Hecla Mining Company Announces Third Quarter Operating Results and Restructuring of Grouse Creek Mine

Strategic Insights -

Hecla Mining Company, in a move to restructure its troubled Grouse Creek mine, has announced a $97 million nonrecurring asset writedown in its third quarter results. The mine, a joint venture between Hecla and Great Lakes Minerals Inc., has encountered significant shortfalls in ore tonnage and gold grade, leading to a revised mine plan and new ore reserve estimate. Despite efforts to optimize the project, current data suggests the mine will not return its investment due to reduced mine life and lower ounces recovered at current metal prices.

Key Takeaways:

  • Hecla Mining Company has announced a $97 million nonrecurring asset writedown associated with the Grouse Creek mine, a joint venture with Great Lakes Minerals Inc.
  • Mining operations at Grouse Creek have encountered significant shortfalls in ore tonnage and gold grade, leading to a revised mine plan and new ore reserve estimate.
  • The new ore reserve estimate and mine plan will be completed in the first quarter of 1996, but current data suggests the mine will not return its investment.
  • Great Lakes' Board of Directors has established a technical committee to review the Grouse Creek project with Hecla staff assistance.
  • Arthur Brown, Hecla's Chief Executive Officer, will step down from the Board of Directors of Great Lakes due to potential conflicting corporate objectives.
  • The Lluvia de Oro gold mine project in Sonora, Mexico, is nearing completion, with earthworks in the pad and pond area nearly finished, and the first gold pour scheduled for March 1996.
  • The Palmarito silver-gold project in Sinaloa, Mexico, has completed a 70-hole drill program, with results to be released shortly.

Statistics:

  • $97 million: The nonrecurring asset writedown associated with the Grouse Creek mine.
  • 20% and 80%: The respective interests held by Great Lakes Minerals Inc. and Hecla Mining Company in the Grouse Creek joint venture.
  • 25,000 ounces: The projected annual gold production from the Lluvia de Oro mine project.
  • $245: The projected cash cost per ounce of gold production at the Lluvia de Oro mine.
  • 70 holes: The number of drill holes completed in the Palmarito silver-gold project in Sinaloa, Mexico.

Sources:

  • Business Wire, "Hecla Mining Company Announces Third Quarter Operating Results and Restructuring of Grouse Creek Mine," November 13, 1995.