Record gold production; Record reserves for
gold, silver, and lead
Hecla Mining Company (NYSE:HL) today announced fourth quarter
and full year 2018 financial and operating results.
YEAR-END HIGHLIGHTS
- Silver production of 10.4 million
ounces and record gold production of 262,103 ounces.
- Silver equivalent production of 43.6
million ounces or gold equivalent of 540,174 ounces.7
- Cost of sales and other direct
production costs and depreciation, depletion and amortization
("cost of sales") of $488.0 million.
- Total cash cost, after by-product
credits and all-in sustaining cost ("AISC"), after by-product
credits, per silver ounce of $1.08 and $11.44,
respectively.1,2
- Record reserves for gold, silver and
lead; increases over 2017 of 26%, 8% and 5%, respectively.
- Completed the acquisition of Klondex in
July 2018.
- Improved safety with All Injury
Frequency Rate 28% lower.
"Greens Creek and Casa Berardi are the economic engines of
Hecla, and the continued increase in reserves and resources,
extended mine life and positive changes to the mine plans are
surfacing additional value at these operations,” said Phillips S.
Baker, Jr., President and CEO. “This allows investment in our three
other mines, which all have the potential to be long-lived with
strong economics like Greens Creek and Casa Berardi. The turnaround
of the Nevada operations continues with an increasing development
rate at Fire Creek that should allow the mine to have operating
consistency as we increase production. This is the same approach we
took when we first acquired Greens Creek and Casa Berardi.
Substantial exploration is planned for both Fire Creek and
Hollister this year as we work to convert resources to reserves and
discover additional resources. With the Hatter Graben decline about
15% complete, we expect to start drilling between the current
Hollister mine area and the Hatter Graben soon."
"At San Sebastian we continue to discover and mine oxide
mineralization while we take a bulk sample to determine the
potential economics of the sulfide ore," Mr. Baker continued.
1,2
Non-GAAP measures. See pages 10 and 11 for
more information.
7
See page 11 for details of equivalent
production.
SILVER AND GOLD RESERVE SUMMARY
Proven and probable silver reserves are 191 million ounces, an
increase of 8% over December 31, 2017 levels. Proven and probable
gold reserves are 2.9 million ounces, an increase of 26% over
December 31, 2017 levels. Proven and probable zinc and lead
reserves of 932,000 tons and 774,000 tons are increases of 11% and
5%, respectively, over December 31, 2017 levels. The reserves for
gold, silver and lead are the highest in Company history. The price
assumptions used for 2018 reserves of $14.50 for silver, $1,200 for
gold, $1.15 for zinc and $0.90 for lead are unchanged from last
year, with the exception of zinc, which was $1.05 in 2017. The
silver price assumption is among the lowest in the industry.
Please refer to the reserves and resources tables at the end of
this press release, or to the press release entitled "Hecla Reports
Record Gold, Silver and Lead Reserves" issued on February 14, 2019,
for the breakdown between proven and probable reserve and resource
levels, as well as a detailed summary of the Company's exploration
programs.
Revised NI 43-101 Technical Reports for Greens Creek and Casa
Berardi are expected by April. At Greens Creek, the optimized mine
plan accelerates access to higher-grade ore, enabling the expected
highest margin reserves to be extracted in the earlier years of the
mine plan. In addition, the increase in reserves is expected to
extend the mine life, excluding resources, by about three years to
2030.
FINANCIAL OVERVIEW
Fourth Quarter Ended
Twelve Months Ended HIGHLIGHTS
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
FINANCIAL DATA
Sales (000)
$ 136,520 $ 160,113
$
567,137 $ 577,775 Gross profit (loss)
(000)
$ (1,265 ) $ 46,310
$
79,099 $ 152,449 Loss applicable to common stockholders
(000)
$ (23,831 ) $ (29,105 )
$
(27,115 ) $ (29,072 ) Basic and diluted loss per
common share
$ (0.05 ) $ (0.07 )
$
(0.06 ) $ (0.07 ) Cash provided by operating
activities (000)
$ 19,011 $ 41,763
$
94,221 $ 115,878
Net loss applicable to common stockholders for the fourth
quarter and full year of 2018 was $23.8 million and $27.1 million,
or $0.05 and $0.06 per basic share, respectively, compared to net
losses applicable to common stockholders of $29.1 million, or $0.07
per basic share, for both periods of the prior year. Among items
impacting the results for the 2018 periods compared to 2017 were
the following:
- Sales for the fourth quarter and full
year were 15% and 2% lower, respectively, than the same periods in
2017. The decreases are mainly due to lower silver production due
to lower grades and production at San Sebastian as well as lower
average silver prices, partially offset by higher gold production
due to higher throughout at Casa Berardi and the addition of the
Nevada operations.
- A slight loss was recorded on base
metal derivative contracts for the fourth quarter 2018, while gains
on base metal derivative contracts of $40.3 million were recorded
for the full year 2018, compared to losses of $4.7 million and
$21.3 million, respectively, in the prior year periods, mainly the
result of lower lead prices. During the third quarter of 2018, the
Company settled in-the-money contracts prior to their maturity
date, for cash proceeds of approximately $32.8 million.
- Foreign exchange gains of $7.5 million
and $10.3 million were recognized in the fourth quarter and full
year of 2018, respectively, compared to a $0.6 million gain and a
loss of $9.7 million, respectively, in the prior year periods. The
variances were primarily due to weakening of the Canadian dollar
relative to the U.S. dollar.
- Interest expense, net of amount
capitalized, was $10.9 million in the fourth quarter and $40.9
million for the full year of 2018 compared to $9.6 million and
$38.0 million, respectively, in the prior year periods.
- Exploration and pre-development expense
was $9.4 million for the fourth quarter and $40.6 million for the
full year of 2018, compared to $7.3 million and $29.0 million,
respectively, in the prior year periods, primarily due to increased
exploration activity in Nevada and Quebec.
- Research and development expense was
$0.4 million for the fourth quarter and $5.4 million for the
full year of 2018, compared to $1.2 million and $3.3 million,
respectively, for the prior year periods, and is related to the
evaluation and development of new technologies, such as the Remote
Vein Miner (RVM) project at the Lucky Friday.
- Suspension costs for the fourth quarter
of $2.4 million and $20.7 million for the full year of 2018,
including $1.3 million and $5.0 million, respectively, in non-cash
depreciation expense. This is compared to suspension costs of $6.9
million and $21.3 million, respectively, for the prior year
periods.
- Income tax benefit for the fourth
quarter and full year of 2018 of $5.2 million and
$6.7 million, respectively, compared to provisions of $38.5
million and $21.0 million, respectively, in the prior year periods.
The tax provisions in 2017 resulted primarily from the changes in
the U.S. Tax Cuts and Jobs Act and the resulting revaluation of the
deferred tax asset, as well as current income and mining taxes in
Mexico.
Cash provided by operating activities for the fourth quarter and
full year of 2018 of $19.0 million and $94.2 million,
respectively, was $22.8 million and $21.7 million lower,
respectively, as compared to the prior year periods. The decrease
in 2018 was mainly the result of lower production and higher
exploration spending, as well as acquisition costs, partly offset
by cash proceeds from settlement of base metals derivative
contracts prior to their maturity date.
Adjusted EBITDA was $28.1 million for the fourth quarter of
2018, compared to $71.1 million for the same period of 2017,
and $211.9 million for the full year of 2018, compared to $231.9
million in 2017.3 The decreases were due to lower production and
higher exploration spending.
Capital expenditures at the operations totaled $53.2 million for
the fourth quarter of 2018, including $17.6 million at Nevada
operations, $13.6 million at Casa Berardi, $12.2 million at Greens
Creek, $7.3 million at Lucky Friday, and $2.5 million at San
Sebastian. Capital expenditures for the year 2018 totaled $140.6
million at the operations, compared to $103.4 million in 2017.
Metals Prices
Average realized silver prices in the fourth quarter and full
year 2018 were $14.58 and $15.63 per ounce, respectively, compared
to $16.87 and $17.23, respectively, for the prior year periods.
Realized prices for gold for the fourth quarter and full year 2018
were $1,237 and $1,265 per ounce, respectively, 3% lower compared
to the fourth quarter 2017, while the price for the year ended
slightly higher. Average realized prices for lead and zinc for the
fourth quarter of 2018 were 23% and 21% lower, respectively,
compared to the prior year period. The average realized prices for
lead and zinc for the full year of 2018 were 2% and 4% lower,
respectively, compared to 2017.
OPERATIONS OVERVIEW
Overview
The following table provides the production summary on a
consolidated basis for the fourth quarter and twelve months ended
December 31, 2018 and 2017:
Fourth Quarter Ended
Twelve Months Ended
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
PRODUCTION SUMMARY
Silver - Ounces produced
2,715,385
2,984,786
10,369,503
12,484,844 Payable ounces sold
2,260,690 3,210,306
9,254,385 11,308,958 Gold - Ounces produced
70,987
60,964
262,103 232,684 Payable ounces sold
64,478
58,008
247,528 219,929 Lead - Tons produced
4,704
4,307
20,091 22,733 Payable tons sold
3,615 4,348
16,214 17,960 Zinc - Tons produced
13,711 12,107
56,023 55,107 Payable tons sold
9,201 10,066
39,273 39,335
3
Non-GAAP measures. See page 11 for more
information.
The following table provides a summary of the final production,
cost of sales, cash cost, after by-product credits, per silver or
gold ounce, and AISC, after by-product credits, per silver and gold
ounce, for the fourth quarter and twelve months ended
December 31, 2018:
Fourth Quarter Total Greens
Creek
Lucky Friday
San Sebastian Casa Berardi
Nevada Operations 2018 Silver
Gold Silver Gold
Silver Silver Gold
Gold Silver Gold
Silver Production (ounces) 2,715,385
70,987 2,163,563 13,097
13,026 443,302 2,928
35,864 7,338 19,098
88,156 Increase/(decrease) over 2017 (9 )%
16 % 1 % 13 % (81 )% (42 )%
(51 )% (17 )% (26 )% N/A N/A
Cost of sales & other direct production costs and depreciation,
depletion and amortization (000) $ 62,846
$ 74,938 $ 48,302 N/A $
3,906 $ 10,638 N/A $ 47,253
N/A $ 27,686 N/A
Increase/(decrease) over 2017 (7 )% 62 %
(22 )% N/A 591 % 100 % N/A
2 % N/A N/A N/A Cash costs, after
by-prod credits, per silver or gold ounce 1,4 $ 4.01
$ 1,048 $ 1.79 N/A
N/A $ 14.78 N/A $ 940 N/A
$ 1,251 N/A Increase/(decrease) over 2017
$ 4.56 $ 329 $ 1.13
N/A N/A $ 18.58 N/A
$ 221 N/A N/A N/A
AISC, after by-prod credits, per silver or
gold ounce 2
$ 13.53 $ 1,582 $ 7.92
N/A N/A $ 19.51 N/A
$ 1,348 N/A $ 2,020 N/A
Increase/(decrease) over 2017 $ 6.30 $
543 $ 1.69 N/A N/A $
20.15 N/A $ 309 N/A N/A
N/A
Twelve Months Ended Total Greens
Creek Lucky Friday San Sebastian Casa
Berardi Nevada Operations Dec 31, 2018
Silver Gold Silver
Gold Silver Silver
Gold Gold Silver
Gold Silver Production (ounces)
10,369,503 262,103 7,953,003
51,493 169,041 2,037,072
14,979 162,744 38,086
32,887 172,301 Increase/(decrease) over 2017
(17 )% 13 % (5 )% 1 % (80
)% (37 )% (41 )% 4 % 4 % N/A
N/A Cost of sales & other direct production costs and
depreciation, depletion and amortization (000) $
241,631 $ 246,407 $ 190,066
N/A $ 9,750 $ 41,815 N/A
$ 199,402 N/A $ 47,005
N/A Increase/(decrease) over 2017 0.4 % 33 %
(6 )% N/A (35 )% 76 % N/A
8 % N/A N/A N/A Cash costs, after by-prod
credits, per silver or gold ounce 1,4 $ 1.08
$ 871 $ (1.13 ) N/A N/A $
9.69 N/A $ 800 N/A $
1,221 N/A Increase/(decrease) over 2017
$ 1.08 $ 51 $ (1.84 ) N/A
N/A $ 13.05 N/A $ (19 ) N/A
N/A N/A
AISC, after by-prod credits, per silver or
gold ounce 2
$ 11.44 $ 1,226 $ 5.58
N/A N/A $ 14.68 N/A
$ 1,080 N/A $ 1,950 N/A
Increase/(decrease) over 2017 $ 3.58 $
52 $ (0.18 ) N/A N/A $ 14.94
N/A $ (94 ) N/A N/A N/A
Greens Creek Mine - Alaska
For the fourth quarter, silver production was 2,163,563 ounces
and gold production was 13,097 ounces, increases of 1% and 13%,
respectively, compared to the prior year periods. Full year 2018
silver production was 7,953,003 ounces, a decrease of 5% compared
to the prior year period, and 2018 gold production was 51,493
ounces, an increase of 1%. The decrease in silver production
resulted from lower grades, and gold production was modestly higher
due to higher throughput. The mill operated at an average of 2,310
tons per day (tpd) in the fourth quarter and 2,316 tpd for the full
year. The annual throughput was a record.
