Nevada operations under review
Hecla Mining Company (NYSE:HL) (Hecla or the Company) today
announced first quarter financial and operating results.
HIGHLIGHTS
- Sales of $152.6 million.
- Cash provided by operating activities
of $20 million.
- Net loss applicable to common
stockholders of $25.7 million, or $0.05 per basic share.
- Adjusted net loss applicable to common
stockholders of $18.5 million, or $0.04 per basic share.1
- Cost of sales and other direct
production costs and depreciation, depletion and amortization
("cost of sales") of $149.2 million.
- Gross profit of $3.4 million and
adjusted EBITDA of $33.4 million. Net debt/adjusted EBITDA (last 12
months) of 2.8x.2,3
- Silver cash cost, after by-product
credits, of $2.26 per ounce.4
- All in sustaining cost (AISC), after
by-product credits, of $9.34 per silver ounce.5
- Cash and cash equivalents and
short-term investments of $11.8 million.
- Maintain annual capital and exploration
spending estimates on a Company-wide basis.
- Suspending Nevada production and cost
estimates pending results of comprehensive review.
“Because of Greens Creek’s exceptional performance, Hecla’s
first quarter was largely as expected, financially.” said Phillips
S. Baker, Jr., Hecla’s President and CEO. “Greens Creek exceeded
expectations for both gold and silver production due to higher
grades and recoveries. However, Casa Berardi and our Nevada
operations both produced less cash flow than expected.”
“Casa Berardi’s gold production was lower in part due to lower
grades, which were expected, and also due to the lower mill
throughput resulting from some temporary issues in the mill that
have now been addressed, and we expect results to improve over the
rest of the year,” Mr. Baker continued. “While Nevada operations
had better development advance rates, the operating metrics
including cost, grade and negative cash flow, were unacceptable. We
are reviewing our Nevada operations to determine the best path
forward and expect the results of this review in the second
quarter. In the meantime, we are suspending our annual Nevada
estimates for production and cost. We are maintaining our annual
estimates for capital and exploration spending to maintain our
liquidity and balance sheet.”
FINANCIAL OVERVIEW
First Quarter Ended HIGHLIGHTS March
31, 2019 March 31, 2018
FINANCIAL DATA
Sales (000)
$ 152,617 $
139,709 Gross profit (000)
$ 3,444 $ 38,786 (Loss)
income applicable to common stockholders (000)
$
(25,671 ) $ 8,102 Basic and diluted (loss) income per
common share
$ (0.05 ) $ 0.02 Net (loss)
income (000)
$ (25,533 ) $ 8,240 Cash provided
by operating activities (000)
$ 20,030 $ 16,383
Net loss for the first quarter of $25.5 million was primarily
impacted by losses from operations in Nevada of $13.8 million, due
to higher costs, as well as lower grades and recoveries, than
anticipated. In addition, gross profit was lower by $15.4 million
at Casa Berardi as a result of 11,000 less gold ounces sold, as
compared to the first quarter 2018; about half was due to planned
lower grades, and the balance due to the mill maintenance
activities.
Operating cash flow of $20.0 million increased 22% over the
first quarter of 2018, principally due to the timing of working
capital changes, offset by lower gross profit. Adjusted EBITDA of
$33.4 million decreased 40% over the first quarter of 2018, mainly
due to lower margins at Casa Berardi and negative margins at our
Nevada operations.2
Capital expenditures totaled $36.4 million for the first quarter
of 2019 compared to $20.0 million in the prior year period, with
the increase mainly due to the addition of the Nevada operations,
as well as increased expenditures at San Sebastian of $1.5 million
and Lucky Friday of $0.7 million, partly offset by decreased
expenditures at Greens Creek of $4.2 million and Casa Berardi of
$3.4 million. Expenditures at Nevada operations, Casa Berardi,
Greens Creek, San Sebastian, and Lucky Friday were $21.8 million,
$5.7 million, $5.3 million, $1.9 million, and $1.7 million,
respectively.
Metals Prices
The average realized silver price in the first quarter of 2019
was $15.70 per ounce, 7% lower than the $16.84 price realized in
the first quarter of 2018. Realized gold, lead and zinc prices
decreased 2%, 22%, and 13%, respectively.
OPERATIONS OVERVIEW
The following table provides the production summary on a
consolidated basis for the quarters ended March 31, 2019 and
2018:
First Quarter Ended
March 31, 2019 March 31, 2018
PRODUCTION
SUMMARY Silver - Ounces produced
2,923,131
2,534,095 Payable ounces sold
2,898,083 2,091,464
Gold - Ounces produced
60,021 57,808 Payable ounces sold
60,936 54,839 Lead - Tons produced
5,784 5,627
Payable tons sold
4,848 3,868 Zinc - Tons produced
13,944 15,211 Payable tons sold
9,533 10,104
The following table provides a summary of the production, cost
of sales, cash cost, after by-product credits, per silver or gold
ounce, and AISC, after by-product credits, per silver or gold
ounce, for the quarters ended March 31, 2019 and 2018.
