Cash and Cash-Like Investments Now $213
Million; a $14 Million Increase Over Year-End
Hecla Mining Company (NYSE:HL) today announced preliminary
production, operating costs and cash balance for the first quarter
of 2017.¹
FIRST QUARTER 2017 HIGHLIGHTS (Preliminary Results)
- Silver production of 3.4 million
ounces; gold production of 56,113 ounces.
- Silver equivalent production of 10.6
million ounces or gold equivalent production of almost 151,000
ounces.2
- Lead production of 8,636 tons; zinc
production of 15,537 tons.
- Cost of sales and other direct
production costs and depreciation, depletion and amortization
(“cost of sales”) of $107.6 million, an increase over 2016
reflecting open pit production from Casa Berardi.
- Silver cash cost, after by-product
credits, per ounce of $0.84, the lowest in over five years and
below our full year estimate of $2.75.3
- Cash, cash equivalents and short-term
investments of approximately $213 million at March 31, 2017, an
increase of about $14 million for the quarter compared to a $21
million decline in the first quarter, 2016.
“The first quarter production at Greens Creek and San Sebastian
exceeded our expectations, more than offsetting the shortfall at
Lucky Friday due to a strike by the union workers,” said Phillips
S. Baker, Jr., President and CEO. “While our cost of sales
increased over last year due to the higher throughput from the Casa
Berardi open pit operations, our cash cost, after by-product
credits, declined 73% over the first quarter 2016 to $0.84 per
silver ounce. This strong operating performance allowed us to add
$14 million of cash since the end of the year, marking the fourth
consecutive quarter of increasing cash balances.”
OPERATIONS OVERVIEW
Overview
The following table provides a summary of the production, cost
of sales and cash cost, after by-product credits, per silver and
gold ounce, for the first quarter ended March 31, 2017
(preliminary) and 2016 (actual).
First Quarter Ended
March 31, 2017 Greens Creek
Lucky Friday Casa Berardi
San Sebastian (preliminary)
Silver Gold Silver
Gold Silver
Gold Silver Silver
Gold Production (ounces)
3,369,426 56,113
1,929,297 14,022
680,782 35,807
8,544 750,803
6,284
Increase/(decrease)
(27 )% 1 %
(22 )% (12 )% (30 )%
18 % 22 %
(38 )% (33 )%
Cost of sales and other direct
production costs and depreciation, depletion and amortization
(000)
$ 65,162 $ 42,466
$ 43,996 N/A
$ 14,543 $ 42,466
N/A $ 6,623 N/A
Cash costs, after by-product credits,
per silver or gold ounce 3,4
$ 0.84 $ 886
$ 0.65 N/A
$ 5.93 $ 886 N/A
$ (3.27 ) N/A
First Quarter Ended Greens Creek
Lucky Friday Casa Berardi
San Sebastian March 31, 2016 (actual)
Silver Gold
Silver Gold Silver
Gold Silver
Silver Gold Production (ounces)
4,642,704
55,688 2,458,276
15,981 977,084
30,378 7,005
1,200,339 9,329
Cost of sales
and other direct production costs and depreciation, depletion and
amortization (000) $ 71,036
$ 29,159 $ 44,854
N/A $ 18,505 $ 29,159
N/A $ 7,677
N/A
Cash costs, after by-product credits,
per silver or gold ounce 3,4
$ 3.16 $ 781
$ 3.96 N/A
$ 9.05 $ 781 N/A
$ (3.26 ) N/A
Greens Creek
At the Greens Creek mine, 1.9 million ounces of silver and
14,022 ounces of gold were produced in the first quarter, compared
to 2.5 million ounces and 15,981 ounces, respectively, in the first
quarter 2016. Lower silver and gold production was expected and
principally due to lower grades than the prior period. The mill
operated at an average of 2,190 tons per day (tpd) in the first
quarter, in-line with the first quarter 2016.
The cost of sales for the first quarter was $44.0 million, and
the cash cost, after by-product credits, per silver ounce, was
$0.65, compared to $44.9 million and $3.96, respectively, for the
first quarter 2016.5 The per ounce silver costs were lower
primarily due to higher base metals prices and fewer ounces of
silver production.
Lucky Friday
At the Lucky Friday mine, 680,782 ounces of silver were produced
in the first quarter, compared to 977,084 ounces in the prior year
period. The decrease in silver production was due to the strike by
the union workers since March 13.
