Hecla Announces Sale of Venezuelan Gold Properties

Hecla Mining Company (NYSE:HL) today announced an agreement to sell its subsidiaries engaged in Venezuelan activities to Rusoro Mining Ltd. (Rusoro) for $25 million, consisting of $20 million in cash and 4,273,504 shares of Rusoro common stock. The transaction is dependent upon regulatory approval. Hecla Mining Company President and Chief Executive Officer, Phillips S. Baker, Jr., said, “The sale of our Venezuelan properties is part of our strategy to reduce the financing put in place to acquire Greens Creek. Prior to this transaction, Hecla repatriated approximately $39 million in cash that generated a $14 million foreign exchange loss. This transaction generates immediate cash from both the sale of the assets and the repatriation of $25 million of cash from our Venezuelan subsidiaries.” Hecla currently carries the Venezuelan properties at a book value of $39 million, so the transaction is expected to result in a pre-tax loss on the sale in the range of $10 million to $12 million, subject to normal post-closing adjustments. The $14 million foreign exchange loss will also be reported in second quarter 2008 results. Baker said, “Our operations in Venezuela were very important to Hecla in the early 2000s, during a time when precious metals prices were depressed. But more recently that operation has become a much smaller proportion of our company’s value, as revenues from our U.S. silver properties grew. In fact, in 2007, the La Camorra unit contributed just 3% of our annual gross profit.”