First Quarter Ended March 31, 2019
Greens Creek
LuckyFriday
San Sebastian Casa Berardi
Nevada Operations Silver Gold
Silver Gold Silver
Silver Gold Gold
Silver Gold Silver Production
(ounces) 2,923,131 60,021
2,232,747 14,328
173,627 441,079
3,530
31,799
8,240 10,364
67,438 Increase/(decrease) 15 % 4 %
17 % 9 % 74 % (14 )% (22 )%
(21
)% (7 )% N/A N/A
Cost of sales and other
direct production costs and depreciation, depletion and
amortization (000) $ 68,645
$ 80,528 $ 54,113
— $ 2,181
$ 12,351 — $
49,081 — $
31,447 — Increase/(decrease) 33
% 64 % 29 % N/A (47 )%
114 % N/A
—
% N/A N/A N/A
Cash costs, after by-product credits,
per silver or gold ounce 4, 6
$ 2.26 $ 1,277
$ 0.49 —
— $ 11.23 —
$ 1,113 —
$ 1,782 — Increase/(decrease)
167 % 54 % 110 % N/A N/A
300 % N/A
35
% N/A N/A N/A
AISC, after by-product
credits per silver or gold ounce5 $
9.34 $ 1,760
$ 3.24 — —
$ 16.55 —
$
1,338
— $ 3,056
— Increase/(decrease) 65 % 62 %
449 % N/A N/A 98 % N/A
23
% N/A N/A N/A
Greens Creek Mine - Alaska
At the Greens Creek mine, 2.2 million ounces of silver and
14,328 ounces of gold were produced, compared to 1.9 million ounces
and 13,118 ounces, respectively, in the first quarter of 2018. The
increase was the result of higher silver and gold grades and
recoveries, partially offset by reduced ore throughput. The mill
operated at an average of 2,298 tons per day (tpd) in the first
quarter compared to 2,349 the first quarter of 2018.
The cost of sales for the first quarter was $54.1 million, and
the cash cost, after by-product credits, per silver ounce, was
$0.49, compared to $41.9 million and $(4.99), respectively, for the
first quarter of 2018.4 The AISC, after by-product credits, was
$3.24 per silver ounce compared to $0.59 in the first quarter of
2018.5 The per ounce silver costs were higher primarily due to
lower by-product metals prices and production as well as higher
onsite power generation costs, partially offset by higher silver
production.
Casa Berardi Mine - Quebec
At the Casa Berardi mine, 31,799 ounces of gold were produced,
including 6,535 ounces from the East Mine Crown Pillar (EMCP) pit,
compared to 40,177 ounces in the first quarter of 2018. The
decrease was expected due to lower grades and to lower mill
throughput and recovery as a result of adjustments to mill
components to accommodate a higher throughput and the requirement
for a new carbon in leach (CIL) drivetrain, which is being
installed in early May. The shortfall in production in the first
quarter is expected to be made up over the remainder of the year.
The mill operated at an average of 3,664 tpd in the first quarter,
a decrease of 5% compared to the first quarter of 2018.
The cost of sales was $49.1 million and the cash cost, after
by-product credits, per gold ounce was $1,113, compared to $49.2
million and $827, respectively, in the first quarter of 2018.4,6
The increase in cash cost, after by-product credits, per gold ounce
is mainly due to lower gold production. The lower production,
partially offset by lower capital spending, resulted in higher
AISC, after by-product credits, of $1,338 per gold ounce compared
to $1,086 in the first quarter of 2018.5
San Sebastian Mine - Mexico
At the San Sebastian mine, 441,079 ounces of silver and 3,530
ounces of gold were produced in the first quarter, compared to
512,192 silver ounces and 4,513 gold ounces in the prior year
period. The decreases were due to lower grades, as expected, upon
transitioning to increased throughput coming from underground mine
material, versus higher-grade open pit. The mill operated at an
average of 494 tpd in the first quarter, a 29% increase over the
first quarter of 2018.
The cost of sales was $12.4 million for the first quarter and
the cash cost, after by-product credits, was $11.23 per silver
ounce, compared to $5.8 million and $2.81, respectively, in the
first quarter of 2018.4 The cash cost, after by-product credits,
increased due to lower silver production and lower by-product gold
production. The AISC, after by-product credits, was $16.55 per
silver ounce compared to $8.37 in the first quarter of 2018,
principally due to the same factors along with higher capital
spending, partially offset by lower exploration costs.5
A review of the sulfide ore continues, including a bulk sample
to test the capabilities of the third-party plant and the
suitability of long-hole stoping for the ore body, with results
expected by the fourth quarter of 2019.
Nevada Operations - Nevada
For the Nevada operations, 10,364 ounces of gold and 67,438
ounces of silver were produced. Advance rate increased 27% from the
fourth quarter of 2018 but milled tons declined 30%. Capital
investment increased from the fourth quarter by $4 million to $21.8
million. Of that amount, $15.8 million was for development at Fire
Creek and Hollister, including $4.2 million for the Hatter Graben
decline.
The Company is demobilizing the mining contractor, mining some
previously-developed remnant stopes at Midas and considering other
alternatives to reduce the cash spend and improve the cash flow at
the Nevada operations. Some of the possible alternatives include
third party processing, reducing development, and changing grade
control procedures. Pending the outcome of the review, the annual
production and cost estimates for Nevada are being suspended.
Lucky Friday Mine - Idaho
Silver production of 173,627 ounces increased 74% over the prior
year period mainly due to a shift in focus from development to
production by the salaried staff. Cost of sales for the first
quarter was $2.2 million compared to $4.1 million in the first
quarter of 2018, with the decrease resulting from lower sales
volume due to the timing of concentrate shipments.
The higher level of production is helping to defray more costs
associated with the strike at Lucky Friday than originally
anticipated. The mine recently celebrated two years of operations
without a Restricted Work Duty Injury (RWDI) or Lost Time Injury
(LTI).
The construction of the Remote Vein Miner (RVM) continues in
Sweden, and delivery is expected in the first half of 2020.
EXPLORATION
Exploration (including Corporate Development) expenses were $4.4
million in the first quarter of 2019, a decrease of $3.0 million
compared to the first quarter 2018.
A complete summary of exploration for the first quarter can be
found in the news release entitled "Hecla Reports Drilling Success
at Casa Berardi, San Sebastian, Greens Creek and Nevada" released
on May 8, 2019.
PRE-DEVELOPMENT
Pre-development spending was $0.9 million for the quarter,
principally to advance the permitting of Rock Creek and
Montanore.