The cost of sales for the fourth quarter and full year 2018 was
$48.3 million and $190.1 million, respectively, a decrease of 22%
and 6%, respectively, over the prior year periods. The cash cost,
after by-product credits, per silver ounce, for the quarter and
full year was $1.79 and $(1.13), respectively, an increase from
$0.66 for the fourth quarter 2017, and a decrease from $0.71 for
the full year 2017.1 The AISC, after by-product credits, was $7.92
per silver ounce for the fourth quarter and $5.58 for the full year
of 2018, up for the quarter from $6.23 and lower for the year from
$5.76.2 The higher per silver ounce cash cost, after by-product
credits, for the quarter was primarily due to higher production
costs and lower by-product credits. The increase in AISC, after
by-product credits, for the quarter resulted from higher capital
spending. The decrease in cash cost, after by-product credits, per
silver ounce for the full year of 2018 was due to higher by-product
credits. The impact of higher by-product credits on AISC, after
by-product credits, was partially offset by higher capital spending
for the full year of 2018.
For the full year of 2018, Greens Creek generated cash provided
by operating activities of approximately $125.1 million and spent
$40.8 million on additions to properties, plants and equipment,
resulting in free cash flow of $84.3 million.5
Casa Berardi - Quebec
Gold production of 35,864 ounces during the fourth quarter 2018,
including 4,849 ounces from the East Mine Crown Pillar (EMCP) pit,
was 17% lower than the same period of 2017 due to lower grades.
Full year 2018 gold production of 162,744 ounces, including 32,097
ounces from the EMCP pit, was higher than the prior year period by
4% and the highest since acquisition of the operation. The mill
operated at an average of 3,515 tpd in the fourth quarter 2018 and
3,769 tpd for the year, which is a record and 218 tpd more than
2017, as well as approximately 1,800 tpd more than at
acquisition.
Cost of sales was $47.3 million and $199.4 million for the
fourth quarter and full year 2018, respectively, increases of 2%
and 8%, respectively, over the prior year periods. The cash cost,
after by-product credits, per gold ounce of $940 for the fourth
quarter 2018 increased 31% over the prior year period, due to lower
gold production.7 For the full year 2018, the cash cost, after
by-product credits, per gold ounce, decreased to $800, from $820
for the prior year period, due to higher gold production and
expensing of EMCP pit stripping costs during the first half of
2017.1,4 The AISC, after by-product credits, was $1,348 per gold
ounce for the fourth quarter and $1,080 for the full year 2018
compared to $1,039 and $1,174 in the same periods of 2017. The
increase for the quarter was due to higher capital spending, with
the decrease for the full year due to higher gold production and
lower capital spending.2
For the full year of 2018, Casa Berardi generated cash provided
by operating activities of approximately $82.9 million and spent
$39.7 million on additions to properties, plants and equipment,
resulting in free cash flow of $43.2 million.5
San Sebastian - Mexico
Silver production was 443,302 ounces for the fourth quarter and
2,037,072 ounces for the full year of 2018 compared to 759,100 and
3,257,738 for the same periods of 2017. Gold production was 2,928
ounces for the fourth quarter and 14,979 ounces for the full year
of 2018, compared to 5,955 and 25,177 for the same periods of 2017.
The lower metal production was expected due to lower grades as a
result of the transition from shallow, high-grade open pits to
underground production. The mill operated at an average of 487 tpd
in the fourth quarter 2018 and 429 tpd for the year.
The cost of sales was $10.6 million and $41.8 million for the
fourth quarter and full year 2018, respectively, compared to $5.3
million and $23.7 million, respectively, for the same periods in
2017. Cash cost, after by-product credits, per silver ounce was
$14.78 in the fourth quarter and $9.69 for the full year of 2018,
compared to ($3.80) and ($3.36) for the same periods of 2017.1 The
AISC, after by-product credits, was $19.51 for the fourth quarter
and $14.68 for the full year of 2018 compared to ($0.64) and
($0.26) for the same periods of 2017.2 The increases in cash cost,
after by-product credits, per silver ounce and AISC, after
by-product credits, per silver ounce, were due to lower silver and
gold production and higher mining costs as a result of the
transition to underground mining.
A review of sulfide ore is underway, including a bulk sample to
test the capabilities of the third-party plant.
Nevada Operations
For the fourth quarter of 2018, 19,098 gold ounces and 88,156
silver ounces were produced. For the period July 20, 2018 to
December 31, 2018, 32,887 gold ounces and 172,301 silver
ounces were produced. During 2018, the Nevada operations focused on
development at Fire Creek and Hollister, limiting production as
little development had been undertaken earlier in the year by
Klondex. While the development rate at Fire Creek has exceeded the
planned advance, the focus remains on finding ways to maintain the
development rate in all ground conditions. In addition, the
increasing development is providing additional drill platforms to
enhance the exploration program, and five drills are operating for
stope design, in-fill drilling and exploration. The Company's plan
is to increase Fire Creek's throughput from 350 tons per day to 520
tons per day by mid-2019. At Hollister, the development of a
decline to the Hatter Graben exploration target is underway with
completion of the initial phase expected to be late in 2019.
During the period July 20, 2018 to December 31, 2018,
approximately $32.6 million in capital and $9.3 million in
exploration expense was invested in Nevada. Of the $32.6 million in
capital, $12.4 million related to the completion of the tailings
facility at Midas which is expected to provide the waste capacity
for four years of full production, while $13.2 million was for
development needed to increase Fire Creek throughput, and $1.5
million was for completing the carbon in leach "CIL" circuit at the
Midas Mill to increase the recoveries from Hollister ore.
Lucky Friday Mine - Idaho
Silver production was 13,026 ounces in the fourth quarter and
169,041 ounces for the full year 2018, a decrease from 69,578
ounces and 838,658 ounces in the fourth quarter and full year of
2017, respectively, due to the ongoing strike by unionized
employees, which began in March 2017. The Company continues to
invest in the mine, with limited production and capital
improvements being performed by salaried staff.
Construction of the RVM machine continues in Sweden, and is
expected to be completed, along with testing of the unit, and sent
to the Company in 2020.
EXPLORATION AND PRE-DEVELOPMENT
Exploration
Exploration (including corporate development) expenses were $8.1
million, and $35.7 million for the fourth quarter and full year
2018, respectively. This represents an increase of 37% and 52% over
the fourth quarter and full year 2017. These increases were
primarily the result of the addition of the Nevada operations and
increased exploration at San Sebastian, the Kinskuch project in
British Columbia and the Little Baldy project in northern
Idaho.
A complete summary of exploration activities can be found in the
news release entitled "Hecla Reports Record Reserves For Silver,
Gold, and Lead" released on February 14, 2019.
Pre-development
Pre-development spending was $1.3 million in the fourth quarter
and $4.9 million for the full year 2018, principally to advance the
permitting at Rock Creek and Montanore.
1,2,4,5
Non-GAAP measure. See pages 10-11 for more
information.
Rock Creek
In August 2018, the Kootenai National Forest issued the Final
Record of Decision (ROD) for Phase I (evaluation phase) of the Rock
Creek Project, a proposed underground copper and silver mine in
northwestern Montana near Noxon in Sanders County. The Company is
updating its plan of operation to reflect the ROD, and agency
approval is anticipated in early 2019. The project remains the
subject of ongoing litigation.
Montanore
In May 2017, the Federal District court judge in Missoula,
Montana remanded back to the U.S. Forest Service and U.S. Fish and
Wildlife Service their approvals for the Montanore project. The
court advised that the agencies could proceed with the approval of
the evaluation phase of the project. The U.S. Forest Service
determined a focused supplemental Environmental Impact Statement
("EIS") would be prepared on the evaluation phase and published its
notice of intent to do so in the Federal Register in December 2017.
It is anticipated that the agency will complete its assessment and
issue a new ROD in 2019. As a part of this permitting process, the
U.S. Fish and Wildlife Service is preparing updated terrestrial and
aquatic biological opinions for the project. The project remains
the subject of ongoing litigation.
RESEARCH AND DEVELOPMENT
The Research and Development activities of the Company consisted
primarily of work being conducted on the RVM, the focus of which is
shifting towards fabrication of the unit, with delivery expected in
2020.
BASE METALS AND CURRENCY HEDGING
Base Metals Forward Sales Contracts
There were no forward sales contracts outstanding at December
31, 2018, other than provisional hedges (which address changes in
prices between shipment and settlement with customers).
Foreign Currency Forward Purchase Contracts
The following table summarizes the Canadian dollars and Mexican
pesos the Company has committed to purchase under foreign exchange
forward contracts at December 31, 2018:
Currency Under Contract
(in thousands of CAD/MXN)
Average Exchange Rate CAD
MXN CAD/USD
MXN/USD 2019 settlements 114,800
124,320 1.30 20.28 2020 settlements 68,900
7,100 1.29 20.72 2021 settlements 49,900 — 1.28 — 2022 settlements
21,000 — 1.27 —
2019 ESTIMATES6
2019 Production Outlook
Silver Production
(Moz)
Gold Production
(Koz)
Silver Equivalent
(Moz)
Gold Equivalent
(Koz)
Greens Creek 7.7
50 24.0 305
Lucky
Friday 0.2 N/A
0.2 N/A
San Sebastian
2.0 14
3.0 40
Casa Berardi
N/A 150
11.7 150
Nevada Operations
0.1 76 6.1
77
Total 10.0
290 45.0
572
2019 Cost Outlook
Costs of Sales
(million)
Cash cost, after by-
product credits, per
silver/gold ounce1,4
AISC, after by-product
credits, per produced
silver/gold ounce2
Greens Creek $202
$0 $5.50
Lucky Friday
N/A N/A N/A
San
Sebastian $41 $9.00
$12.00
Total Silver
$243 $1.10 $11.00
Casa Berardi $210
$850 $1,150
Nevada Operations
$90 $900
$1,325
Total Gold $300
$875 $1,250
2019 Capital and Exploration Outlook
2019E Capital expenditures (excluding capitalized interest)
$150
million
2019E Exploration expenditures (includes Corporate
Development)
$25 million
2019E Pre-development expenditures
$2.5 million
2019E Research and Development expenditures
$3.5 million
1,2,4,6
Non-GAAP measures. See pages 10-11 for
more information.
DIVIDENDS
The Board of Directors declared a quarterly dividend of $0.0025
per share of common stock, payable on or about March 13, 2019, to
shareholders of record on March 5, 2019. The Company's realized
silver price was $14.58 in the fourth quarter and therefore did not
satisfy the criteria for a larger dividend under the Company's
dividend policy.
The Board of Directors also declared the regular quarterly
dividend of $0.875 per share on the 157,816 outstanding shares of
Series B Cumulative Convertible Preferred Stock. This represents a
total amount to be paid of approximately $138,000. The cash
dividend is payable April 1, 2019, to shareholders of record on
March 15, 2019.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held today, Thursday,
February 21, at 10:00 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 operating mines in
Nevada and 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. The
non-GAAP financial measures cited in this release and listed below
are reconciled to their most comparable GAAP measure at the end of
this release.
(1) Cash cost, after by-product credits, per silver and gold
ounce is 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 the 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 and Nevada Operations, 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
program.
(2) All in sustaining cost (AISC), after by-product credits, is
a non-GAAP measurement, a reconciliation of which to cost of sales
and other direct production costs and depreciation, depletion and
amortization, the closest GAAP measurement, can be found in the end
of the release. AISC, after by-product credits, includes cost of
sales and other direct production costs, expenses for reclamation
and exploration at the mines sites, corporate exploration related
to sustaining operations, and all site sustaining capital costs.
AISC, after by-product credits, is calculated net of depreciation,
depletion, and amortization and by-product credits.
Current GAAP measures used in the mining industry, such as cost
of goods sold, do not capture all the expenditures incurred to
discover, develop and sustain silver and gold production.
