Asian port congestion, pricey concentrate smelting costs and politics as usual in Venezuela all took a bite out of Hecla Mining Company's first-quarter 2008 profits, which still managed to do well.

Meanwhile, Hecla Vice President Mike Baker told analysts his La Camorra crew intends to ride out the latest wave of turbulence in Venezuela as they have done for the past nine years, and simply continue to mine and generate cash flow for the Idaho-based Hecla.

Ron Clayton, Senior Vice President Operations, said the Green's Creek mine has been hit by all kinds of cost increases during the first quarter including diesel climbing $1 per gallon in six months for an Alaskan mine which generates all its power with diesel. He added that freight costs for items brought into the mine and for concentrate shipments from the mine have risen sharply.

During a conference call Monday to discuss quarterly results, Clayton said, Lead and zinc concentrate markets have softened rapidly in the past few months. Meanwhile, rising concentrate supply and tax and price c controls on precious metals and concentrates is lowering the demand in China-coupled with the devalued dollar-have driven this market change.:

Annual negotiations between miners and smelting companies are in progress. Based on recent settlements in these markets, we expect smelting and refining costs to increase significantly, Clayton warned.

This will have an impact on most the silver miners selling into lead and zinc concentrate markets, he stressed.

Greens Creek recorded no concentrate sales during March because port congestion in Asia, where the smelters are located, impacted the shipping scheduled. As a result, revenue from 81,000 ounces of silver, 1,900 tons of zinc and 189 tons of lead have been deferred to later this year.

Yahoo News Singapore reported port congestion in Asia is slowing down production for a number of mining companies.


Minera Hecla Venezolana President Mike Callahan--who has emerged over the years as one of the North American mining industry's experts on doing business in Venezuela-told analysts that much of the government's activity related to foreign mining operations can be attributed to upcoming gubernatorial and state elections in November.

President Chavez is focused on gaining support for his party, Callahan noted, admitting he had no idea where mining policy is heading in Venezuela.

The ministers overseeing the mining industry have changed about every 11 months. By the time they really begin to understand the issues, they move on or are replaced.

Nevertheless, Callahan has found a consistent theme in Venezuela's approach to foreign mining and exploration companies is The desire to take back concessions that have been idle for many years and to clean up the environmental damage caused by artisanal mining. We view both of these as very positive and support both of these efforts.

Callahan has also noted an increased frequency of work stoppages in the country. The government has instructed the national guard to not interfere in disputes between works and community and private companies. So there is little deterrent to engage in such conduct by these folks.

Within the past week, three workers have managed to generate delays at the La Camorra unit. However, Callahan asserted, even with disruptions, Hecla was able to generate more than $3 million in profit from its Venezuelan operations during the first quarter of the year.

I certainly don't know what curve balls will be thrown at us going forward. But we're certainly going to manage them as we have done in the past. I expect to continue to generate cash flow out of these assets, he declared.

Nonetheless, Hecla President and CEO Phil Baker said recent government actions which have brought both the Brisas and Las Cristinas projects to a halt are continuing to make a difficult situation even tougher. However, he added, If anyone can get things to work, it will be these guys [the Minera Hecla Venezolana team]. Regardless of the outcome of that, our Venezuela exposure is insignificant next to other assets.


When Coeur announced Jim Sabala's resignation as Senior Vice President and Chief Financial Officer in March, Sabala didn't travel very far for his next job. Down the road to Hecla! The new Hecla Senior Vice President and CFO announced Monday that Hecla first quarter net income increased 90% due to high lead prices, increased zinc production and the recognition of a $3.9 million tax benefit, in spite of lower gold and silver production.

George Sturgis has been appointed Hecla Vice President-Project Development, effective August 1. He is currently a Hecla consultant.

Hecla reported 21,490 ounces of gold production with 17,089 ounces mined at La Camorra at an average total cash cost of $642/oz. The company reported 1.3 million ounces of silver were also produced during the quarter of an average total cash cost of negative $1.42 per ounce after by-product credits.

Sabala replaced long-time CFO Lew Wald, who left to pursue other opportunities. Wald was highly praised by Baker Monday for his role in transforming Hecla into a different company that added assets that fundamentally changed us.

Net income was reported at $12.1 million or 10-cents per common share, compared to $8 million or 7-cents per share reported during the first quarter of 2007.

Hecla forecasts 2008 gold production of 115,000 ounces coming from La Camorra and Greens Creek. Silver production will increase 50% to 9 million ounces this year with the 100% acquisition of Greens Creek from Rio Tinto.