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The bursting of the $8 trillion housing bubble in December 2007 set off a series of events that former Federal Reserve Chairman Ben Bernanke called the worst financial crisis in history: chaos in the global markets, a collapse in business investment, and the loss of nearly
8.5 million jobs in the U.S. labor market alone.
And in the midst of it all – during what eventually came to be known as the Great Recession – Hecla CEO Phil Baker and the company’s board of directors managed to shepherd through a deal that saved the company: the purchase of 100 percent of the Greens Creek mine
in Alaska.
The $750 million deal was struck in April 2008. Nearly half of the purchase was made with cash on hand and $50 million worth of Hecla shares, but $380 million had to be borrowed from a banking syndicate – 70 percent of which had to be repaid by year-end. Three months later, the collapse of Fannie Mae and Freddie Mac, the world financial markets, Merrill Lynch, and Lehman Brothers led to a credit crisis that forced Hecla to do something the company had done only twice during
Baker’s tenure to date: issue equity. But by the end of 2009, thanks in large part to the Greens Creek acquisition and a recovering silver price, Hecla was back in the black, its bank debts repaid. Net income to shareholders that year was $54.2 million (versus a loss of $80 million the previous year).
Around the same time as the Greens Creek deal, Hecla commenced engineering and construction activities on the #4 Shaft project at Lucky Friday, with the board of directors giving its final approval of the project in August 2011. As currently designed, the #4 Shaft – at $225 million the largest capital project in Hecla’s history – is expected to involve development to nearly 9,500 feet below
the surface, providing deeper access to higher-grade material in order to increase the mine’s production and operational life. The Lucky Friday is a 70-year-old mine – but the completion of the #4 Shaft in late 2016 means its best days are still ahead.
This was an exciting time for Hecla. But the company wasn’t done – not by a long shot. The purchase of Casa Berardi and its parent company Aurizon in June 2013 marked Hecla’s return to the primary gold-mining business after its sale of La Camorra in 2008. Though Hecla had flirted with Casa Berardi owner Aurizon first in 2010, the companies were unable to strike a deal. But in January 2013, the two CEOs met to reconsider. Hecla began a due-diligence review of Aurizon and managed to squelch a competitor’s hostile takeover bid.
Difficulties with the EPA proved challenging during this period as well. Hecla was part of a legal action brought by the Coeur d’Alene Tribe of Indians – and later the U.S. government – against more than 70 mining companies operating in North Idaho.
It started with the 1981 closure of the Bunker Hill mining and smelting facility in Kellogg. The owners left behind what the EPA designated as the nation’s largest Superfund site: 21 square miles covering three cities. Hecla was a one-time partner with Bunker Hill in the Star mine north of Wallace, and had acquired other inactive properties in the area through its merger with Day Mines, which had also done business with
Bunker Hill.
When the EPA placed liens on the surviving operations in 1996, many simply gave up – and saw their mine portals bulldozed shut – while others settled early. But neither
of the plaintiffs were satisfied. Ultimately, the lawsuit
led to a 78-day trial in U.S. District Court in 2001. The defendants were Hecla and ASARCO, with the latter reaching a $485 million settlement in 2008 while it was emerging from Chapter 11 bankruptcy. Three years later, Hecla agreed to a settlement of $263 million in cash and stock, and made its final payment to the government
in 2014.
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