SEC Comment Letter for HECLA MINING (HL) — Apr 14, 2005
HECLA MINING CO/DE/ (HL, HL-PB) (CIK 0000719413)
Date: April 14, 2005 · CIK: 0000719413 · Accession: 0000000000-05-018231
AI Filing Summary & Sentiment
File numbers found in text: 001-08491
Letter
April 14, 2005 via facsimile and U.S. mail Mr. Lewis E. Walde Chief Financial Officer Hecla Mining Company 6500 N. Mineral Drive, Suite 200 Coeur d`Alene, Idaho 83815
Re: Hecla Mining Company Form 10-K, Filed March 16, 2005 File No. 001-08491
Dear Mr. Walde:
We have reviewed the above filing and have the following comments. Our review has been limited to the areas commented on below. Where indicated, we think you should revise your document in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure. After reviewing this information, we may or may not raise additional comments.
Please understand that the purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
10-K for the year ended December 31, 2004
Business and Properties, page 1
Glossary of Certain Terms, page 20
1. Indicate how you calculate the "weighted average prices" used in your definition of "Proven and Probable Ore Reserves." Explain why the prices differ for location. Note that the staff encourages issuers to use a three year average. Operating properties, page 23
2. In your description of your mines, disclose the mining systems used at each mine, and the relative cost of those systems versus other mining systems used in underground mines.
3. Associated with each of your reserve tables: * Disclose if you had a third party audit or reviewed your reserve estimates within the last three years. * If you have not had any third party reviews during that time period, disclose that fact. * Supplementally provide a copy of all third party reviews or audits of your reserves for developed and undeveloped properties within last three years.
Management`s Discussion and Analysis, page 52
Reconciliation of Total Cash Costs (non-GAAP) to Cost of Sales and Other Direct Production Costs (GAAP), pages 67-69
4. We note that you are providing a reconciliation between the non- GAAP measure you present as "Total cash cost per ounce produced" to "Cost of sales and other direct production costs" for your gold and silver operations, as well as for each of your individual silver operating properties. As we are unable to determine how the schedules you present reconcile directly to the line item presented in your Consolidated Statements of Operations and Comprehensive Income (Loss), please provide us with a detailed analysis of how you have complied with the requirements of Item 10(e) of Regulation S- K and/or Regulation G. In addition, support your use of "Cost of sales and other direct production costs" as the most directly comparable financial measure. In this regard, we believe that it would be more appropriate to reconcile to an amount that is fully burdened with depreciation, depletion and amortization related to the production of ore consistent with SAB Topic 11:B.
5. In footnote (3) to your non-GAAP reconciliation, you indicate that you treat gold as a by-product at the San Sebastian unit. We note, however, that gold revenue represented between 45% - 50.1% of your total revenues at this unit for 2002 - 2004. Based on these percentages, please tell us why you consider gold to be a by- product of the San Sebastian unit for accounting purposes rather than a co- product. We also note your disclosure in MD&A on page 56, "For the years ended December 31, 2004 and 2003, gold by-product credits were approximately $6.61 per silver ounce and $4.35 per silver ounce, respectively." Please add disclosure in both your MD&A and non- GAAP reconciliation to make clear the dollar amount of gold by-product that you are crediting to "Cost of sales and other direct production costs." Additionally, expand your accounting policy to disclose how you classify by-product revenue and the amount of such revenue for each period reported. Critical Accounting Policies, page 73
Revenue Recognition
6. You state that your revenue recognition policy with respect to sales of metal products sold directly to smelters is to record the transaction "at current spot metals prices" and that "Due to the time elapsed from the transfer to the smelter and the final settlement with the smelter," you are required to estimate the price your metals will be sold in reporting profitability and cash flow. You further state that "Recorded values are adjusted monthly until final settlement at month-end metals prices and final metal content." We note that you have a similar policy for your sales of concentrates and precipitates from the Greens Creek, Lucky Friday and San Sebastian units. Based on these disclosures, tell us how you have considered the applicable guidance for embedded derivative instruments, commonly referred to as provisionally-priced metals contracts in the industry, in paragraph 12 of SFAS 133. Further note that provisionally priced revenue should be measured using the forward rate. Refer to Topic VII of the September 25, 2002 AICPA SEC Regulations Committee meeting highlights, at the following website address: http://www.aicpa.org/download/belt/2002_09_25_highlights.pdf.
Closing Comments
As appropriate, please amend your filing and respond to these comments within 10 business days or tell us when you will provide us with a response. You may wish to provide us with marked copies of your amendment to expedite our review. Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested supplemental information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing reviewed by the staff to be certain that they have provided all information investors require for an informed decision. Since the company and its management are in possession of all facts relating to the company`s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the disclosure in the filing;
* staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corporation Finance in our review of your filing or in response to our comments on your filing.
You may contact Jennifer Goeken at (202) 824-5287, or in her absence, Jill Davis at (202) 942-1981, if you have questions regarding comments on the financial statements and related matters. You may contact Roger Baer at (202) 942-2965 if you have questions regarding engineering comments. Please contact me at (202) 942- with any other questions. Direct all correspondence to the following ZIP code: 20549-0405.
