Hecla mined silver ‘for free’ in Venezuela. Cd’A mining company’s Latin American properties post outstanding results

<a href=www.spokanejournal.com>spokanejournal.comBy  Addy Hatch

Hecla Mining Co.’s Central and South American mining properties continue to light the way for the Coeur d’Alene-based company’s financial rebound.

Hecla says its San Sebastian property in Mexico, for example, was its “star performer” in its first quarter, producing a record 1 million troy ounces of silver at an average total cash cost of minus 7 cents an ounce. In essence, Hecla was “mining the silver for free” at San Sebastian in the first quarter, says Vicki Veltkamp, the company’s vice president of investor and public relations.

How is that possible? Veltkamp explains that Hecla produces gold as a byproduct of its silver-mining operation at San Sebastian, so whatever money the company makes on the gold mined there offsets its cash cost of producing silver. In the first quarter, the price of gold rose, plus Hecla produced a record amount of gold at San Sebastian—12,000 ounces—resulting in a “phenomenally low” production cost for that property.

For all of 2002, San Sebastian produced 3.4 million ounces of silver and nearly 42,000 ounces of gold. The average total cash cost of silver production there was $1.09 an ounce for the year—far below the commodity’s average market price last year of $4.63 an ounce.

If San Sebastian is Hecla’s current star, the company’s Venezuelan mine, La Camorra, is its talented understudy.

La Camorra was Hecla’s primary gold producer in 2002, yielding more than 167,000 ounces of gold at an average cash cost of $137 per ounce, the company’s annual report says.

“We expect La Camorra to continue to be one of Hecla’s largest revenue producers in the future,” the report says, noting that the mine was responsible for 47 percent of the company’s 2002 revenues.

That will make the Venezuelan property increasingly more important to Hecla as the company seeks to fulfill a goal of doubling its gold production within the next five years. Hecla controls nine other exploration concessions near La Camorra, plus another property, which it calls Block B, in the Venezuelan state of Bolivar. The company expects to begin developing a mining ramp at Block B before the end of the year.