TORONTO (miningweekly.com) – The second-largest US silver producer by output, Hecla Mining, on Thursday said it had started hedging all metals once they were shipped, to reduce its exposure to the variability in the realised prices.

The company, which had for long been hedging its base-metals shipment, said it had sold about 40% of its silver production of about 2.2-million ounces in June, the month with a lower average silver price than that of the second quarter's.

Hecla said the realised silver prices fell 40% to $16.27/oz, while spot prices declined by about 21% to an average of $23.17/oz. The average realised price in the second quarter of 2012 was $27.05/oz.

The time lag between shipping the concentrates for processing and actual sale of the metals also negatively impacted the company’s earnings, forcing it to book a $15.1-million provisional price adjustment.

The provisional price adjustments were applied to 2.3-million silver ounces, representing an adjustment of about $6/oz. The provisional price adjustment related to zinc and lead contained in its concentrate shipments was largely offset by net gains on forward contracts of $400 000 in the quarter for those metals.

The company posted a net loss of $25-million, or $0.08 a share, compared with net income of $2.4 million, or $0.01 a share, for the same period a year ago. The adjusted net loss, which excludes special items, totalled $0.03 a share, while Wall Street analysts had on average expected earnings of $0.01 a share.

The company cut its yearly capital spending budget to $129-million from the $145-million it forecast in May for its Greens Creek mine, in Alaska, and the Lucky Friday mine, in Idaho. The planned $26-million openpit expenditure at Casa Berardi, in Quebec, which the company bought through a C$796-million deal to acquire Aurizon Mines during the quarter, was also deferred.

Total sales for the quarter of $85.3-million were 27% higher year-on-year.

The total cash cost, net of by-product credits was $5.56/oz of silver, a 21% decrease over the first quarter, and the total cash cost net of by-product credits was $1 152/oz of gold at Casa Berardi for June, the first month following the acquisition.

Gold output increased 68% to 22 226 oz, with only one month of production from Casa Berardi. Silver output rose 64% year-on-year.

Hecla’s NYSE-listed shares rose 10.47% on Thursday, closing at $3.27 apiece.