2019 ESTIMATES7
The annual production and cost outlook have been suspended for
Nevada pending the results of the comprehensive review.
2019 Production Outlook
Silver Production
(Moz)
Gold Production
(Koz)
Silver Equivalent
(Moz)
Gold Equivalent
(Koz)
Original(if revised)
Current
Original(if revised)
Current
Original(if revised)
Current
Original(if revised)
Current Greens Creek 7.7 7.7
50 50 24.0 24.0 305 305
Lucky Friday 0.2 0.2 N/A N/A
0.2 0.2 N/A N/A
San Sebastian
2.0 2.0 14 14 3.0 3.0
40 40
Casa Berardi N/A N/A
150 150 11.7 11.7 150 150
Nevada Operations 0.1 Suspended 76
Suspended 6.1 Suspended 77
Suspended
Total8 10.0 9.9 290
N/A 45.0 N/A 572 N/A
2019 Cost Outlook
Costs of Sales (million) Cash cost,
after by-product credits, per silver/gold ounce2,4
AISC, after by-product credits, per produced silver/gold
ounce3
Original(if revised)
Current
Original(if revised)
Current
Original(if revised)
Current Greens Creek $202 $202
$0 $0 $5.50 $5.50
Lucky Friday
N/A N/A N/A N/A N/A N/A
San Sebastian $41 $41 $9.00
$9.00 $12.00 $12.00
Total Silver $243
$243 $1.10 $1.10 $11.00 $11.00
Casa Berardi $210 $210 $850 $850
$1,150 $1,150
Nevada Operations $90
Suspended $900 Suspended $1,325
Suspended
Total Gold8 $300 N/A
$875 N/A $1,250 N/A
2019 Capital and Exploration
Outlook
Original(if revised)
Current 2019E Capital expenditures (excluding
capitalized interest) $150 million $150 million
2019E Exploration expenditures (includes Corporate
Development) $25 million $25 million
2019E
Pre-development expenditures $2.5 million $2.5
million
2019E Research and Development expenditures
$3.5 million $3.5 million
1,2,4,6 Non-GAAP measures. See pages 8-9
for more information.
DIVIDENDS
Common
The Board of Directors elected to declare a quarterly cash
dividend of $0.0025 per share of common stock, payable on or about
June 9, 2019, to stockholders of record on May 24, 2019.
The realized silver price was $15.70 in the first quarter and
therefore did not satisfy the criteria for a larger dividend under
the Company's dividend policy.
Preferred
The Board of Directors elected to declare a quarterly cash
dividend of $0.875 per share of preferred stock, payable on or
about July 1, 2019, to stockholders of record on June
14, 2019.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Thursday, May 9, 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 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 gold producer with operating mines in
Quebec, Canada and Nevada. 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 in the United States
(GAAP). These measures should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with GAAP.
(1) Adjusted net income (loss) applicable to common stockholders
is a non-GAAP measurement, a reconciliation of which to net income
(loss) applicable to common stockholders, the most comparable GAAP
measure, can be found at the end of the release. Adjusted net
income (loss) is a measure used by management to evaluate the
Company's operating performance but should not be considered an
alternative to net income (loss), 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.
(2) Adjusted EBITDA is a non-GAAP measurement, a reconciliation
of which to net income (loss), 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 (loss), 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.
(3) Net debt to adjusted EBITDA is a non-GAAP measurement, a
reconciliation of adjusted EBITDA and net debt to the closest GAAP
measurements of net income (loss) and debt can be found at the end
of the release. It is an important measure for management to
measure relative indebtedness and the ability to service the debt
relative to its peers. It is calculated as total debt outstanding
less total cash on hand divided by adjusted EBITDA.
(4) Cash cost, after by-product credits, per silver or 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 silver and gold 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 silver mining companies, and
aggregating Casa Berardi and Nevada Operations to compare
performance with other gold companies. 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. Cash cost, after by-product credits, per silver ounce is
not presented for Lucky Friday for the first quarter of 2019 and
2018, as production was limited due to the strike and results are
not comparable to those from prior periods and are not indicative
of future operating results under full production.
(5) 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 mine 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. AISC, after
by-product credits, per silver ounce is not presented for Lucky
Friday for the first quarter of 2019 and 2018, as production was
limited due to the strike and results are not comparable to those
from prior periods and are not indicative of future operating
results under full production.
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 in the understanding of the
economics of our operations and performance compared to other
producers and in the investor's visibility 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.
(6) Cash cost, after by-product credits, per gold ounce is 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.
Other
(7) 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.
(8) Estimates for 2019 Nevada production and costs, as well as
annual gold estimates, are suspended pending completion of the
comprehensive review of Nevada operations.
Cautionary Statements to Investors on Forward-Looking
Statements
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 production and
sales; (ii) successful integration of our recently acquired Nevada
operations unit and its impact on Hecla's operations and results;
(iii) expectations regarding the development, growth potential,
financial performance of the Company’s projects; (iv) the Company’s
mineral reserves and resources; (v) ability to optimize operations
at Casa Berardi; (vi) ability to complete construction of the
remote vein miner and for it to operate successfully; (vii) impact
of the Lucky Friday strike on production and cash flow; (viii)
ability to generate value from innovations being introduced into
the mines; (ix) impact of metals prices on cash costs, after
by-product credits; and (x) estimates of future smelter demand.
