Hecla reports record annual revenue, gold
production and silver reserves
Hecla Mining Company (NYSE:HL) today announced fourth quarter
and full year 2019 financial and operating results.
HIGHLIGHTS
- Fourth quarter sales of $225 million; cash flow from operations
of $57 million; net loss of $8.0 million; and adjusted EBITDA of
$62 million.1
- 2019 silver production of 12.6 million ounces, up 22% and
record gold production of 272,873 ounces, up 4%, over 2018.
- 2019 sales of $673.3 million (the highest in the company's
history); cash flow from operations of $120.9 million; net loss of
$99.6 million; and adjusted EBITDA of $177.7 million.1
- Record reserves for silver, lead and zinc; increases of 11%, 5%
and 8%, respectively over 2018.
- Net debt reduction of approximately $136 million, or more than
23%, from the peak net debt mid-year.
- Cash and cash equivalents of $62 million at year end, an
increase of $35 million with no borrowings on the revolving line of
credit facility.
- Lowest All Injury Frequency Rate (AIFR) in Company
history.
- Lucky Friday return to full production is underway and expected
to be complete by the end of 2020.
- Moody's Investors Service upgraded Hecla's Corporate Family
Rating from Caa1 to B3 with a stable outlook.
"2019 was a tale of two halves where the second half had higher
production, higher prices, better earnings and more cash flow,"
said Phillips S. Baker, Jr., President and CEO. "The strong third
and fourth quarters markedly improved our financial condition,
putting us in a better position to refinance the Senior Notes."
"In 2020, at current prices, we expect continued strong cash
flow generation with the ongoing solid performance at Greens Creek,
the ramp-up of Lucky Friday, expected improvements at Casa Berardi
and the potential mine life extension at San Sebastian from the
Hugh Zone," Mr. Baker added.
SILVER AND GOLD RESERVE SUMMARY
Proven and probable reserves are 212 million ounces of silver,
an increase of 11% over last year and 2.71 million ounces of gold,
a decrease of 5%. Proven and probable lead and zinc reserves of
810,930 tons and 1,001,930 tons are increases of 5% and 8%,
respectively. The reserves for silver, lead and zinc are the
highest in Company history. The price assumptions used for 2019
reserves of $14.50 for silver, $1.15 for zinc and $0.90 for lead
are unchanged this year and our assumption for gold is $100 higher
at $1,300 per ounce. The silver price assumption is among the
lowest in the industry again this year.
Please refer to the reserves and resources tables at the end of
this press release, or to the press release entitled "Hecla Reports
Record Silver, Lead and Zinc Reserves" released on February 5,
2020, for the breakdown between proven and probable reserve and
resource levels, as well as a detailed summary of the Company's
exploration programs.
FINANCIAL OVERVIEW
Fourth Quarter Ended
Twelve Months Ended
HIGHLIGHTS
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
FINANCIAL DATA
Sales (000)
$
224,945
$
136,520
$
673,266
$
567,137
Gross profit (loss) (000)
$
25,318
$
(1,265
)
$
23,399
$
79,099
Loss applicable to common stockholders
(000)
$
(8,114
)
$
(23,831
)
$
(100,109
)
$
(27,115
)
Basic and diluted loss per common
share
$
(0.02
)
$
(0.05
)
$
(0.20
)
$
(0.06
)
Cash provided by operating activities
(000)
$
57,257
$
19,011
$
120,866
$
94,221
Net loss applicable to common stockholders for the fourth
quarter and full year of 2019 was $8.1 million and $100.1 million,
or $0.02 and $0.20 per basic share, respectively, compared to net
losses applicable to common stockholders of $23.8 million and $27.1
million, or $0.05 and $0.06 per basic share, respectively, for the
fourth quarter and full year of 2018. Among items impacting the
results for the 2019 periods compared to 2018 were the
following:
- Gross profit for the fourth quarter of 2019 was higher by $26.6
million. The variance was due in part to higher gross profit at
Greens Creek and San Sebastian of $22.0 million and $4.2 million,
respectively, and lower losses in Nevada and Lucky Friday of $3.1
million and $2.4 million, respectively, partly offset by higher
losses at Casa Berardi of $5.1 million for the fourth quarter.
- Gross profit for the full year of 2019 was $55.7 million less,
principally due to depreciation expense in Nevada.
- Losses on metal derivative contracts for the fourth quarter and
full year of 2019 of $1.3 million and $4.0 million, respectively,
compared to a slight loss in the fourth quarter and a gain of $40.3
million in the full year. During the third quarters of 2019 and
2018, the Company settled in-the-money contracts prior to their
maturity date, for cash proceeds of approximately $6.7 million and
$32.8 million, respectively.