Management believes that all in sustaining costs is a non-GAAP
measure that provides additional information to management,
investors and analysts to help (i) in the understanding of the
economics of our operations and performance compared to other
producers and (ii) in the transparency by better defining the total
costs associated with production. 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
program.
(3) Adjusted EBITDA is a non-GAAP measurement, a reconciliation
of which to net income, the most comparable GAAP measure, can be
found at the end of the release. Adjusted EBITDA is a measure used
by management to evaluate the Company's operating performance but
should not be considered an alternative to net income, or cash
provided by operating activities as those terms are defined by
GAAP, and does not necessarily indicate whether cash flows will be
sufficient to fund cash needs. In addition, the Company may use it
when formulating performance goals and targets under its incentive
program.
(4) Cash cost, after by-product credits, per gold ounce, is a
Non-GAAP measurement only applicable to Casa Berardi and Nevada
Operations production. Gold produced from Greens Creek and San
Sebastian is treated as a by-product credit against the silver cash
cost.
(5) Free cash flow is a non-GAAP measure calculated as cash
provided by operating activities less additions to properties,
plants and equipment.
Other
(6) Expectations for 2019 include silver, gold, lead and zinc
production from Greens Creek, San Sebastian, Casa Berardi and
Nevada Operations converted using Au $1,250/oz, Ag $16.00/oz, Zn
$1.25/lb, and Pb $1.00/lb. Lucky Friday expectations are currently
suspended as there is currently a strike. Numbers may be
rounded.
(7) Silver and gold equivalent calculation based on average
actual prices for each metal in the year as follows: $15.71 for Ag,
$1,269 for Au, $1.02 for Pb, and $1.33 for Zn.
Cautionary Statement Regarding Forward
Looking Statements, Including 2019 Outlook
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbor
created by such sections and other applicable laws, including
Canadian securities laws. Such forward-looking statements may
include, without limitation: (i) estimates of future costs
including cost of sales, cash cost, after by-product credits per
ounce of silver/gold and AISC, after by-product credits, per ounce
of silver/gold; (ii) estimates for 2019 for silver and gold
production and silver equivalent production, cash cost, after
by-product credits, AISC, after by-product credits, capital
expenditures and exploration and pre-development expenditures
(which assumes metal prices of gold at $1,250/oz, Ag $16.00/oz, Zn
$1.25/lb, Pb $1.00/lb; USD/CAD assumed to be $0.79, USD/MXN assumed
to be $0.06; and (iii) the Company’s mineral reserves and
resources. Estimates or expectations of future events or results
are based upon certain assumptions, which may prove to be
incorrect. Such assumptions, include, but are not limited to: (a)
there being no significant change to current geotechnical,
metallurgical, hydrological and other physical conditions; (b)
permitting, development, operations and expansion of the Company’s
projects being consistent with current expectations and mine plans;
(c) political/regulatory developments in any jurisdiction in which
the Company operates being consistent with its current
expectations; (d) the exchange rate for the Canadian dollar to the
U.S. dollar, being approximately consistent with current levels;
(e) certain price assumptions for gold, silver, lead and zinc; (f)
prices for key supplies being approximately consistent with current
levels; (g) the accuracy of our current mineral reserve and mineral
resource estimates; and (h) 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. Where the Company expresses or implies an
expectation or belief as to future events or results, such
expectation or belief is expressed in good faith and believed to
have a reasonable basis. However, such statements are subject to
risks, uncertainties and other factors, which could cause actual
results to differ materially from future results expressed,
projected or implied by the “forward-looking statements.” Such
risks include, but are not limited to gold, silver and other metals
price volatility, operating risks, currency fluctuations, increased
production costs and variances in ore grade or recovery rates from
those assumed in mining plans, community relations, conflict
resolution and outcome of projects or oppositions, litigation,
political, regulatory, labor and environmental risks, and
exploration risks and results, including that mineral resources are
not mineral reserves, they do not have demonstrated economic
viability and there is no certainty that they can be upgraded to
mineral reserves through continued exploration. For a more detailed
discussion of such risks and other factors, see the Company’s 2018
Form 10-K, filed on February 22, 2019, with the Securities and
Exchange Commission (SEC), as well as the Company’s other SEC
filings. The Company does not undertake any obligation to release
publicly revisions to any “forward-looking statement,” including,
without limitation, outlook, to reflect events or circumstances
after the date of this news release, or to reflect the occurrence
of unanticipated events, except as may be required under applicable
securities laws. Investors should not assume that any lack of
update to a previously issued “forward-looking statement”
constitutes a reaffirmation of that statement. Continued reliance
on “forward-looking statements” is at investors’ own risk.
Cautionary Statements to Investors on Reserves and
Resources
Reporting requirements in the United States for disclosure of
mineral properties are governed by the SEC and included in the
SEC's Securities Act Industry Guide 7, entitled “Description of
Property by Issuers Engaged or to be Engaged in Significant Mining
Operations” (Guide 7). Although the SEC has recently issued new
rules rescinding Guide 7, the new rules are not binding until
January 1, 2022, and at this time the Company still reports in
accordance with Guide 7. However, the Company is also a “reporting
issuer” under Canadian securities laws, which require estimates of
mineral resources and reserves to be prepared in accordance with
Canadian National Instrument 43-101 (NI 43-101). NI 43-101 requires
all disclosure of estimates of potential mineral resources and
reserves to be disclosed in accordance with its requirements. Such
Canadian information is included herein to satisfy the Company's
“public disclosure” obligations under Regulation FD of the SEC and
to provide U.S. holders with ready access to information publicly
available in Canada.
Reporting requirements in the United States for disclosure of
mineral properties under Guide 7 and the requirements in Canada
under NI 43-101 standards are substantially different. This
document contains a summary of certain estimates of the Company,
not only of proven and probable reserves within the meaning of
Guide 7, but also of mineral resource and mineral reserve estimates
estimated in accordance with the definitional standards of the
Canadian Institute of Mining, Metallurgy and Petroleum referred to
in NI 43-101. Under Guide 7, the term "reserve" means that part of
a mineral deposit that can be economically and legally extracted or
produced at the time of the reserve determination. The term
"economically", as used in the definition of reserve, means that
profitable extraction or production has been established or
analytically demonstrated to be viable and justifiable under
reasonable investment and market assumptions. The term "legally",
as used in the definition of reserve, does not imply that all
permits needed for mining and processing have been obtained or that
other legal issues have been completely resolved. However, for a
reserve to exist, Hecla must have a justifiable expectation, based
on applicable laws and regulations, that issuance of permits or
resolution of legal issues necessary for mining and processing at a
particular deposit will be accomplished in the ordinary course and
in a timeframe consistent with Hecla's current mine plans. The
terms “measured resources”, “indicated resources,” and “inferred
resources” are Canadian mining terms as defined in accordance with
NI 43-101. These terms are not defined under Guide 7 and are not
normally permitted to be used in reports and registration
statements filed with the SEC in the United States, except where
required to be disclosed by foreign law. The term “resource” does
not equate to the term “reserve”. Under Guide 7, the material
described herein as “indicated resources” and “measured resources”
would be characterized as “mineralized material” and is permitted
to be disclosed in tonnage and grade only, not ounces. The category
of “inferred resources” is not recognized by Guide 7. Investors are
cautioned not to assume that any part or all of the mineral
deposits in such categories will ever be converted into proven or
probable reserves. “Resources” have a great amount of uncertainty
as to their existence, and great uncertainty as to their economic
and legal feasibility. It cannot be assumed that all or any part of
such a “resource” will ever be upgraded to a higher category or
will ever be economically extracted. Investors are cautioned not to
assume that all or any part of a “resource” exists or is
economically or legally mineable. Investors are also especially
cautioned that the mere fact that such resources may be referred to
in ounces of silver and/or gold, rather than in tons of
mineralization and grades of silver and/or gold estimated per ton,
is not an indication that such material will ever result in mined
ore which is processed into commercial silver or gold.
Qualified Person (QP) Pursuant to
Canadian National Instrument 43-101
Dean McDonald, PhD. P.Geo., Senior Vice President - Exploration
of Hecla Mining Company, who serves as a Qualified Person under
National Instrument 43-101, supervised the preparation of the
scientific and technical information concerning Hecla’s mineral
projects in this news release. Information regarding data
verification, surveys and investigations, quality assurance program
and quality control measures and a summary of sample, analytical or
testing procedures for the Greens Creek Mine are contained in a
technical report prepared for Hecla titled “Technical Report for
the Greens Creek Mine, Juneau, Alaska, USA” effective date March
28, 2013, and for the Lucky Friday Mine are contained in a
technical report prepared for Hecla titled “Technical Report on the
Lucky Friday Mine Shoshone County, Idaho, USA” effective date April
2, 2014, for the Casa Berardi Mine are contained in a technical
report prepared for Hecla titled "Technical Report on the Mineral
Resource and Mineral Reserve Estimate for the Casa Berardi Mine,
Northwestern Quebec, Canada" effective date March 31, 2014 (the
"Casa Berardi Technical Report"), and for the San Sebastian Mine
are contained in a technical report prepared for Hecla titled
"Technical Report for the San Sebastian Ag-Au Property, Durango,
Mexico" effective date September 8, 2015. Also included in these
four technical reports is a description of the key assumptions,
parameters and methods used to estimate mineral reserves and
resources and a general discussion of the extent to which the
estimates may be affected by any known environmental, permitting,
legal, title, taxation, socio-political, marketing or other
relevant factors. Information regarding data verification, surveys
and investigations, quality assurance program and quality control
measures and a summary of sample, analytical or testing procedures
for the Fire Creek Mine are contained in a technical report
prepared for Klondex Mines, dated March 31, 2018; the Hollister
Mine dated May 31, 2017, amended August 9, 2017; and the Midas Mine
dated August 31, 2014, amended April 2, 2015. Copies of these
technical reports are available under Hecla's and Klondex's
profiles on SEDAR at www.sedar.com.
The current Casa Berardi drill program was performed on core
sawed in half and included the insertion of blanks and standards of
variable grade in every 24 core samples. Standards were generally
provided by Analytical Solutions Ltd and prepared in 30-gram bags.
Samples were sent to the Swastika Laboratories in Swastika,
Ontario, a registered accredited laboratory, where they were dried,
crushed, and split for gold analysis. Analysis for gold was
completed by fire assay with AA finish. Gold over-limits were
analyzed by fire assay with gravimetric finish. Data received from
the lab were subject to validation using in-built program triggers
to identify outside limit blank or standard assays that require
re-analysis. Over 5% of the original pulps and rejects are sent for
re-assay to ALS Chemex in Val d’Or for quality control.
Dr. McDonald reviewed and verified information regarding drill
sampling, data verification of all digitally-collected data, drill
surveys and specific gravity determinations relating to the Casa
Berardi mine. The review encompassed quality assurance programs and
quality control measures including analytical or testing practice,
chain-of-custody procedures, sample storage procedures and included
independent sample collection and analysis. This review found the
information and procedures meet industry standards and are adequate
for Mineral Resource and Mineral Reserve estimation and mine
planning purposes.
