Companies post record profits

Posted: Thursday, August 03, 2006

The owners of Juneau's Kensington and Greens Creek mines reported record-setting corporate earnings this week.

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Coeur d'Alene Mines Corp., the owner of the Kensington gold mine northwest of Juneau, announced an all-time record quarterly net income of $32.6 million on Tuesday.

Hecla Mining Co., a 30 percent owner of the Greens Creek mine on Admiralty Island, announced a record-breaking quarterly sales revenue of $56.9 million on Wednesday.

Brad Fluetsch, an investment advisor who trades in mining stocks for his Juneau clients, is pleased. So is Wall Street.

After the two Idaho-based companies issued their rosy quarterly financial reports on Tuesday and Wednesday, their stock prices jumped 7 to 10 percent.

"Gold and silver (prices) are just screaming," Fluetsch said. "I think it should make our community feel good. I know it makes investors feel good."

Both Coeur and Hecla are significant silver producers in North America. They run mines in other countries as well, including Venezuela, Argentina, Chile and Australia.

Both also produce gold.

The companies' revenue sheets have been bolstered by skyrocketing prices for gold, silver and other metals. The rise in gold prices has been particularly startling.

In 1999, gold prices dropped as low as $255 per ounce. They hit $450 per ounce in 2004. Wednesday, they were at $650 per ounce and some investors predict they could go as high as $800.

"To the extent that prices stay up, it's certainly favorable to us," said Scott Lamb, a spokesman for Coeur d'Alene Mines. "The project itself is not predicated on high prices."

The high metals prices have a direct benefit for corporate investment and profits, according to Hecla officials.

The recent prices have allowed Hecla "to generate significant earnings and operating cash flow after funding our aggressive exploration program," said Hecla president and chief executive officer Phillips Baker Jr., in a Business Wire report published Wednesday.

Numbers at a glance

Hecla Mining Co. (30 percent stake in Greens Creek Mine on Admiralty Island):

• Record quarterly sales revenue: $56.9 million.

Coeur d'Alene Mine Corp. (100 percent owner of Juneau's Kensington Mine)

• Record net income for first six months of year: $47 million.

• Record quarterly cash provided by operations: $32 million.

Recent exploration at Greens Creek, about 20 miles west of downtown, pinpointed a new mineral resource that has the potential to extend the life of the mine, according to Hecla.

The Kensington Mine, about 45 miles northwest of downtown, is not making a contribution to Coeur's financial result, but the company is expending much of its capital budget on building the mine. Since 2005, Coeur has spent roughly $80 million on Kensington Mine construction.

In the last quarter of 2006, 80 percent of Coeur's capital spending was funneled to building the mine in Berners Bay.

"They are a global company, but their best prospect is here in Juneau. That's got to make us feel good," Fluetsch said.

"There's a large group of people in Juneau who invest in mining stocks," Fluetsch added.

The Kensington mine is not expected to produce gold until 2007.

Eight years ago, rock-bottom gold prices and controversy over the mine led Coeur to propose a new disposal plan for the mine: Putting its rock waste, or tailings, in a sub-alpine lake. The U.S. Army Corps of Engineers approved the disposal permit, but the permit is being challenged in federal district court by environmentalists who claim it violates the Clean Water Act. The lawsuit awaits a judge's decision, but Coeur is preparing to build the contested Lower Slate Lake dam.

• Elizabeth Bluemink can be reached at elizabeth.bluemink@juneauempire.com.



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