The cost of sales for the first quarter was $14.5 million and
the cash cost, after by-product credits, per silver ounce was
$5.93, compared to $18.5 million and $9.05, respectively, for the
first quarter of 2016, with the decrease in cash cost, after
by-product credits, per silver ounce primarily due to higher base
metals prices and fewer silver ounces produced.3
Casa Berardi
At the Casa Berardi mine, 35,807 ounces of gold were produced in
the first quarter, including 7,157 ounces from the East Mine Crown
Pillar (EMCP) pit, compared to 30,378 ounces in the prior year
period, primarily due to higher throughput. The mill operated at an
average of 3,263 tpd in the first quarter, an increase of 37% over
the first quarter 2016.
The cost of sales was $42.5 million for the first quarter and
the cash cost, after by-product credits, per gold ounce was $886,
compared to $29.2 million and $781, respectively, in the prior year
period, with the increase in cash cost, after by-product credits,
per gold ounce partly due to the expensing of stripping costs for
the new EMCP pit.4
San Sebastian
At the San Sebastian mine, 750,803 ounces of silver and 6,284
ounces of gold were produced in the first quarter, compared to
1,200,339 ounces and 9,329 ounces in the prior year period. The
lower silver and gold production was expected as the mine moved
from East Francine to Middle and North veins, resulting in lower
grades. The mill operated at an average of 407 tpd in the first
quarter, an increase of 19% over the first quarter 2016.
The cost of sales was $6.6 million for the first quarter and the
cash cost, after by-product credits, was negative $3.27 per silver
ounce, compared to $7.7 million and negative $3.26, respectively,
in the first quarter 2016.3 The strong cash cost, after by-product
credits, performance continues to be due to the silver grade, which
despite being lower than the prior period is still strong, as well
as significant gold production, which is used as a by-product
credit.
The Company has the mill leased for 2018 and expects to
transition from open pit to underground mining by the end of 2017.
The ramp is under construction to connect the new portal to the
existing workings, which are also being rehabilitated. Recent
definition drilling on the Middle Vein has shown better continuity
of high-grade within the reserve area and exploration drilling
continues to define new high-grade material in the vicinity of the
mine along the Middle and East Francine veins.
CONFERENCE CALL AND WEBCAST MAY 8, 2017
Hecla expects to report first quarter 2017 financial results on
May 8, 2017. A conference call and webcast will be held on May 8 at
10 a.m. Eastern Time to discuss these results. You may join the
conference call by dialing toll-free 1-855-760-8158 or for
international by dialing 1-720-634-2922. 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.
ABOUT HECLA
Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading
low-cost U.S. silver producer with operating mines in Alaska, Idaho
and Mexico, and is a growing gold producer with an operating mine
in Quebec, Canada. The Company also has exploration and
pre-development properties in seven world-class silver and gold
mining districts in the U.S., Canada, and Mexico, and an
exploration office and investments in early-stage silver
exploration projects in Canada.
NOTES
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by
generally accepted accounting principles (GAAP). These measures
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
(1) See cautionary statement regarding preliminary statements at
the end of this release.
(2) Silver or gold equivalent production includes silver, gold,
lead and zinc production from Lucky Friday, Greens Creek, San
Sebastian and Casa Berardi converted using average realized prices
for the quarter or year. Silver and gold equivalent calculations
are based on the following prices: $17.42 for Ag, $1,219 for Au,
$1.03 for Pb, and $1.26 for Zn.
(3) Cash cost, after by-product credits, per silver and gold
ounce represents a non-GAAP measurement, a reconciliation of which
to cost of sales and other direct production costs and
depreciation, depletion and amortization (sometimes referred to as
“cost of sales” in this release), can be found at the end of this
release. It is an important operating statistic that management
utilizes to measure each mine’s operating performance. It also
allows the benchmarking of performance of each mine versus those of
our competitors. As a primary silver mining company, management
also uses the statistic on an aggregate basis - aggregating the
Greens Creek, Lucky Friday and San Sebastian mines - to compare
performance with that of other primary silver mining companies.
With regard to Casa Berardi, management uses cash cost, after
by-product credits, per gold ounce to compare its performance with
other gold mines. Similarly, the statistic is useful in identifying
acquisition and investment opportunities as it provides a common
tool for measuring the financial performance of other mines with
varying geologic, metallurgical and operating characteristics. In
addition, the Company may use it when formulating performance goals
and targets under its incentive compensation program.
(4) Cash cost, after by-product credits, per gold ounce is only
applicable to Casa Berardi production. Gold produced from Greens
Creek and San Sebastian is treated as a by-product credit against
the silver cash cost.
