,
2001 and 2000, respectively. Hecla anticipates that expenditures
relating to these reserves will be made over the next several
years.
In August 2001, Hecla announced it had reached an Agreement
in Principle with the United States and the State of Idaho to
settle the governments' claims for natural resource damages and
cleanup costs related to historic mining practices in the Coeur
d'Alene Basin in northern Idaho. The settlement, if and when
finalized, would release the Company from further liability to
the governments for its historic mining practices in the Coeur
d'Alene Basin and cap the majority of cleanup-related
expenditures Hecla is responsible for annually at the Bunker Hill
Superfund Site, the Grouse Creek mine and Stibnite site in
central Idaho over a 10-year period. The Agreement limits these
payments and/or cleanup obligations in the Coeur d'Alene Basin,
the Bunker Hill Superfund Site, Grouse Creek and Stibnite to a
fixed annual cap of $5.0 million for each of the first two years
of the Agreement and $6.0 million for each of the next eight
years. Hecla is committed to work and/or payments of $4.0
million annually for the following 20 years. In addition, Hecla
would either have to pay or perform cleanup obligations amounting
to 10% of its operating cash flow as adjusted for certain
exploration expenditures. Hecla would provide a security
interest in assets with a value of $20 million which will decline
over ten years. Over the past four years, Hecla's environmental
expenditures at those four sites have averaged $9.0 million per
year. The settlement will reduce Hecla's annual environmental
costs to an amount that is more manageable for the Company. As
of December 31, 2001, the Company has accrued $43.6 million
related to the properties covered by the Agreement in Principle.
The range of liability for these sites could be up to $138.0
million on an undiscounted basis over 30 years plus the
percentage of operating cash flow. If, and when, the Agreement
in Principle is finalized, if the terms of the obligation are
fixed and determinable, they may be discounted. Hecla has
accrued what management believes is the best estimate of the
liability as of December 31, 2001. However, it is reasonably
possible that Hecla's obligation may change in the near or long
term depending on a number of factors, including finalization and
entry of a Consent Decree. In addition, an adverse ruling
against Hecla for liability and damages in this matter could have
a material adverse effect on the Company.
Future closure, reclamation and environment-related
expenditures are difficult to estimate in many circumstances due
to the early stages of investigation, the uncertainties relating
to specific reclamation and remediation methods and costs, the
possible participation of other potentially responsible parties
and changing environmental laws, regulations and interpretations.
It is possible that changes to estimates of future closure,
reclamation and environmental contingencies could have a material
effect on future operating results as new information becomes
known.
New York Stock Exchange Listing
Hecla received shareholder approval at its annual
shareholders' meeting on June 8, 2001, allowing a reverse split
of its common stock at the discretion of Hecla's board of
directors. The choice of stock split ratios given to the
directors was one for three, one for four or one for five. The
directors have the option to implement a reverse split at one of
those ratios any time prior to June 8, 2003, or not at all. The
company requested the board be granted authority to implement a
reverse split from shareholders if necessary to remain listed on
the New York Stock Exchange (NYSE). Hecla's common stock traded
above the minimum average criterion for continued listing on the
Exchange until early November 2001. On December 26, 2001, Hecla
was notified by the NYSE that Hecla had fallen below the minimum
criterion of $1 per share over a 30-day period. On February 14,
2002, Hecla was notified that the Company's share price would be
reviewed on June 26, 2002, to determine compliance with this
listing requirement. As of February 28, 2002, Hecla was in
compliance with the listing criteria of the New York Stock
Exchange.
Glossary of Certain Mining Terms
Cash Operating Costs -- Includes all direct and indirect
operating cash costs incurred at each operating mine,
excluding royalties and mine production taxes.
Cash Operating Costs Per Ounce -- Calculated based upon cash
operating costs, as defined herein, net of by-product
revenues from all metals other than the primary metal
produced at each mine, divided by the total ounces of the
primary metal produced.
Decline -- An underground passageway connecting one or more
levels in a mine, providing adequate traction for heavy,
self-propelled equipment. Such underground openings are
often driven in an upward or downward spiral, much the same
as a spiral staircase.
Development -- Work carried out for the purpose of opening
up a mineral deposit and making the actual ore extraction
possible.
Dilution -- The amount of waste which must be mined along
with the ore in order to obtain the ore.
Dore -- Unrefined gold and silver bullion bars consisting of
approximately 90% precious metals which will be further
refined to almost pure metal.
Exploration -- Searching for ore, usually by geological
surveys, geophysical prospecting, drilling, surface or
underground headings, drifts or tunnels.
Grade -- The average assay of a ton of ore, reflecting metal
content.
Heap Leaching -- A process involving the percolation of a
cyanide solution through crushed ore heaped on an impervious
pad or base to dissolve minerals or metals out of the ore.
Hectare -- Equivalent to 2.47 acres.
Mill -- A processing plant that produces a concentrate of
the valuable minerals or metals contained in an ore. The
concentrate must then be treated in some other type of
plant, such as a smelter, to effect recovery of the pure
metal.
Mineral-Bearing Material -- Material for which quantitative
estimates are based on inferences from known mineralization,
or on drill-hole samples too few in number to allow for
classification as Probable ore reserves.
Mineralization - The process by which a mineral or minerals
are introduced into a rock, resulting in a valuable deposit.
Ore -- A mixture of valuable minerals and gangue (valueless
minerals) from which at least one of the minerals or metals
can be extracted at a profit.
Orebody -- A continuous, well-defined mass of material of
sufficient ore content to make extraction economically
feasible.
Patented Mining Claim -- A parcel of land originally located
on federal lands as an unpatented mining claim under the
General Mining Law, the title of which has been conveyed
from the federal government to a private party pursuant to
the patenting requirements of the General Mining Law.
Proven and Probable Ore Reserves -- Reserves that reflect
estimates of the quantities and grades of mineralized
material at Hecla's mines which Hecla believes can be
recovered and sold at prices in excess of the total cash
cost associated with extracting and processing the ore. The
estimates are based largely on current costs and on
projected prices and demand for Hecla's products. Mineral
reserves are stated separately for each of Hecla's mines
based upon factors relevant to each mine. Reserves
represent diluted in-place grades and do not reflect losses
in the recovery process. Hecla's estimates of Proven and
Probable reserves for the Lucky Friday mine, the San
Sebastian mine and the La Camorra mine at December 31, 2001
and 2000, are based on
gold prices of $300 and $300 per ounce, silver prices of
$5.10 and $5.50 per ounce, lead prices of $0.24 and $0.25
per pound, and zinc prices of $0.48 and $0.55 per pound,
respectively. Proven and Probable ore reserves for the
Lucky Friday, San Sebastian and La Camorra mines are
calculated and reviewed in-house and are subject to periodic
audit by others outside Hecla, although audits are not
performed on an annual basis. Proven and Probable ore
reserves for the Greens Creek mine are based on calculations
of reserves provided to Hecla by the operator of Greens
Creek that have been reviewed but not independently
confirmed by Hecla. Kennecott Greens Creek Mining Company's
estimates of Proven and Probable ore reserves for the Greens
Creek mine as of December 2001 and 2000 are derived from
successive generations of reserve and feasibility analyses
for different areas of the mine each using a separate
assessment of metals prices. The weighted average prices
used were:
December 31, December 31,
2001 2000
------------- ------------
Gold $ 309 $ 295
Silver $ 4.92 $ 5.51
Lead $ 0.25 $ 0.25
Zinc $ 0.49 $ 0.55
Changes in reserves represent general indicators of the
results of efforts to develop additional reserves as
existing reserves are depleted through production. Grades
of ore fed to process may be different from stated reserve
grades because of variation in grades in areas mined from
time to time, mining dilution and other factors. Reserves
should not be interpreted as assurances of mine life or of
the profitability of current or future operations.
Probable Reserves -- Reserves for which quantity and grade
and/or quality are computed from information similar to that
used for Proven reserves, but the sites for inspection,
sampling and measurement are farther apart or are otherwise
less adequately spaced. The degree of assurance, although
lower than that for Proven reserves, is high enough to
assume continuity between points of observation.
Proven Reserves -- Reserves for which (a) quantity is
computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are computed
from the results of detailed sampling, and (b) the sites for
inspection, sampling and measurement are spaced so closely
and the geologic character is so well-defined that size,
shape, depth and mineral content of reserves are well-
established.
Reclamation -- The process of returning the land to another
use after mining has been completed.
Remediation -- In the context of superfund or the hazardous
waste law, relates to those actions taken to investigate,
prevent or minimize the effects or potential effects on
human health or the environment of a release or threatened
release of a hazardous substance.
Reserves -- That part of a mineral deposit which could be
economically and legally extracted or produced at the time
of the reserve determination. Reserves are customarily
stated in terms of "ore" when dealing with metalliferous
minerals.
Rockburst -- Explosive rock failures caused by the pressure
exerted by rock adjacent to mine openings far below the
surface.
Sand Fill -- The coarser fraction of concentrator tailings,
which is conveyed as a slurry in underground pipes to
support cavities left by extraction of ore.
Shaft -- A vertical or steeply inclined excavation for the
purpose of opening and servicing a mine. It is usually
equipped with a hoist at the top which lowers and raises a
conveyance for handling personnel and materials.
Stope -- An underground excavation from which ore has been
extracted either above or below mine level.
Total Cash Costs -- Includes all direct and indirect
operating cash costs incurred at each operating mine.
Total Cash Costs Per Ounce -- Calculated based upon total
cash costs, as defined herein, net of by-product revenues
from all metals other than the primary metal produced at
each mine, divided by the total ounces of the primary metal
produced.
Total Production Costs -- Includes total cash costs, as
defined, plus depreciation, depletion, amortization and
reclamation accruals relating to each operating mine.
Total Production Costs Per Ounce -- Calculated based upon
total production costs, as defined, net of by-product
revenues earned from all metals other than the primary metal
produced at each mine, divided by the total ounces of the
primary metal produced.
Troy Ounce -- Unit of weight measurement used for all
precious metals. The familiar 16-ounce avoirdupois pound
equals 14.583 Troy Ounces.
Unpatented Mining Claim -- A parcel of property located on
federal lands pursuant to the General Mining Law and the
requirements of the state in which the unpatented claim is
located, the paramount title of which remains with the
federal government. The holder of a valid, unpatented lode-
mining claim is granted certain rights including the right
to explore and mine such claim under the General Mining Law.
Vein -- A mineralized zone having a more or less regular
development in length, width and depth which clearly
separates it from neighboring rock.
Waste -- Barren rock in a mine, or mineralized material that
is too low in grade to be mined and milled at a profit.
Item 2. Properties.
Hecla's principal mineral properties are described in Item 1
above. Hecla also has interests in a number of other mineral
properties in the United States, Mexico and South America.
Although some of such properties are known or believed to contain
significant quantities of mineralization, they are not considered
material to Hecla's operations at the present time. Encouraging
results from further exploration or increases in the market
prices of certain metals could, in the future, make such
properties considerably more valuable to the business of Hecla
taken as a whole.
The general corporate office of Hecla is located in
Coeur d'Alene, Idaho, on a tract of land containing approximately
13 acres. The Company currently has an agreement to sell the
corporate office building, which is anticipated to close during
the second quarter of 2002. Hecla intends to lease a portion of
the building following the sale.
Hecla believes that its existing facilities are sufficient
for their intended purposes.
Item 3. Legal Proceedings.
Bunker Hill Superfund Site
In 1994, Hecla, as a potentially responsible party under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (CERCLA), entered into a consent decree with the
Environmental Protection Agency (EPA) and the state of Idaho,
concerning environmental remediation obligations at the Bunker
Hill Superfund site located at Kellogg, Idaho. The consent
decree settled Hecla's response-cost liability under CERCLA at
the Bunker Hill site. In August 2000, Sunshine Mining and
Refining Company which was also a party to the 1994 Consent
Decree, filed for Chapter 11 bankruptcy and in January 2001, the
Federal District Court approved a new Consent Decree between
Sunshine, the U.S. Government and the Coeur d'Alene Indian Tribe
which settled Sunshine's environmental liabilities in the Coeur
d'Alene Basin lawsuits described below and released Sunshine from
further obligations under the 1994 Consent Decree. In September
2001, the Idaho Federal District Court held a hearing on the
Company's motion to relieve the Company from some or all of the
obligations under the 1994 Consent Decree based on a number of
arguments including the impact of changed circumstances because
EPA determined to utilize a broad remedial investigation
feasibility study (RI/FS) CERCLA process to address environmental
issues in the Coeur d'Alene Basin outside the Bunker Hill Site.
In a September 30, 2001, Order, amended October 15, 2001, the
Court held that sufficient changed circumstances had occurred to
support modification of the 1994 Consent Decree. In the Order,
as amended, the Court permitted the mining companies to terminate
further work under the 1994 Consent Decree for 2001 except for a
few high-risk yards and stated the Court would make a final
decision on the request to modify the Consent Decree after EPA's
Record of Decision (ROD) on the Basin cleanup is issued. EPA
recently issued its proposed plan for the cleanup of the Coeur
d'Alene Basin and a ROD on the cleanup plan is expected to be
issued by EPA in 2002. As of December 31, 2001, Hecla has
estimated and accrued an allowance for liability for remedial
activity costs at the Bunker Hill site of $9.7 million. These
estimated expenditures are anticipated to be made over the next
three to five years. Although Hecla believes the accrual is
adequate based upon current estimates of aggregate costs, it is
reasonably possible that Hecla's estimate of its obligations may
change in the near or longer term.
Coeur d'Alene River Basin Environmental Claims
- Coeur d'Alene Indian Tribe Claims
In July 1991, the Coeur d'Alene Indian Tribe brought a
lawsuit, under CERCLA, in Idaho Federal District Court against
Hecla and a number of other mining companies asserting claims for
damages to natural resources downstream from the Bunker Hill site
over which the Tribe alleges some ownership or control. The
Tribe's natural resource damage litigation has been consolidated
with the United States' litigation described below.
- U.S. Government Claims
In March 1996, the United States filed a lawsuit in Idaho
Federal District Court against certain mining companies that
conducted historic mining operations in the Silver Valley of
northern Idaho, including Hecla. The lawsuit asserts claims
under CERCLA and the Clean Water Act and seeks recovery for
alleged damages to or loss of natural resources located in the
Coeur d'Alene River Basin in northern Idaho for which the United
States asserts to be the trustee under CERCLA. The lawsuit
asserts that the defendants' historic mining activity resulted in
releases of hazardous substances and damaged natural resources
within the Basin. The suit also seeks declaratory relief that
Hecla and other defendants are jointly and severally liable for
response costs under CERCLA for historic mining impacts in the
Basin outside the Bunker Hill site. Hecla has asserted a number
of defenses to the United States' claims.
In May 1998, the EPA announced that it had commenced a RI/FS
under CERCLA for the entire Basin, including Lake Coeur d'Alene,
in support of its response cost claims asserted in its March 1996
lawsuit. In October 2001, the EPA issued its proposed cleanup
plan for the Basin, and EPA's Record of Decision on the cleanup
plan is expected to be issued by EPA in 2002.
The first phase of the trial commenced on the consolidated
Coeur d'Alene Indian Tribe's and the United States' Federal
District Court cases on January 22, 2001, and was concluded on
July 30, 2001. In the first phase of the trial, the Court has
been asked to determine the extent of liability, if any, of the
defendants for the plaintiffs' CERCLA claims. The Court has also
been asked to determine the liability of the United States for
its historic involvement in the Basin. No decision on the issues
before the Court in the first phase of the litigation has been
issued. If liability is determined in the first phase, a second
trial will be scheduled for 2002 or 2003 to address damages and
remedy selection. Two of the defendant mining companies, Coeur
d'Alene Mines Corporation and Sunshine Mining and Refining
Company, settled their liabilities under the litigation during
the first quarter of 2001. Hecla and ASARCO are the only
defendants remaining in the litigation.
During 2000 and into 2001, Hecla was involved in settlement
negotiations with representatives of the U.S. government and the
Coeur d'Alene Indian Tribe. The Company also participated with
certain of the other defendants in the litigation in a state of
Idaho led settlement effort. On August 16, 2001, the Company
entered into an Agreement in Principle with the United States and
the State of Idaho to settle the governments' claims for natural
resource damages and cleanup costs related to the historic mining
practices in the Coeur d'Alene Basin in northern Idaho. The
settlement, if and when finalized in the form of a Consent
Decree, would release the Company from further liability to the
governments for its historic mining practices in the Coeur
d'Alene Basin. The Agreement in Principle caps for a period of
ten years the majority of the cleanup related expenditures the
Company is responsible for annually at the Bunker Hill Superfund
Site, the Grouse Creek mine and the Stibnite site in central
Idaho. The Agreement limits these payments to the Government
and/or cleanup obligations at these sites to a fixed annual cap
of $5.0 million for each of the first two years of the Agreement
and $6.0 million for each of the next eight years. Hecla is
committed to work and/or make payments of $4.0 million annually
for the following 20 years thereafter. In addition, Hecla would
either have to pay or perform clean up obligations amounting to
10% of its operating cash flow as adjusted for certain
exploration expenditures. Hecla would provide a security
interest in assets with a value of $20 million which will decline
over ten years. The Agreement in Principle does not include the
Coeur d'Alene Indian Tribe; however, the Company hopes to be able
to include the Tribe as a party to the settlement under the terms
of a final consent decree. Representatives of the United States,
the State of Idaho and the Company continue to work on terms of a
definitive consent decree incorporating the terms of the
Agreement in Principle. However, there are a number of
significant issues which will need to be resolved prior to
finalizing the definitive Consent Decree.
As of December 31, 2001, the Company has accrued $43.6
million related to the properties covered by the Agreement in
Principle. The range of liability for these sites could be up to
$138.0 million on an undiscounted basis plus the percentage of
operating cash flow. If, and when, the Agreement in Principle is
finalized in the form of a Consent Decree, if the terms of the
obligation are fixed and determinable, they may be discounted.
Hecla has accrued what management believes is the best estimate
of the liability as of December 31, 2001. However, it is
reasonably possible that Hecla's obligation may change in the
near or long term depending on a number of factors, including
finalization and entry of a Consent Decree. In addition, an
adverse ruling against Hecla for liability and damages in this
matter could have a material adverse effect on the Company.
Private Class Action Litigation
On or about January 7, 2002, a class action complaint was
filed in this matter in the Idaho District Court, County of
Kootenai, against several corporate defendants, including the
Company. The Company was served with the Complaint on
January 29, 2002. The Complaint seeks certification of three
plaintiff classes of Coeur d'Alene Basin residents and current
and former property owners to pursue three types of relief:
various medical monitoring programs, a real property remediation
and restoration program, and damages for diminution in property
value, plus other damages and costs. The Company believes the
Complaint is subject to challenge on a number of bases and
intends to vigorously defend itself in this litigation.
Insurance Coverage Litigation
In 1991, Hecla initiated litigation in the Idaho District
Court, County of Kootenai, against a number of insurance
companies that provided comprehensive general liability insurance
coverage to Hecla and its predecessors. Hecla believes the
insurance companies have a duty to defend and indemnify Hecla
under their policies of insurance for all liabilities and claims
asserted against Hecla by the EPA and the tribe under CERCLA
related to the Bunker Hill site and the Basin in northern Idaho.
In 1992, the Idaho State District Court ruled that the primary
insurance companies had a duty to defend Hecla in the Tribe's
lawsuit. During 1995 and 1996, Hecla entered into settlement
agreements with a number of the insurance carriers named in the
litigation. Hecla has received a total of approximately $7.2
million under the terms of the settlement agreements. Thirty
percent of these settlements were paid to the EPA to reimburse
the U.S. government for past costs under the Bunker Hill site
Consent Decree. Litigation is still pending against one insurer
with trial suspended until the underlying environmental claims
against Hecla are resolved or settled. The remaining insurer in
the litigation, along with a second insurer not named in the
litigation, is providing Hecla with a partial defense in all
Basin environmental litigation. As of December 31, 2001, Hecla
had not reduced its accrual for reclamation and closure costs to
reflect the receipt of any potential insurance proceeds.
Other Claims
In 1997, Hecla's subsidiary, Kentucky-Tennessee Clay Company
(K-T Clay), terminated shipments (comprising approximately 1% of
annual ball clay production) sold to animal feed producers, when
the Food and Drug Administration determined trace elements of
dioxin were present in poultry. Dioxin is inherently present in
ball clays generally. On September 22, 1999, Riceland Foods (the
primary purchaser of ball clay from K-T Clay used in animal feed)
commenced litigation against K-T Clay in State Court in Arkansas
to recover its losses and its insurance company's payments to
downstream users of its animal feed. The complaint alleged
negligence, strict liability and breach of implied warranties and
seeks damages in excess of $7.0 million. Legal counsel retained
by the insurance company for K-T Clay had the case removed to
Federal Court in Arkansas. In July 2000, a second complaint was
filed against K-T Clay and Hecla in Arkansas State Court by
Townsends, Inc., another purchaser of animal feed containing ball
clay sold by K-T Clay. A third complaint was filed in the United
States District Court in Arkansas on August 31, 2000, by Archer
Daniels Midland Company, a successor in interest to Quincy
Soybean Company, a third purchaser of ball clay sold by K-T Clay
and used in the animal feed industry. The Townsends and Archer
Daniels lawsuits allege damages totaling approximately $300,000
and $1.4 million, respectively. These complaints contain similar
allegations to the Riceland Foods' case and legal counsel
retained by the insurance carrier is defending K-T Clay and Hecla
in these lawsuits. The Company believes that these claims
comprise substantially all the potential claims related to this
matter. In January 2001, Hecla was dismissed from the only
lawsuit in which it had been named as a defendant. In March
2001, prior to trial, K-T Clay settled the Riceland Foods
litigation against K-T Clay through settlement payment
substantially funded by K-T Clay's insurance carrier. K-T Clay
contributed $230,000 toward the Riceland Foods settlement. In
August 2001, the Federal District Court dismissed the Archer
Daniels litigation; however, a similar lawsuit based upon implied
warranty was refiled by Archer Daniels against K-T Clay on
October 24, 2001, in Arkansas Federal Court. The defense of the
Townsends lawsuit is being covered by insurance. The Company
believes that K-T Clay's insurance coverage is available to cover
the remaining claims. On March 27, 2001, Hecla sold its interest
in K-T Clay. However, Hecla agreed to indemnify the purchaser of
K-T Clay from all liability resulting from these dioxin claims
and litigation to the extent not covered by insurance. Although
the outcome of the remaining litigation or insurance coverage
cannot be assured, Hecla currently believes that there will be no
material adverse effect on Hecla's results of operations,
financial condition or cash flows from this matter.
On November 17, 2000, Hecla entered into an agreement with
Zemex U.S. Corporation guaranteed by its parent, Zemex
Corporation of Toronto, Canada, to sell the stock of K-T Clay and
K-T Mexico, which included the ball clay and kaolin operations,
for a price of $68.0 million. On January 18, 2001, Zemex U.S.
