MAC: Mines and Communities

Resource Investor: Hecla Mining "comfortable" with Venezuelan uncertainty

Published by MAC on 2005-09-27

Resource Investor: Hecla Mining "comfortable" with Venezuelan uncertainty

Tuesday, September 27, 2005

http://www.vheadline.com

ResourceInvestor.com's Jon A. Nones writes that from the group of foreign miners Resource Investor has looked at in Venezuela, Hecla Mining on the surface appears to be the least affected by the news last week.

Although the company’s share price lost 34 cents or 8% to close at $3.91 when President Hugo Chavez’ comments hit the street, its now trading at $4.14. Yesterday’s close was $4.35, so it seems apparent that the market has brushed it off as far as Hecla is concerned.

However, Hecla currently has $7 million already invested in exploration in Venezuela, with concessions still waiting for permits. So the question is, how will the recent events affect Hecla’s future decisions in Venezuela?

First off, Hecla is a very diversified miner with operating silver and gold projects in the United States and Mexico, in addition to Venezuela. It has been a silver miner for 100 years and a gold miner for 30 years. The company has four active mines: Green Creek in Alaska, Lucky Friday in Idaho (its flagship project), San Sebastian in Mexico and La Camorra in Venezuela. Last year, Hecla produced 6.65 million ounces of silver and 155,000 ounces of gold.

Although the La Camorra mine in Venezuela produced the most gold at 120,000 ounces last year, it’s easy to see how Hecla would more easily recover from the Venezuela news than other miners. Plus, the company’s La Camorra mine is already producing under an operating contract with the Venezuelan Guayana Corporation (CVG), which puts it on the safe list, according to well-circulated news release by National Assembly deputy Pedro Jimenez Flores. Okay, but what of the exploration program?

Hecla president and CEO Phillips S. Baker, Jr. admitted at the Denver Gold Forum that the company has had to curb plans because of the news in Venezuela. Resource Investor tracked him down for some exclusive thoughts. “There’s been some ground we were going to pick up, but we backed off because of uncertainty,” he said. “We’d like to grow our land package there, but now’s not the time.”

Baker added that the company still needs some permits to begin projects in other areas. “If we get the permits, we’ll start drilling,” Baker quite simply said. “I think there’s great opportunities if we get the permits and we can expand our resources, but if not, we’ll continue the way we’re going,” he added.

According to Baker, Hecla has built a good relationship with the Venezuelan government. “When you boil it down, the Venezuela government is looking for companies to come in and mine the properties properly. That’s what we’ve been doing,” he said.

Hecla has also supported more than 20 different local mining groups in the area, Baker added. “With all the noise that’s been happening in Venezuela, we’re still comfortable and happy to be there,” he said.

However, it still remains to be seen how much the news will affect Hecla’s future exploration and pending permits. Baker concluded by alluding to this uncertainty. “We don’t have any specific knowledge of how long it’s going to take to put [Venezuela’s new mining strategy] in place.”

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