Cautionary Statements Regarding Preliminary Results
All measures of the Company’s first quarter 2017 operating and
financial results contained in this news release, including cash,
cash equivalents and short-term investments, are preliminary and
reflect the Company’s expected first quarter 2017 results as of the
date of this news release. Actual reported first quarter 2017
results are subject to management’s final review as well as review
by the Company’s independent registered public accounting firm and
may vary significantly from those expectations because of a number
of factors, including, without limitation, additional or revised
information and changes in accounting standards or policies or in
how those standards are applied.
Cautionary Statements Regarding Forward-Looking
Statements
Statements made or information provided in this news release
that are not historical facts are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and “forward-looking information” within the meaning of
Canadian securities laws. Words such as “may,” “will,” “should,”
“expects,” “intends,” “projects,” “believes,” “estimates,”
“targets,” “anticipates” and similar expressions are used to
identify these forward-looking statements. Such forward-looking
statements or forward-looking information include statements or
information regarding estimates of silver production for the first
quarter of 2017 on a consolidated basis and at each of the Greens
Creek, Lucky Friday and San Sebastian mines, first quarter 2017
gold production at Casa Berardi. The material factors or
assumptions used to develop such forward-looking statements or
forward-looking information include that the Company’s plans for
development and production will proceed as expected and will not
require revision as a result of risks or uncertainties, whether
known, unknown or unanticipated, to which the Company’s operations
are subject.
Forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated, expected or implied. These risks
and uncertainties include, but are not limited to, metals price
volatility, volatility of metals production and costs, litigation,
regulatory and environmental risks, operating risks, project
development risks, political risks, labor issues, ability to raise
financing and exploration risks and results. Refer to the Company’s
Form 10K and 10-Q reports for a more detailed discussion of
factors that may impact expected future results. The Company
undertakes no obligation and has no intention of updating
forward-looking statements other than as may be required by
law.
Reconciliation of Cost of Sales and Other Direct Production
Costs and Depreciation, Depletion and Amortization (GAAP) to Cash
Cost, Before By-product Credits and Cash Cost, After By-product
Credits, Per Ounce (non-GAAP)
The tables below present reconciliations between the most
comparable GAAP measure of cost of sales and other direct
production costs and depreciation, depletion and amortization to
the non-GAAP measures of Cash Cost, Before By-product Credits, per
Ounce and Cash Cost, After By-product Credits, per Ounce for our
operations at the Greens Creek, Lucky Friday, San Sebastian and
Casa Berardi units for the three-month periods ended March 31,
2017 and 2016.
Cash Cost, After By-product Credits, per Ounce is an important
operating statistic that we utilize to measure each mine’s
operating performance. It also allows us to benchmark the
performance of each of our mines versus those of our competitors.
As a primary silver mining company, we also use the statistic on an
aggregate basis – aggregating the Greens Creek, Lucky Friday and
San Sebastian mines – to compare our performance with that of other
primary silver mining companies. With regard to Casa Berardi, we
use Cash Cost, After By-product Credits, per Gold Ounce to compare
its performance with other gold mines. Similarly, the statistic is
useful in identifying acquisition and investment opportunities as
it provides a common tool for measuring the financial performance
of other mines with varying geologic, metallurgical and operating
characteristics.
Cash Cost, Before By-product Credits, per Ounce includes all
direct and indirect operating cash costs related directly to the
physical activities of producing metals, including mining,
processing and other plant costs, third-party refining expense,
on-site general and administrative costs, royalties and mining
production taxes. By-product credits include revenues earned from
all metals other than the primary metal produced at each unit. As
depicted in the tables below, by-product credits comprise an
essential element of our silver unit cost structure, distinguishing
our silver operations due to the polymetallic nature of their
orebodies. Cash Cost, After By-product Credits, per Ounce provides
management and investors an indication of operating cash flow,
after consideration of the average price, received from production.
We also use this measurement for the comparative monitoring of
performance of our mining operations period-to-period from a cash
flow perspective. Cash Cost, After By-product Credits, per Ounce is
a measure developed by precious metals companies (including the
Silver Institute) in an effort to provide a uniform standard for
comparison purposes. There can be no assurance, however, that our
reporting of this non-GAAP measure is the same as that reported by
other mining companies.
The Casa Berardi section below reports Cash Cost, After
By-product Credits, per Gold Ounce for the production of gold, its
primary product, and by-product revenues earned from silver, which
is a by-product at Casa Berardi. Only costs and ounces produced
relating to units with the same primary product are combined to
represent Cash Cost, After By-product Credits, per Ounce. Thus, the
gold produced at our Casa Berardi unit is not included as a
by-product credit when calculating Cash Cost, After By-product
Credits, per Silver Ounce for the total of Greens Creek, Lucky
Friday and San Sebastian, our combined silver properties.