Corporation failed to close on the transaction, and on
January 22, 2001, Hecla brought suit against the parent, Zemex
Corporation, for its subsidiary's failure to close on the
purchase. Hecla is seeking damages from Zemex Corporation for
the failure of its subsidiary to meet its obligations under the
November 2000 agreement. The litigation is proceeding through
discovery with a trial expected to be scheduled in the second
quarter of 2002. At December 31, 2001, Hecla has not recorded
any potential gain from the settlement of this litigation.
Hecla is subject to other legal proceedings and claims not
disclosed above which have arisen in the ordinary course of its
business and have not been finally adjudicated. Although there
can be no assurance as to the ultimate disposition of these other
matters, it is the opinion of Hecla's management that the outcome
of these other matters will not have a material adverse effect on
the financial condition of Hecla.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Part II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
(a) (i) Shares of the Common Stock are traded on
the New York Stock Exchange, Inc., New York, New
York.
(ii) The price range of the Common Stock on
the New York Stock Exchange for the past two years
was as follows:
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- ------- ------- --------
2001 - High $ 1.00 $ 1.70 $ 1.26 $ 1.27
- Low $ 0.50 $ 0.66 $ 0.78 $ 0.77
2000 - High $ 2.00 $ 1.50 $ 1.13 $ 0.94
- Low $ 1.25 $ 1.00 $ 0.75 $ 0.50
(b) As of December 31, 2001, there were 8,926
shareholders of record of the Common Stock.
(c) There were no Common Stock cash dividends paid in
2001 or 2000. The amount and frequency of cash
dividends are significantly influenced by metals prices,
operating results and Hecla's cash requirements. Hecla
is currently restricted from paying dividends on common
stock or repurchasing common stock until such time Hecla
has paid the cumulative dividends on Hecla's Series B
Cumulative Convertible Preferred Stock. At December 31,
the cumulative dividend for the Series B Cumulative
Convertible Preferred Stock was $12.1 million.
(d) On August 27, 2001, the Company sold 5,749,883
authorized but unissued shares of the Company's common
stock $0.25 par value to Copper Mountain Trust Company,
Trustee for the Hecla Mining Company Retirement Plan and
the Lucky Friday Pension Plan. These shares were issued
pursuant to a private placement stock purchase agreement
and not registered under the Securities Act of 1933.
The shares were listed on the New York Stock Exchange.
Item 6. Selected Financial Data.
(dollars in thousands except for per share amounts)
[Enlarge/Download Table]
Years Ended December 31,
----------------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Total revenue $ 88,738 $ 80,459 $ 78,731 $ 81,003 $ 94,067
========== ========== ========== ========== ==========
Loss from continued operations $ (9,582) $ (84,847) $ (43,391) $ (4,674) $ (3,741)
Income from discontinued
operations 11,922 1,529 4,786 4,374 3,258
Preferred stock dividends(1) (8,050) (8,050) (8,050) (8,050) (8,050)
Loss applicable to
common shareholders $ (5,710) $ (92,015) $ (48,040) $ (8,350) $ (8,533)
========== ========== ========== ========== ==========
Loss from continuing operations
per common share $ (0.25) $ (1.39) $ (0.83) $ (0.23) $ (0.22)
========== ========== ========== ========== ==========
Basic and diluted loss per
common share $ (0.08) $ (1.38) $ (0.77) $ (0.15) $ (0.16)
========== ========== ========== ========== ==========
Total assets $ 153,116 $ 194,836 $ 268,357 $ 252,062 $ 250,668
========== ========== ========== ========== ==========
Noncurrent portion of debt $ 11,948 $ 10,041 $ 55,095 $ 42,923 $ 22,136
========== ========== ========== ========== ==========
Cash dividends paid per common
share $ - - $ - - $ - - $ - - $ - -
========== ========== ========== ========== ==========
Cash dividends paid per preferred
share(1) $ - - $ 1.75 $ 3.50 $ 3.50 $ 3.50
========== ========== ========== ========== ==========
Common shares issued 73,068,796 66,859,752 66,844,575 55,166,728 55,156,324
Shareholders of record 8,926 9,273 9,714 10,162 10,636
Employees 701 1,195 1,277 1,184 1,202
(1) As of December 31, 2001, the Company has not declared or
paid $12.1 million of preferred stock dividends. However, since
the dividends are cumulative, they continue to be reported in
determining the loss applicable to common shareholders, but are
excluded in the amount reported as cash dividends paid per
preferred share.
In November 2000, Hecla's Board of Directors decided to sell
Kentucky-Tennessee Clay Company, which represented the major
remaining portion of its industrial minerals segment.
Accordingly, the industrial minerals segment has been recorded as
a discontinued operation as of and for each of the five years in
the period ended December 31, 2001. As of December 31, 2001 and
2000, only, the balance sheets have been reclassified to reflect
the net assets of the industrial minerals segment as a
discontinued operation.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.(1)
Introduction
Hecla Mining Company is involved in the exploration,
development, mining and processing of gold, silver, lead, zinc
and industrial minerals. Hecla's gold and silver segment
revenues and profitability are strongly influenced by world
prices of gold, silver, lead and zinc, which fluctuate widely and
are affected by numerous factors beyond Hecla's control,
including inflation and worldwide forces of supply and demand for
precious and base metals. The aggregate effect of these factors
is not possible to accurately predict. On March 27, 2001, Hecla
completed a sale of the Kentucky-Tennessee Clay Company, K-T
Feldspar Corporation, K-T Clay de Mexico and certain other minor
inactive industrial minerals companies (collectively the K-T
Group). On March 4, 2002, Hecla completed a sale of the pet
operations of the Colorado Aggregate division (CAC) of MWCA, a
wholly owned subsidiary of Hecla. Hecla also intends to sell the
briquette operations, which represent the remaining assets of
CAC. As a result of Hecla's decision to sell the industrial
minerals segment, it is now accounted for as discontinued
operations.
Except for the historical information contained in this
Management's Discussion and Analysis of Financial Condition and
Results of Operations, the matters discussed below are forward-
looking statements that involve risks and uncertainties,
including:
- the timely development of existing properties and
reserves and future projects,
- the impact of metals prices and metal production
volatility,
- changing market conditions and the regulatory
environment,
- limited access to capital markets,
- settlement of environmental litigation,
- potential asset sales, and
1 For definitions of certain mining terms used in this
description, see "Glossary of Certain Mining Terms" at the end of
Item 1, of this Form 10-K, page 29.
- other risks detailed below and elsewhere in this Form
10-K (see also "Investment Considerations" of Part I,
Item 1 of this Form 10-K).
As a result of the above factors and potentially others,
actual results may differ materially from those projected,
forecasted or implied. These forward-looking statements
represent Hecla's judgment as of the date of this filing. Hecla
disclaims, however, any intent or obligation to update these
forward-looking statements as circumstances may change or
develop.
On April 30, 2001, Hecla's wholly owned subsidiary, Minera
Hecla, S.A. de C.V. (Minera Hecla) acquired a processing mill at
Velardena, Mexico, to process ore to be mined from the San
Sebastian project on the Saladillo mining concessions located
near Durango, Mexico. The purchase price of $7.4 million was
financed by a credit facility between Minera Hecla and the
lender. The credit facility is nonrecourse to Hecla. Ore mined
from the San Sebastian project is trucked approximately 100
kilometers to the processing mill. The mill has a rated capacity
of 500 tonnes per day and produces a silver/gold precipitate
which is sold to a precious metals refiner. Milling operations
commenced in early May and production from San Sebastian during
2001 was approximately 1.0 million ounces of silver and 16,000
ounces of gold.
On July 17, 2001, Hecla announced that operations at its
Lucky Friday silver mine would be reduced, effective October
2001, due to continued low silver and lead prices. Production
totaled approximately 3.2 million ounces of silver in 2001, and
will be further reduced to approximately 1.5 million ounces in
2002. The reduced production level will allow the mine to remain
ready to increase production if and when silver and lead prices
increase. Primary development at the mine will be suspended and
mining will take place in currently developed areas. It is
estimated that the currently developed resource can sustain the
lower production levels up to 24 months. It is currently
anticipated that reduced operations will continue as long as the
cost of operating is less than the cost of care and maintenance.
During 2001, Hecla produced approximately 195,000 ounces of
gold compared to approximately 146,000 ounces in 2000. The
following table displays the actual gold production (in ounces)
by operation for the years ended December 31, 2001, 2000 and
1999, and projected gold production for the year ending December
31, 2002 (in thousands):
Projected Actual Actual Actual
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Operation 2002 2001 2000 1999
-------------- ---------- -------- -------- --------
La Camorra(1) 140 152 93 17
Greens Creek(2) 25 26 25 24
San Sebastian(3) 25 16 - - - -
Rosebud(2)(4) - - - - 24 56
Other sources(2)(5) - - 1 4 13
----------- -------- -------- --------
Totals 190 195 146 110
=========== ======== ======== ========
(1) Production commenced under Hecla's ownership in
October 1999 at the La Camorra mine.
(2) Reflects Hecla's portion.
(3) Production commenced in May 2001 at the San Sebastian mine.
(4) The Rosebud mine completed operations in the third
quarter of 2000.
(5) Includes production from La Choya and other sources.
In 2001, Hecla produced approximately 7.4 million ounces of
silver compared to approximately 8.0 million ounces in 2000. The
following table displays the actual silver production (in ounces)
by operation for the years ended December 31, 2001, 2000 and
1999, and projected silver production for the year ending
December 31, 2002 (in thousands):
Projected Actual Actual Actual
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Operation 2002 2001 2000 1999
------------ --------- -------- -------- --------
Lucky Friday 1,500 3,224 5,012 4,441
Greens Creek 3,000 3,260 2,754 3,051
San Sebastian 2,000 950 - - - -
Other sources - - - - 233 125
--------- -------- -------- --------
Totals 6,500 7,434 7,999 7,617
========= ======== ======== ========
In 2000, Hecla shipped approximately 1,078,000 tons of
product from the K-T Group, which included ball clay, kaolin and
feldspar, as well as approximately 61,000 tons of specialty
aggregates from CAC and 130,000 cubic yards of landscape material
from the Mountain West Products division (MWP) of MWCA. In 2001,
Hecla shipped approximately 261,000 tons from the industrial
minerals group, including 20,000 tons from CAC. On March 27,
2001, Hecla completed a sale of the K-T Group for $62.5 million
subject to customary post-closing adjustments. Hecla recorded a
gain on the sale of the K-T Group of $12.7 million. The proceeds
were used to repay a term loan facility of $55.0 million and to
repay amounts outstanding under a $2.0 million revolving bank
agreement. The remaining net proceeds were available for general
corporate purposes. On March 4, 2002, Hecla completed a sale of
the pet operations of CAC for approximately $1.5 million in cash.
Hecla continues to pursue a sale of the remaining assets of the
industrial minerals segment and has a signed letter of intent to
sell the briquette operations of CAC, although there can be no
assurance a sales transaction will take place. During 2000,
Hecla sold substantially all of the assets of MWP and the
landscape operations of CAC.
Results of Operations
---------------------
2001 Compared to 2000
---------------------
Hecla recorded a loss from continuing operations, before
preferred stock dividends, of approximately $9.6 million, or
$0.14 per common share, in 2001 compared to a loss from
continuing operations, before an extraordinary charge and
preferred stock dividends, of approximately $84.8 million, or
$1.27 per common share, in 2000. After recognizing $11.9 million
in income from discontinued operations and $8.1 million (which
has not been declared or paid) in dividends to holders of Hecla's
Series B Cumulative Convertible Preferred Stock, Hecla's loss
applicable to common shareholders for 2001 was approximately $5.7
million, or $0.08 per common share, compared to a loss of $92.0
million, or $1.38 per common share, in 2000 after recognition of
$1.5 million in income from discontinued operations, a $0.6
million extraordinary charge for the write-off of debt issuance
costs related to extinguished debt, and $8.1 million (only $4.0
million of which was declared or paid) in dividends to holders of
Hecla's Series B Cumulative Convertible Preferred Stock.
Although Hecla did not declare the dividends for the year 2001
and the third and fourth quarters of 2000, because these
dividends are cumulative, the effect of the undeclared dividends
are reflected in the loss applicable to common shareholders.
During 2000, adjustments to the carrying value of mining
properties totaled $40.2 million, including an adjustment of
$31.2 million to reduce the carrying value of the Lucky Friday
mine property, plant and equipment. Additionally during 2000,
Hecla recorded adjustments of $4.4 million for properties, plants
and equipment and supply inventory at the Rosebud mine and $4.7
million for previously capitalized development costs at the Noche
Buena gold property. During 2001, there were no adjustments to
the carrying value of mining properties.
Hecla's provision for closed operations and environmental
matters decreased $18.7 million from $20.0 million in 2000 to
$1.3 million in 2001. The reduction resulted principally from a
decrease at the Grouse Creek mine and the Bunker Hill Superfund
site of $17.8 million, primarily due to 2000 environmental and
reclamation accruals for future environmental and reclamation
expenditures.
Sales of products increased by approximately $9.4 million,
or 12%, from $75.8 million in 2000 to $85.2 million in 2001,
primarily due to:
- increased sales of $9.9 million from gold
operations principally as a result of increased
production at the La Camorra mine ($16.6 million),
partly offset by the completion of mining activity at
the Rosebud mine ($6.6 million) in the third quarter of
2000, and
- decreased sales totaling approximately $0.5
million from silver operations primarily due to lower
zinc and silver prices, lower production at the Lucky
Friday mine ($7.4 million) and decreased hedging
activities ($0.9 million) in the 2001 period. These
factors are partly offset by increased sales at the San
Sebastian mine, due to the commencement of operations
in May 2001 ($7.8 million).
The following table compares the average metals prices
for 2001 with 2000:
Metal 2001 2000 $ Change % Change
----------------------- ------ ------ -------- --------
Gold-Realized ($/oz.) $ 280 $ 284 $ (4) (1)%
Gold-London Final ($/oz.) 272 279 (7) (3)
Silver-Handy & Harman ($/oz.) 4.36 5.00 (0.64) (13)
Lead-LME Cash ($/pound) 0.216 0.206 0.010 5
Zinc-LME Cash ($/pound) 0.402 0.512 (0.110) (21)
Cost of sales and other direct production costs decreased
approximately $3.0 million, or 5%, from $63.1 million in 2000 to
$60.1 million in 2001, primarily due to:
- decreased cost of sales at the Rosebud mine ($7.5
million) due to the completion of mining activity in the
third quarter of 2000,
- decreased cost of sales at the Lucky Friday mine ($5.3
million) resulting from decreased production of silver
and lead,
- increased cost of sales at the San Sebastian mine ($6.2
million) due to the commencement of operations in May
2001, and
- increased cost of sales from the La Camorra and Greens
Creek mines ($3.0 million and $1.1 million) due to
increased production.
Cost of sales and other direct production costs as a
percentage of sales decreased from 83.2% in 2000 to 70.4% in
2001. The change was due to increased margins from gold
operations resulting from increased production, increased gold
ore grade and better efficiencies at the La Camorra mine,
decreased production and sales at the Rosebud mine due to the
completion of mining activity in 2000, partly offset by lower
hedging revenues and lower margins from the silver segment due to
lower silver and zinc prices.
Depreciation, depletion and amortization increased $2.4
million, or 13%, from $18.1 million in 2000 to $20.5 million in
2001, principally due to:
- increased depreciation from the La Camorra mine due to
increased production ($4.7 million),
- increased depreciation at the San Sebastian mine ($1.0
million), due to the commencement of operations in May
2001,
- decreased depreciation at the Lucky Friday mine ($1.6
million), due to the write-down of assets in December
2000, and
- decreased depreciation at the Rosebud mine ($2.0
million), due to the completion of mining activity in the
third quarter of 2000.
Exploration expense decreased $4.2 million, or 66%, from
$6.3 million in 2000 to $2.1 million in 2001. This decrease is
principally due to reduced exploration activity in Mexico ($1.4
million), decreased expenditures at the Rosebud mine ($1.3
million), due to completion of operations in the third quarter of
2000, and decreased expenditures at La Camorra and other South
American countries ($0.8 million).
Interest expense decreased $4.2 million in 2001 as compared
to 2000, primarily the result of the repayment of the $55.0
million term loan facility in March 2001 and decreased loan fees
during 2001 as compared to the 2000 period.
Interest and other income decreased $1.1 million from $4.6
million in 2000 to $3.5 million in 2001, principally a result of
the gains recognized during 2000 on the sale of assets and lower
interest income in 2001.
Miscellaneous expense increased $1.1 million from $1.8
million in 2000 to $3.0 million in 2001, primarily due to a
pension curtailment adjustment related to the Lucky Friday
Pension Plan associated with the cut back in operations at the
mine.
Hecla recorded income from discontinued operations of
approximately $11.9 million, or $0.17 per common share, in 2001
compared to income of approximately $1.5 million, or $0.02 per
common share, in 2000. On March 27, 2001, Hecla completed a sale
of the K-T Group for $62.5 million, subject to customary post-
closing adjustments, and recorded a gain of $12.7 million on the
sale in 2001. Other factors contributing to the change include:
- decreased sales of approximately $53.4 million, a direct
result of the sale of the K-T Group ($47.8 million), as well as
decreased shipments at the MWCA group ($5.6 million) due to the
sale of MWP in March 2000 and the landscape operation of CAC in
June 2000,
- decreased cost of sales of $47.0 million, directly due to
the lower sales at the K-T Group and the partial sale of MWCA
during 2000,
- decreased depreciation, depletion and amortization of $2.9
million, due to the sale of the K-T Group and the partial sale of
MWCA in 2000,
- a loss of $1.0 million on the sale of MWP in 2000, and
- legal fees during 2001 associated with litigation
concerning the failed sale for the K-T Group in January
2001 ($0.8 million).
An extraordinary charge of $0.6 million was recorded in 2000
to write off previously unamortized debt issuance costs
associated with the extinguishment of debt.
Cash operating, total cash and total production cost per
gold ounce decreased from $208, $211 and $275 in 2000 to $133,
$133 and $200 in 2001, respectively. The decreases in cost per
gold ounce were primarily attributable to increased gold
production at the La Camorra mine, as well as the completion of
mining activity in the third quarter of 2000 at the Rosebud mine.
Cash operating, total cash and total production cost per
silver ounce decreased from $4.02, $4.02 and $5.49 in 2000 to
$3.55, $3.57 and $5.09 in 2001, respectively. The decreases in
the cost per silver ounce were due primarily to the addition of
the low-cost San Sebastian mine, which commenced operations in
May 2001, and the positive impacts of Greens Creek's increased
silver production during 2001, resulting from a higher silver
grade and increased tons mined. The full cost per ounce was also
positively impacted by decreased per ounce depreciation at the
Lucky Friday mine due to the write-down of the majority of
property, plant and equipment in the fourth quarter of 2000.
During the fourth quarter of 2001, approximately $0.4 million of
costs were classified as care-and-maintenance costs and included
in the determination of the cost per ounce at Lucky Friday.
Excluding the $0.4 million in costs, the cash operating, total
cash and total production costs per ounce total $3.49, $3.52 and
$5.04, respectively, for 2001.
2000 Compared to 1999
---------------------
Hecla recorded a loss from continuing operations, before an
extraordinary charge and preferred stock dividends, of
approximately $84.8 million, or $1.27 per common share, in 2000
compared to a loss from continuing operations, before a
cumulative effect of change in accounting principle and preferred
stock dividends, of approximately $43.4 million, or $0.70 per
common share, in 1999. After recognizing $1.5 million in income
from discontinued operations, a $0.6 million extraordinary charge
for the write-off of debt issuance costs related to extinguished
debt, and $8.1 million (only $4.0 million of which has been
declared and paid) in dividends to holders of Hecla's Series B
Cumulative Convertible Preferred Stock, Hecla's loss applicable
to common shareholders for 2000 was approximately $92.0 million,
or $1.38 per common share, compared to a loss of $48.0 million,
or $0.77 per common share, in 1999 after recognition of $4.8
million in income from discontinued operations, a $1.4 million
charge to write off unamortized start-up costs associated with
the Greens Creek mine, and $8.1 million in dividends to holders
of Hecla's Series B Cumulative Convertible Preferred Stock.
Although Hecla did not declare the dividend for the third and
fourth quarters of 2000, because these dividends are cumulative,
the effect of the undeclared dividends is reflected in the loss
applicable to common shareholders.
Adjustments to the carrying value of mining properties
increased $40.0 million to $40.2 million in 2000 compared with an
asset write-down totaling $0.2 million during 1999. In the
fourth quarter of 2000, the Company recorded an adjustment of
$31.2 million to reduce the carrying value of the Lucky Friday
mine property, plant and equipment in accordance with Statement
of Financial Accounting Standard No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." The adjustment was necessitated by continuing low
silver and lead prices, combined with further declines in silver
and lead prices during the fourth quarter of 2000. For the first
nine months of 2000, silver averaged $5.08 per ounce and lead
averaged $0.203 per pound. During the fourth quarter of 2000,
silver decreased to an average of $4.75 per ounce and ended the
year at $4.59 per ounce. Lead averaged $0.214 per pound during
the fourth quarter and ended the year at $0.214 per pound. Hecla
continues to evaluate all available alternatives for developing
the next level of the Gold Hunter expansion area in the current
metals price environment. Additionally, during the second
quarter of 2000, Hecla recorded adjustments of $4.4 million for
properties, plants and equipment and supply inventory at the
Rosebud mine, and $4.7 million for previously capitalized
deferred development costs at the Noche Buena gold property. The
$4.4 million adjustment at the Rosebud mine was necessitated due
to the closure of the Rosebud mine previously announced by Hecla
and Newmont, Hecla's joint-venture partner. The Rosebud mine
completed mining activity in July 2000 and milling activities in
August 2000. At the Noche Buena property, Hecla suspended
activities in 1999 due to the low price for gold. Based upon the
continuation of the lower gold price, an adjustment to the
carrying value of the Noche Buena property was recorded in the
second quarter of 2000.
Sales of products increased by approximately $2.1 million,
or 2.9%, from $73.7 million in 1999 to $75.8 million in 2000,
primarily due to:
- increased sales of $8.0 million from gold
operations principally as a result of the acquisition
of the La Camorra mine in June 1999, partly offset by
the completion of mining and milling activities at the
Rosebud mine in August 2000, and
- decreased sales totaling approximately $5.8
million from silver operations primarily due to lower
lead and silver prices, partly offset by an increased
zinc price and increased production of silver, lead and
zinc.
