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-- Posted 18 January, 2004 | | Source: SilverSeek.com
Home page Chart HECLA MINING: RETURN ON $ 10,000 INVESTMENT | | | Purchase Date | No. of Shares | Purchase Price | Cost ($) | Price Today | Value Today | June 21, 2002 | 2'500 | 4.10 | 10'250.00 | | | Total | 2'500 | 4.10 | 10'250.00 | 7.79 | 19'475.00 | Profit | | | | | 9'225.00 | Profit (in %) | | | | | 90% |
SILVER, GOLD, LEAD AND ZINC IN THE UNITED STATES, MEXICO AND VENEZUELA Business Summary Established in 1891 in northern Idaho's Silver Valley, Hecla Mining Company's rich history of mining has distinguished it as a respected precious metals producer. Now headquartered in Coeur d'Alene, Idaho, this international, publicly traded company is 112 years old.
Hecla Mining Company mines and processes silver, gold, lead and zinc in the United States, Mexico and Venezuela. Hecla currently produces silver from three silver mines, Greens Creek, San Sebastian and Lucky Friday, and mines gold as well at the La Camorra mine. The company's gold and silver operations are low cost, with total cash costs during 2001 at $ 133 per ounce of gold and $ 3.52 per ounce of silver. The Greens Creek Unit, in which Hecla holds a 29.73% interest, is on Admiralty Island near Juneau, Alaska, and produced over 3 million ounces of silver for Hecla's account in 2001. Hecla's share of Greens Creek includes over 37.6 million ounces of silver in proven and probable reserves. The San Sebastian mine, an underground mine and exploration project, is located in central Mexico's historically silver-rich Durango district. It produced over 950,000 ounces of silver and nearly 16,000 ounces of gold in 2001, after only six months of operation. San Sebastian has 8.6 million ounces of proven and probable silver reserves and more than 91,000 ounces of proven and probable gold reserves. The Lucky Friday Unit, located in Mullan, Idaho, produced over 3.2 million ounces of silver in 2001 and has over 17 million ounces of silver in proven and probable reserves. Hecla's gold operation, the La Camorra Unit, is located in El Callao, Venezuela. The mine produced over 152,000 ounces of gold in 2001 and has nearly 700,000 ounces of proven and probable gold reserves and other resources.
Hecla is well known in the United States as a major primary silver producer, and the name "Hecla" is commonly associated with silver by many investors. Over the past two decades, Hecla has also produced a significant amount of gold. 
(1) Corporate Headquarters (2+3+4) Gold (5+6) Silver Recent Developments: Hecla Announces Exchange Offer for Preferred B Shares The Hecla Mining Company has announced its intent to offer $ 66.00 in value of Hecla common stock, not to exceed 8.25 common shares, in exchange for each share of Hecla's Series B Cumulative Convertible Preferred stock. The $ 66.00 in value of common stock represents a 12% premium over today's $ 59.00 preferred share closing price and a 6% premium over the current redemption price for the preferred stock. If all 464,777 remaining outstanding preferred shares were exchanged at this price (and without considering fractional shares which would be paid for in cash), Hecla would issue approximately 3,454,000 common shares, representing approximately 2.9 percent of shares outstanding. The exact number of common shares to be exchanged for each share of preferred stock will be determined by dividing $ 66.00 by the volume weighted average price for Hecla common stock on the NYSE for the five trading days ending two trading days prior to the expiration date of the exchange offer (but not to exceed 8.25 common shares). At the volume weighted average price for Hecla common stock for the five days ending today of $ 8.88 per share, 7.43 common shares would be exchanged for each share of preferred stock. Hecla will announce the exchange ratio at the end of the five-day pricing period. Hecla's Chief Executive Officer, Phillips S. Baker, Jr., said, "With the excellent performance of Hecla and its common stock, now is a great opportunity for our preferred shareholders to realize both the face value of the preferred plus the past unpaid dividends, and participate in any future increase in the value of the common stock. Our common shareholders also benefit, as this action eliminates the split capital structure and the impact of past and future dividends. Following the completion of the exchange offer, we will also evaluate exercising our right to redeem any remaining preferred shares at the redemption price, which is currently $ 62.25 per share." The exchange offer will be open for 20 business days from the time the final offer document has been mailed to preferred shareholders, which is expected to occur within the next few days.
Fundamental Considerations 
Hecla refers only to indicated, proven, and probable ore reserves, while inferred resources remain “blue sky”. We believe that Hecla, which today is more gold than silver, and listed on the NYSE, will attract institutional funds, since these are unlikely to go to junior exploration companies with little trading volume. Hecla’s average trading volume exceeds 1.5 million shares per day. Technical Considerations 
The gold price has risen 70% since the low reached in 2001 while silver rose 50%. Silver, which looks overextended on the chart, has nevertheless only done some “catching up” to the gold price. Both metals probably need some rest. Nevertheless, we should not forget that we are still at the beginning of a long-term bull-market in precious metals. Big institutions still treat precious metals as “quantité négligeable”. “Once the share price overcomes resistance at $ 6, we shall likely have a quick move towards the $ 10 plus area”, we wrote on July 21 of last year. We stick to our prediction. 
We are confident that we shall see much higher prices in the future. Our recommendation: BUY!
Peter Zihlmann www.pzim.com investment@pzim.com forex@pzim.com January 16, 2004 ********************************************************************************************************** Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company’s share price. SilverSeek.com did not receive compensation for this report nor does it have any position in this company at the time of publication. Disclaimer: The author’s objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock. **********************************************************************************************************
-- Posted 18 January, 2004 | |
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Last Three Articles by Peter Zihlmann, Zihlmann Investment Management AG
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Hecla Mining Company (NY: HL): Follow-Up No. 6