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: (i) there being no
significant change to current geotechnical, metallurgical,
hydrological and other physical conditions; (ii) permitting,
development, operations and expansion of the Company’s projects
being consistent with current expectations and mine plans; (iii)
political/regulatory developments in any jurisdiction in which the
Company operates being consistent with its current expectations;
(iv) the exchange rate for the Canadian dollar to the U.S. dollar,
being approximately consistent with current levels; (v) certain
price assumptions for gold, silver, lead and zinc; (vi) prices for
key supplies being approximately consistent with current levels;
(vii) the accuracy of our current mineral reserve and mineral
resource estimates; and (viii) 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, and Form 10-Q filed on May
9, 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 publicly release 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, 2021, 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
three 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. Copies of these technical reports are available
under Hecla's profile 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)
Three Months Ended
March 31, 2019 March
31, 2018 Sales of products
$ 152,617 $ 139,709
Cost of sales and other direct production costs
110,386 72,869 Depreciation, depletion and amortization
38,787 28,054
149,173 100,923
Gross profit
3,444 38,786 Other
operating expenses: General and administrative
9,959 7,735
Exploration
4,402 7,360 Pre-development
856 1,005
Research and development
403 1,436 Other operating expense
587 515 Provision for closed operations and environmental
matters
570 1,262 Suspension-related costs
2,778
5,017 Acquisition costs
13 2,507
19,568
26,837 (Loss) income from operations
(16,124
) 11,949 Other income (expense): (Loss) gain on
derivative contracts
(1,799 ) 4,007 Other expense
(1,124 ) (56 ) Unrealized gain on investments
96 310 Net foreign exchange (loss) gain
(3,133
) 2,592 Interest expense
(10,665 ) (9,794 )
(16,625 ) (2,941 ) (Loss) income before income taxes
(32,749 ) 9,008 Income tax benefit (provision)
7,216 (768 ) Net (loss) income
(25,533
) 8,240 Preferred stock dividends
(138 ) (138
) (Loss) income applicable to common stockholders
$
(25,671 ) $ 8,102 Basic (loss) income per
common share after preferred dividends
$ (0.05
) $ 0.02 Diluted (loss) income per common share after
preferred dividends
$ (0.05 ) $ 0.02
Weighted average number of common shares outstanding - basic
482,829 399,322 Weighted average number of
common shares outstanding - diluted
482,829 401,923
HECLA MINING COMPANY
Condensed Consolidated Balance Sheets
(dollars and shares in thousands -
unaudited)
March 31, 2019 December 31, 2018
ASSETS Current assets:
Cash and cash equivalents
$ 11,797 $ 27,389
Accounts receivable: Trade
9,586 4,184 Taxes
16,831
14,191 Other, net
5,162 7,443 Inventories
78,674
87,533 Prepaid taxes
13,818 12,231 Other current assets
8,239 11,179 Total current assets
144,107 164,150 Non-current investments
6,768 6,583
Non-current restricted cash and investments
1,025 1,025
Properties, plants, equipment and mineral interests, net
2,508,981 2,520,004 Operating lease right-of-use asset
20,647 — Non-current deferred income taxes
3,058
1,987 Other non-current assets
10,019 10,195
Total assets $ 2,694,605 $ 2,703,944
LIABILITIES
Current liabilities: Accounts payable and
accrued liabilities
$ 61,680 $ 77,861 Accrued payroll
and related benefits
36,435 30,034 Accrued taxes
9,109 7,727 Current portion of finance leases
5,858
5,264 Current portion of operating leases
6,701 — Current
portion of accrued reclamation and closure costs
5,325 3,410
Other current liabilities
21,713 11,898 Total
current liabilities
146,821 136,194 Non-current finance
leases
9,302 7,871 Non-current operating leases
13,964 — Long-term debt
533,723 532,799 Non-current
deferred tax liability
159,425 173,537 Accrued reclamation
and closure costs
104,186 104,979 Non-current pension
liability
49,821 47,711 Other non-current liabilities
6,793 9,890
Total liabilities
1,024,035 1,012,981
STOCKHOLDERS’ EQUITY
Preferred stock
39 39 Common stock
122,052
121,956 Capital surplus
1,882,613 1,880,481 Accumulated
deficit
(275,188 ) (248,308 ) Accumulated other
comprehensive loss
(38,210 ) (42,469 ) Treasury stock
(20,736 ) (20,736 )
Total stockholders’ equity
1,670,570 1,690,963
Total liabilities and
stockholders’ equity $ 2,694,605 $
2,703,944 Common shares outstanding
482,988 482,604
HECLA MINING COMPANY
Condensed Consolidated Statements of Cash
Flows
(dollars in thousands - unaudited)
Three Months Ended
March 31,
2019 March 31, 2018
OPERATING ACTIVITIES
Net (loss) income
$ (25,533
) $ 8,240 Non-cash elements included in net (loss)
income: Depreciation, depletion and amortization
40,267
29,490 Unrealized gain on investments
(96 ) (310 )
Adjustment of inventory to market value
1,399 — Gain on
disposition of properties, plants, equipment and mineral interests
— (129 ) Provision for reclamation and closure costs
1,594 1,323 Stock compensation
1,580 1,089 Deferred
income taxes
(8,293 ) (438 ) Amortization of loan
origination fees
625 449 Loss (gain) on derivative contracts
3,686 (9,094 ) Foreign exchange loss (gain)
5,550
(3,399 ) Other non-cash charges, net
2 2 Change in assets
and liabilities: Accounts receivable
(5,063 ) (7,266
) Inventories
3,171 (6,762 ) Other current and non-current
assets
1,124 (3,171 ) Accounts payable and accrued
liabilities
(9,496 ) 13,956 Accrued payroll and
related benefits
7,212 (3,927 ) Accrued taxes
1,237
218 Accrued reclamation and closure costs and other non-current
liabilities
1,064 (3,888 )
Cash provided by
operating activities 20,030 16,383
INVESTING ACTIVITIES
Additions to properties, plants,
equipment and mineral interests
(33,071 ) (17,635 )
Maturities of investments
— 30,501 Proceeds from disposition
of properties, plants and equipment
1 151 Purchases of
investments
— (31,182 )
Net cash used in
investing activities (33,070 ) (18,165 )
FINANCING ACTIVITIES
Acquisition of treasury shares
—
(1,225 ) Dividends paid to common stockholders
(1,209
) (998 ) Dividends paid to preferred stockholders
(138 ) (138 ) Debt origination fees
(39
) — Borrowings on debt
58,000 31,024 Payments on debt
(58,000 ) — Repayments of finance leases
(1,261 ) (1,322 )
Net cash (used in)
provided by financing activities (2,647 )
27,341 Effect of exchange rates on cash
95 876 Net
(decrease) increase in cash, cash equivalents and restricted cash
and cash equivalents
(15,592 ) 26,435 Cash, cash
equivalents and restricted cash and cash equivalents at beginning
of period
28,414 187,139 Cash, cash
equivalents and restricted cash and cash equivalents at end of
period
$ 12,822 $ 213,574
HECLA MINING COMPANY
Production Data
Three Months Ended
March 31,
2019 March 31, 2018
GREENS CREEK UNIT
Tons of ore milled
206,825
211,430 Mining cost per ton of ore
$ 78.83 $
68.99 Milling cost per ton of ore
$ 35.86 $ 32.64 Ore
grade milled - Silver (oz./ton)
13.46 11.71 Ore grade milled
- Gold (oz./ton)
0.10 0.10 Ore grade milled - Lead (%)
2.83 2.96 Ore grade milled - Zinc (%)
7.32 8.05
Silver produced (oz.)
