Tuesday, April 19, 2011

Hecla Mining (HL) Updates On Coeur d'Alene Basin Litigation

Hecla Mining (NYSE:HL) has released an update concerning its ongoing settlement negotiations for the Coeur d'Alene Basin Environmental litigation

On February 24, we announced that the parties reached an understanding on proposed financial terms to be included into a comprehensive settlement of the Coeur d'Alene Basin environmental litigation and related claims. The Court issued an order giving the parties until April 15, 2011, to inform the Court of the status of settlement negotiations.

Since that date, the parties have made significant progress in negotiating the final terms of settlement to be reflected in a Consent Decree incorporating both the previously announced financial terms and the non-monetary terms of settlement, but have not yet finalized the Consent Decree. On each of April 15 and April 18, an update regarding settlement efforts was provided to the Court by the parties and the mediator. As part of the update, the Court was told that the parties need additional time to finalize the Consent Decree and for the management of each of the Plaintiffs to approve the complete terms of settlement. In response, Hecla anticipates that the Court will issue an order requiring bi-weekly status conferences with the Court, starting the first week of May, to keep the Court informed of the progress towards lodging of the Consent Decree. Hecla is hopeful that the settlement will be completed and effective no later than during the third quarter.

If the terms of settlement are completed and approved by the parties, the Consent Decree will be lodged with the Court, followed by a public comment period anticipated to last 30 days, after which time the United States will evaluate and respond to any public comments received and then presumably seek Court approval and entry of the Consent Decree. If the Court enters the Consent Decree, Hecla will have settled its historic environmental liability in the Basin and the remaining obligations in the Box and would make the following payments:


•$102 million of cash, $55.5 million of cash or Hecla stock, and approximately $9.5 million in proceeds from series 3 warrants received by Hecla to date and referred to below, all payable 30 days after entry of the Consent Decree

•$25 million of cash 30 days after the first anniversary of entry of the Consent Decree

•$15 million of cash 30 days after the second anniversary of entry of the Consent Decree

•Approximately $56.4 million by August 2014, as quarterly payments of the proceeds from the exercise of any outstanding Series 1 and Series 3 warrants (which have an exercise price of between $2.45 and $2.50 per share) during the quarter, with the remaining balance, if any, due in August 2014.


Although Hecla is optimistic the Consent Decree will be entered, there can be no assurance that the parties will be successful in negotiating and agreeing on the final terms of the Consent Decree or that the Consent Decree will be entered by the Court and thereby become final and binding. Hecla will continue to provide updates on the status of the Consent Decree.

Hecla was trading at $8.80, falling $0.06, or 0.68 percent, as of 12:33 PM EDT.

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