The following table compares the average metals prices
for 2000 with 1999:
Metal 2000 1999 $ Change % Change
------------------------- ------ ------ -------- --------
Gold-Realized ($/oz.) $ 284 $ 286 $ (2) (1)%
Gold-London Final ($/oz.) 279 279 - - - -
Silver-Handy & Harman ($/oz.) 5.00 5.25 (0.25) (5)
Lead-LME Cash ($/pound) 0.206 0.228 (0.022) (10)
Zinc-LME Cash ($/pound) 0.512 0.488 0.024 5
Cost of sales and other direct production costs increased
approximately $8.7 million, or 16%, from $54.4 million in 1999 to
$63.1 million in 2000, primarily due to:
- increased cost of sales from gold operations of $6.4 million
due to the acquisition of the La Camorra mine in June 1999,
partly offset by lower cost of sales at the Rosebud mine and the
La Choya mine, both as a result of the completion of mining
activities, and
- increased cost of sales from silver operations of $2.2
million resulting from increased production of silver, lead and
zinc at the Lucky Friday and Greens Creek mines.
Cost of sales and other direct production costs as a
percentage of sales increased from 73.9% in 1999 to 83.2% in
2000. The increase was principally a result of decreased margins
in both the silver and gold segments. In the gold segment,
decreased gold production and higher unit cash costs at the
Rosebud mine negatively impacted the gross margin. In the silver
segment, lower hedging revenues combined with lower average lead
and silver prices led to the reduced margins.
Depreciation, depletion and amortization decreased $0.6
million, or 3%, from $18.7 million in 1999 to $18.1 million in
2000, principally due to:
- decreased depreciation at the Rosebud mine of $3.5 million
due to completion of mining in July 2000 and milling in August
2000,
- decreased depreciation at the La Choya mine of $1.2 million,
due to completion of gold production in 1999 as a result of the
completion of mining activity in December 1998,
- decreased depreciation at the Lucky Friday mine of $0.2
million, and
- increased depreciation at the La Camorra mine of $4.3
million as a result of a full year's production in 2000 as
compared to three months of production in 1999.
Exploration expense increased $0.8 million, or 14%, from
$5.5 million in 1999 to $6.3 million in 2000. This increase is
principally due to increased expenditures at the Saladillo
property in Mexico of $0.8 million, increased exploration at the
La Camorra mine of $0.6 million and increased expenditures at the
Rosebud mine of $0.4 million. These increases were partly offset
by decreased expenditures at the Cacique property of $0.4 million
and other properties, principally in Mexico, of $0.6 million.
Hecla's provision for closed operations and environmental
matters decreased $10.1 million from $30.1 million in 1999 to
$20.0 million in 2000. The decrease resulted principally from
the 1999 environmental and reclamation expense totaling $27.3
million for future environmental and reclamation expenditures at
the Grouse Creek mine and the Bunker Hill Superfund site, which
decreased to $12.2 million at Grouse Creek, $5.6 million at the
Bunker Hill Superfund site and $2.2 million at various other
properties in 2000.
Interest expense increased $3.5 million in 2000 as compared
to 1999, primarily the result of increased average borrowings
including the $11.0 million of the La Camorra project financing
put in place in June 1999, $3.0 million of subordinated debt that
was outstanding for three additional months in 2000 and the $55.0
million term loan facility put in place in March 2000, replacing
a prior revolving $55.0 million credit facility that was in place
in 1999. Higher average interest rates and increased loan fees
also contributed to the increase in interest expense as compared
to 1999.
Hecla recorded income from discontinued operations of
approximately $1.5 million, or $0.02 per common share, in 2000
compared to income of approximately $4.8 million, or $0.08 per
common share, in 1999. The decrease in 2000 compared to 1999 is
primarily due to:
- decreased sales totaling approximately $14.8 million,
principally the result of decreased shipments at the MWCA group
of $16.9 million after the sale of the Mountain West Products
division of MWCA on March 15, 2000, and the sale of the landscape
operations of Colorado Aggregate on June 5, 2000. The decreases
from MWCA were partly offset by increased sales of $2.1 million
from the K-T Clay Group,
- a loss of $1.0 million on the sale of the Mountain West
Products division of MWCA in 2000,
- decreased cost of sales of $7.9 million, principally due to
the partial sale of MWCA, partly offset by increased costs at the
K-T Clay Group resulting from increased sales and increased
energy costs, and
- 1999 adjustments of $4.4 million made to the carrying value
of MWCA.
An extraordinary charge of $0.6 million was recorded in 2000
to write off previously unamortized debt issuance costs
associated with the extinguishment of Hecla's previous $55.0
million revolving credit facility.
A cumulative effect of change in accounting principle
totaled $1.4 million in 1999, due to the write off of unamortized
start-up costs relating to Hecla's 29.73% ownership interest in
the Greens Creek mine. The adjustment was the result of the
required application of Statement of Position No. 98-5,
"Reporting on the Costs of Start-up Activities."
Cash operating and total cash cost per gold ounce increased
from $195 and $205 in 1999 to $208 and $211 in 2000,
respectively. The increases in the cash operating and total cash
cost per gold ounce were primarily attributable to higher costs
per ounce at the Rosebud mine associated with mining of lower-
grade ore in 2000. Total production costs per gold ounce
decreased from $298 per ounce in 1999 to $275 per ounce in 2000.
The decrease in the total production cost per gold ounce was
principally due to production from the lower-cost La Camorra mine
in 2000 and due to the write-down of the carrying value of the
Rosebud mine in the second quarter of 2000, which eliminated the
depreciation, depletion and amortization component of the total
production cost per ounce at Rosebud in the third quarter of
2000.
Cash operating, total cash and total production cost per
silver ounce increased from $3.72, $3.72 and $5.25 in 1999 to
$4.02, $4.02 and $5.49 in 2000, respectively. The increases in
the cost per silver ounce were due primarily to lower average
lead prices which negatively impacted by-product credits partly
offset by increased production and a favorable zinc price.
Financial Condition and Liquidity
---------------------------------
At December 31, 2001, cash and cash equivalents totaled $7.6
million, an increase of $6.2 million from cash and cash
equivalents as of December 31, 2000, of $1.4 million. The cash
balance at December 31, 2000, excludes approximately $1.7 million
in cash at Hecla's industrial minerals operations which is
included in "Net assets of discontinued operations" on Hecla's
balance sheet.
Operating Activities
Operating activities provided approximately $8.0 million of
cash during 2001. Significant sources of cash included cash
provided by La Camorra, reduced accounts and notes receivable
($4.5 million) and increased accrued payroll and related benefits
($3.1 million). Significant uses of cash included cash required
for reclamation activities and other noncurrent liabilities ($7.8
million). Principal noncash charges included charges for
depreciation, depletion and amortization of $20.7 million, partly
offset by a $12.7 million gain on the sale of the K-T Group.
Investing Activities
Investing activities provided $42.5 million of cash during
2001. The significant source of cash was from the sale of the K-
T Group ($59.8 million), partly offset by additions to
properties, plants and equipment totaling $17.9 million,
principally at the San Sebastian mine to acquire the Velardena
mill ($7.7 million), at the Greens Creek mine ($5.3 million) and
at the La Camorra mine ($4.7 million).
Hecla currently estimates that capital expenditures in 2002
will be in the range of $11.0 to $13.0 million, principally for
expenditures at the Greens Creek, La Camorra and San Sebastian
mines.
Hecla also currently anticipates proceeds from investing
activities in 2002 related to the sale of its headquarters
building in Coeur d'Alene, Idaho, for $5.6 million. This sale is
expected to close during the second quarter of 2002. The Company
also continues to pursue the sale of the Colorado Aggregate
Division of MWCA, Inc. On March 4, 2002, Hecla completed a sale
of the pet operations of CAC for approximately $1.5 million in
cash. Hecla has signed a letter of intent to sell the briquette
division, although there can be no assurance a sales transaction
will take place.
Financing Activities
During 2001, approximately $44.4 million of cash was used by
financing activities. The major use of cash was repayment of
debt of $66.2 million, including the Company's $55.0 million term
loan facility. This use was partly offset by borrowings of $15.9
million, including $7.4 million at Minera Hecla to finance the
Velardena mill purchase. In addition, the Company received net
proceeds of approximately $5.5 million in a private placement of
5.7 million common shares to the Company's pension plans.
As of December 31, 2001, Hecla had outstanding debt of $19.0
million, including $7.0 million due to be repaid in the next 12
months. The outstanding debt included project financing
facilities for the La Camorra mine in Venezuela ($6.5 million)
and the San Sebastian mill in Mexico ($6.7 million), a $3.0
million subordinated loan and $2.8 million outstanding under a
$3.0 million revolving credit facility.
Environmental
In August 2001, Hecla announced it had reached an Agreement
in Principle with the United States and the State of Idaho to
settle the governments' claims for natural resource damages and
cleanup costs related to historic mining practices in the Coeur
d'Alene Basin in northern Idaho. The settlement, if and when
finalized, would release the Company from further liability to
the governments for its historic mining practices in the Coeur
d'Alene Basin and cap the majority of cleanup-related
expenditures Hecla is responsible for annually at the Bunker Hill
Superfund Site, the Grouse Creek mine and Stibnite site in
central Idaho over a 10-year period. The Agreement limits these
payments and/or cleanup obligations in the Coeur d'Alene Basin,
the Bunker Hill Superfund Site, Grouse Creek and Stibnite to a
fixed annual cap of $5.0 million for each of the first two years
of the Agreement and $6.0 million for each of the next eight
years. Hecla is committed to work and/or payments of $4.0
million annually for the following 20 years. In addition, Hecla
would either have to pay or perform cleanup obligations amounting
to 10% of its operating cash flow as adjusted for certain
exploration expenditures. Hecla would provide a security
interest in assets with a value of $20 million which will decline
over ten years. Over the past four years, Hecla's environmental
expenditures at those four sites have averaged $9.0 million per
year. The settlement will reduce Hecla's annual environmental
costs to an amount that is more manageable for the Company. As
of December 31, 2001, the Company has accrued $43.6 million
related to the properties covered by the Agreement in Principle.
The range of liability for these sites could be up to $138.0
million on an undiscounted basis over 30 years plus the
percentage of operating cash flow. If, and when, the Agreement
in Principle is finalized in the form of a Consent Decree, if the
terms of the obligation are fixed and determinable, they may be
discounted. Hecla has accrued what management believes is the
best estimate of the liability as of December 31, 2001. However,
it is reasonably possible that Hecla's obligation may change in
the near or long term depending on a number of factors, including
finalization and entry of a Consent Decree. In addition, an
adverse ruling against Hecla for liability and damages in this
matter could have a material adverse effect on the Company.
Reserves for closure costs, reclamation and environmental
matters totaled $52.5 million at December 31, 2001. Hecla
anticipates that expenditures relating to these reserves will be
made over the next several years. Although Hecla believes the
allowance is adequate based on current estimates of aggregate
costs, Hecla plans to periodically reassess its environmental and
reclamation obligations as new information is developed.
Depending on the results of any reassessment, it is reasonably
possible that Hecla's estimate of its obligations may change in
the near term. For additional information regarding
environmental matters, see Part II, Legal Proceedings and Note 8
of Notes to Consolidated Financial Statements.
Expenditures for environmental remediation and reclamation
in 2002 are estimated in the range of $7.0 million to $8.0
million, principally for activities at the Grouse Creek property
and the Bunker Hill Superfund site.
Exploration
Hecla estimates that exploration expenditures in 2002 will
be in the range of $4.0 million to $5.0 million at the San
Sebastian, Greens Creek and La Camorra mines.
Other
On July 17, 2001, Hecla announced that operations at its
Lucky Friday silver mine would be reduced, effective October
2001, due to continued low silver and lead prices. The mine is
currently operating on a reduced basis and is expected to
continue to operate as long as the cost to operate the mine is
less than care-and-maintenance costs. It is estimated that the
currently developed areas can sustain the lower production levels
for up to 24 months.
During the fourth quarter of 2001, Hecla implemented an
early retirement program that reduced the corporate office staff
by approximately 30%, with most of the reduction taking place
January 1, 2002. This reduction in staff is expected to yield
annual savings of approximately $1.5 million when fully
implemented.
At December 31, 2001, Hecla had outstanding 1,098,801
warrants to purchase Hecla common stock. Each warrant entitles
the holder to purchase one share of common stock at an exercise
price equal to the lesser of (i) $3.19, and (ii) 102% of the
volume weighted average price on the NYSE for each trading day
during the ten consecutive trading days immediately preceding the
date notice is given to Hecla. In February 2002, 668,345
warrants were exercised and Hecla issued 668,345 shares of its
common stock. Proceeds of $0.8 million were realized from the
exercise of the warrants.
Hecla has 2.3 million shares of Series B Cumulative
Convertible Preferred Stock (the Preferred Shares) outstanding.
Holders of the Preferred Shares are entitled to receive
cumulative cash dividends at the annual rate of $3.50 per share
payable quarterly, when and if declared by the Board of Directors
and have voting rights related to certain amendments to Hecla's
Articles of Incorporation. As of January 31, 2002, Hecla has
not declared and paid the equivalent of six quarterly dividends,
which now entitles the holders of Preferred Shares, voting as a
class, to elect two additional directors at Hecla's next annual
shareholders' meeting. Reduction or elimination of the Preferred
Shares would reduce or eliminate the impact from Preferred Share
dividends on the Company's income statement. Hecla has
considered several options with regard to the Preferred Stock,
including private and public exchange offers for the Preferred
Shares and merger transactions, where the Preferred Shares could
be converted into Hecla Common Stock, cash and/or other
securities. Certain options would not require approval by
holders of Preferred Shares.
Hecla brought suit in January 2001 against Zemex Corporation
of Toronto, Canada, under its guarantee for its subsidiary Zemex
U.S. Corporation's failure to close on the sale of K-T Clay and K-
T Mexico. Hecla had announced the agreed upon sale in November
2000 for $68.0 million and is seeking damages incurred by Zemex
U.S. Corporation's failure to purchase K-T Clay and K-T Mexico as
agreed. The litigation is proceeding through discovery and the
trial is expected to occur during the second or third quarter of
2002. K-T Clay and K-T Mexico were ultimately part of the sale
of the K-T Group to another purchaser in March 2001.
Hecla received shareholder approval at its annual
shareholders' meeting on June 8, 2001, allowing a reverse split
of its common stock at the discretion of Hecla's board of
directors. The choice of stock split ratios given to the
directors was one for three, one for four or one for five. The
directors have the option to implement a reverse split at one of
those ratios any time prior to June 8, 2003, or not at all. The
company requested the board be granted authority to implement a
reverse split from shareholders if necessary to remain listed on
the New York Stock Exchange (NYSE). Hecla's common stock traded
above the minimum average criterion for continued listing on the
Exchange until early November 2001. On December 26, 2001, Hecla
was notified by the NYSE that Hecla had fallen below the minimum
criterion of $1 per share over a 30-day period. On February 14,
2002, Hecla was notified that the Company's share price would be
reviewed on June 26, 2002, to determine compliance with this
listing requirement. As of February 28, 2002, Hecla was in
compliance with the listing criteria of the NYSE.
Pursuant to a Registration Statement filed with the
Securities and Exchange Commission and declared effective in the
third quarter of 1995, Hecla can, at its option, issue debt
securities, common shares, preferred shares or warrants in an
amount not to exceed $100.0 million in the aggregate. As of
December 31, 2001, Hecla has issued $62.2 million of Hecla's
common shares and warrants under the Registration Statement. Due
to the current market capitalization of Hecla and the nonpayment
by the Company of certain dividends on its Series B Convertible
Preferred Stock, there can be no assurance as to the availability
of this Registration Statement.
For information on hedged positions and derivative
instruments, see Item 7A "Quantitative and Qualitative Disclosure
About Market Risk."
Hecla is subject to legal proceedings and claims that have
not been finally adjudicated (see Part II, Item 3, Legal
Proceedings and Note 8 of Notes to Consolidated Financial
Statements). The ultimate disposition of these matters and
various other pending legal actions and claims is not presently
determinable. However, an adverse determination in certain of
these matters may have a materially adverse effect on the
financial position of Hecla and its subsidiaries.
Conclusion
Hecla believes cash requirements over the next twelve months
will be funded through a combination of current cash, future cash
flows from operations, proceeds from potential asset sales and/or
future debt or equity security issuances. Hecla's ability to
raise capital is highly dependent upon the commercial viability
of its projects and the associated prices of metals Hecla
produces. Because of the significant impact that changes in the
prices of gold, silver, zinc and lead have on Hecla's financial
condition, declines in these metals prices may negatively impact
short-term liquidity and Hecla's ability to raise additional
funding for long-term projects. In the event that cash balances
decline to a level that cannot support the operations of Hecla,
management will defer certain planned capital expenditures and
exploration expenditures as needed to conserve cash for
operations. There can be no assurance that Hecla will be
successful in generating adequate funding for planned capital
expenditures, environmental remediation and reclamation
expenditures and for exploration expenditures.
New Accounting Pronouncements
-----------------------------
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 was amended in June 2000 with the issuance
of SFAS 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities." SFAS 133, which Hecla adopted
effective January 1, 2001, requires that derivatives be
recognized as assets or liabilities and be measured at fair
value. Gains or losses resulting from changes in the fair value
of derivatives in each period are to be accounted for either in
current earnings or other comprehensive income (loss) depending
on the use of the derivatives and whether they qualify for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in the fair value or cash flows of the hedging
instruments and the hedged items.
At December 31, 2001, Hecla's hedging contracts, used to
reduce exposure to precious metal prices, consisted of forward
sales contracts and a gold lease rate swap. Hecla intends to
physically deliver metal in accordance with the terms of certain
of the forward sales contracts. As such, Hecla has accounted for
these contracts as normal sales in accordance with SFAS 138 and
as a result, these contracts are not required to be accounted for
as derivatives under SFAS 133. Certain other forward contracts
where delivery is not certain have been designated as cash flow
hedges, and the changes in fair value of these cash flow hedges
are recorded in other comprehensive income until the contract is
closed out. Hecla recorded a cumulative effect of a change in
accounting principle in other comprehensive income of
approximately $0.1 million loss related to the gold lease rate
swap upon adoption of SFAS 133 on January 1, 2001. This amount
is being amortized over the physical settlement of ounces subject
to the gold lease rate swap. During the next twelve months,
approximately $40,000 is expected to be amortized to the income
statement.
In April 1998, Statement of Position 98-5 (SOP 98-5),
"Reporting on the Costs of Start-up Activities" was issued. SOP
98-5 provides guidance on the financial reporting of start-up
costs and organizational costs. It requires costs of start-up
activities and organizational costs to be expensed as incurred,
as well as the recognition of a cumulative effect of a change in
accounting principle for retroactive application of the standard.
Hecla adopted SOP 98-5 as required on January 1, 1999. The
impact of this change in accounting principle related to
unamortized start-up costs associated with Hecla's 29.73%
ownership interest in the Greens Creek mine. The $1.4 million
cumulative effect of this change in accounting principle is
included in the consolidated statement of operations for the year
ended December 31, 1999. Due to the availability of net
operating losses, there was no tax effect associated with the
change.
In June 2001, the FASB issued SFAS No. 141 "Business
Combinations" which supersedes APB Opinion No. 16 "Business
Combinations" and FASB Statement No. 38 "Accounting for
Preacquisition Contingencies of Purchased Enterprises." The
provisions of this statement require that all business
combinations be accounted for using "purchase accounting" and it
disallows the use of "pooling of interests" as previously allowed
under APB Opinion No. 16 and FASB Statement No. 38. This
statement is effective for all business combinations subsequent
to June 30, 2001. The adoption of this statement is not expected
to have a material effect on the Company's financial statements.
Also in June 2001, the FASB issued SFAS No. 142 "Goodwill
and Other Intangible Assets," which supersedes APB Opinion No. 17
"Intangible Assets." The provisions of this statement changes
the unit of account for goodwill and takes a very different
approach to how goodwill and other intangible assets are
accounted for subsequent to their initial recognition. Because
goodwill and some intangible assets will no longer be amortized,
the reported amounts of goodwill and intangible assets, as well
as total assets, will not decrease at the same time and in the
same manner as under previous standards. This statement is
effective for all fiscal years beginning subsequent to December
15, 2001. The adoption of this statement is not expected to have
a material effect on the Company's financial statements.
In June 2001, the FASB issued SFAS No. 143 "Accounting for
Asset Retirement Obligations," which amends SFAS No. 19. This
Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This Statement
required that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The
requirements of this statement must be implemented for fiscal
years beginning after June 15, 2002; however, early adoption is
encouraged. The Company is currently evaluating what effect the
adoption of this standard will have on the Company's financial
statements.
The FASB also issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets." This Statement
addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. It supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," and the accounting and reporting
provisions of APB Opinion No. 30, "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," for the disposal of a segment of a
business. It also amends APB No. 51, "Consolidated Financial
Statements," to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary. The
provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, with early
application encouraged. The provisions of this Statement
generally are to be applied prospectively. The adoption of this
statement is not expected to have a material effect on the
Company's financial statements.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The following discussion about Hecla's risk-management
activities includes "forward-looking statements" that involve
risk and uncertainties, as well as summarize the financial
instruments
and derivative instruments held by Hecla at December 31, 2001,
which are sensitive to changes in interest rates and commodity
prices. Actual results could differ materially from those
projected in the forward-looking statements. Hecla believes
that there has not been a material change in its market risk
since the end of its last fiscal year. In the normal course of
business, Hecla also faces risks that are either nonfinancial or
nonquantifiable (See "Investment Considerations" of Part I, Item
1 of this Form 10-K).
Interest-Rate Risk Management
At December 31, 2001, Hecla's debt was subject to changes in
market interest rates and was sensitive to those changes. Hecla
currently has no derivative instruments to offset the risk of
interest rate changes. Hecla may choose to use derivative
instruments, such as interest rate swaps to manage the risk
associated with interest rate changes.
The following table presents principal cash flows for debt
outstanding at December 31, 2001, by maturity date and the
related average interest rate. The variable rates are estimated
based on implied forward rates in the yield curve at the
reporting date.
[Enlarge/Download Table]
(in thousands)
Expected Maturity Date
---------------------------------------- Fair
2002 2003 2004 2005 Thereafter Total Value
------- ------- ------- ------- ---------- -------- -------
Subordinated debt $ - - $ 2,000 $ 1,000 $ - - $ - - $ 3,000 $ 3,000
Average interest rate 6.4% 9.1% 10.1% - - - -
Project financing debt $ 3,000 $ 3,000 $ 500 $ - - $ - - $ 6,500 $ 6,500
Average interest rate 4.9% 7.6% 8.6% - - - -
Project financing debt $ 1,243 $ 2,283 $ 837 $ 1,368 $ 959 $ 6,690 $ 6,690
Average interest rate 13% 13% 13% 13% 13%
Revolving credit facility $ 2,800 - - - - - - - - $ 2,800 $ 2,800
Average interest rate 7% - - - - - - - -
Commodity-Price Risk Management
Hecla uses commodity forward sales commitments, commodity
swap contracts and commodity put and call option contracts to
manage its exposure to fluctuation in the prices of certain
metals which it produces. Contract positions are designed to
ensure that Hecla will receive a defined minimum price for
certain quantities of its production. Hecla uses these
instruments to reduce risk by offsetting market exposures. Hecla
is exposed to certain losses, generally the amount by which the
contract price exceeds the spot price of a commodity, in the
event of nonperformance by the counterparties to these
agreements. The instruments held by Hecla are not leveraged and
are held for purposes other than trading. Hecla intends to
physically deliver metal in accordance with the terms of certain
of the forward sales contracts. As such, Hecla has elected to
designate these contracts as normal sales in accordance with SFAS
138 and as a result, these contracts are not required to be
accounted for as derivatives under SFAS 133. Certain other
forward contracts where delivery is not certain have been
designated as cash flow hedges, and the changes in fair value of
these cash flow hedges are recorded in other comprehensive income
until the contract is closed out.