- Foreign exchange losses of $1.5 million and $8.2 million were
recognized in the fourth quarter and full year of 2019,
respectively, compared to gains of $7.5 million and $10.3 million,
respectively. The variances were primarily due to changes in the
value of the Canadian dollar relative to the U.S. dollar.
- Interest expense was $14.7 million in the fourth quarter and
$48.4 million for the full year of 2019 compared to $10.9 million
and $40.9 million, respectively. The increase in the 2019 periods
was due to a loss on the prepayment of the Ressources Quebec Note
and increased amounts drawn on the revolving credit facility, which
were repaid, leaving no amount drawn as of December 31, 2019.
- Income tax benefit for the fourth quarter and full year of 2019
of $4.1 million and $24.1 million, respectively, compared to
benefits of $5.2 million and $6.7 million, respectively.
- Suspension costs for the fourth quarter of $3.3 million and
$12.1 million for the full year of 2019, compared to costs of $2.4
million and $20.7 million, respectively.
- Exploration and pre-development expense was $3.0 million for
the fourth quarter and $19.1 million for the full year of 2019,
compared to $9.4 million and $40.6 million, respectively due to
reduced spending at all sites.
Cash provided by operating activities for the fourth quarter and
full year of 2019 of $57.3 million and $120.9 million,
respectively, was $38.2 million and $26.6 million higher,
respectively, compared to the prior year periods. The increase in
the fourth quarter of 2019 was primarily due to lower spending in
Nevada, higher sales and lower exploration. The increase for the
full year of 2019 was a result of the same factors, along with
lower acquisition costs and Lucky Friday suspension costs and the
impact of working capital changes, partially offset by lower cash
proceeds from settlement of base metals derivative contracts prior
to their maturity date.
Adjusted EBITDA increased $43.2 million quarter-over-quarter,
and the $177.7 million in 2019 was $6.4 million more than 2018.1
The increases were primarily due to lower spending in Nevada,
higher sales, and lower exploration spending.
Fourth quarter capital expenditures totaled $23.8 million,
including $12.9 million at Greens Creek, $7.7 million at Casa
Berardi, and $3.0 million at Lucky Friday. Capital expenditures,
including non-cash items for equipment acquired under finance
leases, for the year 2019 totaled $128.1 million, compared to last
year's $140.6 million.
Metals Prices
Average realized silver prices in the fourth quarter and full
year 2019 were $17.47 and $16.65 per ounce, respectively, compared
to $14.58 and $15.63, respectively, for the prior year periods.
Average realized prices for gold for the fourth quarter and full
year 2019 were $1,488 and $1,413 per ounce, respectively, higher by
20% and 12%, respectively, compared to the prior year periods.
Average realized prices for lead were 3% higher, with the zinc
price 4% lower quarter-over-quarter. The average realized prices
for lead and zinc for the full year of 2019 were 13% and 10% lower,
respectively, compared to 2018.
OPERATIONS OVERVIEW
Overview
The following table provides the production summary on a
consolidated basis for the fourth quarter and twelve months ended
December 31, 2019 and 2018:
Fourth Quarter Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
PRODUCTION SUMMARY
Silver -
Ounces produced
3,411,988
2,715,385
12,605,234
10,369,503
Payable ounces sold
3,999,013
2,260,690
11,548,373
9,254,385
Gold -
Ounces produced
74,773
70,987
272,873
262,103
Payable ounces sold
85,237
64,478
275,060
247,528
Lead -
Tons produced
6,804
4,704
24,210
20,091
Payable tons sold
7,118
3,615
19,746
16,214
Zinc -
Tons produced
16,185
13,711
58,857
56,023
Payable tons sold
12,147
9,201
39,381
39,273
The following tables provides a summary of the final production,
cost of sales and other direct production costs and depreciation,
depletion and amortization ("cost of sales"), cash cost, after
by-product credits, per silver or gold ounce, and All in Sustaining
Cost ("AISC"), after by-product credits, per silver and gold ounce,
for the fourth quarter and twelve months ended December 31,
2019:
Fourth Quarter Ended
Total
Greens Creek
Lucky Friday
San Sebastian
Casa Berardi
Nevada Operations
December 31, 2019
Silver
Gold
Silver
Gold
Silver
Silver
Gold
Gold
Silver
Gold
Silver
Production (ounces)
3,411,988
74,773
2,741,090
15,356
