Hecla must shut down Lucky Friday for entire year, stock down 20%

Hecla Mining Company announced on Wednesday that US mine safety officials have ordered the Silver Shaft at the Lucky Friday mine in Mullan, Idaho closed for removal of built-up material in the shaft. The silver-lead-zinc mine in northern Idaho is one of the deepest underground mines in the US.

The order comes after an investigation following a December 14 rock burst when seven miners were pulled from the mine with minor injuries. Hecla said in a statement compliance with the order is expected to take through year-end and that as a consequence the company's 2012 silver production is now estimated to be approximately 7 million ounces. Hecla (NYSE:HL) shed over 21% in heavy volumes on the New York exchange in the first hour of trade on Wednesday. The company is worth some $1.3 billion and changed hands at $4.61 by 9:20 EST.

Two miners died in separate incidents at the same mine this year. In November two contractors were buried in rubble after trying to dislodge a jammed rock bin. One was hospitalized and released while the other was killed. A roof collapse more than a mile underground killed a 53-year-old employee in April. The mine received four citations following the first accident and is facing nearly $1 million in penalties.

“The Lucky Friday mine is a world-class mine that we see producing silver for decades to come. Hecla and the Lucky Friday mine have faced challenges in the past and we will once again overcome them.”

“While we are disappointed with this order and are considering what action we might take, work has already begun to resume production as quickly as possible,” Phil Baker, Hecla’s president and CEO said on Wednesday.

The Silver Shaft is a one-mile deep shaft from surface and the primary access to the Lucky Friday mine. The sand and concrete material to be removed from the shaft has built up over a number of years and is expected to be removed primarily by power washing. All other significant activities at the mine including construction of the #4 Shaft and bypass around the rock burst are on hold.

Care and maintenance of the underground will be focused on the 4900 level where the #4 Shaft infrastructure is located. Production is expected to resume in early 2013 Hecla said in a statement.

A conference call and webcast will be held Wednesday, January 11, at 1:00 p.m. Eastern Time to discuss this latest development. You may join the conference call by dialing toll-free 1-866-510-0711 or 1-617-597-5379 internationally. The participant passcode is HECLA. Hecla’s live and archived webcast can be accessed at www.hecla-mining.com under Investors or via Thomson StreetEvents Network.