The following table provides information about Hecla's
forward sales contracts at December 31, 2001. The table presents
the notional amount in ounces, the average forward sales price
and the total-dollar contract amount expected by the maturity
dates, which occur between January 31, 2002, and December 31,
2004.
Expected Expected Expected Estimated
Maturity Maturity Maturity Fair
2002 2003 2004 Value
-------- -------- -------- ---------
Forward contracts:
Gold sales (ounces) 90,428 59,802 48,928
Future price (per ounce) $ 290 $ 288 $ 288
Contract amount (in $000s) $ 26,199 $ 17,238 $ 14,103 $ 576
In addition to the above contracts, Hecla has a quarterly
Gold Lease Rate Swap at a fixed rate of 1.5% on 169,158 ounces of
the above gold forward contracts. The ounces covered under the
swap are adjusted each quarter, in accordance with the expiration
of the gold forward contracts. The estimated cost to close out
the Gold Lease Rate Swap at December 31, 2001, was approximately
$56,000.
Item 8. Financial Statements and Supplementary Data.
See Item 14 of this report for information with respect to
the financial statements filed as a part hereof, including
financial statements filed pursuant to the requirements of this
Item 8.
[Enlarge/Download Table]
Selected Quarterly Data
(dollars in thousands except for per share amounts)
First Second Third Fourth
2001 Quarter Quarter Quarter Quarter Total
-------------------- -------- --------- -------- --------- --------
Sales of products(1) $ 16,417 $ 24,561 $ 22,501 $ 21,768 $ 85,247
Gross profit(1) $ 852 $ 2,358 $ 270 $ 1,239 $ 4,719
Net income (loss) $ 9,535 $ (1,555) $ (2,456) $ (3,184) $ 2,340
Preferred stock dividends $ (2,012) $ (2,013) $ (2,013) $ (2,012) $ (8,050)
Income (loss) applicable to
common shareholders $ 7,523 $ (3,568) $ (4,469) $ (5,196) $ (5,710)
Basic and diluted income
(loss) per common share $ 0.11 $ (0.06) $ (0.06) $ (0.07) $ (0.08)
2000
--------------------------
Sales of products(1) $ 17,628 $ 21,005 $ 20,044 $ 17,173 $ 75,850
Gross profit (loss)(1) $ (1,145) $ (1,252) $ (82) $ (2,850) $ (5,329)
Net income (loss) $ (7,319) $ (16,712) $ (3,622) $ (56,312) $(83,965)
Preferred stock dividends $ (2,012) $ (2,013) $ (2,013) $ (2,012) $ (8,050)
Income (loss) applicable to
common shareholders $ (9,331) $ (18,725) $ (5,635) $ (58,324) $(92,015)
Basic and diluted loss
per common share $ (0.14) $ (0.28) $ (0.08) $ (0.87) $ (1.38)
(1) In November 2000, the Company decided to sell its industrial
minerals operations. As such, the industrial minerals
segment is accounted for as a discontinued operation, and
the above amounts have been restated to reflect the
accounting treatment of the industrial minerals segment as a
discontinued operation.
Item 9. Changes and Disagreements with Accountants on
Accounting and Financial Disclosures.
Reference is made to the information set forth in the Form 8-
K filed October 19, 2001, "Change in Registrant's Certifying
Accountant."
Part III
Item 10. Directors and Executive Officers of the Registrant.
Information with respect to directors and executive officers
of Hecla is set forth as follows:
[Download Table]
Age at
May 10, Director Position and Committee
Board of Directors 2002 Since Assignments
-------------------- ------- -------- ----------------------------
Phillips S. Baker, Jr. 42 2001 President, Chief Operating
Officer and Chief Financial
Officer
Arthur Brown 61 1983 Chairman of the Board and
Chief Executive Officer of
Hecla Mining Company (1,6)
John E. Clute 67 1981 Retired Dean of Gonzaga
University School of Law
(1,4,5)
Joe Coors, Jr. 60 1990 Retired Chairman of the Board
and CEO of CoorsTek, Inc.
(2,3,5)
Ted Crumley 57 1995 Senior Vice President and
Chief Financial Officer of
Boise Cascade Corporation
(1,2,5)
Leland Erdahl(*) 73 1984 Former President and Chief
Executive Officer of Ranchers
Exploration and Development
Corporation and retired Chief
Financial Officer of Amax
Gold, Inc. (1,4,5,7)
Charles L. McAlpine 68 1989 Former President of
Arimathaea Resources Inc. and
former President of Campbell
Chibougamau Mines Ltd.
(3,4,7)
Jorge E. Ordonez C. 62 1994 President and Chief Executive
Officer of Ordonez
Profesional S.C., Vice
President of Minera Montoro,
S.A. de C.V. (2,3,4,7)
Paul A. Redmond(*) 65 1988-94 Retired Chairman and Chief
1998 Executive Officer of
Washington Water Power (now
Avista Corp.) (1,4,5)
1) Member of Executive Committee
2) Member of Finance Committee
3) Member of Audit Committee
4) Member of Directors Nominating Committee
5) Member of Compensation Committee
6) Member of Retirement Board
7) Member of Technical Committee
* Messrs. Erdahl and Redmond are retiring from the Board and
will not seek an additional term at the annual meeting
scheduled to be held on May 10, 2002.
Additional information with respect to the directors of
Hecla is set forth under the caption "Election of Common
Shareholder Director" in Hecla's proxy statement to be filed
pursuant to Regulation 14A for the annual meeting scheduled to be
held on May 10, 2002 (the Proxy Statement), which information is
incorporated herein by reference.
[Download Table]
Age at
May 10,
Executive Officers 2002 Position and Term Served
--------------------- ------ -------------------------------
Phillips S. Baker, Jr. 42 President and Chief Operating
Officer since November 2001;
Chief Financial Officer since
May 2001.
William B. Booth(1) 51 Vice President - Environmental
and Public Affairs since May
2000; Vice President - Investor
and Public Affairs from May 1994
to May 2000; various administrative
functions with Hecla since December
1985.
Arthur Brown 61 Chairman since June 1987; Chief
Executive Officer since May
1987; President from May
1986 to November 2001.
Thomas F. Fudge, Jr. 47 Vice President - Operations
since June 2001; Manager of
Operations from July 2000 to May
2001; Lucky Friday Unit Manager
from 1995 to June 2000; Mine
Superintendent at Lucky Friday
from 1994 to 1995.
Vicki J. Veltkamp 45 Vice President - Investor and
Public Relations since May 2000;
various administrative functions
with Hecla from 1988 to 1993,
and 1995 to 2000.
Lewis E. Walde 35 Vice President - Controller
since June 2001; Controller from
May 2000 to May 2001;
Assistant Controller from
January 1999 to April 2000;
various accounting functions
with Hecla since 1992.
Michael B. White(1) 51 Vice President - General Counsel
and Secretary since May 1992;
Secretary since November 1991;
Assistant Secretary from March
1981 to November 1991; General
Counsel since June 1986.
David F. Wolfe(1) 58 Treasurer since May 1997;
Manager of Precious Metals
Marketing since 1993; Assistant
Treasurer from June 1985 to May
1997.
(1) Messrs. Booth, White and Wolfe have accepted early
retirement, and as of the date of the annual meeting, will
not be officers of the Company. However, Mr. White will
continue his duties as corporate secretary, and Mr. Booth
and Mr. White will make their services available to the
Company on a consulting basis.
Item 11. Executive Compensation.
Reference is made to the information set forth under the
caption "Compensation of Executive Officers" in the Proxy
Statement (except the Report on the Compensation Committee on
Executive Compensation set forth therein) to be filed pursuant to
Regulation 14A, which information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Reference is made to the information set forth under the
caption "Security Ownership of Certain Beneficial Owners and
Management" in the Proxy Statement to be filed pursuant to
Regulation 14A, which information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
Reference is made to the information set forth in the Proxy
Statement to be filed pursuant to Regulation 14A, which
information is incorporated herein by reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) Financial Statements
See Index to Financial Statements on Page F-1
(a) (2) Financial Statement Schedules
See Index to Financial Statements on Page F-1
(a) (3) Exhibits
See Exhibit Index following the financial
statements
(b) Reports on Form 8-K
Report on Form 8-K dated October 19, 2001, related
to Registrant's change in certifying accountant.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 12, 2002.
HECLA MINING COMPANY
By /s/ Arthur Brown
----------------------------
Arthur Brown, Chairman
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
[Download Table]
/s/ Phillips S. Baker, Jr. 3/12/2002 /s/ Theodore Crumley 3/12/2002
------------------------- --------- --------------------- ---------
Phillips S. Baker, Jr. Date Theodore Crumley Date
President and Director Director
(principal financial officer)
/s/ Arthur Brown 3/12/2002 /s/ Leland O. Erdahl 3/12/2002
-------------------------- --------- --------------------- ---------
Arthur Brown Date Leland O. Erdahl Date
Chairman and Director Director
(principal executive officer)
/s/ Lewis E. Walde 3/12/2002 /s/ Charles L. McAlpine 3/12/2002
-------------------------- --------- ----------------------- ---------
Lewis E. Walde Date Charles L. McAlpine Date
Vice President - Controller Director
(principal accounting officer)
/s/ John E. Clute 3/12/2002 /s/ Jorge E. Ordonez 3/12/2002
-------------------------- --------- ---------------------- ---------
John E. Clute Date Jorge E. Ordonez Date
Director Director
/s/ Joe Coors, Jr. 3/12/2002 /s/ Paul A. Redmond 3/12/2002
------------------------- --------- ---------------------- ---------
Joe Coors, Jr. Date Paul A. Redmond Date
Director Director
Index to Financial Statements
Page
Financial Statements
Reports of Independent Certified Public Accountants F-2 to F-4
Consolidated Balance Sheets at December 31, 2001 and 2000 F-5
Consolidated Statements of Operations and Comprehensive
Loss for the Years Ended December 31, 2001, 2000 and 1999 F-6
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999 F-7
Consolidated Statements of Changes in Shareholders'
Equity for the Years Ended December 31, 2001, 2000 and 1999 F-8
Notes to Consolidated Financial Statements F-9 to F-46
Financial Statement Schedules*
*Financial statement schedules
have been omitted as not applicable
Report of Independent Certified Public Accountants
The Board of Directors and Shareholders of
Hecla Mining Company
We have audited the accompanying consolidated balance sheet of
Hecla Mining Company as of December 31, 2001, and the related
statement of operations and comprehensive loss, cash flows, and
changes in shareholders' equity for the year then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit. We did not audit the
financial statements of Greens Creek Joint Venture, a 29.73
percent owned subsidiary, which statements reflect total assets
and revenues constituting 33.7 percent and 26.3 percent,
respectively, of the related consolidated totals. Those
statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the
amounts included for Greens Creek Joint Venture, is based solely
on the report of the other auditors.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit and the report of the
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other
auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position
of Hecla Mining Company at December 31, 2001 and the results of
its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the
United States of America.
As discussed in Note 1 to the Consolidated Financial Statements,
the Company changed its method of accounting for derivative
instruments and hedging activities in 2001.
/s/ BDO Seidman, LLP
February 1, 2002
Spokane, Washington
Report of Independent Certified Public Accountants
The Board of Directors and Shareholders of
Hecla Mining Company
In our opinion, the consolidated balance sheet as of December 31,
2000 and the related consolidated statements of operations and
comprehensive loss, changes in shareholders' equity and of cash
flows of each of the two years in the period ended December 31,
2000 (appearing on pages F-5 through F-46 of the Hecla Mining
Company 2001 Form 10-K) present fairly, in all material respects,
the financial position, results of operations and cash flows of
Hecla Mining Company and its subsidiaries at December 31, 2000
and for each of the two years in the period ended December 31,
2000, in conformity with accounting principles generally accepted
in the United States of America. These financial statements are
the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally
accepted in the United States of America, which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis of our opinion.
/s/ PricewaterhouseCoopers LLP
March 28, 2001
San Francisco, California
Report of Independent Certified Public Accountants
To the Management Committee of the
Greens Creek Joint Venture:
In our opinion, the balance sheets and the related statements of
operations, of changes in venturers' equity and of cash flows
present fairly, in all material respects, the financial position
of the Greens Creek Joint Venture (the "Venture") at December 31,
2001 and 2000, and the results of its operations and its cash
flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
These financial statements are the responsibility of the
Venture's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted
our audits of these statements in accordance with auditing
standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
January 12, 2002
Salt Lake City, Utah
Hecla Mining Company and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
__________
[Enlarge/Download Table]
December 31,
-------------------------
2001 2000
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 7,560 $ 1,373
Accounts and notes receivable 6,648 11,164
Inventories 10,868 11,269
Other current assets 1,426 2,105
Net assets of discontinued operations 2,714 44,057
----------- ----------
Total current assets 29,216 69,968
Investments 69 502
Restricted investments 6,375 6,268
Properties, plants and equipment, net 104,593 108,343
Other noncurrent assets 12,863 9,755
----------- ----------
Total assets $ 153,116 $ 194,836
=========== ==========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 7,938 $ 7,520
Accrued payroll and related benefits 7,832 4,732
Current portion of long-term debt 7,043 59,274
Accrued taxes 787 2,188
Current portion of accrued reclamation and closure costs 6,026 12,060
----------- ----------
Total current liabilities 29,626 85,774
Deferred income taxes 300 300
Long-term debt 11,948 10,041
Accrued reclamation and closure costs 46,455 46,650
Other noncurrent liabilities 6,823 7,326
----------- ----------
Total liabilities 95,152 150,091
----------- ----------
Commitments and contingencies (Notes 3, 4, 5, 7 and 8)
SHAREHOLDERS' EQUITY
Preferred stock, $0.25 par value, authorized 5,000,000 shares;
issued and outstanding - 2,300,000 shares,
liquidation preference, 2001 - $127,075 and 2000 - $119,025 575 575
Common stock, $0.25 par value, authorized 100,000,000 shares;
issued 2001 - 73,068,796 shares, issued 2000 - 66,859,752 shares 18,267 16,715
Capital surplus 404,354 400,236
Accumulated deficit (364,183) (366,523)
Accumulated other comprehensive income (loss) 173 (4,858)
Less stock held by grantor trust; 2001 - 102,114 common shares,
2000 - 139,467 common shares (330) (514)
Less stock held as unearned compensation; issued 2001 - 19,035 common shares (6) - -
Less treasury stock, at cost; 2001 - 62,116 common shares,
2000 - 62,114 common shares (886) (886)
----------- ----------
Total shareholders' equity 57,964 44,745
----------- ----------
Total liabilities and shareholders' equity $ 153,116 $ 194,836
=========== ==========
The accompanying notes are an integral part of the consolidated financial statements.
Hecla Mining Company and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
(Dollars and shares in thousands, except per share amounts)
__________
[Enlarge/Download Table]
Year Ended December 31,
-------------------------------------
2001 2000 1999
---------- --------- ----------
Continuing operations:
Sales of products $ 85,247 $ 75,850 $ 73,703
---------- --------- ----------
Cost of sales and other direct production costs 60,053 63,088 54,435
Depreciation, depletion and amortization 20,475 18,091 18,662
---------- --------- ----------
80,528 81,179 73,097
---------- --------- ----------
Gross profit (loss) 4,719 (5,329) 606
---------- --------- ----------
Other operating expenses:
General and administrative 7,219 7,303 7,121
Exploration 2,157 6,332 5,540
Depreciation and amortization 265 282 321
Provision for closed operations and environmental matters 1,310 20,029 30,100
Reduction in carrying value of mining properties - - 40,240 175
---------- --------- ----------
10,951 74,186 43,257
---------- --------- ----------
Loss from operations (6,232) (79,515) (42,651)
---------- --------- ----------
Other income (expense):
Interest and other income 3,491 4,609 5,028
Miscellaneous expense (2,954) (1,809) (1,487)
Gain (loss) on investments - - - - (96)
Interest expense:
Interest costs (3,887) (8,119) (4,607)
Less amount capitalized - - - - 19
---------- --------- ----------
(3,350) (5,319) (1,143)
---------- --------- ----------
Loss from continuing operations before income taxes, extraordinary
charge and cumulative effect of change
in accounting principle (9,582) (84,834) (43,794)
Income tax benefit (provision) - - (13) 403
---------- --------- ----------
Loss from continuing operations before extraordinary charge and
cumulative effect of change in accounting principle (9,582) (84,847) (43,391)
Discontinued operations:
Income (loss), net of income tax (743) 2,572 4,786
Gain (loss) on disposal, net of income tax 12,665 (1,043) - -
Extraordinary charge, net of income tax - - (647) - -
Cumulative effect of change in accounting principle, net of income tax - - - - (1,385)
---------- --------- ----------
Net income (loss) 2,340 (83,965) (39,990)
Preferred stock dividends (8,050) (8,050) (8,050)
---------- --------- ----------
Loss applicable to common shareholders (5,710) (92,015) (48,040)
---------- --------- ----------
Other comprehensive income (loss), net of income tax:
Cumulative effect of a change in accounting principle (136) - - - -
Change in derivative contracts 256 - - - -
Unrealized holding gains (losses) on securities (26) 13 13
Reclassification adjustment for losses included in net income (loss) 39 - - 96
Minimum pension liability adjustment - - - - 289
Change in foreign currency items 4,898 - - - -
---------- --------- ----------
Other comprehensive income 5,031 13 398
---------- --------- ----------
Comprehensive loss applicable to common shareholders $ (679) $ (92,002) $ (47,642)
========== ========= ==========
Basic and diluted income (loss) per common share:
Loss from continuing operations $ (0.25) $ (1.39) $ (0.83)
Income from discontinued operations 0.17 0.02 0.08
Extraordinary charge - - (0.01) - -
Cumulative effect of change in accounting principle - - - - (0.02)
---------- --------- ----------
Basic and diluted loss per common share $ (0.08) $ (1.38) $ (0.77)
========== ========= ==========
Weighted average number of common shares outstanding 69,396 66,791 62,347
========== ========= ==========
The accompanying notes are an integral part of the consolidated
financial statements.
Hecla Mining Company and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
__________
[Enlarge/Download Table]
Year Ended December 31,
-------------------------------------
2001 2000 1999
---------- ---------- ----------
Operating activities:
Net income (loss) $ 2,340 $ (83,965) $ (39,990)
Noncash elements included in net income (loss):
Depreciation, depletion and amortization 20,740 22,363 23,738
Cumulative effect of change in accounting principle - - - - 1,385
Extraordinary charge - - 647 - -
(Gain) loss on sale of discontinued operations (12,665) 1,043 - -
Gain on disposition of properties, plants and equipment (338) (1,460) (2,133)
Loss on investments - - - - 96
Reduction in carrying value of mining properties - - 40,240 4,577
Provision for reclamation and closure costs 1,061 17,601 28,614
Change in net assets of discontinued operations 1,234 1,347 - -
Change in assets and liabilities:
Accounts and notes receivable 4,516 6,486 (1,691)
Income tax refund receivable - - - - 1,079
Inventories (1,738) (108) (317)
Other current and noncurrent assets (1,435) 100 (1,324)
Accounts payable and accrued expenses 417 (1,266) (4,788)
Accrued payroll and related benefits 3,100 669 1,542
Accrued taxes (1,401) 97 1,597
Accrued reclamation and closure costs and other noncurrent liabilities (7,793) (9,528) (9,429)
---------- ---------- ----------
Net cash provided (used) by operating activities 8,038 (5,734) 2,956
---------- ---------- ----------
Investing activities:
Proceeds from sale of discontinued operations 59,761 9,562 - -
Purchase of Monarch Resources Investments Limited, net of
cash acquired - - - - (9,183)
Additions to properties, plants and equipment (17,890) (15,210) (13,467)
Proceeds from disposition of properties, plants and equipment 545 2,671 2,476
Proceeds from the sale of investments - - 283 311
Decrease (increase) in restricted investments (107) (270) 333
Purchase of investments and change in cash surrender
value of life insurance, net 406 1,354 54
Other, net (173) 381 133
---------- ---------- ----------
Net cash provided (used) by investing activities 42,542 (1,229) (19,343)
---------- ---------- ----------
Financing activities:
Common stock issued for warrants and stock option plans 428 35 277
Issuance of common stock, net of offering costs 5,462 - - 11,865
Dividends paid on preferred stock - - (6,037) (8,050)
Payments for debt issuance costs - - (1,811) (1,255)
Borrowings against cash surrender value of life insurance - - - - 925
Borrowings on debt 15,909 80,524 54,063
Repayments on debt (66,192) (67,094) (41,199)
---------- ---------- ----------
Net cash provided (used) by financing activities (44,393) 5,617 16,626
---------- ---------- ----------
Change in cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents 6,187 (1,346) 239
Cash and cash equivalents at beginning of year 1,373 2,719 2,480
---------- ---------- ----------
Cash and cash equivalents at end of year $ 7,560 $ 1,373 $ 2,719
========== ========== ==========
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest, net of amount capitalized $ 2,888 $ 8,376 $ 4,377
========== ========== ==========
Income tax payments (refunds), net $ (68) $ 54 $ (847)
========== ========== ==========
See Notes 10 and 16 for noncash investing and financing activities.
The accompanying notes are an integral part of the consolidated
financial statements.