2,232,747 1,913,232 Gold produced
(oz.)
14,328 13,118 Lead produced (tons)
4,782 5,021
Zinc produced (tons)
13,518 14,799 Cash cost, after
by-product credits, per silver ounce (1)
$ 0.49 $
(4.99 ) AISC, after by-product credits, per silver ounce (1)
$ 3.24 $ 0.59 Capital additions (in thousands)
$ 5,312 $ 9,482
LUCKY FRIDAY
UNIT Tons of ore processed
13,803 9,559 Mining cost per ton of ore
$
131.25 $ 114.76 Milling cost per ton of ore
$
36.45 $ 21.67 Ore grade milled - Silver (oz./ton)
13.33 11.10 Ore grade milled - Lead (%)
7.97 6.92 Ore
grade milled - Zinc (%)
3.54 4.79 Silver produced (oz.)
173,627 99,780 Lead produced (tons)
1,002 606 Zinc
produced (tons)
426 412 Cash cost, after by-product credits,
per silver ounce (1)
$ — $ — AISC, after by-product
credits, per silver ounce (1)
$ — $ — Capital
additions (in thousands)
$ 1,726
$ 988
CASA BERARDI UNIT
Tons of ore milled - underground
189,352 191,333 Tons
of ore milled - surface pit
140,399 157,216
Tons of ore milled - total
329,751
348,549 Surface tons mined - ore and waste
2,160,123
1,676,434 Mining cost per ton of ore - underground
$
106.47 $ 108.50 Mining cost per ton of ore - combined
$ 86.14 $ 76.95 Mining cost per ton of ore and waste
- surface tons mined
$ 3.82 $ 3.62 Milling cost per
ton of ore
$ 15.77 $ 15.96 Ore grade milled - Gold
(oz./ton) - underground
0.130 0.18 Ore grade milled - Gold
(oz./ton) - surface pit
0.05 0.08 Ore grade milled - Gold
(oz./ton) - combined
0.120 0.135 Ore grade milled - Silver
(oz./ton)
0.03 0.03 Gold produced (oz.) - underground
25,264 29,522 Gold produced (oz.) - surface pit
6,535
10,655 Gold produced (oz.) - total
31,799 40,177 Silver produced (oz.)
8,240 8,891 Cash cost, after by-product credits, per gold
ounce (1)
$ 1,113 $ 827 AISC, after by-product
credits, per gold ounce (1)
$ 1,338 $ 1,086 Capital
additions (in thousands)
$ 5,679 $ 9,067
SAN
SEBASTIAN UNIT Tons of ore
milled
44,475 34,397 Mining cost per ton of ore
$
125.59 $ 115.12 Milling cost per ton of ore
$
62.21 $ 67.13 Ore grade milled - Silver (oz./ton)
10.94 16.1 Ore grade milled - Gold (oz./ton)
0.095
0.142 Silver produced (oz.)
441,079 512,192 Gold produced
(oz.)
3,530 4,513 Cash cost, after by-product credits, per
silver ounce (1)
$ 11.23 $ 2.81 AISC, after
by-product credits, per silver ounce (1)
$ 16.55 $
8.37 Capital additions (in thousands)
$ 1,896
$ 430
NEVADA OPERATIONS UNIT
Tons of ore milled
$
41,365 N/A Mining cost per ton of ore
$ 212.56
N/A Milling cost per ton of ore
$ 112.35 N/A Ore
grade milled - Gold (oz./ton)
0.300 N/A Ore grade milled -
Silver (oz./ton)
2.49 N/A Gold produced (oz.)
10,364
N/A Silver produced (oz.)
67,438 N/A Cash cost, after
by-product credits, per gold ounce (1)
$ 1,782 N/A
AISC, after by-product credits, per gold ounce (1)
$
3,056 N/A Capital additions (in thousands)
$
21,805 N/A (1) Cash cost, after
by-product credits, per ounce and AISC, after by-products credits,
per ounce represent a non-U.S. Generally Accepted Accounting
Principles (GAAP) measurement. A reconciliation of cash cost, after
by-product credits and AISC, after by-products credits to cost of
sales and other direct production costs and depreciation, depletion
and amortization (GAAP) 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.
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 Costs, Before By-product
Credits and All-In Sustaining Costs, 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 Cash Cost, Before By-product Credits, Cash
Cost, After By-product Credits, AISC, Before By-product Credits and
AISC, After By-product Credits for our operations at the Greens
Creek, Lucky Friday, San Sebastian and Casa Berardi units for the
three-month periods ended March 31, 2019 and 2018.