In thousands (except per ounce amounts) Three
Months Ended March 31, 2017
Casa Greens Lucky San Total
Berardi Creek Friday((2)) Sebastian
Silver (Gold) Total Cost
of sales and other direct production costs and depreciation,
depletion and amortization $ 43,996 $ 14,543 $ 6,623 $ 65,162 $
42,466 $ 107,628 Depreciation, depletion and amortization (13,333 )
(2,433 ) (673 ) (16,439 ) (12,514 ) (28,953 ) Treatment costs
14,131 3,817 225 18,173 571 18,744 Change in product inventory
3,265 (149 ) (380 ) 2,736 1,381 4,117 Reclamation and other costs
(385 ) (182 ) (590 ) (1,157 )
(17 ) (1,174 ) Cash Cost, Before By-product Credits (1)
47,674 15,596 5,205 68,475 31,887 100,362 By-product credits: Zinc
(23,779 ) (4,060 ) (27,839 ) (27,839 ) Gold (14,852 ) (7,657 )
(22,509 ) (22,509 ) Lead (7,782 ) (7,496 ) (15,278 ) (15,278 )
Silver (147 ) (147 )
Total By-product credits (46,413 ) (11,556 )
(7,657 ) (65,626 ) (147 ) (65,773 ) Cash Cost,
After By-product Credits $ 1,261 $ 4,040 $ (2,452 ) $
2,849 $ 31,740 $ 34,589 Divided by ounces
produced 1,929 681 751 3,361 36 Cash Cost, Before By-product
Credits, per Ounce $ 24.71 $ 22.90 $ 6.93 $ 20.37 $ 890.53
By-product credits per ounce (24.06 ) (16.97 )
(10.20 ) (19.53 ) (4.11 ) Cash Cost, After By-product
Credits, per Ounce $ 0.65 $ 5.93 $ (3.27 ) $ 0.84
$ 886.42 In thousands
(except per ounce amounts) Three Months Ended March 31, 2016
Casa
Greens Lucky San Total Berardi Creek Friday((2))
Sebastian Silver (Gold)
Total Cost of sales and other direct production costs
and depreciation, depletion and amortization $ 44,854 $ 18,505 $
7,677 $ 71,036 $ 29,159 $ 100,195 Depreciation, depletion and
amortization (13,601 ) (3,004 ) (769 ) (17,374 ) (8,501 ) (25,875 )
Treatment costs 15,638 5,334 (9 ) 20,963 171 21,134 Change in
product inventory 1,640 (21 ) 340 1,959 3,118 5,077 Reclamation and
other costs (398 ) (166 ) (41 ) (605 )
(111 ) (716 ) Cash Cost, Before By-product Credits
(1) 48,133 20,648 7,198 75,979 23,836 99,815 By-product credits:
Zinc (15,684 ) (3,133 ) (18,817 ) (18,817 ) Gold (16,340 ) (11,116
) (27,456 ) (27,456 ) Lead (6,384 ) (8,673 ) (15,057 ) (15,057 )
Silver (103 ) (103 )
Total By-product credits (38,408 ) (11,806 )
(11,116 ) (61,330 ) (103 ) (61,433 ) Cash
Cost, After By-product Credits $ 9,725 $ 8,842 $
(3,918 ) $ 14,649 $ 23,733 $ 38,382 Divided by
ounces produced 2,458 977 1,200 4,635 30 Cash Cost, Before
By-product Credits, per Ounce $ 19.58 $ 21.13 $ 6.00 $ 16.39 $
784.66 By-product credits per ounce (15.62 ) (12.08 )
(9.26 ) (13.23 ) (3.39 ) Cash Cost,
After By-product Credits, per Ounce $ 3.96 $ 9.05 $
(3.26 ) $ 3.16 $ 781.27 (1)
Includes all direct and indirect operating costs related
directly to the physical activities of producing metals, including
mining, processing and other plant costs, third-party refining and
marketing expense, on-site general and administrative costs,
royalties and mining production taxes, after by-product revenues
earned from all metals other than the primary metal produced at
each unit. (2) The unionized employees at Lucky Friday have
been on strike since March 13, 2017, and production at Lucky Friday
has been suspended since that time. Costs related to the suspension
period totaling approximately $1.6 million in the first quarter of
2017 have been excluded from the calculations of cost of sales and
other direct production costs and depreciation, depletion and
amortization, Cash Cost, Before By-product Credits, and Cash Cost,
After By-product Credits.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170420005414/en/
Hecla Mining CompanyMike Westerlund, 800-HECLA91
(800-432-5291)Vice President – Investor
Relationshmc-info@hecla-mining.comwww.hecla-mining.com
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