Hecla Mining Company and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
For the Years Ended December 31, 2001, 2000 and 1999
(Dollars and shares in thousands, except per share amounts)
_______________
[Enlarge/Download Table]
Accumulated Stock
Preferred Stock Common Stock Other Held by
--------------- ------------- Capital Accumulated Comprehensive Grantor Unearned Treasury
Shares Amount Shares Amount Surplus Deficit Income (Loss) Stock Compensation Stock
------ ------ ------ ------ ------- ----------- ------------- ------- ------------ --------
Balances, December 31, 1998 2,300 $ 575 55,167 $13,792 $374,017 $(230,493) $ (5,269) $ - - $ - - $ (886)
Net loss (39,990)
Preferred stock dividends
($3.50 per share) (8,050)
Stock issued for cash, net
of issuance costs 4,739 1,184 10,681
Stock issued under stock
option and warrant plans 99 25 232
Stock issued to directors 8 2 18
Stock issued in connection
with acquisition of
Monarch Resources
Investments Limited 6,700 1,675 14,290
Stock issued and held by
grantor trust 132 33 967 (500)
Other comprehensive income 398
----- ----- ------ ------- -------- --------- -------- ------- ------- ------
Balances, December 31, 1999 2,300 575 66,845 16,711 400,205 (278,533) (4,871) (500) - - (886)
Net loss (83,965)
Preferred stock dividends
($1.75 per share) (4,025)
Stock issued to directors 8 2 19
Stock issued and held by
grantor trust 7 2 12 (14)
Other comprehensive income 13
----- ----- ------ ------- -------- --------- -------- ------- ------- ------
Balances, December 31, 2000 2,300 575 66,860 16,715 400,236 (366,523) (4,858) (514) - - (886)
Net income 2,340
Stock issued to directors 7 2 5
Stock issued and held by
grantor trust 25 6 38 (20)
Stock disbursed by grantor
trust (204) 204
Stock issued under stock
option and warrant plans 408 102 325
Stock issued for cash, net
of issuance costs 5,750 1,437 3,940
Issuance of restricted stock 19 5 14 (19)
Amortization of unearned
compensation 13
Other comprehensive income 5,031
----- ----- ------ ------- -------- --------- -------- ------- ------- ------
Balances, December 31, 2001 2,300 $ 575 73,069 $18,267 $404,354 $(364,183) $ 173 $ (330) $ (6) $ (886)
===== ===== ====== ======= ======== ========= ======== ======= ======= ======
The accompanying notes are an integral part of the consolidated financial statements.
Hecla Mining Company and Subsidiaries
Notes to Consolidated Financial Statements
________
Note 1: Summary of Significant Accounting Policies
A. Basis of Presentation -- The accompanying consolidated
financial statements include the accounts of Hecla Mining Company
(Hecla or the Company), its majority-owned subsidiaries and its
proportionate share of the accounts of the joint ventures in
which it participates. All significant intercompany transactions
and accounts are eliminated in consolidation.
Hecla's revenues and profitability are largely dependent on
world prices for gold, silver, lead and zinc, which fluctuate
widely and are affected by numerous factors beyond Hecla's
control, including inflation and worldwide forces of supply and
demand. The aggregate effect of these factors is not possible to
accurately predict.
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could
differ materially from those estimates.
Certain consolidated financial statement amounts have been
reclassified to conform to the 2001 presentation. These
reclassifications had no effect on earnings or shareholders'
equity as previously reported.
B. Company's Business and Concentrations of Credit Risk --
Hecla is engaged in mining and mineral processing activities,
including exploration, extraction, processing and reclamation.
Hecla's principal products are metals (primarily gold, silver,
lead and zinc) and industrial minerals (primarily aggregate
products). Substantially all of Hecla's operations are conducted
in the United States, Mexico and Venezuela. Sales of metals
products are made principally to domestic and foreign custom
smelters and metal traders.
Hecla sells substantially all of its metallic concentrates
to smelters which are subject to extensive regulations including
environmental protection laws. Hecla has no control over the
smelters' operations or their compliance with environmental laws
and regulations. If the smelting capacity available to Hecla was
significantly reduced because of environmental requirements or
otherwise, it is possible that Hecla's silver operations could be
adversely affected. Industrial minerals are sold principally to
domestic retailers and wholesalers.
Hecla's financial instruments that are exposed to
concentrations of credit risk consist primarily of cash and cash
equivalents and trade accounts receivable. Hecla places its cash
and temporary cash investments with institutions of high credit-
worthiness. At times, such investments may be in excess of the
federal insurance limit. Hecla routinely assesses the financial
strength of its customers and, as a consequence, believes that
its trade accounts receivable credit risk exposure is limited.
At December 31, 2001, the Company had factored accounts
receivable without recourse of $0.5 million. Factored accounts
receivable are eliminated from the balance of accounts receivable
when sold.
C. Inventories -- Inventories are stated at the lower of
average cost or estimated net realizable value.
D. Investments -- Marketable equity securities are categorized
as available for sale and carried at quoted market value.
Realized gains and losses on the sale of securities are
recognized on a specific identification basis. Unrealized gains
and losses are included as a component of accumulated other
comprehensive loss, net of related deferred income taxes, unless
a permanent impairment in value has occurred, which is then
charged to operations.
Restricted investments primarily represent investments in
money market funds. These investments are restricted primarily
for reclamation funding or surety bonds.
E. Properties, Plants and Equipment -- Properties, plants and
equipment are stated at the lower of cost or estimated net
realizable value. Maintenance, repairs and renewals are charged
to operations. Betterments of a major nature are capitalized.
When assets are retired or sold, the costs and related allowances
for depreciation and amortization are eliminated from the
accounts and any resulting gain or loss is reflected in
operations. Idle facilities, placed on a standby basis, are
carried at the lower of net carrying value or estimated net
realizable value.
Management of Hecla reviews the net carrying value of all
facilities, including idle facilities, on a periodic basis.
Hecla estimates the net realizable value of each property based
on the estimated undiscounted future cash flows that will be
generated from operations at each property, the estimated salvage
value of the surface plant and equipment and the value associated
with property interests. These estimates of undiscounted future
cash flows are dependent upon estimates of metal to be recovered
from proven and probable ore reserves, future production costs
and future metals prices over the estimated remaining mine life.
If undiscounted cash flows are less than the carrying value of a
property, an impairment loss is recognized based upon the
estimated expected future net cash flows from the property
discounted at an interest rate commensurate with the risk
involved.
Management's estimates of metals prices, recoverable proven
and probable ore reserves, and operating, capital and reclamation
costs are subject to risks and uncertainties of change affecting
the recoverability of Hecla's investment in various projects.
Although management has made a reasonable estimate of these
factors based on current conditions and information, it is
reasonably possible that changes could occur in the near term
which could adversely affect management's estimate of net cash
flows expected to be generated from its operating properties and
the need for asset impairment write-downs.
Management's calculations of proven and probable ore
reserves are based on engineering and geological estimates
including minerals prices and operating costs. Changes in the
geological and engineering interpretation of various orebodies,
minerals prices and operating costs may change Hecla's estimates
of proven and probable ore reserves. It is reasonably possible
that certain of Hecla's estimates of proven and probable ore
reserves will change in the near term resulting in a change to
amortization and reclamation accrual rates in future reporting
periods.
Depreciation is based on the estimated useful lives of the
assets and is computed using straight-line and unit-of-production
methods. Depletion is computed using the unit-of-production
method.
F. Mine Exploration and Development -- Exploration costs and
ongoing development costs at operating mines are charged to
operations as incurred. Major mine development expenditures are
capitalized at operating properties and at new mining properties
not yet producing where proven and probable ore reserves have
been identified.
G. Reclamation of Mining Areas -- All of Hecla's operations are
subject to reclamation and closure requirements. Minimum
standards for mine reclamation have been established by various
governmental agencies which affect certain operations of Hecla.
A reserve for mine reclamation costs has been established for
restoring certain abandoned and currently disturbed mining areas
based upon estimates of cost to comply with existing reclamation
standards. Mine reclamation costs for operating properties are
accrued using the unit-of-production method and charged to cost
of sales and other direct production costs. The estimated amount
of metals or minerals to be recovered from a mine site is based
on internal and external geological data and is reviewed by
management on a periodic basis. Changes in such estimated
amounts which affect reclamation cost accrual rates are accounted
for prospectively from the date of the change unless they
indicate there is a current impairment of an asset's carrying
value and a decision is made to permanently close the property,
in which case they are recognized currently and charged to
provision for closed operations and environmental matters. It is
reasonably possible that Hecla's estimate of its ultimate accrual
for reclamation costs will change in the near term due to
possible changes in laws and regulations, and interpretations
thereof, and changes in cost estimates.
H. Remediation of Mining Areas -- Hecla accrues costs
associated with environmental remediation obligations at the most
likely estimate when it is probable that such costs will be
incurred and they are reasonably estimable. Accruals for
estimated losses from environmental remediation obligations
generally are recognized no later than completion of the remedial
feasibility study and are charged to provision for closed
operations and environmental matters. Costs of future
expenditures for environmental remediation are not discounted to
their present value unless subject to a contractually obligated
fixed payment schedule. Such costs are based on management's
current estimate of amounts that are expected to be incurred when
the remediation work is performed within current laws and
regulations. Recoveries of environmental remediation costs from
other parties are recorded as assets when their receipt is deemed
probable.
It is reasonably possible that, due to uncertainties
associated with defining the nature and extent of environmental
contamination, application of laws and regulations by regulatory
authorities and changes in remediation technology, the ultimate
cost of remediation could change in the future. Hecla
periodically reviews its accrued liabilities for such remediation
costs as evidence becomes available indicating that its
remediation liability has potentially changed.
I. Income Taxes -- Hecla records deferred tax liabilities and
assets for the expected future income tax consequences of events
that have been recognized in its financial statements. Deferred
tax liabilities and assets are determined based on the temporary
differences between the financial statement carrying amounts and
the tax bases of assets and liabilities using enacted tax rates
in effect in the years in which the temporary differences are
expected to reverse.
J. Basic and Diluted Loss Per Common Share -- Basic earnings
per share (EPS) is calculated by dividing loss applicable to
common shareholders by the weighted average number of common
shares outstanding for the year. Diluted EPS reflects the
potential dilution that could occur if potentially dilutive
securities were exercised or converted to common stock. Due to
the losses in 2001, 2000 and 1999, potentially dilutive
securities were excluded from the calculation of diluted EPS as
they were antidilutive. Therefore, there was no difference in
the calculation of basic and diluted EPS in 2001, 2000 and 1999.
K. Revenue Recognition -- Sales of metal products sold directly
to smelters are recorded when title and risk of loss transfer to
the smelter at current metals spot prices. Recorded values are
adjusted monthly until final settlement at month-end metals
prices. Sales of metal in products tolled (rather than sold to
smelters) are recorded at contractual amounts when title and risk
of loss transfer to the buyer. Sales of industrial minerals are
recognized as the minerals are shipped and title transferred.
L. Interest Expense -- Interest costs incurred during the
construction of qualifying assets are capitalized as part of the
asset cost.
M. Cash Equivalents -- Hecla considers cash equivalents to
consist of highly liquid investments with a remaining maturity of
three months or less when purchased.
N. Foreign Currency Translation -- Hecla operates in Mexico
with its wholly owned subsidiary, Minera Hecla, S.A. de C.V.
(Minera Hecla). Hecla also operates in Venezuela with its wholly
owned subsidiary, Minera Hecla Venezolana, C.A. The functional
currency for Minera Hecla and Minera Hecla Venezolana is the U.S.
dollar. Accordingly, Hecla translates the monetary assets and
liabilities of these subsidiaries at the period-end exchange rate
while nonmonetary assets and liabilities are translated at
historical rates. Income and expense accounts are translated at
the average exchange rate for each period. Translation
adjustments and transaction gains and losses are reflected in the
net loss for the period.
O. Risk Management Contracts -- Hecla uses derivative financial
instruments as part of an overall risk-management strategy.
These instruments are used as a means of hedging exposure to
precious metals prices. Hecla does not hold or issue derivative
financial instruments for speculative trading purposes.
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 was amended in June 2000 with the issuance
of SFAS 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities." SFAS 133, which Hecla adopted
effective January 1, 2001, requires that derivatives be
recognized as assets or liabilities and be measured at fair
value. Gains or losses resulting from changes in the fair value
of derivatives in each period are to be accounted for either in
current earnings or other comprehensive income depending on the
use of the derivatives and whether they qualify for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in the fair value or cash flows of the hedging
instruments and the hedged items.
Hecla uses forward sales contracts to hedge its exposure to
precious metals prices. The underlying hedged production is
designated at the inception of the hedge. At January 1, 2001,
Hecla's hedging contracts, used to reduce exposure to precious
metals prices, consisted of forward sales contracts and a gold
lease rate swap.
As Hecla intends to physically deliver metals in accordance
with the terms of certain of the forward sales contracts, Hecla
has accounted for these contracts as normal sales in accordance
with SFAS 138. As a result, these contracts are not required to
be accounted for as derivatives under SFAS 133. In regard to the
gold lease rate swap, Hecla recorded a cumulative effect of a
change in accounting principle in other comprehensive income of a
loss of approximately $0.1 million upon adoption of SFAS 133 on
January 1, 2001.
P. Accounting for Stock Options -- Hecla measures compensation
cost for stock option plans using the intrinsic value method of
accounting prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees." Hecla also
provides the required disclosures of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123).
Q. New Accounting Pronouncements -- In April 1998, Statement of
Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-up
Activities" was issued. SOP 98-5 provides guidance on the
financial reporting of start-up costs and organizational costs.
It requires costs of start-up activities and organizational costs
to be expensed as incurred, as well as the recognition of a
cumulative effect of a change in accounting principle for
retroactive application of the standard. Hecla adopted SOP 98-5
as required on January 1, 1999. The impact of this change in
accounting principle related to unamortized start-up costs
associated with Hecla's 29.73% ownership interest in the Greens
Creek mine. The $1.4 million cumulative effect of this change in
accounting principle is included in the consolidated statement of
operations for the year ended December 31, 1999. Due to the
availability of net operating losses, there was no tax effect
associated with the change.
In June 2001, the FASB issued SFAS No. 141 "Business
Combinations" which supersedes APB Opinion No. 16 "Business
Combinations" and FASB Statement No. 38 "Accounting for
Preacquisition Contingencies of Purchased Enterprises." The
provisions of this statement require that all business
combinations be accounted for using "purchase accounting" and it
disallows the use of "pooling of interests" as previously allowed
under APB Opinion No. 16 and FASB Statement No. 38. This
statement is effective for all business combinations subsequent
to June 30, 2001. The adoption of this statement is not expected
to have a material effect on the Company's financial statements.
Also in June 2001, the FASB issued SFAS No. 142 "Goodwill
and Other Intangible Assets," which supersedes APB Opinion No. 17
"Intangible Assets." The provisions of this statement changes
the unit of account for goodwill and takes a very different
approach to how goodwill and other intangible assets are
accounted for subsequent to their initial recognition. Because
goodwill and some intangible assets will no longer be amortized,
the reported amounts of goodwill and intangible assets, as well
as total
assets, will not decrease at the same time and in the same manner
as under previous standards. This statement is effective for all
fiscal years beginning subsequent to December 15, 2001. The
adoption of this statement is not expected to have a material
effect on the Company's financial statements.
In June 2001, the FASB issued SFAS No. 143 "Accounting for
Asset Retirement Obligations," which amends SFAS No. 19. This
Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This Statement
required that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The
requirements of this Statement must be implemented for fiscal
years beginning after June 15, 2002; however, early adoption is
encouraged. The Company is currently evaluating what effect the
adoption of this standard will have on the Company's financial
statements.
The FASB also issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets." This Statement
addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. It supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," and the accounting and reporting
provisions of APB Opinion No. 30, "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," for the disposal of a segment of a
business. It also amends APB No. 51, "Consolidated Financial
Statements," to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary. The
provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, with early
application encouraged. The provisions of this Statement
generally are to be applied prospectively. The adoption of this
statement is not expected to have a material effect on the
Company's financial statements.
R. Liquidity -- As of December 31, 2001, Hecla had cash and
cash equivalents of $7.6 million and negative working capital of
$0.4 million. Hecla believes cash requirements over the next
twelve months will be funded through a combination of current
cash, future cash flows from operations, proceeds from potential
asset sales and/or future debt or equity security issuances.
Hecla's ability to raise capital is highly dependent upon the
commercial viability of its projects and the associated prices of
metals Hecla produces. Because of the significant impact that
changes in the prices of gold, silver, zinc and lead have on
Hecla's financial condition, declines in these metals prices may
negatively impact short-term liquidity and Hecla's ability to
raise additional funding for long-term projects. In the event
that cash balances decline to a level that cannot support the
operations of Hecla, management will defer certain planned
capital expenditures and exploration expenditures as needed to
conserve cash for operations. If management's plans are not
successful, operations and liquidity may be adversely affected.
Note 2: Discontinued Operations
On March 27, 2001, Hecla completed a sale of the Kentucky-
Tennessee Clay Company, K-T Feldspar Corporation, K-T Clay de
Mexico and certain other minor inactive industrial minerals
companies (collectively the K-T Group) for $62.5 million. Hecla
recorded a gain on the sale of the K-T Group of $12.7 million in
2001. The proceeds from the sale were used to repay a term loan
facility of $55.0 million, and to repay amounts outstanding under
a $2.0 million revolving bank agreement. The remaining net
proceeds were available for general corporate purposes.
On March 4, 2002, Hecla completed a sale of the pet
operations of the Colorado Aggregate division (CAC) of MWCA for
approximately $1.5 million in cash. Hecla continues to pursue
the sale of the remaining assets of the industrial minerals
segment and has a signed letter of intent to sell the briquette
operations of CAC, although there can be no assurance a sales
transaction will take place. At December 31, 2001, the net
assets of CAC were approximately $2.7 million.
On March 15, 2000, Hecla sold substantially all of the
assets of its Mountain West Products (MWP) division of MWCA for
$8.5 million in cash. The sale of MWP resulted in a loss on
disposal of $1.0 million. On June 5, 2000, Hecla completed a
sale of the landscape operations of CAC for $1.1 million in cash.
The sale of the landscape operations did not result in a gain or
loss.
During 1999, based upon anticipated sales proceeds for the
sale of the MWCA subsidiary, Hecla determined that certain
adjustments were necessary to properly reflect the estimated net
realizable value of MWCA. These adjustments, totaling $4.4
million, consisted of write-downs of property, plant and
equipment of $3.2 million and a write-down of other noncurrent
assets of $1.2 million during the year ended December 31, 1999.
The net assets of discontinued operations at December 31,
2001 and 2000, consist of (in thousands):
2001 2000
-------- --------
ASSETS
Cash and cash equivalents $ - - $ 1,750
Accounts and notes receivable - - 9,528
Inventories 2,139 5,035
Other current assets - - 433
Properties, plants and equipment, net 645 32,174
Other noncurrent assets - - 1,126
-------- --------
Total assets $ 2,784 $ 50,046
======== ========
LIABILITIES
Accounts payable and accrued expenses $ - - $ 4,808
Accrued payroll and related benefits - - 510
Accrued taxes - - 41
Accrued reclamation and closure costs 70 414
Other noncurrent liabilities - - 216
-------- --------
Total liabilities 70 5,989
-------- --------
Net assets of discontinued operations $ 2,714 $ 44,057
======== ========
A summary of operating results of discontinued operations
for the three years ended December 31 are as follows (in
thousands):
[Download Table]
2001 2000 1999
--------- -------- --------
Sales of products $ 21,625 $ 75,054 $ 89,911
--------- -------- --------
Cost of sales 20,082 67,114 75,041
Depreciation, depletion and amortization 1,099 3,990 4,755
--------- -------- --------
21,181 71,104 79,796
--------- -------- --------
Gross profit 444 3,950 10,115
--------- -------- --------
Other operating expenses:
General and administrative 86 355 328
Exploration 174 242 394
Reduction in carrying value of mining properties - - - - 4,402
--------- -------- --------
260 597 5,124
--------- -------- --------
Income from operations 184 3,353 4,991
--------- -------- --------
Other income (expense):
Interest and other income 1 9 35
Miscellaneous expense (923) (516) (94)
Interest expense (5) (59) (28)
--------- -------- --------
(927) (566) (87)
--------- -------- --------
Income (loss) from discontinued operations before
income taxes and gain (loss) on disposal (743) 2,787 4,904
Income tax provision - - (215) (118)
--------- -------- --------
Income (loss) from discontinued operations
before gain (loss) on disposal (743) 2,572 4,786
Gain (loss) on disposal, net of income tax 12,665 (1,043) - -
--------- -------- --------
Net income from discontinued operations $ 11,922 $ 1,529 $ 4,786
========= ======== ========
The following is sales information for discontinued operations
by geographic area for the years ended December 31 (in thousands):
2001 2000 1999
-------- -------- --------
United States $ 15,497 $ 52,293 $ 69,573
Canada 1,336 4,225 4,533
Mexico 2,950 12,771 11,062
Japan 135 421 488
Taiwan 376 1,275 885
Venezuela 564 1,000 810
Chile 307 463 223
Italy 197 849 876
Other foreign 263 1,757 1,461
-------- -------- --------
$ 21,625 $ 75,054 $ 89,911
======== ======== ========
The following is sales information for discontinued operations
by country of origin for the years ended December 31 (in
thousands):
2001 2000 1999
-------- -------- --------
United States $ 19,037 $ 64,309 $ 80,940
Mexico 2,588 10,745 8,971
-------- -------- --------
$ 21,625 $ 75,054 $ 89,911
======== ======== ========
Hecla's industrial minerals operations lease various
facilities and equipment under noncancelable operating lease
arrangements. Rent expense incurred for these operating leases
during the years ended December 31, 2001, 2000 and 1999, was
approximately $0.7 million, $3.6 million and $3.5 million,
respectively.
Note 3: Inventories
Inventories consist of the following (in thousands):
December 31,
-------------------
2001 2000
-------- --------
Concentrates, bullion, metals in transit
and other products $ 4,211 $ 5,932
Materials and supplies 6,657 5,337
-------- --------
$ 10,868 $ 11,269
======== ========
At December 31, 2001, Hecla had forward sales commitments
through December 31, 2004, for 199,158 ounces of gold at an
average price of $288.92 per ounce. The aforementioned contracts
were designated as hedges at December 31, 2001. Hecla is exposed
to certain losses, generally the amount by which the contract
price exceeds the spot price of a commodity, in the event of
nonperformance by the counterparties to these agreements. The
London AM gold price at December 31, 2001, was $276.50 per ounce.
Note 4: Properties, Plants and Equipment
The major components of properties, plants and equipment are (in
thousands):
December 31,
-----------------------
2001 2000
--------- ---------
Mining properties $ 8,271 $ 8,563
Development costs 111,827 114,054
Plants and equipment 168,210 173,012
Land 925 1,100
--------- ---------
289,233 296,729
Less accumulated depreciation,
depletion and amortization 184,640 188,386
--------- ---------
Net carrying value $ 104,593 $ 108,343
========= =========
During the fourth quarter of 2001, Hecla entered into an
agreement to sell its headquarters building in Coeur d'Alene,
Idaho, for $5.6 million in cash. The sale of the building is
expected to close during the second quarter of 2002. In
connection with the sale, the Company entered into a lease
agreement with the purchaser to lease a portion of the building,
which will be effective upon closing on the sale of the building.
The lease calls for monthly payments of approximately $38,000
over the next two years, at which time the Company has an option
to reduce the amount of leased space for an additional three
years. The purchaser of the building will also have an option to
terminate the lease agreement with Hecla during the first two
years of the lease agreement, subject to certain payments to
Hecla.