HECLA MINING COMPANY
Condensed Consolidated Statements of
(Loss) Income
(dollars and shares in thousands, except
per share amounts - unaudited)
Fourth Quarter Ended Twelve Months Ended
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
Sales of products
$ 136,520 $ 160,113
$ 567,137 $ 577,775 Cost of sales and
other direct production costs
102,192 80,190
353,994
304,727 Depreciation, depletion and amortization
35,593
33,613
134,044 120,599 Total
cost of sales
137,785 113,803
488,038
425,326 Gross (loss) profit
(1,265 )
46,310
79,099 152,449 Other
operating expenses: General and administrative
8,693 6,567
36,542 35,611 Exploration
8,086 5,888
35,695
23,510 Pre-development
1,272 1,387
4,887 5,448
Research and development
399 1,151
5,441 3,276 Other
operating (income) expense
(171 ) 923
1,596
2,513 Loss (gain) on disposition of property, plants, equipment and
mineral interests
581 (1,118 )
(2,793 ) (6,042
) Suspension-related costs
2,356 6,916
20,693 21,301
Acquisition costs
389 —
10,045 25 Provision for
closed operations and reclamation
1,585 1,657
6,119 6,701
23,190 23,371
118,225 92,343 (Loss) income from operations
(24,455 ) 22,939
(39,126 )
60,106 Other income (expense): (Loss) gain on derivative
contracts
(18 ) (4,702 )
40,253 (21,250 ) Gain
(loss) on disposition of investments
2 1
(34 )
(166 ) Unrealized loss on investments
(355 ) (174 )
(2,816 ) (247 ) Net foreign exchange gain (loss)
7,454 578
10,310 (9,680 ) Interest and other
(expense) income
(613 ) 507
(907 )
1,692 Interest expense
(10,925 ) (9,589 )
(40,944 ) (38,012 )
(4,455 ) (13,379 )
5,862 (67,663 ) (Loss) income before income taxes
(28,910 ) 9,560
(33,264 ) (7,557 )
Income tax benefit (provision)
5,217 (38,527 )
6,701 (20,963 ) Net loss
(23,693 )
(28,967 )
(26,563 ) (28,520 ) Preferred stock
dividends
(138 ) (138 )
(552 ) (552 )
Loss applicable to common stockholders
$ (23,831
) $ (29,105 )
$ (27,115 ) $ (29,072 )
Basic loss per common share after preferred dividends
$
(0.05 ) $ (0.07 )
$ (0.06 ) $
(0.07 ) Diluted loss per common share after preferred dividends
$ (0.05 ) $ (0.07 )
$ (0.06
) $ (0.07 ) Weighted average number of common shares
outstanding basic
480,572 399,133
433,419 397,394 Weighted average number of
common shares outstanding diluted
480,572 399,133
433,419 397,394
HECLA MINING COMPANY
Condensed Consolidated Balance Sheets
(dollars and shares in thousands -
unaudited)
December 31, 2018
December 31, 2017
ASSETS
Current assets: Cash and cash equivalents
$ 27,389 $
186,107 Investments
— 33,758 Accounts receivable
25,818 32,190 Inventories
87,533 55,466 Other current
assets
23,410 13,715 Total current assets
164,150 321,236 Non-current investments
6,583 7,561
Non-current restricted cash and investments
1,025 1,032
Properties, plants, equipment and mineral interests, net
2,520,004 1,999,311 Deferred income tax asset
1,987
1,509 Other non-current assets and deferred charges
10,195
14,509
Total assets $ 2,703,944
$ 2,345,158
LIABILITIES
Current
liabilities: Accounts payable and accrued liabilities
$
77,861 $ 46,549 Accrued payroll and related benefits
30,034 31,259 Accrued taxes
7,727 5,919 Current
portion of capital leases
5,264 5,608 Current portion of
accrued reclamation and closure costs
3,410 6,679 Accrued
interest
5,961 5,745 Other current liabilities
5,937
10,371 Total current liabilities
136,194
112,130 Capital leases
7,871 6,193 Accrued reclamation and
closure costs
104,979 79,366 Long-term debt
532,799
502,229 Deferred income tax liability
173,537 124,352
Non-current pension liability
47,711 46,628 Other
non-current liabilities
9,890 12,983
Total
liabilities 1,012,981 883,881
STOCKHOLDERS’ EQUITY
Preferred stock
39 39
Common stock
121,956 100,926 Capital surplus
1,880,481 1,619,816 Accumulated deficit
(248,308
) (218,089 ) Accumulated other comprehensive loss
(42,469 ) (23,373 ) Treasury stock
(20,736
) (18,042 )
Total stockholders’ equity
1,690,963 1,461,277
Total liabilities and
stockholders’ equity $ 2,703,944 $
2,345,158 Common shares outstanding
482,604
399,176
HECLA MINING COMPANY
Condensed Consolidated Statements of Cash
Flows
(dollars in thousands - unaudited)
December 31, 2018
December 31, 2017
OPERATING ACTIVITIES
Net loss
$ (26,563 ) $ (28,520 )
Non-cash elements included in net loss: Depreciation, depletion and
amortization
140,905 126,467 Loss on disposition of
investments
— 167 Unrealized loss on investments
2,816 251 Gain on disposition of properties, plants,
equipment and mineral interests
(2,793 ) (6,042 )
Provision for reclamation and closure costs
6,090 4,508
Deferred income taxes
(9,699 ) 19,392 Stock
compensation
6,278 6,323 Acquisition costs
— —
Amortization of loan origination fees
2,077 1,864 (Gain)
loss on derivative contracts
(15,366 ) 20,741 Foreign
exchange (gain) loss
(7,104 ) 10,208 Adjustment of
inventory to market value
8,191 — Other non-cash charges,
net
(32 ) 51 Change in assets and liabilities:
Accounts receivable
9,843 (2,414 ) Inventories
(27,512 ) (3,744 ) Other current and non-current
assets
(1,726 ) (11,595 ) Accounts payable and
accrued liabilities
17,795 (16,434 ) Accrued payroll and
related benefits
(2,425 ) 2,092 Accrued taxes
645 (2,234 ) Accrued reclamation and closure costs and other
non-current liabilities
(7,199 ) (5,203 )
Cash
provided by operating activities 94,221 115,878
INVESTING
ACTIVITIES
Additions to
properties, plants, equipment and mineral interests
(136,933
) (98,038 ) Purchase of other companies, net of cash and
restricted cash acquired
(139,326 ) — Proceeds from
disposition of properties, plants and equipment
2,411 374
Insurance proceeds received for damaged property
4,377 7,745
Purchases of investments
(31,971 ) (56,613 )
Maturities of investments
64,895 49,969
Net
cash used in investing activities (236,547 )
(96,563 )
FINANCING
ACTIVITIES
Acquisition of
treasury shares
(2,694 ) (2,868 ) Proceeds from
issuance of common stock and warrants, net of related expense
6,744 9,610 Dividends paid to common stockholders
(4,393 ) (3,976 ) Dividends paid to preferred
stockholders
(552 ) (552 ) Borrowings on debt
102,024 — Payments on debt
(106,036 ) (470 )
Debt issuance and loan origination fees paid
(2,638 )
(476 ) Repayments of capital leases
(7,339 ) (6,516 )
Net cash used in financing activities (14,884
) (5,248 ) Effect of exchange rates on cash
(1,515
) 1,095 Net increase in cash, cash equivalents and
restricted cash and cash equivalents
(158,725 )
15,162 Cash, cash equivalents and restricted cash and cash
equivalents at beginning of year
187,139 171,977
Cash, cash equivalents and restricted cash and cash
equivalents at end of year
$ 28,414 $ 187,139
HECLA MINING COMPANY
Metal Prices
Fourth Quarter Ended Twelve Months Ended
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
AVERAGE METAL PRICES
Silver -
London PM Fix ($/oz)
$ 14.55 $
16.70
$ 15.71 $ 17.05 Realized
price per ounce
$ 14.58 $ 16.87
$ 15.63
$ 17.23 Gold - London PM Fix ($/oz)
$ 1,228 $ 1,274
$ 1,269 $ 1,257 Realized price per ounce
$
1,237 $ 1,278
$ 1,265 $ 1,261 Lead - LME Cash
($/pound)
$ 0.89 $ 1.13
$ 1.02 $ 1.05
Realized price per pound
$ 0.88 $ 1.14
$
1.04 $ 1.06 Zinc - LME Cash ($/pound)
$ 1.19 $
1.47
$ 1.33 $ 1.31 Realized price per pound
$
1.15 $ 1.46
$ 1.27 $ 1.32
Production Data
Fourth Quarter Ended Twelve Months Ended
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
GREENS CREEK UNIT
Tons of ore
processed
212,522 211,689
845,398 839,589 Mining cost per ton
$ 77.87 $ 74.49
$ 71.37 $ 70.86 Milling
cost per ton
$ 35.93 $ 32.38
$ 33.53 $
32.38 Ore grade milled - Silver (oz./ton)
12.81 13.02
12.16 12.88 Ore grade milled - Gold (oz./ton)
0.09
0.09
0.09 0.09 Ore grade milled - Lead (%)
2.67 2.41
2.80 2.72 Ore grade milled - Zinc (%)
7.12 6.53
7.47 7.25 Silver produced (oz.)
2,163,563 2,146,223
7,953,003 8,351,882 Gold produced (oz.)
13,097 11,565
51,493 50,854 Lead produced (tons)
4,608 3,916
18,960 17,996 Zinc produced (tons)
13,677 11,850
55,350 52,547 Total cash cost, after by-product credits, per
silver ounce (1)
$ 1.79 $ 0.66
$ (1.13
) $ 0.71 AISC, after by-product credits, per silver ounce
(1)
$ 7.92 $ 6.23
$ 5.58 $ 5.76 Capital
additions (in thousands)
$
12,170 $ 10,364
$ 46,864
$ 35,255
LUCKY FRIDAY UNIT
Tons of ore processed
1,297 6,347
17,309 70,718 Mining cost per ton
$ 67.91 $
47.39
$ 86.30 $ 106.75 Milling cost per ton
$
22.32 $ 9.35
$ 14.86 $ 21.71 Ore grade milled
- Silver (oz./ton)
7.33 11.73
10.78 12.38 Ore grade
milled - Lead (%)
6.89 6.90
7.19 7.10 Ore grade
milled - Zinc (%)
3.13 5.06
4.20 4.01 Silver produced
(oz.)
13,026 69,578
169,041 838,658 Lead produced
(tons)
96 391
1,131 4,737 Zinc produced (tons)
34 257
673 2,560 Total cash cost, net of by-product
credits, per silver ounce (1)
N/A $ (2.65 )
N/A $
5.81 AISC, after by-product credits, per silver ounce (1)
N/A $ 15.57
N/A $ 12.48 Capital additions (in
thousands)
$ 7,347
$ 1,268
$
14,236 $ 6,268
SAN SEBASTIAN UNIT
Tons of ore
processed
44,817 32,574
156,733 144,197 Mining cost
per ton
$ 131.16 $ 30.18
$ 149.77 $
36.77 Milling cost per ton
$ 64.03 $ 70.53
$
65.55 $ 67.52 Ore grade milled - Silver (oz./ton)
10.85 24.58
14.07 23.91 Ore grade milled - Gold
(oz./ton)
0.082 0.193
0.11 0.185 Silver produced
(oz.)
443,302 759,100
2,037,072 3,257,738 Gold
produced (oz.)
2,928 5,955
14,979 25,177 Total cash
cost, net of by-product credits, per silver ounce (1)
$
14.78 $ (3.80 )
$ 9.69 $ (3.36 ) AISC, after
by-product credits, per silver ounce (1)
$ 19.51 $
(0.64 )
$ 14.68 $ (0.26 ) Capital additions (in
thousands)
$ 2,527
$ 3,751
$
6,219 $ 11,231
CASA BERARDI UNIT
Tons of ore
processed - underground
187,956 198,846
744,947
805.047 Tons of ore processed - surface pit
135,436
147,432
630,771 491.177 Tons of ore
processed - total
323,392 346.278
1,375,718 1,296.224 Surface tons mined - ore
and waste
1,773,114 1,225,692
6,902,760 7,652,759
Mining cost per ton - underground
$ 106.75 $ 101.87
$ 105.78 $ 99.49 Mining cost per ton - combined
$ 81.92 $ 54.34
$ 74.44 $ 79.49 Mining
cost per ton or ore and waste - surface tons mined
$
3.10 $ 3.84
$ 3.56 $ 3.00 Milling cost per ton
$ 15.61 $ 15.59
$ 15.84 $ 16.10 Ore
grade milled - Gold (oz./ton) - underground
0.189 0.180
0.203 0.170 Ore grade milled - Gold (oz./ton) - surface pit
0.041 0.096
0.059 0.089 Ore grade milled - Gold
(oz./ton) - combined
0.129 0.144
0.136 0.139 Ore
grade milled - Silver (oz./ton)
0.03 0.03
0.03 0.03
Gold produced (oz.) - underground
31,015 31,117
130,647 118,739 Gold produced (oz.) - surface pit
4,849 12,327
32,097 37,914
Gold produced (oz.) - total
35,864 43,444
162,744 156,653 Silver produced (oz.) -
total
7,338 9,885
38,086 36,566
Total cash cost, net of by-product credits, per gold ounce
(1)
$ 940 $ 719
$ 800 $ 820 AISC, after
by-product credits, per gold ounce (1)
$ 1,348 $
1,039
$ 1,080 $ 1,174 Capital additions (in
thousands)
$ 13,590
$ 12,419
$ 40,710 $ 50,668
NEVADA OPERATIONS
Tons of ore
processed
60,484 N/A
116,383 N/A Mining cost per ton
$ 245.15 N/A
$ 216.80 N/A Milling cost
per ton
$ 79.09 N/A
$ 74.91 N/A Ore
grade milled - Gold (oz./ton)
0.365 N/A
0.328 N/A
Silver produced (oz.)