Cash Cost, After By-product Credits, per Ounce is an important
operating statistic that we utilize to measure each mine's
operating performance. AISC, After By-product Credits, per Ounce is
an important operating statistic that we utilize as a measures of
our mines' net cash flow after costs for exploration,
pre-development, reclamation, and sustaining capital. 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 silver and gold mining
company, we also use these statistics on an aggregate basis -
aggregating the Greens Creek, Lucky Friday and San Sebastian mines
- to compare our performance with that of other silver mining
companies, and aggregating Casa Berardi and Nevada Operations for
comparison to other 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,
reclamation, exploration, and pre-development. By-product credits
include revenues earned from all metals other than the primary
metal produced at each unit. As depicted in the tables below,
by-product credits comprise an essential element of our silver unit
cost structure, distinguishing our silver operations due to the
polymetallic nature of their orebodies. Cash Cost, After By-product
Credits, per Ounce 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. Cash Cost, After By-product Credits,
per Ounce is a measure developed by precious metals companies
(including the Silver Institute) in an effort to provide a uniform
standard for comparison purposes. There can be no assurance,
however, that our reporting of these non-GAAP measures are the same
as those reported by other mining companies.
The Casa Berardi, Nevada Operations and combined gold properties
information below reports Cash Cost, After By-product Credits, per
Gold Ounce and AISC, After By-product Credits, per Gold Ounce for
the production of gold, its primary product, and by-product
revenues earned from silver, which is a by-product at Casa Berardi
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 gold metrics for Casa Berardi and Nevada
Operations.
In thousands (except per ounce amounts) Three Months Ended
March 31, 2019
GreensCreek
LuckyFriday(2)
SanSebastian
Corporate(3)
TotalSilver
Cost of sales and other direct production costs and depreciation,
depletion and amortization $ 54,113 $ 2,181 $ 12,351 $ 68,645
Depreciation, depletion and amortization (12,370 ) (169 ) (1,760 )
(14,299 ) Treatment costs 10,352 810 131 11,293 Change in product
inventory (3,865 ) 1,483 (853 ) (3,235 ) Reclamation and other
costs (415 ) — (312 ) (727 ) Exclusion of Lucky Friday costs —
(4,305 ) — (4,305 ) Cash Cost, Before By-product
Credits (1) 47,815 — 9,557 57,372 Reclamation and other costs 737 —
123 860 Exploration 81 — 1,717 441 2,239 Sustaining capital 5,312 —
506 61 5,879 General and administrative 9,959
9,959 AISC, Before By-product Credits (1) 53,945 — 11,903
76,309 By-product credits: Zinc (23,285 ) — — (23,285 ) Gold
(16,518 ) — (4,602 ) (21,120 ) Lead (6,917 ) — —
(6,917 ) Total By-product credits (46,720 ) — (4,602 )
(51,322 ) Cash Cost, After By-product Credits $ 1,095 $ —
$ 4,955 $ 6,050 AISC, After By-product Credits
$ 7,225 $ — $ 7,301 $ 24,987 Divided by
ounces produced 2,233 — 441 2,674 Cash Cost, Before By-product
Credits, per Ounce $ 21.41 $ — $ 21.67 $ 21.45 By-product credits
per ounce (20.92 ) — (10.44 ) (19.19 ) Cash Cost, After
By-product Credits, per Ounce $ 0.49 $ — $ 11.23
$ 2.26 AISC, Before By-product Credits, per Ounce $
24.16 $ — $ 26.99 $ 28.53 By-product credits per ounce (20.92 ) —
(10.44 ) (19.19 ) AISC, After By-product Credits, per Ounce
$ 3.24 $ — $ 16.55 $ 9.34 In
thousands (except per ounce amounts) Three Months Ended
March 31, 2019 Casa Berardi
NevadaOperations (4)
Total Gold Cost of sales and other direct production costs
and depreciation, depletion and amortization $ 49,081 $
31,447 $ 80,528 Depreciation, depletion and amortization (16,155 )
(8,333 ) (24,488 ) Treatment costs 442 38 480 Change in product
inventory 2,268 (3,246 ) (978 ) Reclamation and other costs (129 )
(379 ) (508 ) Cash Cost, Before By-product Credits (1) 35,507
19,527 55,034 Reclamation and other costs 129 378 507 Exploration
1,346 118 1,464 Sustaining capital 5,692 12,707 18,399 General and
administrative — AISC, Before By-product
Credits (1) 42,674 32,730 75,404 By-product credits: Zinc — — —
Gold — — — Lead — — — Silver (126 ) (1,057 ) (1,183 ) Total
By-product credits (126 ) (1,057 ) (1,183 ) Cash Cost, After
By-product Credits $ 35,381 $ 18,470 $ 53,851
AISC, After By-product Credits $ 42,548 $ 31,673 $
74,221 Divided by ounces produced 32 10 42 Cash Cost, Before
By-product Credits, per Ounce $ 1,116.59 $ 1,884.17 $ 1,305.27
By-product credits per ounce (3.96 ) (101.99 ) (28.06 ) Cash Cost,
After By-product Credits, per Ounce $ 1,112.63 $ 1,782.18
$ 1,277.21 AISC, Before By-product Credits, per Ounce
$ 1,341.95 $ 3,158.05 $ 1,788.37 By-product credits per ounce (3.96
) (101.99 ) (28.06 ) AISC, After By-product Credits, per Ounce $