In the fourth quarter of 2000, Hecla recorded an adjustment
of $31.2 million to reduce the carrying value of the Lucky Friday
silver mine property, plant and equipment in accordance with
Statement of Financial Accounting Standard No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." The adjustment at Lucky Friday was
necessitated due to continued low silver and lead prices combined
with further declines in silver and lead prices during the fourth
quarter of 2000. For the first nine months of 2000, silver
averaged $5.08 per ounce and lead averaged $0.203 per pound.
During the fourth quarter of 2000, silver decreased to an average
price of $4.75 per ounce and ended the year at $4.59 per ounce.
Lead averaged $0.214 per pound during the fourth quarter of 2000
and ended the year at $0.214 per pound. On July 17, 2001, Hecla
announced that operations at its Lucky Friday silver mine would
be reduced, effective October 2001, due to continued low silver
and lead prices. Additionally, during the second quarter of
2000, Hecla recorded adjustments of $4.4 million for properties,
plants and equipment and supply inventory at the Rosebud mine,
and $4.7 million for previously capitalized deferred development
costs at the Noche Buena gold property. The $4.4 million
adjustment at the Rosebud mine was necessitated due to the
planned closure of the Rosebud mine by Hecla and its joint-
venture partner. The Rosebud mine completed mining activity in
July 2000 and milling activities in August 2000. At the Noche
Buena property, Hecla suspended activities in 1999 due to a low
price for gold. Based upon the continuation of the lower gold
price, an adjustment to the carrying value of the Noche Buena
property was recorded.
Note 5: Environmental and Reclamation Adjustments
During 2000, Hecla recorded charges of $16.4 million for
future environmental and reclamation expenditures at the Grouse
Creek property, the Bunker Hill Superfund site and other idle
properties. During the fourth quarter of 2000, an Administrative
Order on Consent was entered into with the U.S. Environmental
Protection Agency, requiring Hecla to commence dewatering of the
tailings impoundment at Grouse Creek in 2001. Due to the
Administrative Order on Consent, updated cost estimates were
determined in accordance with Statement of Position 96-1,
"Environmental Remediation Liabilities." At the Bunker Hill
Superfund site, estimated future costs were increased based upon
results of sampling activities completed through 2000 and current
cost estimates to remediate residential yards and commercial
properties.
In 1999, Hecla recorded charges totaling $27.3 million for
future environmental and reclamation expenditures at the Grouse
Creek property and the Bunker Hill Superfund site. The accrual
adjustment at Grouse Creek was based upon anticipated changes to
the closure plan developed in 1999, including increased
dewatering requirements and other expenditures. The changes to
the reclamation plan at Grouse Creek were necessitated
principally by the need to dewater the tailings impoundment
rather than reclaim it as a wetland as originally planned. At the
Bunker Hill Superfund site, estimated future costs were increased
based upon results of sampling activities completed through 1999
and current cost estimates to remediate residential yards and
commercial properties.
For additional information regarding environmental matters,
see Note 8 of Notes to Consolidated Financial Statements.
Note 6: Income Taxes
Major components of Hecla's income tax provision (benefit)
for the years ended December 31, 2001, 2000 and 1999, relating to
continuing operations are as follows (in thousands):
2001 2000 1999
------ ------ ------
Current:
Federal $ - - $ - - $ - -
Foreign - - 13 (403)
------ ------ ------
Income tax provision (benefit) $ - - $ 13 $ (403)
====== ====== ======
For the year ended December 31, 2001, the income tax
provision related to discontinued operations was zero. For the
years ended December 31, 2000 and 1999, the income tax provision
related to discontinued operations was $215,000 and $118,000,
respectively.
Domestic and foreign components of income (loss) from
continuing operations before income taxes for the years ended
December 31, 2001, 2000 and 1999, are as follows (in thousands):
2001 2000 1999
--------- --------- ---------
Domestic $ (19,822) $ (79,645) $ (38,781)
Foreign 10,240 (5,189) (5,013)
--------- --------- ---------
Total $ (9,582) $ (84,834) $ (43,794)
========= ========= =========
The components of the net deferred tax liability were as
follows (in thousands):
December 31,
-------------------------
2001 2000
---------- ----------
Deferred tax assets:
Accrued reclamation costs $ 18,231 $ 19,945
Investment valuation differences 1,357 2,172
Capital loss carryover - - 603
Postretirement benefits other than pensions 1,437 1,303
Deferred compensation 902 1,493
Accounts receivable - - 456
Foreign net operating losses 7,579 10,420
Federal net operating losses 109,627 105,104
State net operating losses 12,264 13,327
Properties, plants and equipment 2,747 12,049
Tax credit carryforwards 1,989 1,989
Miscellaneous 1,479 1,355
---------- ----------
Total deferred tax assets 157,612 170,216
Valuation allowance (153,214) (167,109)
---------- ----------
Net deferred tax assets 4,398 3,107
---------- ----------
Deferred tax liabilities:
Pension costs (4,398) (3,107)
Other (300) (300)
---------- ----------
Total deferred tax liability (4,698) (3,407)
---------- ----------
Net deferred tax liability $ (300) $ (300)
========== ==========
Hecla recorded a valuation allowance to reflect the
estimated amount of deferred tax assets which may not be realized
principally due to the expiration of net operating losses and tax
credit carryforwards. The changes in the valuation allowance for
the years ended December 31, 2001, 2000 and 1999, are as follows
(in thousands):
2001 2000 1999
---------- ---------- ----------
Balance at beginning of year $ (167,109) $ (139,852) $ (115,654)
Increase due to
exclusion of net
deferred tax liability
associated with
discontinued operations - - (3,266) - -
Increase related to
nonutilization of net
operating loss carry-
forwards and
nonrecognition of
deferred tax assets due
to uncertainty of
recovery - - (23,991) (24,198)
Decrease related to
expiration of foreign
net operating loss
carryforwards and an
adjustment to foreign
property, plant and 13,895 - - - -
equipment ---------- ---------- ----------
Balance at end of year $ (153,214) $ (167,109) $ (139,852)
========== ========== ==========
The annual tax provision (benefit) is different from the
amount which would be provided by applying the statutory federal
income tax rate to Hecla's pretax income (loss). The reasons for
the difference are (in thousands):
[Enlarge/Download Table]
2001 2000 1999
------------------ ------------------ ------------------
Computed "statutory"
(benefit)/provision $ (3,258) (34)% $ (28,844) (34)% $ (14,890) (34)%
Nonutilization of net
operating losses and
effect of foreign taxes 3,258 34 28,857 34 14,487 33
---------- ---- ---------- ---- ---------- ----
$ - - - -% $ 13 - -% $ (403) (1)%
========== ==== ========== ==== ========== ====
As of December 31, 2001, for income tax purposes, Hecla has
net operating loss carryovers of $322.4 million and $241.2
million for regular and alternative minimum tax purposes,
respectively. These operating loss carryovers substantially
expire over the next 15 to 20 years, the majority of which expire
between 2006 and 2021. In addition, Hecla has foreign tax
operating losses of approximately $22.3 million which expire
between 2004 and 2011. Approximately $17.4 million of regular
tax loss carryovers are subject to limitations in any given year
due to mergers. Hecla has approximately $0.9 million in
alternative minimum tax credit carryovers eligible to reduce
future regular tax liabilities.
Note 7: Long-Term Debt and Credit Agreement
Long-term debt consists of the following (in thousands):
December 31,
----------------------
2001 2000
--------- ---------
Revolving bank debt $ 2,800 $ 1,024
Project financing debt 13,191 10,250
Subordinated bank debt 3,000 3,000
Term loan facility - - 55,000
Other long-term debt - - 41
--------- ---------
18,991 69,315
Less current portion (7,043) (59,274)
--------- ---------
$ 11,948 $ 10,041
========= =========
Future minimum debt repayments associated with long-term
debt as of December 31, 2001, are as follows (in thousands):
Year ending December 31
-------------------------------
2002 $ 7,043
2003 7,283
2004 2,337
2005 1,368
2006 960
--------
Total long-term debt repayments $ 18,991
========
Revolving Bank Debt
The Company has a revolving bank agreement which allows
borrowings up to $3.0 million for general corporate purposes.
This loan is payable on April 30, 2002, and is collateralized by
Hecla's headquarters building in Coeur d'Alene, Idaho. Hecla has
entered into an agreement to sell its headquarters building
during the second quarter of 2002. As of December 31, 2001 and
2000, $2.8 million and $1.0 million was outstanding and
classified as current portion of long-term debt. At December 31,
2001, the interest rate on this loan was 7%.
Project Financing and Subordinated Bank Debt
At December 31, 2001 and 2000, Hecla's wholly owned
subsidiary, Hecla Resources Investments Limited (HRIL) had $6.5
million and $10.25 million outstanding under a credit agreement
used to provide project financing at the La Camorra mine. The
project financing agreement is payable in semiannual payments
through December 31, 2004, and had an interest rate of 4.8% at
December 31, 2001.
HRIL must maintain compliance with certain financial and
other restrictive covenants related to the available ore reserves
and financial performance of the La Camorra mine. The Company is
required to maintain hedged gold positions sufficient to cover
all dollar loans, operating expenditures, taxes, royalties and
similar fees projected for the project. At December 31, 2001,
there were 169,158 ounces of gold sold forward. The forward
sales agreement assumes the ounces of gold committed to forward
sales at the end of each quarter thereafter can be leased at a
rate of 1.5% for each following quarter. The Company maintains a
Gold Lease Rate Swap at a fixed rate of 1.5% on the outstanding
notional volume of the flat forward sale, with settlement being
made quarterly with the Company receiving the fixed rate and
paying the current floating gold lease rate.
In connection with the project financing agreement, Hecla
has outstanding a $3.0 million subordinated loan agreement,
repayable in three semiannual payments beginning June 30, 2003.
The entire $3.0 million subordinated loan was outstanding at
December 31, 2001 and 2000. The loan agreement gives the Company
the option to capitalize interest payments by adding them to the
principal amount of the loan. At December 31, 2001, the interest
amount added to principal was approximately $0.5 million. The
interest rate on the subordinated debt was 5.9% as of December
31, 2001.
At December 31, 2001, Hecla's wholly owned subsidiary,
Minera Hecla, S.A. de C.V. (Minera Hecla) had $6.7 million
outstanding under a project loan used to acquire a processing
mill at Velardena, Mexico, to process ore mined from the San
Sebastian project on the Saladillo mining concessions located
near Durango, Mexico. The credit facility is nonrecourse to
Hecla. Under the terms of the credit facility, Minera Hecla will
make monthly payments for principal and interest over 63 months.
The loan is collateralized by the mill at Velardena and the
Saladillo, Saladillo 1 and Saladillo 5 mining concessions and
bears interest at the rate of 13%.
Term Loan Facility
On March 27, 2001, Hecla completed a sales transaction for
the K-T Clay group for $62.5 million which was partially utilized
to repay the $55.0 million term loan facility due on April 10,
2001. At December 31, 2000, $55.0 million was outstanding and
classified as current portion of long-term debt.
Note 8: Commitments and Contingencies
Bunker Hill Superfund Site
In 1994, Hecla, as a potentially responsible party under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (CERCLA), entered into a consent decree with the
Environmental Protection Agency (EPA) and the state of Idaho,
concerning environmental remediation obligations at the Bunker
Hill Superfund site located at Kellogg, Idaho. The consent
decree settled Hecla's response-cost liability under CERCLA at
the Bunker Hill site. In August 2000, Sunshine Mining and
Refining Company which was also a party to the 1994 Consent
Decree, filed for Chapter 11 bankruptcy and in January 2001, the
Federal District Court approved a new Consent Decree between
Sunshine, the U.S. Government and the Coeur d'Alene Indian Tribe
which settled Sunshine's environmental liabilities in the Coeur
d'Alene Basin lawsuits described below and released Sunshine from
further obligations under the 1994 Consent Decree. In September
2001, the Idaho Federal District Court held a hearing on the
Company's motion to relieve the Company from some or all of the
obligations under the 1994 Consent Decree based on a number of
arguments including the impact of changed circumstances because
EPA determined to utilize a broad remedial investigation
feasibility study (RI/FS) CERCLA process to address environmental
issues in the Coeur d'Alene Basin outside the Bunker Hill Site.
In a September 30, 2001, Order, amended October 15, 2001, the
Court held that sufficient changed circumstances had occurred to
support modification of the 1994 Consent Decree. In the Order,
as amended, the Court permitted the mining companies to terminate
further work under the 1994 Consent Decree for 2001 except for a
few high-risk yards and stated the Court would make a final
decision on the request to modify the Consent Decree after EPA's
Record of Decision (ROD) on the Basin cleanup is issued. EPA
recently issued its proposed plan for the cleanup of the Coeur
d'Alene Basin and a ROD on the cleanup plan is expected to be
issued by EPA in 2002. As of December 31, 2001, Hecla has
estimated and accrued an allowance for liability for remedial
activity costs at the Bunker Hill site of $9.7 million. These
estimated expenditures are anticipated to be made over the next
three to five years. Although Hecla believes the accrual is
adequate based upon current estimates of aggregate costs, it is
reasonably possible that Hecla's estimate of its obligations may
change in the near or longer term.
Coeur d'Alene River Basin Environmental Claims
- Coeur d'Alene Indian Tribe Claims
In July 1991, the Coeur d'Alene Indian Tribe brought a
lawsuit, under CERCLA, in Idaho Federal District Court against
Hecla and a number of other mining companies asserting claims for
damages to natural resources downstream from the Bunker Hill site
over which the tribe alleges some ownership or control. The
Tribe's natural resource damage litigation has been consolidated
with the United States' litigation described below.
- U.S. Government Claims
In March 1996, the United States filed a lawsuit in Idaho
Federal District Court against certain mining companies that
conducted historic mining operations in the Silver Valley of
northern Idaho, including Hecla. The lawsuit asserts claims
under CERCLA and the Clean Water Act and seeks recovery for
alleged damages to or loss of natural resources located in the
Coeur d'Alene River Basin in northern Idaho for which the United
States asserts to be the trustee under CERCLA. The lawsuit
asserts that the defendants' historic mining activity resulted in
releases of hazardous substances and damaged natural resources
within the Basin. The suit also seeks declaratory relief that
Hecla and other defendants are jointly and severally liable for
response costs under CERCLA for historic mining impacts in the
Basin outside the Bunker Hill site. Hecla has asserted a number
of defenses to the United States' claims.
In May 1998, the EPA announced that it had commenced a RI/FS
under CERCLA for the entire Basin, including Lake Coeur d'Alene,
in support of its response cost claims asserted in its March 1996
lawsuit. In October 2001, the EPA issued its proposed cleanup
plan for the Basin, and EPA's Record of Decision on the cleanup
plan is expected to be issued by EPA in 2002.
The first phase of the trial commenced on the consolidated
Coeur d'Alene Indian Tribe's and the United States' Federal
District Court cases on January 22, 2001, and was concluded on
July 30, 2001. In the first phase of the trial, the Court has
been asked to determine the extent of liability, if any, of the
defendants for the plaintiffs' CERCLA claims. The Court has also
been asked to determine the liability of the United States for
its historic involvement in the Basin. No decision on the issues
before the Court in the first phase of the litigation has been
issued. If liability is determined in the first phase, a second
trial will be scheduled for 2002 or 2003 to address damages and
remedy selection. Two of the defendant mining companies, Coeur
d'Alene Mines Corporation and Sunshine Mining and Refining
Company, settled their liabilities under the litigation during
the first quarter of 2001. Hecla and ASARCO are the only
defendants remaining in the litigation.
During 2000 and into 2001, Hecla was involved in settlement
negotiations with representatives of the U.S. government and the
Coeur d'Alene Indian Tribe. The Company also participated with
certain of the other defendants in the litigation in a state of
Idaho led settlement effort. On August 16, 2001, the Company
entered into an Agreement in Principle with the United States and
the State of Idaho to settle the governments' claims for natural
resource damages and cleanup costs related to the historic mining
practices in the Coeur d'Alene Basin in northern Idaho. The
settlement, if and when finalized in the form of a Consent
Decree, would release the Company from further liability to the
governments for its historic mining practices in the Coeur
d'Alene Basin. The Agreement in Principle caps for a period of
ten years the majority of the cleanup related expenditures the
Company is responsible for annually at the Bunker Hill Superfund
Site, the Grouse Creek mine and the Stibnite site in central
Idaho. The Agreement limits these payments to the Government
and/or cleanup obligations at these sites to a fixed annual cap
of $5.0 million for each of the first two years of the Agreement
and $6.0 million for each of the next eight years. Hecla is
committed to work and/or make payments of $4.0 million annually
for the following 20 years thereafter. In addition, Hecla would
either have to pay or perform clean up obligations amounting to
10% of its operating cash flow as adjusted for certain
exploration expenditures. Hecla would provide a security
interest in assets with a value of $20 million which will decline
over ten years. The Agreement in Principle does not include the
Coeur d'Alene Indian Tribe; however, the Company hopes to be able
to include the Tribe as a party to the settlement under the terms
of a final consent decree. Representatives of the United States,
the State of Idaho and the Company continue to work on terms of a
definitive consent decree incorporating the terms of the
Agreement in Principle. However, there are a number of
significant issues which will need to be resolved prior to
finalizing the definitive Consent Decree.
As of December 31, 2001, the Company has accrued $43.6
million related to the properties covered by the Agreement in
Principle. The range of liability for these sites could be up to
$138.0 million on an undiscounted basis over 30 years plus the
percentage of operating cash flow. If, and when, the Agreement
in Principle is finalized in the form of a Consent Decree, if the
terms of the obligation are fixed and determinable, they may be
discounted. Hecla has accrued what management believes is the
best estimate of the liability as of December 31, 2001. However,
it is reasonably possible that Hecla's obligation may change in
the near or long term depending on a number of factors, including
finalization and entry of a Consent Decree. In addition, an
adverse ruling against Hecla for liability and damages in this
matter could have a material adverse effect on the Company.
Private Class Action Litigation
On or about January 7, 2002, a class action complaint was
filed in this matter in the Idaho District Court, County of
Kootenai, against several corporate defendants, including the
Company. The Company was served with the Complaint on
January 29, 2002. The Complaint seeks certification of three
plaintiff classes of Coeur d'Alene Basin residents and current
and former property owners to pursue three types of relief:
various medical monitoring programs, a real property remediation
and restoration program, and damages for diminution in property
value, plus other damages and costs. The Company believes the
Complaint is subject to challenge on a number of bases and
intends to vigorously defend itself in this litigation.
Insurance Coverage Litigation
In 1991, Hecla initiated litigation in the Idaho District
Court, County of Kootenai, against a number of insurance
companies that provided comprehensive general liability insurance
coverage to Hecla and its predecessors. Hecla believes the
insurance companies have a duty to defend and indemnify Hecla
under their policies of insurance for all liabilities and claims
asserted against Hecla by the EPA and the tribe under CERCLA
related to the Bunker Hill site and the Basin in northern Idaho.
In 1992, the Idaho State District Court ruled that the primary
insurance companies had a duty to defend Hecla in the Tribe's
lawsuit. During 1995 and 1996, Hecla entered into settlement
agreements with a number of the insurance carriers named in the
litigation. Hecla has received a total of approximately $7.2
million under the terms of the settlement agreements. Thirty
percent of these settlements were paid to the EPA to reimburse
the U.S. government for past costs under the Bunker Hill site
consent decree. Litigation is still pending against one insurer
with trial suspended until the underlying environmental claims
against Hecla are resolved or settled. The remaining insurer in
the litigation, along with a second insurer not named in the
litigation, is providing Hecla with a partial defense in all
Basin environmental litigation. As of December 31, 2001, Hecla
had not reduced its accrual for reclamation and closure costs to
reflect the receipt of any potential insurance proceeds.
Other Claims
In 1997, Hecla's subsidiary, Kentucky-Tennessee Clay Company
(K-T Clay), terminated shipments (comprising approximately 1% of
annual ball clay production) sold to animal feed producers, when
the Food and Drug Administration determined trace elements of
dioxin were present in poultry. Dioxin is inherently present in
ball clays generally. On September 22, 1999, Riceland Foods (the
primary purchaser of ball clay from K-T Clay used in animal feed)
commenced litigation against K-T Clay in State Court in Arkansas
to recover its losses and its insurance company's payments to
downstream users of its animal feed. The complaint alleged
negligence, strict liability and breach of implied warranties and
seeks damages in excess of $7.0 million. Legal counsel retained
by the insurance company for K-T Clay had the case removed to
Federal Court in Arkansas. In July 2000, a second complaint was
filed against K-T Clay and Hecla in Arkansas State Court by
Townsends, Inc., another purchaser of animal feed containing ball
clay sold by K-T Clay. A third complaint was filed in the United
States District Court in Arkansas on August 31, 2000, by Archer
Daniels Midland Company, a successor in interest to Quincy
Soybean Company, a third purchaser of ball clay sold by K-T Clay
and used in the animal feed industry. The Townsends and Archer
Daniels lawsuits allege damages totaling approximately $300,000
and $1.4 million, respectively. These complaints contain similar
allegations to the Riceland Foods' case and legal counsel
retained by the insurance carrier is defending K-T Clay and Hecla
in these lawsuits. The Company believes that these claims
comprise substantially all the potential claims related to this
matter. In January 2001, Hecla was dismissed from the only
lawsuit in which it had been named as a defendant. In March
2001, prior to trial, K-T Clay settled the Riceland Foods
litigation against K-T Clay through settlement payment
substantially funded by K-T Clay's insurance carrier. K-T Clay
contributed $230,000 toward the Riceland Foods settlement. In
August 2001, the Federal District Court dismissed the Archer
Daniels litigation; however, a similar lawsuit based upon implied
warranty was refiled by Archer Daniels against K-T Clay on
October 24, 2001, in Arkansas Federal Court. The defense of the
Townsends lawsuit is being covered by insurance. The Company
believes that K-T Clay's insurance coverage is available to cover
the remaining claims. On March 27, 2001, Hecla sold its interest
in K-T Clay. However, Hecla agreed to indemnify the purchaser of
K-T Clay from all liability resulting from these dioxin claims
and litigation to the extent not covered by insurance. Although
the outcome of the remaining litigation or insurance coverage
cannot be assured, Hecla currently believes that there will be no
material adverse effect on Hecla's results of operations,
financial condition or cash flows from this matter.
Hecla is subject to other legal proceedings and claims not
disclosed above which have arisen in the ordinary course of its
business and have not been finally adjudicated. Although there
can be no assurance as to the ultimate disposition of these other
matters, it is the opinion of Hecla's management that the outcome
of these other matters will not have a material adverse effect on
the financial condition of Hecla.
Note 9: Employee Benefit Plans
Hecla and certain subsidiaries sponsor defined benefit
pension plans covering substantially all employees. Hecla also
provides certain postretirement benefits, principally health care
and life insurance benefits for qualifying retired employees.