88,156 N/A
172,301 N/A Gold
produced (oz.)
19,098 N/A
32,887 N/A Total cash cost,
net of by-product credits, per silver ounce (1)
$
1,251 N/A
$ 1,221 N/A AISC, after by-product
credits, per silver ounce (1)
$ 2,020 N/A
$
1,950 N/A Capital additions (in thousands)
$
17,589 N/A
$ 32,587 N/A (1)
Cash cost, after by-product credits, per ounce and AISC,
after by-product credits. per ounce represent non-U.S. Generally
Accepted Accounting Principles (GAAP) measurements. A
reconciliation of cost of sales and other direct production costs
and depreciation, depletion and amortization (GAAP) to cash cost,
after by-product credits can be found in the cash cost per ounce
reconciliation section of this news release. Gold, lead and zinc
produced have been treated as by-product credits in calculating
silver costs per ounce. The primary metal produced at Casa Berardi
and Nevada Operations is gold, with a by-product credit for the
value of silver production.
Non-GAAP Measures(Unaudited)
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 (non-GAAP) and All-In Sustaining Cost, Before By-product
Credits and All-In Sustaining Cost, After By-product Credits
(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 (i) Cash Cost, Before By-product Credits,
(ii) Cash Cost, After By-product Credits, (iii) AISC, Before
By-product Credits and (iv) AISC, After By-product Credits for our
operations at the Greens Creek, Lucky Friday, San Sebastian, Casa
Berardi and Nevada Operations units and for the Company for the
three- and twelve-month periods ended December 31, 2018 and
2017, and for estimated amounts for the twelve months ended
December 31, 2019.
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 these
non-GAAP measures as we report them are the same as those reported
by other mining companies.
Cash Cost, After By-product Credits, per Ounce is an important
operating statistic that we utilize to measure each mine's
operating performance. We have recently started reporting AISC,
After By-product Credits, per Ounce which we use as a measure of
our mines' net cash flow after costs for exploration,
pre-development, reclamation, and sustaining capital. This is
similar to the Cash Cost, After By-product Credits, per Ounce
non-GAAP measure we report, but also includes on-site exploration,
reclamation, and sustaining capital costs. Current GAAP measures
used in the mining industry, such as cost of goods sold, do not
capture all the expenditures incurred to discover, develop and
sustain silver and gold production. Cash Cost, After By-product
Credits, per Ounce and AISC, After By-product Credits, per Ounce
also allow us to benchmark the performance of each of our mines
versus those of our competitors. As a primary silver and gold
mining company, we also use these statistics on an aggregate basis.
We aggregate the Greens Creek, Lucky Friday and San Sebastian mines
to compare our performance with that of other primary silver mining
companies and aggregate the Casa Berardi and Nevada Operations
units to compare our performance with that of other primary gold
mining companies. Similarly, these statistics are useful in
identifying acquisition and investment opportunities as they
provide a common tool for measuring the financial performance of
other mines with varying geologic, metallurgical and operating
characteristics.
Cash Cost, Before By-product Credits and AISC, Before By-product
Credits include 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. AISC, Before By-product
Credits for each mine also includes on-site exploration,
reclamation, and sustaining capital costs. AISC, Before By-product
Credits for our consolidated silver properties also includes
corporate costs for general and administrative expense, exploration
and sustaining capital projects. 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.
In addition to the uses described above, Cash Cost, After
By-product Credits, per Ounce and AISC, After By-product Credits,
per Ounce provide management and investors an indication of
operating cash flow, after consideration of the average price,
received from production. We also use these measurements for the
comparative monitoring of performance of our mining operations
period-to-period from a cash flow perspective.
The Casa Berardi and Nevada Operations sections below report
Cash Cost, After By-product Credits, per Gold Ounce and AISC, After
By-product Credits, per Gold Ounce for the production of gold,
their primary product, and by-product revenues earned from silver,
which is a by-product at Casa Berardi and Nevada Operations. 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 and AISC, After By-product Credits, per Ounce.
Thus, the gold produced at our Casa Berardi and Nevada Operations
units is not included as a by-product credit when calculating Cash
Cost, After By-product Credits, per Silver Ounce and AISC, After
By-product Credits, per Silver Ounce for the total of Greens Creek,
Lucky Friday and San Sebastian, our combined silver properties.
Similarly, the silver produced at our other three units is not
included as a by-product credit when calculating the similar gold
metrics for Casa Berardi.
In thousands (except per ounce amounts) Three
Months Ended December 31, 2018
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Cost of sales and other direct production costs and depreciation,
depletion and amortization $ 48,302 $ 3,906 $ 10,638 $ 62,846
Depreciation, depletion and amortization (11,631 ) (209 ) (1,016 )
(12,856 ) Treatment costs 9,038 78 180 9,296 Change in product
inventory 2,092 (148 ) 527 2,471 Reclamation and other costs (587 )
— (185 ) (772 ) Exclusion of Lucky Friday costs — (3,627 ) —
(3,627 ) Cash Cost, Before By-product Credits (1) 47,214 —
10,144 57,358 Reclamation and other costs 849 — 105 954 Exploration
242 — 1,164 608 2,014 Sustaining capital 12,170 — 828 157 13,155
General and administrative 8,693 8,693
AISC, Before By-product Credits (1) 60,475 — 12,241 82,174
By-product credits: Zinc (22,788 ) — (22,788 ) Gold (14,079 )
(3,595 ) (17,674 ) Lead (6,475 ) — (6,475 ) Total
By-product credits (43,342 ) — (3,595 ) (46,937 ) Cash Cost,
After By-product Credits $ 3,872 $ — $ 6,549 $
10,421 AISC, After By-product Credits $ 17,133 $ —
$ 8,646 $ 35,237 Divided by ounces produced
2,164 — 443 2,607 Cash Cost, Before By-product Credits, per Silver
Ounce $ 21.83 $ — $ 22.90 $ 22.01 By-product credits per ounce
(20.04 ) — (8.12 ) (18.00 ) Cash Cost, After By-product
Credits, per Silver Ounce $ 1.79 $ — $ 14.78 $
4.01 AISC, Before By-product Credits, per Silver Ounce $
27.96 $ — $ 27.63 $ 31.53 By-product credits per ounce (20.04 ) —
(8.12 ) (18.00 ) AISC, After By-product Credits, per Silver
Ounce $ 7.92 $ — $ 19.51 $ 13.53
In thousands (except per ounce amounts) Three
Months Ended December 31, 2018
Casa
Berardi
Nevada
Operations
Total Gold Cost of sales and other direct
production costs and depreciation, depletion and amortization $
47,253 $ 27,686 $ 74,939 Depreciation, depletion and amortization
(16,423 ) (6,314 ) (22,737 ) Treatment costs 440 48 488 Change in
product inventory 2,686 4,711 7,397 Reclamation and other costs
(137 ) (954 ) (1,091 ) Cash Cost, Before By-product Credits (1)
33,819 25,177 58,996 Reclamation and other costs 137 567 704
Exploration 903 4,101 5,004 Sustaining capital 13,591 10,018
23,609 AISC, Before By-product Credits (1) 48,450
39,863 88,313 By-product credits: Silver (106 ) (1,280 ) (1,386 )
Total By-product credits (106 ) (1,280 ) (1,386 ) Cash Cost, After
By-product Credits $ 33,713 $ 23,897 $ 57,610
AISC, After By-product Credits $ 48,344 $ 38,583 $
86,927 Divided by gold ounces produced 36 19 55 Cash Cost,
Before By-product Credits, per Gold Ounce $ 943 $ 1,318 $ 1,073
By-product credits per ounce (3 ) (67 ) (25 ) Cash Cost, After
By-product Credits, per Gold Ounce $ 940 $ 1,251 $
1,048 AISC, Before By-product Credits, per Gold Ounce $
1,351 $ 2,087 $ 1,607 By-product credits per ounce (3 ) (67 ) (25 )
AISC, After By-product Credits, per Gold Ounce $ 1,348 $
2,020 $ 1,582 In thousands (except per ounce
amounts) Three Months Ended December 31, 2018
Total
Silver
Total
Gold
Total Cost of sales and other direct
production costs and depreciation, depletion and amortization $
62,846 $ 74,939 $ 137,785 Depreciation, depletion and amortization
(12,856 ) (22,737 ) (35,593 ) Treatment costs 9,296 488 9,784
Change in product inventory 2,471 7,397 9,868 Reclamation and other
costs (772 ) (1,091 ) (1,863 ) Exclusion of Lucky Friday costs
(3,627 ) (3,627 ) Cash Cost, Before By-product Credits (1)
57,358 58,996 116,354 Reclamation and other costs 954 704 1,658
Exploration 2,014 5,004 7,018 Sustaining capital 13,155 23,609
36,764 General and administrative 8,693 — 8,693
AISC, Before By-product Credits (1) 82,174 88,313 170,487
By-product credits: Zinc (22,788 ) — (22,788 ) Gold (17,674 ) —
(17,674 ) Lead (6,475 ) — (6,475 ) Silver (1,386 ) (1,386 )
Total By-product credits (46,937 ) (1,386 ) (48,323 ) Cash Cost,
After By-product Credits $ 10,421 $ 57,610 $ 68,031
AISC, After By-product Credits $ 35,237 $ 86,927
$ 122,164 Divided by ounces produced 2,607 55 Cash
Cost, Before By-product Credits, per Ounce $ 22.01 $ 1,073
By-product credits per ounce (18.00 ) (25 ) Cash Cost, After
By-product Credits, per Ounce $ 4.01 $ 1,048 AISC,
Before By-product Credits, per Ounce $ 31.53 $ 1,607 By-product
credits per ounce (18.00 ) (25 ) AISC, After By-product Credits,
per Ounce $ 13.53 $ 1,582 In thousands (except
per ounce amounts) Three Months Ended December
31, 2017
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Casa
Berardi
(Gold)
Total Cost of sales and other direct
production costs and depreciation, depletion and amortization $
61,561 $ 565 $ 5,323 $ 67,449 $ 46,354 $ 113,803 Depreciation,
depletion and amortization (16,886 ) (14 ) (657 ) (17,557 ) (16,056
) (33,613 ) Treatment costs 10,153 502 279 10,934 658 11,592 Change
in product inventory (7,645 ) 42 137 (7,466 ) 584 (6,882 )
Reclamation and other costs (1,241 ) 48 (378 ) (1,571 ) (122
) (1,693 ) Cash Cost, Before By-product Credits (1) 45,942 1,143
4,704 51,789 31,418 83,207 Reclamation and other costs 667 — 117
784 122 906 Exploration 926 — 1,895 518 3,339 1,322 4,661
Sustaining capital 10,360 1,268 391 441 12,460 12,419 24,879
General and administrative 6,567 6,567
6,567 AISC, Before By-product Credits (1) 57,895
2,411 7,107 74,939 45,281 120,220 By-product credits: Zinc (24,478
) (561 ) (25,039 ) (25,039 ) Gold (13,019 ) (7,593 ) (20,612 )
(20,612 ) Lead (7,021 ) (768 ) (7,789 ) (7,789 ) Silver
(164 ) (164 ) Total By-product credits (44,518
) (1,329 ) (7,593 ) (53,440 ) (164 ) (53,604 ) Cash Cost, After
By-product Credits $ 1,424 $ (186 ) $ (2,889 ) $ (1,651 ) $
31,254 $ 29,603 AISC, After By-product Credits $
13,377 $ 1,082 $ (486 ) $ 21,499 $ 45,117
$ 66,616 Divided by ounces produced 2,146 70 760
2,976 43 Cash Cost, Before By-product Credits, per Ounce $ 21.41 $
16.34 $ 6.19 $ 17.41 $ 723 By-product credits per ounce (20.75 )
(18.99 ) (9.99 ) (17.96 ) (4 ) Cash Cost, After By-product Credits,
per Ounce $ 0.66 $ (2.65 ) $ (3.80 ) $ (0.55 ) $ 719
AISC, Before By-product Credits, per Ounce $ 26.98 $ 34.56 $ 9.35 $
25.19 $ 1,043 By-product credits per ounce (20.75 ) (18.99 ) (9.99
) (17.96 ) (4 ) AISC, After By-product Credits, per Ounce $ 6.23
$ 15.57 $ (0.64 ) $ 7.23 $ 1,039
In thousands (except per ounce amounts) Twelve
Months Ended December 31, 2018
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Cost of sales and other direct production costs and depreciation,