1,337.99 $ 3,056.06 $ 1,760.31 In
thousands (except per ounce amounts) Three Months Ended
March 31, 2019 Total Silver Total Gold Total Cost of
sales and other direct production costs and depreciation, depletion
and amortization $ 68,645 $ 80,528 $ 149,173 Depreciation,
depletion and amortization (14,299 ) (24,488 ) (38,787 ) Treatment
costs 11,293 480 11,773 Change in product inventory (3,235 ) (978 )
(4,213 ) Reclamation and other costs (727 ) (508 ) (1,235 )
Exclusion of Lucky Friday costs (4,305 ) — (4,305 )
Cash Cost, Before By-product Credits (1) 57,372 55,034 112,406
Reclamation and other costs 860 507 1,367 Exploration 2,239 1,464
3,703 Sustaining capital 5,879 18,399 24,278 General and
administrative 9,959 — 9,959 AISC, Before
By-product Credits (1) 76,309 75,404 151,713 By-product credits:
Zinc (23,285 ) — (23,285 ) Gold (21,120 ) — (21,120 ) Lead (6,917 )
— (6,917 ) Silver — (1,183 ) (1,183 ) Total By-product
credits (51,322 ) (1,183 ) (52,505 ) Cash Cost, After By-product
Credits $ 6,050 $ 53,851 $ 59,901 AISC, After
By-product Credits $ 24,987 $ 74,221 $ 99,208
Divided by ounces produced 2,674 42 Cash Cost, Before By-product
Credits, per Ounce $ 21.45 $ 1,305.27 By-product credits per ounce
(19.19 ) (28.06 ) Cash Cost, After By-product Credits, per Ounce $
2.26 $ 1,277.21 AISC, Before By-product Credits, per
Ounce $ 28.53 $ 1,788.37 By-product credits per ounce (19.19 )
(28.06 ) AISC, After By-product Credits, per Ounce $ 9.34 $
1,760.31 In thousands (except per ounce amounts)
Three Months Ended March 31, 2018
GreensCreek
LuckyFriday(2)
SanSebastian
Corporate(3)
TotalSilver
CasaBerardi(Gold)
Total Cost of sales and other direct production costs and
depreciation, depletion and amortization $ 41,861 $ 4,100 $ 5,775 $
51,736 $ 49,187 $ 100,923 Depreciation, depletion and amortization
(10,639 ) (621 ) (684 ) (11,944 ) (16,110 ) (28,054 ) Treatment
costs 11,388 572 204 12,164 535 12,699 Change in product inventory
5,154 (1,022 ) 2,638 6,770 (101 ) 6,669 Reclamation and other costs
(912 ) (45 ) (494 ) (1,451 ) (142 ) (1,593 ) Exclusion of Lucky
Friday costs — (2,984 ) — (2,984 ) — (2,984 )
Cash Cost, Before By-product Credits (1) 46,852 — 7,439 54,291
33,369 87,660 Reclamation and other costs 849 — 106 955 143 1,098
Exploration 360 — 2,312 444 3,116 1,190 4,306 Sustaining capital
9,482 — 430 117 10,029 9,067 19,096 General and administrative
7,735 7,735 7,735 AISC,
Before By-product Credits (1) 57,543 — 10,287 76,126 43,769 119,895
By-product credits: Zinc (32,142 ) — — (32,142 ) — (32,142 ) Gold
(15,292 ) — (5,998 ) (21,290 ) — (21,290 ) Lead (8,974 ) — — (8,974
) — (8,974 ) Silver — — — (148 ) (148 )
Total By-product credits (56,408 ) — (5,998 ) (62,406 ) (148
) (62,554 ) Cash Cost, After By-product Credits $ (9,556 ) $ —
$ 1,441 $ (8,115 ) $ 33,221 $ 25,106
AISC, After By-product Credits $ 1,135 $ — $ 4,289
$ 13,720 $ 43,621 $ 57,341 Divided by
ounces produced 1,913 — 512 2,425 40 Cash Cost, Before By-product
Credits, per Ounce $ 24.49 $ — $ 14.52 $ 22.38 $ 831 By-product
credits per ounce (29.48 ) — (11.71 ) (25.73 ) (4 ) Cash
Cost, After By-product Credits, per Ounce $ (4.99 ) $ — $
2.81 $ (3.35 ) $ 827 AISC, Before By-product Credits,
per Ounce $ 30.07 $ — $ 20.08 $ 31.39 $ 1,090 By-product credits
per ounce (29.48 ) — (11.71 ) (25.73 ) (4 ) AISC, After
By-product Credits, per Ounce $ 0.59 $ — $ 8.37
$ 5.66 $ 1,086 In thousands (except per
ounce amounts) Estimated Twelve Months Ended December 31,
2019
GreensCreek
LuckyFriday(2)
SanSebastian
Corporate(3)
TotalSilver
CasaBerardi(Gold)
Cost of sales and other direct production costs and depreciation,
depletion and amortization $ 202,000 $ 41,000 $
243,000 $ 210.000 Depreciation, depletion and amortization (45,000
) (4,000 ) (49,000 ) (80,000 ) Treatment costs 38,000 1,000 39,000
Change in product inventory (1,000 ) — (1,000 ) (2,000 )
Reclamation and other costs (1,000 ) (1,000 ) (2,000
) 1,000 Cash Cost, Before By-product Credits (1) 193,000 37,000
230,000 129,000 Reclamation and other costs 1,000 1,000 2,000 1,000
Exploration 2,000 3,500 5,500 4,000 Sustaining capital 42,000 1,500
43,500 43,000 General and administrative — — 40,000 40,000
— AISC, Before By-product Credits (1) 238,000 43,000 321,000
177,000 By-product credits: Zinc (109,000 ) — (109,000 ) — Gold
(55,000 ) (19,000 ) (74,000 ) — Lead (34,000 ) — (34,000 ) — Silver
— — (2,000 ) Total By-product
credits (198,000 ) (19,000 ) (217,000 ) (2,000 ) Cash
Cost, After By-product Credits $ (5,000 ) $
18,000 $ 13,000 $ 127,000 AISC, After
By-product Credits $ 40,000 $ 24,000
$ 104,000 $ 175,000 Divided by ounces produced
7,700 2,000 9,700 150 Cash Cost, Before By-product Credits, per
Ounce $ 25.06 $ 18.50 $ 23.71 $ 860 By-product credits per ounce
(25.71 ) (9.50 ) (22.37 ) (13 ) Cash Cost, After
By-product Credits, per Ounce $ (0.65 ) $ 9.00
$ 1.34 $ 847 AISC, Before By-product Credits,
per Ounce $ 30.91 $ 21.50 $ 33.09 $ 1,180 By-product credits per