The following tables provide a reconciliation of the changes
in the plans' benefit obligations and fair value of assets over
the two-year period ended December 31, 2001, and a statement of
the funded status as of December 31, 2001 and 2000 (in
thousands):
[Enlarge/Download Table]
Pension Benefits Other Benefits
---------------------- ----------------------
2001 2000 2001 2000
--------- --------- --------- ---------
Change in benefit obligation:
Benefit obligation at beginning of year $ 45,994 $ 43,811 $ 2,377 $ 2,418
Service cost 822 1,406 24 24
Interest cost 2,707 2,989 166 169
Plan amendments 2,027 7 - - - -
Actuarial (gain) loss (1,678) 405 177 (98)
Divestitures (4,044) - - - - - -
Benefits paid (2,298) (2,624) (126) (136)
Settlements (1,934) - - - - - -
Curtailments (501) - - - - - -
--------- --------- --------- ---------
Benefit obligation at end of year 41,095 45,994 2,618 2,377
--------- --------- --------- ---------
Change in plan assets:
Fair value of plan assets at beginning of year 67,285 58,721 - - - -
Actual return on plan assets (6,497) 11,023 - - - -
Divestitures (4,027) - - - - - -
Employer contributions 64 165 126 136
Settlements (2,419) - - - - - -
Benefits paid (2,298) (2,624) (126) (136)
--------- --------- --------- ---------
Fair value of plan assets at end of year 52,108 67,285 - - - -
--------- --------- --------- ---------
Funded status at end of year 11,014 21,292 (2,618) (2,377)
Unrecognized net actuarial gain (3,333) (15,674) (153) (352)
Unrecognized transition (asset) obligation 35 (455) - - - -
Unrecognized prior service cost 2,687 2,756 209 285
--------- --------- --------- ---------
Net amount recognized in consolidated
balance sheets $ 10,403 $ 7,919 $ (2,562) $ (2,444)
========= ========= ========= =========
The following table provides the amounts recognized in the
consolidated balance sheets as of December 31, 2001 and 2000 (in
thousands):
Pension Benefits Other Benefits
-------------------- --------------------
2001 2000 2001 2000
-------- -------- -------- --------
Prepaid benefit costs $ 12,067 $ 9,524 $ - - $ - -
Accrued benefit liability (1,664) (1,940) (2,562) (2,444)
Intangible asset - - 335 - - - -
-------- -------- -------- --------
Net amount recognized $ 10,403 $ 7,919 $ (2,562) $ (2,444)
======== ======== ======== ========
The benefit obligation was calculated by applying the
following weighted average assumptions:
Pension Other
Benefits Benefits
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Discount rate 7.00% 7.00% 7.00% 7.00%
Expected rate on plan assets 9.00% 9.00% - - - -
Rate of compensation increase 3.00% 3.50% - - - -
Net periodic pension cost (income) for the plans consisted
of the following in 2001, 2000 and 1999 (in thousands):
[Enlarge/Download Table]
Pension Benefits Other Benefits
----------------------------------- --------------------------------
2001 2000 1999 2001 2000 1999
--------- --------- --------- -------- -------- --------
Service cost $ 822 $ 1,406 $ 1,289 $ 24 $ 24 $ 23
Interest cost 2,707 2,989 2,611 166 169 155
Expected return on plan assets (5,593) (5,192) (4,516) - - - - - -
Amortization of transition asset (711) (426) (152) 75 75 - -
Amortization of unrecognized prior
service cost 246 315 211 - - - - - -
Amortization of unrecognized net
gain from earlier periods (450) (420) (316) (22) (14) (116)
--------- --------- --------- -------- -------- --------
Net periodic pension cost (income) (2,979) (1,328) (873) 243 254 62
Curtailment loss 395 - - - - - - - - - -
--------- --------- --------- -------- -------- --------
Net periodic benefit cost (income)
after curtailment $ (2,584) $ (1,328) $ (873) $ 243 $ 254 $ 62
========= ========= ========= ======== ======== ========
During 2001, as part of the sale of the K-T Clay Group, the
Company recognized a $0.5 million pension curtailment gain on the
Hecla Mining Company Pension Plan. This gain was a result of the
elimination of salaried employees at K-T Clay from inclusion in
the Hecla Mining Company Pension Plan. Also, as part of the K-T
Clay Group sale, $2.4 million in assets of the Hecla Mining
Company Pension Plan were transferred to the purchaser's pension
plan to fund the liability of plan participants that were
employed by the K-T Clay Group at the time of the sale. In
addition, two hourly pension plans for hourly employees of the
K-T Clay Group were transferred in their entirety as part of the
sale of the K-T Clay Group.
As a result of a reduction in the workforce at the Lucky
Friday mine during 2001, the Company recorded a pension
curtailment loss of approximately $0.9 million associated with
the Lucky Friday Hourly Pension Plan.
Information related to the defined benefit plans of the
industrial minerals segment, which is reported as a discontinued
operation as of December 31, 2000, is included in the preceding
tables. These plans were transferred as part of the sale of the
K-T Group during 2001. Summarized information with respect to
these plans is as follows (in thousands):
Benefit obligation at December 31, 2000 $ 4,044
========
Fair value of plan assets at December 31, 2000 $ 4,027
========
Net prepaid benefit cost at December 31, 2000 $ 163
========
Net periodic pension cost for the year ended $ 129
December 31, 2000 ========
The projected benefit obligation, accumulated benefit
obligation and fair value of plan assets for pension plans with
accumulated benefit obligations in excess of plan assets were
$1,303,000, $1,303,000 and $0, respectively, as of December 31,
2001, and $2,989,000, $2,417,000 and $665,000, respectively, as
of December 31, 2000.
Hecla has a nonqualified Deferred Compensation Plan which
permits eligible officers, directors and key employees to defer a
portion of their compensation. In November 1998, Hecla amended
the plan to permit participants to transfer all or a portion of
their deferred compensation amounts into a Company common stock
account to be held in trust until distribution. As of December
31, 2001 and 2000, a total of 102,114 and 139,467 shares,
respectively, of Hecla's common stock are held in the grantor
trust. Shares held in the grantor trust are valued at fair value
at the time of issuance, are recorded in the contra equity
account "Stock held by grantor trust," and are legally
outstanding for registration purposes and dividend payments. The
shares held in the grantor trust are considered outstanding for
purposes of calculating loss per share. The deferred
compensation, together with Company matching amounts and
accumulated interest, is distributable in cash after retirement
or termination of employment, and at December 31, 2001 and 2000,
amounted to approximately $2.3 and $3.6 million, respectively.
During 2001, the plan was terminated and all amounts will be
distributed during 2002 and 2003.
Hecla has an employees' Capital Accumulation Plan which is
available to all salaried and certain hourly employees after
completion of six months of service. Employees may contribute
from 2% to 15% of their compensation to the plan. Hecla makes a
matching contribution of 25% of an employee's contribution up to,
but not exceeding, 6% of the employee's earnings. Hecla's
contribution was approximately $102,000 in 2001, $232,700 in 2000
and $274,000 in 1999.
Hecla has an employee's 401(k) plan which is available to
all hourly employees at Hecla's Lucky Friday mine after
completion of six months of service. Employees may contribute
from 2% to 15% of their compensation to the plan. Hecla makes a
matching contribution of 25% of an employee's contribution up to,
but not exceeding, 5% of the employee's earnings. Hecla's
contribution was approximately $40,000 in 2001, $60,000 in 2000
and $50,000 in 1999.
Note 10: Shareholders' Equity
Preferred Stock
Hecla has 2.3 million shares of Series B Cumulative
Convertible Preferred Stock (the Preferred Shares) outstanding.
Holders of the Preferred Shares are entitled to receive
cumulative cash dividends at the annual rate of $3.50 per share
payable quarterly, when and if declared by the Board of
Directors. As of January 31, 2002, Hecla has failed to pay the
equivalent of six quarterly dividends of $12.1 million.
The Preferred Shares are convertible, in whole or in part,
at the option of the holders thereof, into shares of common stock
at an initial conversion price of $15.55 per share of common
stock. The Preferred Shares are redeemable at the option of
Hecla, in whole or in part, at $52.45 per share in July 1996 and
thereafter at prices declining ratably on each July 1 to $50.00
per share on or after July 1, 2003.
Holders of the Preferred Shares have no voting rights except
if Hecla fails to pay the equivalent of six quarterly dividends.
As of January 31, 2002, Hecla has failed to pay the equivalent of
six quarterly dividends totaling $12.1 million. Due to the
failure to pay dividends, at the Company's next annual
shareholders' meeting, holders of the Preferred Shares, voting as
a class, shall be entitled to elect two additional directors.
The holders of Preferred Shares also have voting rights related
to certain amendments to Hecla's Certificate of Incorporation.
The Preferred Shares rank senior as to dividends and upon
liquidation to the common stock and any outstanding shares of
Series A Preferred Shares. The Preferred Shares have a
liquidation preference of $50.00 per share plus all undeclared
and unpaid dividends. Such preference aggregates total
$127,075,000 at December 31, 2001.
Shareholder Rights Plan
In 1996, Hecla adopted a replacement Shareholder Rights
Plan. Pursuant to this plan, holders of common stock received
one preferred share purchase right for each common share held.
The rights will be triggered once an Acquiring Person, as defined
in the plan, acquires 15% or more of Hecla's outstanding common
shares. The 15% triggering threshold may be reduced by the Board
of Directors to not less than 10%. When exercisable, the right
would, subject to certain adjustments and alterations, entitle
rightholders, other than the Acquiring Person or group, to
purchase common stock of Hecla or the acquiring company having a
market value of twice the $50 exercise price of the right. The
rights are nonvoting, may be redeemed by the Company at any time
at a price of one cent per right, and expire in May 2006.
Additional details regarding the rights are set forth in the
Rights Agreement filed with the Securities and Exchange
Commission on May 10, 1996.
Stock Based Plans
At December 31, 2001, executives, key employees and
directors had been granted options to purchase common shares or
were credited with common shares under the stock based plans
described below. Hecla has adopted the disclosure-only
provisions of SFAS 123. No compensation expense has been
recognized in 2001, 2000 or 1999 for unexercised options related
to the stock option plans. Had compensation cost for Hecla's
stock option plans been determined based on the fair market value
at the grant date for awards in 2001, 2000 and 1999 consistent
with the provisions of SFAS 123, Hecla's loss and per share loss
applicable to common shareholders would have been increased to
the pro forma amounts indicated below (in thousands, except per
share amounts):
2001 2000 1999
------- -------- -------
Loss applicable to common shareholders:
As reported $ 5,710 $ 92,015 $ 48,040
Pro forma $ 6,490 $ 92,937 $ 49,060
Loss applicable to common
shareholders per share:
As reported $ 0.08 $ 1.38 $ 0.77
Pro forma $ 0.09 $ 1.39 $ 0.79
The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions:
2001 2000 1999
-------- -------- --------
Expected dividend yield 0.00% 0.00% 0.00%
Expected stock price volatility 61.24% 49.03% 50.87%
Risk-free interest rate 4.68% 6.74% 4.79%
Expected life of options 4.3 years 4.1 years 4.1 years
The weighted average fair value of options granted in 2001,
2000 and 1999 was $0.47, $0.51 and $1.19, respectively.
Hecla adopted a nonstatutory stock option plan in 1987. The
plan provides that options may be granted to certain officers and
key employees to purchase common stock at a price of not less
than 50% of the fair market value at the date of grant. The plan
also provides that options may be granted with a corresponding
number of stock appreciation rights and/or tax offset bonuses to
assist the optionee in paying the income tax liability that may
exist upon exercise of the options. All of the outstanding stock
options under the 1987 plan were granted at an exercise price
equal to the fair market value at the date of grant and with an
associated tax offset bonus. Outstanding options under the 1987
plan are immediately exercisable for periods up to ten years.
During 2001, 2000 and 1999, respectively, 8,000, 23,500 and
58,500 options to acquire shares expired under the 1987 plan.
The ability to grant further options under the plan expired on
February 13, 1997.
In 1995, the shareholders of Hecla approved the 1995 Stock
Incentive Plan which provides for a variety of stock-based grants
to Hecla's officers and key employees. The plan provides for the
grant of stock options, stock appreciation rights, restricted
stock and performance units to eligible officers and key
employees of Hecla. The 1995 stock option plan has 3,000,000
shares authorized. Stock options under the plan are required to
be granted at 100% of the market value of the stock on the date
of the grant. The terms of such options shall be no longer than
ten years from the date of grant. During 2001, 2000 and 1999,
respectively, 698,000, 481,000 and 739,500 options to acquire
shares were granted to Hecla's officers and key employees of
which 641,000, 385,000 and 630,000, respectively, of these
options to acquire shares were granted with vesting requirements.
Under the vesting requirements for 2001, 33% of the options were
available on the date of the grant, with an additional 33%
available on the next anniversary period and 33% available six
months after the first anniversary date. For the options granted
during 2001, there is no tax offset bonus provision. During
2001, 2000 and 1999, respectively, 188,500, 947,500 and 27,000
options to acquire shares expired under the 1995 plan.
In November 2001, 76,142 shares of restricted common stock
of the Company were issued to one officer of the Company as a
component of the officer's base salary for the twelve-month
period commencing December 1, 2001. These shares were issued
under the 1995 Stock Incentive Plan. At December 31, 2001, there
were 722,358 shares available for future grant under the 1995
plan.
In 1995, Hecla adopted the Hecla Mining Company Stock Plan
for Nonemployee Directors (the Directors' Stock Plan), which may
be terminated by the Board of Directors at any time. Each
nonemployee director is credited with 1,000 shares of Hecla's
common stock on May 30 of each year. Nonemployee directors
joining the Board of Directors after May 30 of any year are
credited with a pro-rata number of shares based upon the date
they join the Board. All credited shares are held in trust for
the benefit of each director until delivered to the director.
Delivery of the shares from the trust occurs upon the earliest of
(1) death or disability; (2) retirement; (3) a cessation of the
director's service for any other reason; or (4) a change in
control of Hecla. Subject to certain restrictions, directors may
elect to receive delivery of shares on such date or in annual
installments thereafter over 5, 10 or 15 years. The shares of
common stock credited to nonemployee directors pursuant to the
Directors' Stock Plan may not be sold until at least six months
following the date they are delivered. The maximum number of
shares of common stock which may be granted pursuant to the
Directors' Stock Plan is 120,000. During 2001, 2000 and 1999,
respectively, 7,000, 8,000 and 8,000 shares were credited to the
nonemployee directors. During 2001, 2000 and 1999, $7,000,
$9,000 and $20,000, respectively, were charged to operations
associated with the Directors' Stock Plan. At December 31, 2001,
there were 68,057 shares available for grant in the future under
the plan.
Transactions concerning stock options pursuant to all of the
above-described stock option plans are summarized as follows:
Weighted Average
Shares Exercise Price
--------- ----------------
Outstanding, December 31, 1998 1,655,415 $ 6.76
Year ended December 31, 1999
Granted 739,500 $ 2.88
Exercised (1,500) $ 2.88
Expired (85,500) $ 10.14
---------
Outstanding, December 31, 1999 2,307,915 $ 5.39
Year ended December 31, 2000
Granted 481,000 $ 1.31
Exercised - - $ - -
Expired (973,415) $ 4.40
---------
Outstanding, December 31, 2000 1,815,500 $ 4.85
Year ended December 31, 2001
Granted 698,000 $ 1.13
Exercised - - $ - -
Expired (196,500) $ 2.86
---------
Outstanding, December 31, 2001 2,317,000 $ 3.89
=========
The following table displays exercisable stock options and
the weighted average exercise price of the exercisable options as
of December 31, 2001, 2000 and 1999:
2001 2000 1999
----------- ----------- -----------
Exercisable options 1,701,400 1,322,533 1,302,215
Weighted average exercise price $ 4.62 $ 5.36 $ 6.06
The following table presents information about the stock
options outstanding as of December 31, 2001:
[Enlarge/Download Table]
Weighted Average
-----------------------------
Range of Remaining
Shares Exercise Price Exercise Price Life (years)
--------- ---------------- -----------------------------
Exercisable options 421,150 $ 1.13 - $ 1.31 $ 1.20 5
Exercisable options 340,750 $ 2.88 - $ 2.88 $ 2.88 7
Exercisable options 680,000 $ 5.63 - $ 8.00 $ 5.86 6
Exercisable options 259,500 $ 8.63 - $10.50 $ 9.20 3
---------
Total exercisable options 1,701,400 $ 1.13 - $10.50 $ 4.62 6
Unexercisable options 615,600 $ 1.13 - $ 8.63 $ 1.90 5
---------
Total all options 2,317,000 $ 1.13 - $10.50 $ 3.89 6
=========
No amounts were charged to operations in connection with the
stock option plans in 2001, 2000 or 1999.
Common Stock Offerings
On August 28, 2001, Hecla issued 5,749,883 shares of its
common stock in a private placement transaction for the benefit
of the Hecla Mining Company Retirement Plan and the Lucky Friday
Pension Plan for approximately $5.5 million. Proceeds from the
private placement are available for general corporate purposes.
In connection with a May 1999 stock offering, Hecla issued
1,603,998 warrants to purchase Hecla common stock. Each warrant
entitles the holder to purchase one share of common stock at an
exercise price equal to the lesser of (i) $3.19, and (ii) 102% of
the volume weighted average price on the NYSE for each trading
day during the ten consecutive trading days immediately preceding
the date that notice of exercise is given to Hecla. In 1999,
97,000 warrants were exercised and Hecla issued 97,000 shares of
its common stock. Proceeds of $0.3 million were realized from
the exercise of the warrants. During 2001, 408,000 warrants were
exercised and Hecla issued 408,000 shares of its common stock.
Proceeds of $0.4 million were realized from the exercise of the
warrants. At December 31, 2001, 1,098,801 warrants remain
outstanding and are exercisable until May 11, 2002. In February
2002, 668,345 warrants were exercised and Hecla issued 668,345
shares of its common stock. Proceeds of $0.8 million were
realized from the exercise of the warrants.
Hecla has an existing Registration Statement on Form S-3
which provides for the issuance of up to $100.0 million of equity
and debt securities. As of December 31, 2001, Hecla has issued
$62.2 million of Hecla's common shares and warrants under the
Registration Statement. Due to the current market capitalization
of the Company and the unpaid dividends on the Preferred Stock,
there can be no assurance as to the availability of any financing
arrangement under this Registration Statement.
Note 11: Business Segments
Hecla is organized and managed primarily on the basis of the
principal products being produced from its operating units. One
of the operating units has been aggregated into the Metals-Gold
segment, three of the operating units have been aggregated into
the Metals-Silver segment, and one operating unit has been
aggregated as part of the Industrial Minerals segment. During
November 2000, the industrial minerals segment was designated as
a discontinued operation. For further discussion, see
"Discontinued Operations" Note 2 to financial statements.
General corporate activities not associated with operating units,
as well as idle properties, are presented as Other.
The tables below present information about reportable
segments as of and for the years ended December 31 (in
thousands). Information related to the statement of operations
data relates to continuing operations only. See Note 2 for
information related to the industrial minerals segment
operations. Balance sheet data include the industrial minerals
segment classified as discontinued operations as of December 31,
2001 and 2000.
2001 2000 1999
-------- -------- -------
Net sales to unaffiliated customers:
Metals-Gold $ 41,452 $ 31,573 $ 23,588
Metals-Silver 43,795 44,277 50,115
-------- -------- --------
$ 85,247 $ 75,850 $ 73,703
======== ======== ========
Gain (loss) from operations:
Metals-Gold $ 11,525 $(13,982) $ (6,848)
Metals-Silver (8,640) (37,699) 1,913
Other (9,117) (27,834) (37,716)
-------- -------- --------
$ (6,232) $(79,515) $(42,651)
======== ======== ========
Capital expenditures:
Metals-Gold $ 4,692 $ 4,592 $ 7,788
Metals-Silver 13,183 6,670 3,418
Industrial Minerals - - - - 2,221
Discontinued operations 145 3,921 - -
Other 15 27 40
-------- -------- --------
$ 18,035 $ 15,210 $ 13,467
======== ======== ========
Depreciation, depletion and amortization:
Metals-Gold $ 9,868 $ 7,282 $ 7,706
Metals-Silver 10,607 10,809 10,956
Other 265 282 321
-------- -------- --------
$ 20,740 $ 18,373 $ 18,983
======== ======== ========
2001 2000 1999
-------- -------- --------
Other significant noncash items:
Metals-Gold $ 354 $ 9,241 $ 240
Metals-Silver 707 31,759 1,911
Industrial Minerals - - - - 4,638
Discontinued operations - - 159 - -
Other 44 17,329 27,787
-------- -------- --------
$ 1,105 $ 58,488 $ 34,576
======== ======== ========
Identifiable assets:
Metals-Gold $ 40,489 $ 42,667 $ 56,018
Metals-Silver 84,845 81,572 121,814
Industrial Minerals - - - - 65,580
Discontinued operations 2,714 44,057 - -
Other 25,068 26,540 24,945
-------- -------- --------
$153,116 $194,836 $268,357
======== ======== ========
The following is sales information for continuing operations
by geographic area for the years ended December 31 (in thousands):
2001 2000 1999
-------- -------- --------
United States $ 15,895 $ 25,147 $ 37,725
Canada 15,951 15,274 14,791
Mexico 12,018 6,193 5,100
United Kingdom 20,771 22,417 8,903
Japan 13,018 3,556 2,268
Other foreign 7,594 3,263 4,916
-------- -------- --------
$ 85,247 $ 75,850 $ 73,703
======== ======== ========
The following is sales information for continuing operations
by country of origin for the years ended December 31 (in
thousands):
2001 2000 1999
-------- -------- --------
United States $ 36,058 $ 51,019 $ 66,246
Venezuela 41,406 24,780 4,248
Mexico 7,783 51 3,209
-------- -------- --------
$ 85,247 $ 75,850 $ 73,703
======== ======== ========
The following is properties, plants and equipment information
for continuing operations by geographic area as of December 31 (in
thousands):
2001 2000 1999
--------- -------- ---------
United States $ 69,791 $ 75,073 $ 148,645
Venezuela 25,677 30,852 31,490
Mexico 9,125 2,418 10,858
Other South America - - - - 33
--------- --------- ---------
$ 104,593 $ 108,343 $ 191,026
========= ========= =========
At December 31, 2001 and 2000, properties, plants and
equipment by geographic location of the discontinued operations
segment are as follows (in thousands):
2001 2000
------- --------
United States $ 645 $ 26,347
Mexico - - 5,801
South America - - 26
------- --------
$ 645 $ 32,174
======= ========
Sales to significant metals customers, including both the
Metals-Gold and Metals-Silver segments, as a percentage of total
sales from the Metals-Gold and Metals-Silver segments, were as
follows for the years ended December 31:
2001 2000 1999
----- ----- -----
Customer A 25.2% 24.9% 5.8%
Customer B 16.3% 16.3% 12.1%
Customer C 14.1% 8.2% 6.9%
Customer D 13.8% 15.5% 14.5%
Customer E 11.2% - -% - -%
Note 12: Fair Value of Financial Instruments
The following estimated fair value amounts have been
determined using available market information and appropriate
valuation methodologies. However, considerable judgment is
required to interpret market data and to develop the estimates of
fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts Hecla could realize in a
current market exchange.