depletion and amortization $ 190,066 $ 9,750 $ 41,815 $ 241,631
Depreciation, depletion and amortization (46,511 ) (1,012 ) (4,602
) (52,125 ) Treatment costs 38,174 839 807 39,820 Change in product
inventory 3,087 (2,330 ) 2,385 3,142 Reclamation and other costs
(2,911 ) — (1,559 ) (4,470 ) Exclusion of Lucky Friday costs —
(7,247 ) — (7,247 ) Cash Cost, Before By-product
Credits (1) 181,905 — 38,846 220,751 Reclamation and other costs
3,397 419 3,816 Exploration 3,151 7,792 1,959 12,902 Sustaining
capital 46,864 1,947 1,495 50,306 General and administrative
36,542 36,542 AISC, Before By-product Credits
(1) 235,317 — 49,004 324,317 By-product credits: Zinc (103,096 ) —
(103,096 ) Gold (57,316 ) — (19,100 ) (76,416 ) Lead (30,512 ) —
(30,512 ) Total By-product credits (190,924 ) —
(19,100 ) (210,024 ) Cash Cost, After By-product Credits $
(9,019 ) $ — $ 19,746 $ 10,727 AISC, After
By-product Credits $ 44,393 $ — $ 29,904 $
114,293 Divided by silver ounces produced 7,953 2,037 9,990
Cash Cost, Before By-product Credits, per Silver Ounce $ 22.88 $ —
$ 19.07 $ 22.10 By-product credits per ounce (24.01 ) —
(9.38 ) (21.02 ) Cash Cost, After By-product Credits, per Silver
Ounce $ (1.13 ) $ — $ 9.69 $ 1.08 AISC, Before
By-product Credits, per Silver Ounce $ 29.59 $ — $ 24.06 $ 32.46
By-product credits per ounce (24.01 ) — (9.38 ) (21.02 )
AISC, After By-product Credits, per Silver Ounce $ 5.58 $ —
$ 14.68 $ 11.44 In thousands (except
per ounce amounts) Twelve Months Ended
December 31, 2018
Casa
Berardi
Nevada
Operations
Total Gold Cost of sales and other direct
production costs and depreciation, depletion and amortization $
199,402 $ 47,005 $ 246,407 Depreciation, depletion and amortization
(71,302 ) (10,617 ) (81,919 ) Treatment costs 2,068 90 2,158 Change
in product inventory 1,205 7,138 8,343 Reclamation and other costs
(558 ) (954 ) (1,512 ) Cash Cost, Before By-product Credits (1)
130,815 42,662 173,477 Reclamation and other costs 558 567 1,125
Exploration 4,277 6,345 10,622 Sustaining capital 40,711
17,079 57,790 AISC, Before By-product Credits (1)
176,361 66,653 243,014 By-product credits: Silver (597 ) (2,512 )
(3,109 ) Total By-product credits (597 ) (2,512 ) (3,109 ) Cash
Cost, After By-product Credits $ 130,218 $ 40,150 $
170,368 AISC, After By-product Credits $ 175,764 $
64,141 $ 239,905 Divided by gold ounces produced 163
33 196 Cash Cost, Before By-product Credits, per Gold Ounce $ 804 $
1,297 $ 887 By-product credits per ounce (4 ) (76 ) (16 ) Cash
Cost, After By-product Credits, per Gold Ounce $ 800 $ 1,221
$ 871 AISC, Before By-product Credits, per Gold Ounce
$ 1,084 $ 2,026 $ 1,242 By-product credits per ounce (4 ) (76 ) (16
) AISC, After By-product Credits, per Gold Ounce $ 1,080 $
1,950 $ 1,226 In thousands (except per ounce
amounts) Twelve Months Ended December 31, 2018
Total Silver Total Gold
Total Cost of sales and other direct production costs and
depreciation, depletion and amortization $ 241,631 $ 246,407 $
488,038 Depreciation, depletion and amortization (52,125 ) (81,919
) (134,044 ) Treatment costs 39,820 2,158 41,978 Change in product
inventory 3,142 8,343 11,485 Reclamation and other costs (4,470 )
(1,512 ) (5,982 ) Exclusion of Lucky Friday costs (7,247 )
(7,247 ) Cash Cost, Before By-product Credits (1) 220,751 173,477
394,228 Reclamation and other costs 3,816 1,125 4,941 Exploration
12,902 10,622 23,524 Sustaining capital 50,306 57,790 108,096
General and administrative 36,542 — 36,542
AISC, Before By-product Credits (1) 324,317 243,014 567,331
By-product credits: Zinc (103,096 ) (103,096 ) Gold (76,416 )
(76,416 ) Lead (30,512 ) (30,512 ) Silver (3,109 ) (3,109 )
Total By-product credits (210,024 ) (3,109 ) (213,133 ) Cash Cost,
After By-product Credits $ 10,727 $ 170,368 $ 181,095
AISC, After By-product Credits $ 114,293 $ 239,905
$ 354,198 Divided by gold ounces produced 9,990 196
Cash Cost, Before By-product Credits, per Gold Ounce $ 22.10 $ 887
By-product credits per ounce (21.02 ) (16 ) Cash Cost, After
By-product Credits, per Gold Ounce $ 1.08 $ 871 AISC,
Before By-product Credits, per Gold Ounce $ 32.46 $ 1,242
By-product credits per ounce (21.02 ) (16 ) AISC, After By-product
Credits, per Gold Ounce $ 11.44 $ 1,226 In
thousands (except per ounce amounts) Twelve
Months Ended December 31, 2017
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Casa
Berardi
(Gold)
Total Cost of sales and other direct
production costs and depreciation, depletion and amortization $
201,803 $ 15,107 $ 23,700 $ 240,610 $ 184,716 $ 425,326
Depreciation, depletion and amortization (56,328 ) (2,447 ) (2,693
) (61,468 ) (59,131 ) (120,599 ) Treatment costs 47,774 4,759 1,185
53,718 2,432 56,150 Change in product inventory (2,247 ) 1,853 (55
) (449 ) 1,466 1,017 Reclamation and other costs (2,716 ) (115 )
(1,467 ) (4,298 ) (476 ) (4,774 ) Cash Cost, Before By-product
Credits (1) 188,286 19,157 20,670 228,113 129,007 357,120
Reclamation and other costs 2,666 217 468 3,351 475 3,826
Exploration 4,265 (1 ) 6,879 1,825 12,968 4,351 17,319 Sustaining
capital 35,255 5,377 2,770 2,716 46,118 50,664 96,782 General and
administrative 35,611 35,611
35,611 AISC, Before By-product Credits (1) 230,472 24,750
30,787 326,161 184,497 510,658 By-product credits: Zinc (96,950 )
(4,914 ) (101,864 ) (101,864 ) Gold (55,694 ) (31,625 ) (87,319 )
(87,319 ) Lead (29,717 ) (9,367 ) (39,084 ) (39,084 ) Silver
(614 ) (614 ) Total By-product credits
(182,361 ) (14,281 ) (31,625 ) (228,267 ) (614 ) (228,881 ) Cash
Cost, After By-product Credits $ 5,925 $ 4,876 $
(10,955 ) $ (154 ) $ 128,393 $ 128,239 AISC, After
By-product Credits $ 48,111 $ 10,469 $ (838 ) $
97,894 $ 183,883 $ 281,777 Divided by ounces
produced 8,352 839 3,258 12,449 157 Cash Cost, Before By-product
Credits, per Ounce $ 22.54 $ 22.83 $ 6.35 $ 18.33 $ 824 By-product
credits per ounce (21.83 ) (17.02 ) (9.71 ) (18.34 ) (4 ) Cash
Cost, After By-product Credits, per Ounce $ 0.71 $ 5.81
$ (3.36 ) $ (0.01 ) $ 820 AISC, Before By-product
Credits, per Ounce $ 27.59 $ 29.50 $ 9.45 $ 26.20 $ 1,178
By-product credits per ounce (21.83 ) (17.02 ) (9.71 ) (18.34 ) (4
) AISC, After By-product Credits, per Ounce $ 5.76 $ 12.48
$ (0.26 ) $ 7.86 $ 1,174 In thousands
(except per ounce amounts) Estimate for Twelve
Months Ended December 31, 2019
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Cost of sales and other direct production costs and depreciation,
depletion and amortization $ 202,000 $ 41,000 $ 243,000
Depreciation, depletion and amortization (45,000 ) (4,000 ) (49,000
) Treatment costs 38,000 1,000 39,000 Change in product inventory
(1,000 ) — (1,000 ) Reclamation and other costs (1,000 )
(1,000 ) (2,000 ) Cash Cost, Before By-product Credits (1) 193,000
37,000 230,000 Reclamation and other costs 1,000 1,000 2,000
Exploration 2,000 3,500 5,500 Sustaining capital 42,000 1,500
43,500 General and administrative — — 40,000
40,000 AISC, Before By-product Credits (1) 238,000 43,000
321,000 By-product credits: Zinc (109,000 ) (109,000 ) Gold (55,000
) (19,000 ) (74,000 ) Lead (34,000 ) (34,000 ) Total
By-product credits (198,000 ) (19,000 ) (217,000 ) Cash
Cost, After By-product Credits $ (5,000 ) $ 18,000 $
13,000 AISC, After By-product Credits $ 40,000
$ 24,000 $ 104,000 Divided by ounces produced 7,700
2,000 9,700 Cash Cost, Before By-product Credits, per Silver Ounce
$ 25.06 $ 18.50 $ 23.71 By-product credits per ounce (25.71 )
(9.50 ) (22.37 ) Cash Cost, After By-product Credits, per
Silver Ounce $ (0.65 ) $ 9.00 $ 1.34 AISC,
Before By-product Credits, per Silver Ounce $ 30.91 $ 21.50 $ 33.09
By-product credits per ounce (25.71 ) (9.50 ) (22.37 ) AISC,
After By-product Credits, per Silver Ounce $ 5.20 $
12.00 $ 10.72 In thousands (except per ounce
amounts) Estimate for Twelve Months Ended
December 31, 2019
Casa Berardi
Nevada
Operations
Total Gold Cost of sales and other direct
production costs and depreciation, depletion and amortization $
210,000 $ 90,000 $ 300,000 Depreciation, depletion and amortization
(80,000 ) (15,000 ) (95,000 ) Treatment costs — — — Change in
product inventory (2,000 ) (1,000 ) (3,000 ) Reclamation and other
costs 1,000 (2,800 ) (1,800 ) Cash Cost, Before By-product
Credits (1) 129,000 71,200 200,200 Reclamation and other costs
1,000 850 1,850 Exploration 4,000 6,000 10,000 Sustaining capital
43,000 25,000 68,000 AISC, Before By-product
Credits (1) 177,000 103,050 280,050 By-product credits: — Silver
(2,000 ) (2,000 ) (4,000 ) Total By-product credits (2,000 ) (2,000
) (4,000 ) Cash Cost, After By-product Credits $ 127,000 $
69,200 $ 196,200 AISC, After By-product Credits $
175,000 $ 101,050 $ 276,050 Divided by gold
ounces produced 150 76 226 Cash Cost, Before By-product Credits,
per Gold Ounce $ 860 $ 937 $ 886 By-product credits per ounce (13 )
(26 ) (18 ) Cash Cost, After By-product Credits, per Gold Ounce $
847 $ 911 $ 868 AISC, Before By-product
Credits, per Gold Ounce $ 1,180 $ 1,356 $ 1,239 By-product credits
per ounce (13 ) (26 ) (18 ) AISC, After By-product Credits, per
Gold Ounce $ 1,167 $ 1,330 $ 1,221 In
thousands (except per ounce amounts) Estimate
for Twelve Months Ended December 31, 2019 Total Silver
Total Gold Total Cost of sales
and other direct production costs and depreciation, depletion and
amortization $ 243,000 $ 300,000 $ 543,000 Depreciation, depletion
and amortization (49,000 ) (95,000 ) (144,000 ) Treatment costs
39,000 — 39,000 Change in product inventory (1,000 ) (3,000 )
(4,000 ) Reclamation and other costs (2,000 ) (1,800 ) (3,800 )
Cash Cost, Before By-product Credits (1) 230,000 200,200 430,200
Reclamation and other costs 2,000 1,850 3,850 Exploration 5,500
10,000 15,500 Sustaining capital 43,500 68,000 111,500 General and
administrative 40,000 — 40,000 AISC, Before
By-product Credits (1) 321,000 280,050 601,050 By-product credits:
Zinc (109,000 ) — (109,000 ) Gold (74,000 ) — (74,000 ) Lead
(34,000 ) — (34,000 ) Silver (4,000 ) (4,000 ) Total
By-product credits (217,000 ) (4,000 ) (221,000 ) Cash Cost, After
By-product Credits $ 13,000 $ 196,200 $ 209,200
AISC, After By-product Credits $ 104,000 $ 276,050
$ 380,050 Divided by ounces produced 9,700 226 Cash
Cost, Before By-product Credits, per Ounce $ 23.71 $ 886 By-product
credits per ounce (22.37 ) (18 ) Cash Cost, After By-product
Credits, per Ounce $ 1.34 $ 868 AISC, Before
By-product Credits, per Ounce $ 33.09 $ 1,239 By-product credits
per ounce (22.37 ) (18 ) AISC, After By-product Credits, per Ounce
$ 10.72 $ 1,221 (1) Includes all
direct and indirect operating costs related 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, before by-product revenues earned from all metals
other than the primary metal produced at each unit. AISC, Before
By-product Credits also includes on-site exploration, reclamation,
and sustaining capital costs. (2) The unionized employees at
Lucky Friday have been on strike since March 13, 2017, and
production at Lucky Friday has been limited since that time. For
2018 and 2017, costs related to suspension of full production
totaling approximately $17.4 million and $17.1 million,
respectively, along with $5.2 million and $4.2 million,
respectively, in non-cash depreciation expense for that period,
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, Cash Cost,
After By-product Credits, AISC, Before By-product Credits, and
AISC, After By-product Credits. (3) AISC, Before By-product
Credits for our consolidated silver properties includes corporate
costs for general and administrative expense, exploration and
sustaining capital.