ounce (25.71 ) (9.50 ) (22.37 ) (13 ) AISC, After
By-product Credits, per Ounce $ 5.20 $
12.00 $ 10.72 $ 1,167 (1) Includes all
direct and indirect operating costs related directly to the
physical activities of producing metals, including mining,
processing and other plant costs, third-party refining and
marketing expense, on-site general and administrative costs,
royalties and mining production taxes, after by-product revenues
earned from all metals other than the primary metal produced at
each unit. AISC, Before By-product Credits also includes on-site
exploration, reclamation, and sustaining capital cost. (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. As a result, for the first quarter of 2018 Cash
Cost, Before By-product Credits, Cash Cost, After By-product
Credits, AISC, Before By-product Credits, and AISC, After
By-product Credits are not presented for Lucky Friday, and costs
related to the limited production at Lucky Friday are excluded from
the calculation of Cash Cost, Before By-product Credits, Cash Cost,
After By-product Credits, AISC, Before By-product Credits, and
AISC, After By-product Credits for our combined silver operations.
(3) AISC, Before By-product Credits for our consolidated
silver properties includes corporate costs for general and
administrative expense, exploration and sustaining capital.
(4) The Nevada Operations were acquired on
July 20, 2018 as a result of the acquisition of Klondex.
Reconciliation of Net (Loss) Income Applicable to Common
Stockholders (GAAP) to Adjusted Net (Loss) Income Applicable to
Common Stockholders (non-GAAP)
This release refers to a non-GAAP measure of adjusted net (loss)
income applicable to common stockholders and adjusted net (loss)
income 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 are in thousands (except per share amounts) Three
Months Ended March 31,
2019 2018 Net (loss) income
applicable to common stockholders (GAAP)
$ (25,671
) $ 8,102 Adjusting items: Loss (gain) on derivatives
contracts
1,799 (4,007 ) Suspension costs
2,778 5,017
Provisional price (gains) losses
(524 ) 65 Net
foreign exchange loss (gain)
3,133 (2,592 ) Gain on
disposition of properties, plants, equipment and mineral interests
— (129 ) Acquisition costs
13 2,507 Adjusted
net (loss) income applicable to common stockholders
$
(18,472 ) $ 8,963 Weighted average shares -
basic
482,829 399,322 Weighted average shares - diluted
482,829 401,923 Basic and diluted adjusted net (loss) income
per common share
$ (0.04 ) $ 0.02
Reconciliation of Net (Loss) Income (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 (loss)
income before the following items: interest expense, income tax
(benefit) provision, depreciation, depletion, and amortization
expense, exploration expense, pre-development expense, acquisition
costs, foreign exchange gains and losses, unrealized gains and
losses on derivative contracts, suspension-related costs,
acquisition costs, provisional price gains and losses, stock-based
compensation, unrealized gains on investments, provisions for
closed operations, and interest and other income (expense). Net
debt is calculated as total debt, which consists of the liability
balances for our Senior Notes and Notes, capital leases, and 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) income and debt to
Adjusted EBITDA and net debt:
Dollars are in thousands
Three Months EndedMarch 31,
Twelve Months EndedMarch 31,
2019 2018
2019 2018 Net (loss)
income
$ (25,533 ) $ 8,240
$ (60,336 ) $ (45,362 ) Plus: Interest
expense
10,665 9,794
41,815 39,284 Plus: Income taxes
(7,216 ) 768
(14,685 ) 50,531 Plus:
Depreciation, depletion and amortization
38,787 28,054
144,777 118,218 Plus: Exploration expense
4,402 7,360
32,737 26,356 Plus: Pre-development expense
856 1,005
4,738 5,201 Plus: Acquisition costs
13 2,507
7,551 2,505 Plus/(Less): Foreign exchange loss (gain)
3,133 (2,592 )
(4,585 ) 4,828 Plus/(Less):
Loss (gain) on derivative contracts
1,799 (6,654 )
517 4,555 Plus: Suspension costs
2,778 5,017
18,454 24,737 Less: Gain on disposition of properties,
plants, equipment and mineral interests — (129)
(2,664
) (6,171 ) Plus/(Less): Provisional price losses (gains)
(524 ) 65
3,214 (50 ) Plus: Stock-based
compensation
1,580 1,090
6,732 6,072 Plus: Provision
for closed operations and environmental matters
1,594 1,323
6,361 4,805 Plus/(Less): Unrealized loss (gain) on
investments
(96 ) (310 )
3,030 264
Plus/(Less): Other
1,124 56
2,009
(1,312 ) Adjusted EBITDA
$ 33,362 $
55,723
$ 189,665 $ 234,461 Total
debt
$ 548,883 $ 546,329 Less: Cash, cash equivalents
and short-term investments
$ (11,797 ) $
(246,927 ) Net debt
$ 537,086 $ 299,402
Net debt/LTM adjusted EBITDA (non-GAAP)
2.8 1.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005325/en/
Mike WesterlundVice President - Investor Relations800-HECLA91
(800-432-5291)Email: hmc-info@hecla-mining.comWebsite:
www.hecla-mining.com
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