Sincerely,
H. Roger Schwall
Assistant Director
Show Raw Text
<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
April 14, 2005
via facsimile and U.S. mail
Mr. Lewis E. Walde
Chief Financial Officer
Hecla Mining Company
6500 N. Mineral Drive, Suite 200
Coeur d`Alene, Idaho 83815
Re: Hecla Mining Company
Form 10-K, Filed March 16, 2005
File No. 001-08491
Dear Mr. Walde:
We have reviewed the above filing and have the following
comments. Our review has been limited to the areas commented on
below. Where indicated, we think you should revise your document
in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
10-K for the year ended December 31, 2004
Business and Properties, page 1
Glossary of Certain Terms, page 20
1. Indicate how you calculate the "weighted average prices" used
in
your definition of "Proven and Probable Ore Reserves." Explain
why
the prices differ for location. Note that the staff encourages
issuers to use a three year average.
Operating properties, page 23
2. In your description of your mines, disclose the mining systems
used at each mine, and the relative cost of those systems versus
other mining systems used in underground mines.
3. Associated with each of your reserve tables:
* Disclose if you had a third party audit or reviewed your reserve
estimates within the last three years.
* If you have not had any third party reviews during that time
period, disclose that fact.
* Supplementally provide a copy of all third party reviews or
audits
of your reserves for developed and undeveloped properties within
last
three years.
Management`s Discussion and Analysis, page 52
Reconciliation of Total Cash Costs (non-GAAP) to Cost of Sales and
Other Direct Production Costs (GAAP), pages 67-69
4. We note that you are providing a reconciliation between the
non-
GAAP measure you present as "Total cash cost per ounce produced"
to
"Cost of sales and other direct production costs" for your gold
and
silver operations, as well as for each of your individual silver
operating properties. As we are unable to determine how the
schedules you present reconcile directly to the line item
presented
in your Consolidated Statements of Operations and Comprehensive
Income (Loss), please provide us with a detailed analysis of how
you
have complied with the requirements of Item 10(e) of Regulation S-
K
and/or Regulation G. In addition, support your use of "Cost of
sales
and other direct production costs" as the most directly comparable
financial measure. In this regard, we believe that it would be
more
appropriate to reconcile to an amount that is fully burdened with
depreciation, depletion and amortization related to the production
of
ore consistent with SAB Topic 11:B.
5. In footnote (3) to your non-GAAP reconciliation, you indicate
that
you treat gold as a by-product at the San Sebastian unit. We
note,
however, that gold revenue represented between 45% - 50.1% of your
total revenues at this unit for 2002 - 2004. Based on these
percentages, please tell us why you consider gold to be a by-
product
of the San Sebastian unit for accounting purposes rather than a
co-
product. We also note your disclosure in MD&A on page 56, "For
the
years ended December 31, 2004 and 2003, gold by-product credits
were
approximately $6.61 per silver ounce and $4.35 per silver ounce,
respectively." Please add disclosure in both your MD&A and non-
GAAP
reconciliation to make clear the dollar amount of gold by-product
that you are crediting to "Cost of sales and other direct
production
costs." Additionally, expand your accounting policy to disclose
how
you classify by-product revenue and the amount of such revenue for
each period reported.
Critical Accounting Policies, page 73
Revenue Recognition
6. You state that your revenue recognition policy with respect to
sales of metal products sold directly to smelters is to record the
transaction "at current spot metals prices" and that "Due to the
time
elapsed from the transfer to the smelter and the final settlement
with the smelter," you are required to estimate the price your
metals
will be sold in reporting profitability and cash flow. You
further
state that "Recorded values are adjusted monthly until final
settlement at month-end metals prices and final metal content."
We
note that you have a similar policy for your sales of concentrates
and precipitates from the Greens Creek, Lucky Friday and San
Sebastian units. Based on these disclosures, tell us how you have
considered the applicable guidance for embedded derivative
instruments, commonly referred to as provisionally-priced metals
contracts in the industry, in paragraph 12 of SFAS 133. Further
note
that provisionally priced revenue should be measured using the
forward rate. Refer to Topic VII of the September 25, 2002 AICPA
SEC
Regulations Committee meeting highlights, at the following website
address:
http://www.aicpa.org/download/belt/2002_09_25_highlights.pdf.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
your amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to the company`s disclosure, they
are responsible for the accuracy and adequacy of the disclosures
they
have made. In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging
that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Jennifer Goeken at (202) 824-5287, or in her
absence, Jill Davis at (202) 942-1981, if you have questions
regarding comments on the financial statements and related
matters.
You may contact Roger Baer at (202) 942-2965 if you have questions
regarding engineering comments. Please contact me at (202) 942-
1870
with any other questions. Direct all correspondence to the
following
ZIP code: 20549-0405.
Sincerely,
H. Roger Schwall
Assistant Director
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Hecla Mining Company
April 14, 2005
page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE
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