Reconciliation of Net (Loss) Income Applicable to Common
Shareholders (GAAP) to Adjusted Net (Loss) Income Applicable to
Common Shareholders (non-GAAP)
This release refers to a non-GAAP measure of adjusted net (loss)
income applicable to common stockholders and adjusted net income
(loss) per share, which are indicators of our performance. They
exclude certain impacts which are of a nature which we believe are
not reflective of our underlying performance. Management believes
that adjusted net (loss) income per common share provides investors
with the ability to better evaluate our underlying operating
performance.
Dollars in thousands (except per share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2018 2017
2018
2017 Net loss applicable to common stockholders (GAAP)
$ (23,831 ) $ (29,105 )
$
(27,115 ) $ (29,072 ) Adjusting items: Loss (gain) on
derivatives contracts
18 4,702
(40,253 )
21,250 Provisional price loss (gain)
531 (178 )
3,803
(742 ) Lucky Friday suspension costs
2,356 6,916
20,693 21,301 Environmental accruals
250 —
250
— Foreign exchange (gain) loss
(7,454 ) (578 )
(10,310 ) 9,680 Acquisition costs
389 —
10,045 25 Bond offering costs
— —
— 887 Loss
(gain) on disposition of properties, plants, equipment and mineral
interests
581 (1,118 )
(2,793 ) (6,042 )
Change in deferred tax asset valuation allowance
(862
) 33,421
(862 ) 15,935 Adjusted
net (loss) income applicable to common stockholders
$
(28,022 ) $ 14,060
$ (46,542
) $ 33,222 Weighted average shares - basic
480,572 399,133
433,419 397,394 Weighted average
shares - diluted
480,572 399,133
433,419 397,394
Basic adjusted net (loss) income per common share
$
(0.06 ) $ 0.04
$ (0.11 ) $ 0.08
Diluted adjusted net (loss) income per common share
$
(0.06 ) $ 0.04
$ (0.11 ) $ 0.08
Reconciliation of Net Loss (GAAP) and Debt (GAAP) to Adjusted
EBITDA (non-GAAP) and Net Debt (non-GAAP)
This release refers to the non-GAAP measures of adjusted
earnings before interest, taxes, depreciation and amortization
("Adjusted EBITDA"), which is a measure of our operating
performance, and net debt to adjusted EBITDA for the last 12 months
(or "LTM adjusted EBITDA"), which is a measure of our ability to
service our debt. Adjusted EBITDA is calculated as net income
(loss) before the following items: interest expense, income tax
provision, depreciation, depletion, and amortization expense,
exploration expense, pre-development expense, acquisition costs,
interest and other income (expense), foreign exchange gains and
losses, gains and losses on derivative contracts, unrealized gains
on investments, provisions for environmental matters, stock-based
compensation, and provisional price gains and losses. Net debt is
calculated as total debt, which consists of the liability balances
for our Senior Notes, capital leases, and other notes payable, less
the total of our cash and cash equivalents and short-term
investments. Management believes that, when presented in
conjunction with comparable GAAP measures, adjusted EBITDA and net
debt to LTM adjusted EBITDA are useful to investors in evaluating
our operating performance and ability to meet our debt obligations.
The following table reconciles net loss and debt to adjusted EBITDA
and net debt:
Dollars are in thousands Three Months Ended
Twelve Months Ended
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
Net loss
$ (23,693 ) $ (28,967 )
$
(26,563 ) $ (28,520 ) Plus: Interest expense, net of
amount capitalized
10,925 9,589
40,944 38,012 Plus
(Less): Income taxes
(5,217 ) 38,527
(6,701
) 20,963 Plus: Depreciation, depletion and amortization
35,593 33,613
134,044 120,599 Plus: Exploration
expense
8,086 5,888
35,695 23,510 Plus:
Pre-development expense
1,272 1,387
4,887 5,448 Plus:
Acquisition costs
389 —
10,045 25 Plus: Lucky Friday
suspension-related costs
2,356 6,916
20,693 21,301
Plus/(Less): Loss (gain) on disposition of properties, plants,
equipment, and mineral interests
581 (1,118 )
(2,793
) (6,042 ) Plus/(Less): Foreign exchange (gain) loss
(7,454 ) (578 )
(10,310 ) 9,680
Plus/(Less): Unrealized loss (gain) on derivative contracts
18 3,846
(7,936 ) 18,063 Plus/(Less):
Provisional price loss (gain)
531 (178 )
3,803 (742 )
Plus: Provision for closed operations and environmental matters
2,133 1,129
6,090 4,508 Plus: Stock-based
compensation
1,606 1,380
6,242 6,331 Plus: Unrealized
loss on investments
355 174
2,816 247 Plus/(Less):
Other
611 (508 )
941 (1,526 ) Adjusted
EBITDA
$ 28,092 $ 71,100
$
211,897 $ 231,857 Total debt
$
545,934 $ 514,030 Less: Cash, cash equivalents and
short-term investments
27,389 219,865 Net debt
$ 518,545 $ 294,165 Net debt/LTM
adjusted EBITDA (non-GAAP)
2.4 1.3
Reconciliation of Cash Provided by Operating Activities
(GAAP) to Free Cash Flow (non-GAAP)
This release refers to a non-GAAP measure of free cash flow,
calculated as cash provided by operating activities, less additions
to properties, plants, equipment and mineral interests and a
one-time item for settlement of an insurance policy for reclamation
of the Troy Mine. Management believes that, when presented in
conjunction with comparable GAAP measures, free cash flow is useful
to investors in evaluating our operating performance. The following
table reconciles cash provided by operating activities to free cash
flow:
Hecla Consolidated
Greens
Creek
Casa
Berardi
Nevada
Operations
San
Sebastian
Lucky
Friday 1
Dollars are in thousands Three Months Ended Twelve
Months Ended December 31, December 31,
2018
2017
2018 2017
Twelve Months Ended
December 31, 2018 Cash provided (used) by operating activities
$ 19,011 $ 41,763
$ 94,221 $ 115,878
$ 125,138 $ 82,853 $
17,624 $ 5,401 $ (4,611 )
Less: Additions to properties, plants equipment and mineral
interests
(53,648 ) (27,648 )
(136,933
) (98,038 )
(40,882 )
(39,684 ) (32,587 )
(6,219 ) (14,236 ) Free cash
flow
$ (34,637 ) $ 14,115
$
(42,712 ) $ 17,840
$
84,256 $ 43,169
$ (14,963 ) $ (818
) $ (18,847 ) 1
Cash used by operating activities for Lucky Friday includes
$14.6 million for suspension costs incurred during the strike.
Reserves - 12/31/18(1)
Proven Reserves Tons
Silver Gold Lead
Zinc Copper
Silver Gold Lead
Zinc Copper Asset
(000) (oz/ton)
(oz/ton) %
% % (000 oz)
(000 oz) (Tons)
(Tons) (Tons) Greens Creek (2)
6 13.8 0.1
2.8 7
— 86 1
180 440 —
Lucky Friday (2) 4,230 15.4
— 9.6
4.1 — 65,234
— 406,080
174,630 — Casa Berardi (3)
6,790 — 0.08
— —
— — 563
— — — San
Sebastian (2) 22 3.9
0.08 — —
— 85
2 — —
— Fire Creek (2,4) 24 1.1
1.21 —
— — 27
29 — —
— Hollister (2,5) 2
7.1 0.73 —
— —
17 2 —
— —
Total 11,074
65,448 596 406,260
175,070 —
Probable Reserves Tons
Silver Gold Lead Zinc Copper
Silver Gold Lead Zinc Copper
Asset (000)
(oz/ton) (oz/ton)
% % %
(000 oz) (000 oz)
(Tons) (Tons) (Tons) Greens Creek (2)
9,270 11.5 0.09
2.8 7.6
— 106,972 840
262,760 706,040
— Lucky Friday (2) 1,387
11.4 — 7.6
3.7 —
15,815 — 104,720
50,640 — Casa Berardi (3)
16,954 — 0.08
— —
— — 1,343
— — — San
Sebastian (2) 206 13.1
0.1 — —
— 2,705
21 — —
— Fire Creek (2,4) 91
0.3 0.44 —
— — 30
40 —
— — Hollister (2,5) 11
8.4 0.65 —
— —
66 6 —
— —
Total 27,919
125,588 2,250 367,480
756,680 —
Proven and Probable Reserves Tons
Silver Gold Lead Zinc Copper
Silver Gold Lead Zinc Copper
Asset (000)
(oz/ton) (oz/ton)
% % %
(000 oz) (000 oz)
(Tons) (Tons) (Tons) Greens Creek (2)
9,277 11.5 0.09
2.8 7.6
— 107,058 840
262,940 706,470
— Lucky Friday (2) 5,617
14.4 — 9.1
4 — 81,049
— 510,800
225,260 — Casa Berardi (3)
23,743 — 0.08
— —
— — 1,907
— — — San
Sebastian (2) 228 12.3
0.1 — —
— 2,790
23 — —
— Fire Creek (2,4) 115
0.5 0.6 —
— — 57
69 —
— — Hollister (2,5) 11
7.2 0.67 —
— —
82 8 —
— —
Total 38,991
191,036 2,846 773,740
931,730 — (1) The
term “reserve” means that part of a mineral deposit that can be
economically and legally extracted or produced at the time of the
reserve determination. The term “economically,” as used in the
definition of reserve, means that profitable extraction or
production has been established or analytically demonstrated to be
viable and justifiable under reasonable investment and market
assumptions. The term “legally,” as used in the definition of
reserve, does not imply that all permits needed for mining and
processing have been obtained or that other legal issues have been
completely resolved. However, for a reserve to exist, Hecla must
have a justifiable expectation, based on applicable laws and
regulations, that issuance of permits or resolution of legal issues
necessary for mining and processing at a particular deposit will be
accomplished in the ordinary course and in a time frame consistent
with Hecla’s current mine plans. (2) Mineral reserves are based on
$1200 gold, $14.50 silver, $0.90 lead, $1.15 zinc, unless otherwise
stated. (3) Mineral reserves are based on $1200 gold and a US$/CAN$
exchange rate of 1:1.33 Reserve diluted to an average of 34.7% to
minimum width of 9.8 feet (3 m) Reserves at Casa Berardi were
determined by Jonathan Archambault-Giroux, P. Geo., Que., Real
Parent, P.Geo. Que., and Alain Quenneville, P. Eng., Que. unless
otherwise stated. Open pit mineral reserves of the Principal Mine
were estimated in September 2018 by Hecla Quebec and Mine
Development Associates based on $1225 gold and a US$/CAN$ exchange
rate of 1:3. Hecla Mining Company, Principal Deposit Open Pit
Mining Study - 2018 September 1, 2018, by Mine Development
Associates, Thomas L. Dyer, P.E. Open pit mineral reserves of the
160 and 134 Zones were estimated in January 2018 by Hecla Quebec
and Mine Development Associates based on $1225 gold and a US$/CAN$
exchange rate of 1.3. Hecla Mining, Casa Berardi 160 and 134 Zones,
Open Pit Mining Study - 2017 January 12, 2018, by Mine Development
Associates, Thomas L. Dyer, P.E. Open pit mineral reserves of the
West Mine Crown Pillar were estimated in January 2019 by Hecla
Quebec and Mine Development Associates based on $1225 gold and a
US$/CAN$ exchange rate of 1.3. Hecla Mining Company, West Mine
Crown Pillar Deposit, Open Pit Mining Study - 2018 January 10,
2019, by Mine Development Associates, Thomas L. Dyer, P.E. Open pit
mineral reserves of the East Mine Crown Pillar Expansion were
estimated in August 2018 by Hecla Quebec and Mine Development
Associates based on $1225 gold and a US$/CAN$ exchange rate of 1.3.