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which
it is practicable to estimate that value. Potential income tax
ramifications related to the realization of unrealized gains and
losses that would be incurred in an actual sale or settlement
have not been taken into consideration.
The carrying amounts for cash and cash equivalents, accounts
and notes receivable, restricted investments and current
liabilities are a reasonable estimate of their fair values. Fair
value for equity securities investments is determined by quoted
market prices as recognized in the financial statements. Fair
value of forward contracts and commodity swap contracts are
supplied by Hecla's counterparties and reflect the difference
between the contract prices and forward prices available on the
date of valuation. The fair value of long-term debt is based on
the discounted value of contractual cash flows and at
December 31, 2001 and 2000 approximates fair value. The discount
rate is estimated using the rates currently offered for debt with
similar remaining maturities.
The estimated fair values of other financial instruments are
as follows (in thousands):
December 31,
------------------------------------
2001 2000
----------------- -----------------
Carrying Fair Carrying Fair
Amounts Value Amounts Value
-------- ------- -------- -------
Financial assets (liabilities):
Gold forward sales contracts $ 256 $ 576 $ - - $ (1,935)
Gold lease rate swap (56) (56) - - (136)
Note 13: Loss per Common Share
The following table presents a reconciliation of the
numerators (net income (loss)) and denominators (shares) used in
the basic and diluted loss per common share computations. Also
shown is the effect that has been given to declared and
undeclared cumulative preferred dividends in arriving at loss
applicable to common shareholders for the years ended
December 31, 2001, 2000 and 1999, in computing basic and diluted
loss per common share (dollars and shares in thousands, except
per share amounts). For the years ended December 31, 2001 and
2000, $8.1 million and $4.0 million of dividends, respectively,
have not been declared or paid.
[Enlarge/Download Table]
2001 2000 1999
----------------------------------- --------------------------- --------------------------
Weighted Weighted Weighted
Average Per Share Average Per Share Average Per Share
Net Income (loss) Shares Amount Net Loss Shares Amount Net Loss Shares Amount
----------------- ------ ------ -------- ------ ------ -------- ------ ------
Income (loss) before
extraordinary charge and
cumulative effect of
change in accounting
principle $ 2,340 $ (83,318) $(38,605)
Extraordinary charge, net
of tax - - (647) - -
Cumulative effect of change
in accounting principle,
net of tax - - - - (1,385)
--------- --------- --------
Income (loss) before
preferred stock dividends $ 2,340 $ (83,965) $(39,990)
Less: Preferred
stock dividends (8,050) (8,050) (8,050)
--------- --------- --------
Basic loss per common share:
Loss applicable
to common
shareholders $ (5,710) 69,396 $ (0.08) (92,015) 66,791 $ (1.38) (48,040) 62,347 $ (0.77)
Effect of dilutive
securities(1) - - - - - - - - - - - - - - - - - -
--------- ------- ------- --------- ------- ------- -------- ------- -------
Diluted loss per
common share $ (5,710) 69,396 $ (0.08) $ (92,015) 66,791 $ (1.38) $(48,040) 62,347 $ (0.77)
========= ======= ======= ========= ======= ======= ======== ======= =======
(1) Dilutive Securities
As of December 31, 2001, 2000 and 1999, there were 2,317,000,
1,816,000 and 2,308,000 shares available for issue under granted
stock options, respectively. These options were not included in
the computation of diluted loss per common share as a loss was
incurred in each of these years, and their inclusion would be
antidilutive. Hecla also has 2.3 million shares of convertible
preferred stock outstanding that, if converted, would be
antidilutive, and were therefore excluded from the determination
of diluted loss per share. The calculations also exclude
1,098,801, 1,506,998 and 1,506,998 warrants, respectively, to
purchase common stock, as their exercise would be antidilutive.
Note 14: Other Comprehensive Income (Loss)
Due to the availability of net operating losses and related
deferred tax valuation allowances, there is no tax effect
associated with any component of other comprehensive income
(loss). The following table lists the beginning balance, yearly
activity and ending balance of each component of accumulated
other comprehensive income (loss) (in thousands):
[Enlarge/Download Table]
Unrealized Minimum Accumulated
Foreign Gains Change in Pension Other
Currency (Losses) Derivative Liability Comprehensive
Items On Securities Contracts(1) Adjustment Income (Loss)
-------- ------------- ----------- ---------- -------------
Balance December 31, 1998 $ (4,898) $ (82) $ - - $ (289) $ (5,269)
1999 change - - 109 - - 289 398
-------- --------- ------- ------- --------
Balance December 31, 1999 (4,898) 27 - - - - (4,871)
2000 change - - 13 - - - - 13
-------- --------- ------- ------- --------
Balance December 31, 2000 (4,898) 40 - - - - (4,858)
2001 change 4,898 (26) 159 - - 5,031
-------- --------- ------- ------- --------
Balance December 31, 2001 $ - - $ 14 $ 159 $ - - $ 173
======== ========= ======= ======= ========
(1) Included in the change in derivative contracts for the year ended
December 31, 2001, is a $136,000 loss on the cumulative effect of adopting
SFAS 133, $39,000 of realization on gold lease swaps in 2001 and a fair
value gain adjustment on swaps outstanding at December 31, 2001, of
$256,000.
Note 15: Investment in Greens Creek Joint Venture
The Company holds a 29.73% interest in the Greens Creek mine
through a joint-venture arrangement. Hecla records its portion
of the assets and liabilities of the Greens Creek mine on the
proportionate consolidation method whereby 29.73% of the assets
and liabilities of the Greens Creek mine are included in the
consolidated financial statements of Hecla. The following
summarized balance sheet as of December 31, 2001, and the related
summarized statement of operations for the year ended December
31, 2001, are derived from the audited financial statements of
the Greens Creek Joint Venture. The financial information below
is presented on a 100% basis (in thousands).
Balance Sheet:
Assets:
Current assets $ 18,666
Property, plant and equipment, net 155,028
----------
Total assets $ 173,694
==========
Liabilities and equity:
Liabilities $ 14,813
Equity 158,881
----------
Total liabilities and equity $ 173,694
==========
Summary of Operations:
Revenues $ 75,496
Gross profit $ 17,477
Operating loss $ (3,630)
Net loss $ (3,658)
The Greens Creek mine is operated through a joint-venture
arrangement, and Hecla owns an undivided interest in the assets
of the venture. Under the joint-venture agreement, the joint
participants, including Hecla, are entitled to indemnification
from the other participants and are severally liable only for the
liabilities of the participants in proportion to their interest
therein. If a participant defaults on its obligations under the
terms of the joint venture, Hecla could incur losses in excess of
its pro-rata share of the joint venture. In the event any
participant so defaults, the agreement provides certain rights
and remedies to the remaining participants. These include the
right to force a dilution of the percentage interest of the
defaulting participant and the right to utilize the proceeds from
the sale of the defaulting party's share of products, or its
joint-venture interest in the properties, to satisfy the
obligations of the defaulting participant. Based on the
information available to Hecla, Hecla has no reason to believe
that its joint-venture participants with respect to Greens Creek
mine will be unable to meet their financial obligations under the
terms of the agreement.
Note 16: Acquisition of Monarch Resources Investments Limited
On June 25, 1999, Hecla acquired from Monarch Resources
Limited all of the outstanding stock of Monarch Resources
Investments Limited, or MRIL, a Bermuda company, as well as two
subsidiaries owned by MRIL. MRIL's principal assets include the
La Camorra gold mine, located in Bolivar State in Venezuela, and
the Saladillo silver exploration property located in the Durango
region of Mexico. The acquisition price of $25.0 million
consisted of $9.0 million in cash and 6,700,250 Hecla common
shares which are subject to certain trading restrictions. In
addition, MRIL's seller, Monarch Resources Limited, will receive
a royalty payment on future production from purchased assets that
exceed the resource at the time of acquisition. Following
Hecla's purchase of MRIL, the newly acquired subsidiary was
renamed Hecla Resources Investments Limited (HRIL).
The acquisition of MRIL has been accounted for as a purchase
and, accordingly, Hecla's consolidated financial statements
include the financial position, results of operations and cash
flows of MRIL prospectively from June 25, 1999. Approximately
$18.7 million of the total purchase price has been allocated to
the mineral properties at La Camorra and is amortized on a units-
of-production basis over the La Camorra mine life.
Hecla Mining Company and Wholly Owned Subsidiaries
Form 10-K - December 31, 2001
Index to Exhibits
Number and Description of Exhibits
-----------------------------------
3.1(a) Certificate of Incorporation of the Registrant as
amended to date.2
3.1(b) Certificate of Amendment of Certificate of
Incorporation of the Registrant, dated as of
May 16, 1991.2
3.2 By-Laws of the Registrant as amended to date.2
4.1(a) Certificate of Designations, Preferences and Rights
of Series A Junior Participating Preferred Stock of
the Registrant.2
4.1(b) Certificate of Designations, Preferences and Rights
of Series B Cumulative Convertible Preferred Stock
of the Registrant.2
4.2 Rights Agreement dated as of May 10, 1996, between
Hecla Mining Company and American Stock Transfer &
Trust Company, which includes the form of Rights
Certificate of Designation setting forth the terms
of the Series A Junior Participating Preferred
Stock of Hecla Mining Company as Exhibit A and the
summary of Rights to Purchase Preferred Shares as
Exhibit B.2
10.1(a) Credit Agreement dated as of May 7, 1999, among
Registrant and Certain Subsidiaries and
NationsBank, N.A., as Agent, and Certain Lenders.2
10.1(b) First Amendment to Restated Credit Agreement dated
as of June 25, 1999 among NationsBank, N.A. and
Registrant.2
10.1(c) Second Amendment to Restated Credit Agreement dated
as of August 31, 1999 among NationsBank, N.A. and
Registrant.2
10.1(d) Third Amendment to Restated Credit Agreement dated
as of December 20, 1999, among NationsBank, N.A.
and Registrant.2
10.1(e) Fourth Amendment to Restated Credit Agreement
dated as of December 30, 1999, among NationsBank,
N.A. and Registrant.2
10.2 Employment agreement dated June 1, 2000, between
Hecla Mining Company and Arthur Brown. (Registrant
has substantially identical agreements with each of
Messrs. William B. Booth, Phillips S. Baker, Jr.,
Vicki J. Veltkamp, Thomas F. Fudge, Lewis E. Walde,
and Michael B. White. Such substantially identical
agreements are not included as separate
Exhibits.)1,2
10.3(a) Form of Executive Deferral Plan Master Document, as
amended, effective November 13, 1998.1,2
10.3(b) Form of Director Deferral Plan Master Plan Document
effective January 1, 1995.1,2
10.4(a) 1987 Nonstatutory Stock Option Plan of the
Registrant.1,2
10.4(b) Hecla Mining Company 1995 Stock Incentive Plan.1,2
10.4(c) Hecla Mining Company Stock Plan for Nonemployee
Directors.1,2
10.5(a) Hecla Mining Company Retirement Plan for Employees
and Supplemental Retirement and Death Benefit
Plan.1,2
10.5(b) Supplemental Excess Retirement Master Plan
Documents.1,2
10.5(c) Hecla Mining Company Nonqualified Plans Master
Trust Agreement.1,2
10.6 Form of Indemnification Agreement dated May 27,
1987,between Hecla Mining Company and each of its
Directors and Officers.1,2
10.7 Summary of Short-term Performance Payment Plan.1,2
10.8(a) Amended and Restated Golden Eagle Earn-In Agreement
between Santa Fe Pacific Gold Corporation and Hecla
Mining Company dated as of September 6, 1996.2
10.8(b) Golden Eagle Operating Agreement between Santa Fe
Pacific Gold Corporation and Hecla Mining Company
dated as of September 6, 1996.2
10.9 Limited Liability Company Agreement of the Rosebud
Mining Company, LLC among Santa Fe Pacific Gold
Corporation and Hecla Mining Company dated as of
September 6, 1996.2
10.10 Restated Mining Venture Agreement among Kennecott
Greens Creek Mining Company, Hecla Mining Company
and CSX Alaska Mining Inc. dated May 6, 1994.2
10.11 Credit Agreement dated as of June 25, 1999, among
Monarch Resources Investments Limited as Borrower,
Monarch Minera Suramericana, C.A. as an additional
obligor and Standard Bank London Limited as
Collateral and Administrative Agent.2
10.12 Subordinated Loan Agreement dated as of June 25,
1999,among Hecla Mining Company as Borrower and
Standard Bank London Limited as Initial Lender,
Collateral and Administrative Agent.2
10.13 Subordination Agreement dated as of June 25, 1999,
among NationsBank, N.A. as Senior Creditor,
Standard Bank London Limited as Subordinated
Creditor and Hecla Mining Company.2
10.14 Facility Agreement dated March 24, 2000, among
Hecla Mining Company as Borrower and Standard Bank
London Limited as Initial Lender, Collateral Agent
and Administrative Agent.2
10.15 Subordinated Loan Agreement dated June 29, 2000,
among Hecla Mining Company as Borrower and Standard
Bank London Limited as Lender.2
10.16 Subordination Agreement dated June 29, 2000, among
Hecla Mining Company and Standard Bank London
Limited as Senior Creditor and Subordinated
Creditor.2
10.17 Variable Rate Commercial Revolving Loan dated
October 12, 2000, among Hecla Mining Company as
Borrower and Idaho Independent Bank as Lender.2
10.18 Stock Purchase Agreement dated November 17, 2000,
between Hecla Mining Company and Zemex U.S.
Corporation.2
10.19 Stock Purchase Agreement dated February 27, 2001,
between Hecla Mining Company and IMERYS USA, Inc.2
10.20 Form of Retention Agreement dated July 20, 2001,
between Hecla Mining Company and Arthur Brown.
(Registrant has substantially identical agreements,
with each of Messrs. Phillips S. Baker, Jr, William
B. Booth, Thomas F. Fudge, Vicki J. Veltkamp, Lewis
E. Walde, and Michael B. White.1,2
10.21 Real Estate Purchase and Sale Agreement between
Hecla Mining Company and JDL Enterprises, LLC dated
October 19, 2001. Attached
11. Computation of weighted average number of common
shares outstanding. Attached
12. Statement of Computation of Ratio of Earnings to
Fixed Charges. Attached
16.1 PricewaterhouseCoopers LLP's letter dated October
18, 2001, Registrant's former principal independent
accountant.2
21. List of subsidiaries of the Registrant. Attached
23.1 Consent of PricewaterhouseCoopers LLP to
incorporate by reference its report dated March 28,
2001, on the Consolidated Financial Statements of
the Registrant in the Registrant's Registration
Statements on Form S-3, No. 33-72832, No. 33-59659,
Form S-8, No. 33-7833, No. 33-41833, No. 33-14758,
No. 33-60095 and No. 33-60099.2 Attached
23.2 Consent of BDO Seidman, LLP to incorporate by
reference its report dated February 1, 2002, on
the Consolidated Financial Statements of the
Registrant in the Registrant's Registration
Statements on Form S-3, No. 33-72832, No. 33-59659,
and on Form S-8, No. 33-7833, No. 33-41833, No. 33-
14758 and No. 33-60099.2 Attached
------------------
1. Indicates a management contract or compensatory plan or
arrangement.
2. These exhibits were filed in SEC File No. 1-8491 as
indicated on the following page and are incorporated
herein by this reference thereto.
Corresponding Exhibit in Annual Report on
Form 10-K, Quarterly Report on Form 10-Q,Current
Report on Form 8-K, Proxy Statement
Exhibit in or Registration Statement, as Indicated Below;
this Report All References are to SEC File No. 1-8491.
----------- ---------------------------------------------
3.1(a) & (b) 3.1 (10-K for 1987)
3.2 2 (Current Report on Form 8-K dated November 13, 1998
4.1(a) & (b) 4.1(d)(e) and 4.5 (10-Q for June 30, 1993)
4.2 4 (Current Report on Form 8-K dated May 10, 1996)
10.1(a) 10.2 (10-Q for June 30, 1999)
10.1(b) 10.2(a) (10-Q for June 30, 1999)
10.1(c) 10.1(c) (10-K for 1999)
10.1(d) 10.1(d) (10-K for 1999)
10.1(e) 10.1(e) (10-K for 1999)
10.2 10.2 (10-Q for September 30, 2000)
10.3(a) 10.3(a) (10-K for 1998)
10.3(b) 10.3(b) (10-K for 1994)
10.4(a) B (Proxy Statement dated March 20, 1987)
10.4(b) 10.4(c) (10-Q for June 30, 2001)
10.4(c) B (Proxy Statement dated March 27, 1995)
10.5(a) 10.11(a) (10-K for 1985)
10.5(b) 10.5(b) (10-K for 1994)
10.5(c) 10.5(c) (10-K for 1994)
10.6 10.15 (10-K for 1987)
10.7 10.7 (10-K for 1994)
10.8(a) 10.11(a) (10-Q for September 30, 1996)
10.8(b) 10.11(b) (10-Q for September 30, 1996)
10.9 10.12 (10-Q for September 30, 1996)
10.10 A (10-Q for June 30, 1994)
10.11 10.3 (10-Q for June 30, 1999)
10.12 10.4 (10-Q for June 30, 1999)
10.13 10.5 (10-Q for June 30, 1999)
10.14 10 (Current Report on Form 8-K dated March 24, 2000)
10.15 10.1 (10-Q for June 30, 2000)
10.16 10.2 (10-Q for June 30, 2000)
10.17 10.14 (10-Q for September 30, 2000)
10.18 10.1 (Current Report on Form 8-K dated November 17, 2000)
10.19 99 (Current Report on Form 8-K dated March 27, 2001)
10.20 10.19 (10-Q for June 30, 2001)
16.1 16.1 (Current Report on Form 8-K dated October 12, 2001)
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10KT405’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/31/04 | | 61 | | 93 | | | 10-K, 10-K/A, 11-K, 4 |
| | 8/31/04 | | 18 | | | | | 4 |
| | 7/1/03 | | 102 |
| | 6/30/03 | | 93 | | | | | 10-Q, 10-Q/A, 4 |
| | 6/8/03 | | 30 | | 56 |
| | 12/31/02 | | 43 | | 44 | | | 10-K |
| | 6/26/02 | | 30 | | 56 |
| | 6/15/02 | | 59 | | 82 |
| | 6/1/02 | | 8 |
| | 5/11/02 | | 107 |
| | 5/10/02 | | 64 | | | | | DEF 14A, PRE 14A |
| | 4/30/02 | | 93 |
| Filed on: | | 3/15/02 |
| | 3/12/02 | | 67 |
| | 3/4/02 | | 3 | | 83 |
| | 2/28/02 | | 1 | | 56 |
| | 2/14/02 | | 30 | | 56 |
| | 2/1/02 | | 69 | | 119 |
| | 1/31/02 | | 56 | | 102 |
| | 1/29/02 | | 37 | | 97 |
| | 1/12/02 | | 71 |
| | 1/7/02 | | 37 | | 96 |
| | 1/1/02 | | 55 |
| For Period End: | | 12/31/01 | | 1 | | 116 |
| | 12/26/01 | | 30 | | 56 |
| | 12/15/01 | | 59 | | 82 |
| | 12/1/01 | | 104 |
| | 10/24/01 | | 38 | | 98 |
| | 10/19/01 | | 62 | | 118 | | | 8-K |
| | 10/18/01 | | 119 |
| | 10/15/01 | | 35 | | 94 |
| | 10/12/01 | | 120 | | | | | 8-K |
| | 9/30/01 | | 35 | | 94 | | | 10-Q |
| | 8/28/01 | | 106 | | | | | 8-K |
| | 8/27/01 | | 40 |
| | 8/16/01 | | 36 | | 96 |
| | 7/30/01 | | 36 | | 95 |
| | 7/20/01 | | 118 |
| | 7/17/01 | | 43 | | 88 | | | SC 13D/A |
| | 6/30/01 | | 58 | | 120 | | | 10-Q |
| | 6/8/01 | | 30 | | 56 | | | DEF 14A, PRE 14A |
| | 4/30/01 | | 43 |
| | 4/10/01 | | 94 |
| | 3/28/01 | | 70 | | 119 |
| | 3/27/01 | | 3 | | 120 | | | 8-K |
| | 2/27/01 | | 118 | | | | | 8-K |
| | 2/2/01 | | 7 |
| | 1/22/01 | | 36 | | 95 | | | 8-K |
| | 1/18/01 | | 39 |
| | 1/1/01 | | 57 | | 81 |
| | 12/31/00 | | 3 | | 113 | | | 10-K405, NT 10-K |
| | 11/17/00 | | 39 | | 120 | | | 8-K |
| | 10/12/00 | | 118 |
| | 9/30/00 | | 120 | | | | | 10-Q |
| | 8/31/00 | | 38 | | 98 |
| | 6/30/00 | | 120 | | | | | 10-Q |
| | 6/29/00 | | 118 |
| | 6/5/00 | | 52 | | 83 |
| | 6/1/00 | | 117 |
| | 3/24/00 | | 118 | | 120 | | | 8-K |
| | 3/15/00 | | 52 | | 83 |
| | 12/31/99 | | 20 | | 113 | | | 10-K405 |
| | 12/30/99 | | 116 |
| | 12/20/99 | | 116 |
| | 10/1/99 | | 14 |
| | 9/22/99 | | 38 | | 97 |
| | 8/31/99 | | 116 |
| | 6/30/99 | | 120 | | | | | 10-Q |
| | 6/25/99 | | 115 | | 118 | | | 8-K, 8-K/A, S-3/A |
| | 5/7/99 | | 116 | | | | | 8-K, 8-K/A, DEF 14A |
| | 1/1/99 | | 58 | | 81 |
| | 12/31/98 | | 113 | | | | | 10-K405 |
| | 11/13/98 | | 117 | | 120 | | | 8-K, 8-K/A |
| | 2/13/97 | | 104 |
| | 9/30/96 | | 120 | | | | | 10-Q |
| | 9/6/96 | | 117 |
| | 5/10/96 | | 103 | | 120 | | | 8-K, DEF 14A |
| | 3/27/95 | | 120 | | | | | 10-K405 |
| | 1/1/95 | | 117 |
| | 6/30/94 | | 120 | | | | | 10-Q, 11-K |
| | 5/6/94 | | 117 | | | | | DEF 14A |
| | 6/30/93 | | 120 |
| List all Filings |
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Filing Submission 0000719413-02-000005 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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