Hecla Mining Co. Message Board

buy some. I'll tell you why. That market is so thin that if someone put in a buy order for 10,000 shares of HLPRB it would double in price over night.

Why on earth would management pay $50
for the preferred when then can buy it in the open market at $12 and change?

How can they go bankrupt with no debt?

still another scenario.

It would appear as
though there are about 2,250,000 preferred shares
outstanding. At $50 per share that puts the underlying value
of the preferred at about $112,500,000. HL sells the
clay operation for about $125,000,000 and uses the
proceeds to buy back the preferred stock; Ends up with
about $12,500,000 cash; And improves the cash flow by
over $8,000,000 annually through dividend savings. The
common stock would rise in market value. Everybody wins
and HL maintains its credibility with all factions
involved and stays in the PM business.

Good discussion on this board!

What about
a scenerio like this:

HL sells the Clay
division and takes out the debt. With these creditors out
of the way. Then HL is in a less hindered position
to address dividends payed on the preferred
shares.

In short, something along the lines of a
pre-packaged bankruptcy where the deal is to convert the
preferreds into common shares. Preferreds then become
available for possible future equity financing and $8
million a year in dividend expenditures are eliminated.


These actions clean up the balance sheet and better
alligns HL's cash flow to expenditures. In doing so, it
positions HL for a new conventional loan package and one on
better terms. In addition, it better positions HL for
project financing including the added risks undertaken to
place the Saladillo Property into
development.

Any feed back?

KSully

Yup, figured that was your direction there. The
fullers earth market is still pretty good though for
petroleum clean up. I wonder why they have not tried to get
into the enhenced clays. I have a good buddy who has a
polymer enhenced bentonite product that kicks butt on
removal of metals and hydrocarbons from water. The
fullers earths could be used similarly and have a number
of interesting application for clean up of things
like dioxins. The environmental market for clay is
growing great guns.

to is known as "fullers earth" , & is a highly
absorbant claylike substance used predominantly for
"fulling" wool cloth, until Mr Ed Lowe started marketing it
as Kitty Litter (tm)which by the way made him a
large fortune. (in the seventies 5 or 600 Million
dollars was still considered a lot of money)this is not
Ball Clay or even Bentonite clay but is mostly
hydrated aluminum silicates, & i believe at present is
considered a waste product to be dealt with before you get
to the good stuff-KT has tons, of this fuller's
earth- of course, they have probably already considered
this or i would be disappointed in them. The KT
Crenshaw, MS plant has been selling to the driveway sealant
market for many years - don't know why they didn't get
in the absorbant business- maybe they just wanted to
stay with ball clay,who knows. Make no mistake they
still have a few highly effective people there that are
experienced and knowledgeable in all aspects of the ball clay
business. Bentonite clay in Cat Litter has reduced the
demand for Fuller's Earth in the cat market with the
advent of the poop scoop, Cat Owners now just scoop out
the "used" clump of litter instead of changing the
whole tray. why keep a Cat inside after the mice are
gone? got me, then you'd have to feed em' too. You
gotta admire a man like Ed Lowe, its rumored he could
spit licorice pretty good too...

hard to see good ball clay sold as kitty litter.
Standard kitty litter bentonite sells for about $23 per
ton, whereas, ball clays as good as KT sell for
$55-85.

The idea that they sell into the sealant market is
not a bad one though. Thats a good market, as is the
potential for sales into the structural concrete
market.

I would not put it past Sibilcon to make a bid. The
do not currently have US capacity and WBB clays have
minimal penetration into the US market. They also have
the cash to play.

KT should be selling clay(fuller's earth) to the
Kitty Litter people- the have to handle it anyway. I
realize bentonite is a big thing now but there is still a
market for absorbant clay. Then KT could sell driveway
sealant in spring -summer and sell absorbant clay to
remove snow in winter from driveways - much better than
salt. If KT is selling in April 2001, who is buyer?

Wish I was always right, but at least I am right
on things that count where minerals are
concerned.

The sale of KT should pull in between 80-120 million
bucks from what any source we have can tell us. The
time to do the deal will be at least a little slow due
to the extreme consolidation of the clay industry
right now. SEC and FTC scrutiny are going to be
intense. The last truely major deal was the buy out of GIX
by RHI AG, a move that put the refractory clay biz
almost all in the hands of a single firm and took 8
months to complete. So, Art has promised an April date,
which seems pretty reasonible to finish haggling and
get approvals from the government.

Frankly, if
we did not have the extreme consolidation out there,
the company would fetch a better price. Some of the
potential bidders will simply not be allowed to pick off
the KT clay division. IMERYS, for an example, has far
too much of the industry under control for the Feds
to allow them to buy it. RHI AG is in the same
boat.

And frankly, with the settlement on Grouse Creek
coming up and the sign off by the Feds and the Tribes
also due soon, the envrionmental nightmares are just
about done with. It looks as if the environmental set
asides will not be a permanant feature. So the cash
generated above the debt buy back can go to expansion
plans, getting operations on the new mines in Mexico
going and possibly picking up some of the other
depressed firms.

Much as I hate to see KT go to
other hands, it is a move that will generate the life
saving cash the firm needs to get moving back to
reality.

As for solvency, HL is trading at less then half
book. You are not going bankrupt if your assets are
double your debts. Instead, you sell some asset to cover
you debt position, put your house in order and take
another kick at the cat.