Hecla Mining Company, East Mine Crown Pillar Expansion, Open Pit
Mining Study - 2018 August 22, 2018, by Mine Development
Associates, Thomas L. Dyer, P.E. (4) Recoveries at Fire Creek for
gold and silver are 94% and 92%. Cutoff grade of 0.339 Au
Equivalent oz/ton and incremental cutoff grade of 0.11 Au
Equivalent oz/ton. Unplanned dilution of 10% to 17% included
depending on mining method. (5) Recoveries at Hollister for gold
and silver are 87% and 80%. Cutoff grade of 0.396 Au Equivalent
oz/ton and incremental cutoff grade of 0.07 Au Equivalent oz/ton.
Unplanned dilution of 10% to 17% and 5% mining loss included.
Measured Resources Tons
Silver Gold
Lead Zinc Copper
Silver Gold
Lead Zinc Copper
Asset (000)
(oz/ton) (oz/ton)
% % %
(000 oz) (000 oz)
(Tons) (Tons)
(Tons) Greens Creek (6) 339
9.5 0.11 2.6
9.4 —
3,233 36 8,800
31,700 — Lucky Friday
(6,7) 7,587 7.6
— 4.9 2.7
— 57,314 —
370,240 204,490
— Casa Berardi (8) 1,952
— 0.15 —
— — —
299 —
— — San Sebastian (6,9) —
— —
— — —
— — —
— — Fire Creek (6,10)
64 0.7 0.92
— — —
47 58
— — — Hollister
(6,11) 104 4
0.92 — —
— 420 96
— —
— Midas (6,12) 183 6.7
0.45 — —
— 1,235
82 — —
— Heva (14) 5,480
— 0.06 —
— — —
304 — —
— Hosco (14) 33,070
— 0.04 —
— —
— 1,296 —
— — Rio Grande Silver (15)
— — —
— — —
— —
— — — Star (16)
— — —
— — —
— —
— — —
Total
48,778
62,249 2,172
379,040 236,190
Indicated Resources Tons Silver Gold
Lead Zinc Copper Silver Gold
Lead Zinc Copper Asset
(000) (oz/ton)
(oz/ton) % %
% (000 oz)
(000 oz) (Tons)
(Tons) (Tons) Greens Creek (6)
7,128 13.2 0.1
3.1 8.1
— 94,197 690
218,950 577,650
— Lucky Friday (6,7) 2,498
8 — 5.2
2.5 —
20,049 — 128,830
61,480 — Casa Berardi (8)
10,797 —
0.08 — —
— — 906
— — — San
Sebastian (6,9) 2,243 6.5
0.05 2.5
3.5 1.6 14,690
115 30,410
42,710 19,780 Fire Creek (6,10)
307 0.5 0.54
— — —
158 164
— — — Fire Creek -
Open Pit (13) 42,877 0.1
0.03 — —
— 2,350
1,093 —
Hollister (6,11) 135
2.6 0.64 —
— —
350 86 —
— — Midas (6,12) 722
4.5 0.37
— — —
3,228 267 —
— — Heva (14)
5,570 — 0.07
— —
— — 369
— — — Hosco (14)
31,620 —
0.04 — —
— — 1,151
— — — Rio
Grande Silver (15) 516 14.8
— 2.1
1.1 — 7,620
— 10,760
5,820 — Star (16) 1,126
2.9 — 6.2
7.4 —
3,301 — 69,900
83,410 —
Total
105,538
145,944 4,841
458,850 771,070
19,780
Measured & Indicated Resources Tons Silver
Gold Lead Zinc Copper Silver
Gold Lead Zinc Copper Asset
(000) (oz/ton)
(oz/ton) %
% % (000 oz)
(000 oz) (Tons)
(Tons) (Tons) Greens Creek (6)
7,467 13
0.1 3.1 8.2
— 97,430 726
227,740 609,350
— Lucky Friday (6,7) 10,084
7.7 — 4.9
2.6 —
77,363 -- 499,070
265,970 — Casa Berardi (8)
12,749 —
0.09 — —
— — 1,205
— — — San
Sebastian (6,9) 2,243 6.5
0.05 2.5
3.5 1.6 14,690
115 30,410
42,710 19,780 Fire Creek (6,10)
371 0.6 0.6
— — —
205 222 —
Fire Creek - Open
Pit (13) 42,877 0.1
0.03 — —
— 2,350
1,093 — —
— Hollister (6,11) 239
3.2 0.76 —
— — 770
182 —
— — Midas (6,12) 905
4.9 0.39
— — —
4,463 349 —
— — Heva (14)
11,050 — 0.06
— —
— — 672
— — — Hosco (14)
64,690 —
0.04 — —
— — 2,447
— — — Rio
Grande Silver (15) 516 14.8
— 2.1
1.1 — 7,620
— 10,760
5,820 — Star (16) 1,126
2.9 — 6.2
7.4 —
3,301 — 69,900
83,410 —
Total
154,316
208,193 7,012
837,880 771,070
19,780
Inferred Resources
Tons Silver Gold
Lead Zinc
Copper Silver Gold
Lead Zinc
Copper Asset (000)
(oz/ton) (oz/ton)
% % %
(000 oz) (000 oz)
(Tons) (Tons)
(Tons) Greens Creek (6) 2,470
14.6 0.09 3
7.3 —
35,982 219 74,410
181,400 — Lucky Friday (6,7)
2,861 8.7 —
6.3 2.6
— 24,809 —
181,180 74,430
— Casa Berardi (8) 6,222
— 0.1 —
— — —
652 — —
— San Sebastian (6,17) 3,487
6.6 0.04
1.7 2.5 1.3
22,948 143
12,110 17,440 8,890 Fire
Creek (6,10) 565 0.5
0.53 — —
— 288
299 — —
— Fire Creek - Open Pit (13) 31,707
0.1 0.03
— — —
2,882 1,085
— — — Hollister (6,11,18)
550 3.1 0.4
— —
—
1,716 223
—
— — Midas (6,12)
573 3 0.34
— — —
1,723 198
— — — Heva (14)
4,210 —
0.08 — —
— — 350
— — — Hosco
(14) 7,650 —
0.04 — —
— — 314
— —
— Rio Grande Silver (19) 3,078
10.7 0.01 1.3
1.1 —
33,097 36 40,990
34,980 — Star (16)
3,157 2.9 —
5.6 5.5 —
9,432 —
178,670 174,450 — Monte
Cristo (20) 913 0.3
0.14 — —
— 271
131 — —
— Rock Creek (21) 100,086
1.5 — —
— 0.7
148,736 — —
— 658,680 Montanore (22)
112,185 1.6 —
— — 0.7
183,346 —
— — 759,420
Total 279,714
465,229
3,648 487,360 482,700
1,426,990
Note: All estimates are
in-situ except for the proven reserves at Greens Creek and San
Sebastian which are in surface stockpiles. Resources are exclusive
of reserves. (6) Mineral resources are based on $1350 gold, $21
silver, $1.10 lead, $1.20 zinc and $3.00 copper, unless otherwise
stated. (7) Measured and indicated resources from Gold Hunter and
Lucky Friday vein systems are diluted and factored for expected
mining recovery. (8) Measured, indicated and inferred resources are
based on $1,350 gold and a US$/CAN$ exchange rate of 1:1.33
Underground resources are reported at a minimum mining width of 6.6
to 9.8 feet (2 m to 3 m) Resources at Casa Berardi were determined
by Jonathan Archambault-Giroux, P. Geo., Que., Real Parent, P.Geo.
Que., and Alain Quenneville, P. Eng., Que. unless otherwise stated.
(9) Indicated resources reported at a minimum mining width of 5.9
feet (1.8 m) for Hugh Zone, Middle Vein, North Vein, and East
Francine Vein and 4.9 feet (1.5 m) for Andrea Vein San Sebastian
lead, zinc and copper grades are for 1,224,900 tons of indicated
resource within the Middle Vein and the Hugh Zone of the Francine
Vein. (10) Recoveries at Fire Creek for gold and silver are 94% and
92%. Au equivalent cutoff grade of 0.297 oz/ton. The minimum mining
width is defined as four feet or the vein true thickness plus two
feet, whichever is greater. (11) Recoveries at Hollister for gold
and silver are 87% and 80%. Au equivalent cutoff grade of 0.352
oz/ton. The minimum mining width is defined as four feet or the
vein true thickness plus two feet, whichever is greater. (12)
Recoveries at Midas for gold and silver are 93% and 88% Au
equivalent cutoff grade of 0.217 oz/ton. The minimum mining width
is defined as four feet or the vein true thickness plus two feet,
whichever is greater. (13) Indicated and inferred open-pit
resources for Fire Creek were calculated November 30, 2017 using
recoveries for gold and silver of 65% and 30% for oxide material
and 60% and 25% for mixed oxide-sulfide material. Open pit
resources are calculated at $1400 gold and $19.83 silver and
cut-off grade of 0.01 Au Equivalent oz/ton and is inclusive of 10%
mining dilution and 5% ore loss. Open pit mineral resources
exclusive of underground mineral resources.
NI43-101 Technical Report for the Fire
Creek Project, Lander County, Nevada; Effective Date March 31,
2018; prepared by Practical Mining LLC, Mark Odell, P.E. for Hecla
Mining Company, June 28, 2018
(14) Measured, indicated and inferred
resources were estimated in by GoldMinds Geoservices Inc. with
effective date 12-July-2013, and are based on $1,300 gold and a
US$/CAN$ exchange rate of 1:1.
The resources are in-situ without dilution and material loss.
NI43-101 Technical Report, Mineral Resource Update, Heva-Hosco Gold
Projects, Rouyn-Noranda, Quebec, Hecla Quebec, December 2013
Prepared by: Claude Duplessis, Eng. Project Manager - GoldMinds
Geoservices Inc.; Maxime Dupéré, P.Geo - SGS Canada Inc. (Geostat)
(15) Indicated resources reported at a minimum mining width of 6.0
feet for Bulldog; resources based on $26.5 Ag, $0.85 Pb, and $0.85
Zn (16) Indicated and Inferred resources reported using $21 silver,
$0.95 lead, $1.10 lead minimum mining width of 4.3 feet. (17)
Inferred resources reported at a minimum mining width of 5.9 feet
(1.8 m) for Hugh Zone, Middle Vein, North Vein, and East Francine
Vein and 4.9 feet (1.5 m) for Andrea Vein San Sebastian lead, zinc
and copper grades are for 702,600 tons of inferred resource within
the Middle Vein and the Hugh Zone of the Francine Vein. (18)
Inferred resources for the Hatter Project at the Hollister Mine
calculated using recoveries for gold and silver of 82.7% and 71.8%
and an Au equivalent cutoff grade of 0.27 oz/ton (19) Inferred
resources reported at a minimum mining width of 6.0 feet for
Bulldog, 5.0 feet for Equity & North Amethyst veins; resources
based on $1400 Au, $26.5 Ag, $0.85 Pb, and $0.85 Zn. (20) Inferred
resource reported at a minimum mining width of 5.0 feet; resources
based on $1400 Au, $26.5 Ag. (21) Inferred resource at Rock Creek
reported at a minimum thickness of 15 feet and adjusted given
mining restrictions as defined by U.S. Forest Service, Kootenai
National Forest in the June 2003 'Record of Decision, Rock Creek
Project'.
(22) Inferred resource at Montanore
reported at a minimum thickness of 15 feet and adjusted given
mining restrictions defined by U.S. Forest Service, Kootenai
National Forest, Montana DEQ in December 2015 'Joint Final EIS,
Montanore Project' and the February 2016 U.S. Forest Service -
Kootenai National Forest 'Record of Decision, Montanore
Project'.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190221005327/en/
Mike WesterlundVice President - Investor Relations800-HECLA91
(800-432-5291)Investor RelationsEmail:
hmc-info@hecla-mining.comWebsite: www.hecla-mining.com
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