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As you well know, the mining sector has been hit hard by price volatility. Silver alone lost 20 percent of its value in 2014. Gold, while more stable, is still down from where it was a year ago. Listening to other companies talk about their business, you hear a lot about headwinds. At Hecla, we’re not talking about that. We’re stronger than ever.
Phillips S. Baker, Jr.
president and chief executive officer
shareholder letter
While the downturn in the precious metals market has certainly changed the way we do business, we have both the assets and the long-term view that will enable us to invest through these challenging times. We’re taking advantage of the situation, developing these assets and moving forward at a time when our peers are cutting back.
Hecla is nearing its 125th year in business, and, quite frankly, the price cycle we’re currently experiencing is not that low. Yes, silver is down almost 70 percent from its high in 2011, but it’s also four times the price it was in 2001. And when you look at our philosophy – large land packages, big reserves and resources, and cost structures that allow us to develop efficient, long-lived mines that we can rely on in tough times – well, it’s working. Hecla is stronger than it’s ever been, a strength that comes from production growth, diversification of metals, our low-cost profile, our strong cash balance, and the ability to manage both our capital and our exploration investments, depending on the prevailing metals prices.
Production Growth
2014 was a successful year for Hecla, with all three mines operating well and showing consistent growth. Lucky Friday continues to impress, with production more than double that of last year and a cash cost, after by-product credits, per silver ounce of $9.44. Greens Creek continued its solid, low-cost, consistent cash-generating performance, producing 7.8 million ounces of silver at a cash cost, after by-product credits, per silver ounce of $2.89. (A reconciliation of cash cost, after by-product credits, can be found in the company’s Form 10-K on pages 34-36.) We continue to make improvements at Casa Berardi (acquired from Aurizon Mines Ltd. on June 1, 2013), which saw an overall increase in its production from 62,532 ounces of gold under our ownership in 2013 to 128,244 ounces last year. And total silver equivalent production of 34.5 million ounces (see price assumptions on page 7) is the largest in our history.
Diversified Revenue Stream
One of Hecla’s competitive advantages is that we produce four metals: silver, gold, lead, and zinc. Thirty-nine percent of our revenue at Greens Creek came from base metals in 2014; 45 percent at Lucky
strength through flexibility
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