Hecla Notes Q3 Accrual for Environmental Liabilities

November 3, 2003

Idaho-based Hecla Mining Company reported it will take an accrual on its third quarter financial statements to reflect the company’s current estimate of its environmental liabilities.

The majority of this accrual is reportedly for the Coeur d’Alene Basin in response to a United States District Court ruling in September, which held that Hecla has some liability for yet-to-be determined natural resource damages and response costs due to its historic mining practices.

The court held that joint and several liability is reportedly not appropriate, and that Hecla’s tailings-related liability will be based on an allocation of 31 percent of the historic mine tailings production in the Coeur d’Alene Basin. The court also reportedly stated “that there has been an exaggerated overstatement by the Federal Government and the (Coeur d’Alene) Tribe” of environmental impacts in the Coeur d’Alene Basin in northern Idaho. But, because some liability was determined, a second phase of the trial, scheduled to begin in January 2005, will address what damages are recoverable and what cleanup relief is appropriate.

The company is currently estimating that total costs for potential liability for historical environmental impacts in northern Idaho’s Coeur d’Alene Basin, plus updated estimates for the Grouse Creek mine reclamation and other properties, require an additional accrual of $23.1 million. The environmental accruals taken in the third quarter, while having a significant impact on net income, reportedly should not have a material impact on the company’s current and future plans. The company made the decision to take the accrual after a meeting by the audit committee of Hecla’s Board of Directors.

Hecla President and CEO Phillips Baker, Jr., noted, “These accruals do not materially impact our business, but are required accounting entries. And let me reiterate that we are actually quite pleased with the judge’s ruling in the Coeur d’Alene Basin litigation. (See Hecla news release of Sept. 3, at www.hecla-mining.com)

Of the $23.1 million total third-quarter environmental accrual, $16 million was in response to claims for environmental impacts in the Coeur d’Alene Basin and $6.8 million was taken for reclamation at the Grouse Creek mine in central Idaho.

Based upon the court’s September 2003 order, the company has reportedly attempted to outline a range of potential liability for the Basin cleanup, and has estimated a range of potential liability of $18 million to $58 million, with no amount within this range being more likely than any other at this time. Accounting rules state that when no best estimate within the range can be determined, the minimum liability should be accrued.

Meanwhile, Hecla reportedly continues to successfully manage and close out environmental projects.

This year, reclamation has been completed on four idle properties. A former industrial minerals property in Piedmont, South Dakota, has been given final release, as has the Middle Buttes gold mine in California. Work is complete at the Siddoway scoria rock property in Idaho and is awaiting final inspection and reclamation bond reduction, and regulatory agencies have accepted the site work, reclamation and reseeding at the Shumake gold mine in California.

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