216,488
422,434
3,897
34,793
10,499
20,727
21,477
Increase/(decrease) over 2018
26
%
5
%
27
%
17
%
1,562
%
(5
)%
33
%
(3
)%
43
%
9
%
(76
)%
Cost of sales & other direct
production costs and depreciation, depletion and amortization
(000)
$
91,124
$
108,503
$
71,481
N/A
$
5,472
$
14,171
N/A
$
60,444
N/A
$
48,059
N/A
Increase/(decrease) over 2018
45
%
45
%
48
%
N/A
40
%
33
%
N/A
28
%
N/A
74
%
N/A
Cash costs, after by-prod credits, per
silver or gold ounce 2,4
$
3.58
$
1,003
$
2.76
N/A
N/A
$
8.89
N/A
$
1,037
N/A
$
946
N/A
Increase/(decrease) over 2018
$
(0.43
)
$
(45
)
$
0.97
N/A
N/A
$
(5.89
)
N/A
$
97
N/A
$
(305
)
N/A
AISC, after by-prod credits, per silver or
gold ounce 3
$
11.31
$
1,187
$
7.86
N/A
N/A
$
11.78
N/A
$
1,278
N/A
$
1,024
N/A
Increase/(decrease) over 2018
$
(2.22
)
$
(395
)
$
(0.06
)
N/A
N/A
$
(7.73
)
N/A
$
(70
)
N/A
$
(996
)
N/A
Twelve Months Ended
Total
Greens Creek
Lucky Friday
San Sebastian
Casa Berardi
Nevada Operations
December 31, 2019
Silver
Gold
Silver
Gold
Silver
Silver
Gold
Gold
Silver
Gold
Silver
Production (ounces)
12,605,234
272,873
9,890,125
56,625
632,944
1,868,884
15,673
134,409
31,540
66,166
181,741
Increase/(decrease) over 2018
22
%
4
%
24
%
10
%
274
%
(8
)%
5
%
(17
)%
(17
)%
N/A
N/A
Cost of sales & other direct
production costs and depreciation, depletion and amortization
(000)
$
278,849
$
371,018
$
211,719
N/A
$
16,621
$
50,509
N/A
$
217,682
N/A
$
153,336
N/A
Increase/(decrease) over 2018
15
%
51
%
11
%
N/A
70
%
21
%
N/A
9
%
N/A
N/A
N/A
Cash costs, after by-prod credits, per
silver or gold ounce 2,4
$
2.93
$
1,066
$
1.97
N/A
N/A
$
8.02
N/A
$
1,051
N/A
$
1,096
N/A
Increase/(decrease) over 2018
$
1.85
$
195
$
3.10
N/A
N/A
$
(1.67
)
N/A
$
251
N/A
N/A
N/A
AISC, after by-prod credits, per silver or
gold ounce 3
$
10.13
$
1,411
$
5.99
N/A
N/A
$
12.10
N/A
$
1,354
N/A
$
1,527
N/A
Increase/(decrease) over 2018
$
(1.31
)
$
185
$
0.41
N/A
N/A
$
(2.58
)
N/A
$
274
N/A
N/A
N/A
Greens Creek Mine - Alaska
The increase in silver and gold production for the quarter and
full year resulted from higher grades, with the quarterly increase
also due to higher throughput. The mill operated at an average of
2,351 tons per day (tpd) in the fourth quarter and 2,318 tpd for
the full year. The annual throughput was a record.
The higher cost of sales and per silver ounce cash costs, for
the periods were primarily due to higher production costs and
treatment charges. The decrease in AISC per silver ounce, for the
quarter resulted from higher silver production.
For the full year of 2019, Greens Creek generated cash provided
by operating activities of approximately $136.2 million and spent
$29.3 million on additions to properties, plants and equipment,
resulting in free cash flow of $106.9 million.5
Casa Berardi - Quebec
Lower quarterly and annual gold production was due to lower
grades, as planned. Gold production was also impacted by lower mill
throughput and recoveries in the first half of 2019 due to planned
adjustments to a number of mill components to accommodate higher
throughput, and the requirement for a new carbon in leach (CIL)
tank drive-train, which was installed in May 2019. The mill
operated at an average of 3,950 tpd in the fourth quarter 2019 and
3,775 tpd for the year.
Higher quarterly and annual cost of sales were due to the
extension of stripping at the East Mine Crown Pillar (EMCP) pit as
well as increased quantities of waste and ore extracted from the
pit and higher haulage costs due to deepening of the pit. Milling
costs were also higher due to costs for pre-crushing of ore to
allow for increased throughput, and higher costs for mill
enhancements, maintenance and reagents. These factors impacting
mining and milling costs, along with lower gold production, also
resulted in increased cash costs per gold ounce. However, AISC per
gold ounce declined in the fourth quarter due to lower capital
spending.
For the full year of 2019, Casa Berardi generated cash provided
by operating activities of approximately $55.7 million and spent
$35.8 million on additions to properties, plants and equipment,
resulting in free cash flow of $20.0 million.5
Process improvement studies are being implemented in 2020 in an
effort to improve throughput, recovery and lower costs to increase
cash flow.
San Sebastian - Mexico
San Sebastian's lower metal production was expected due to the
transition from shallow, high-grade open pits to lower-grade
underground production. The mill operated at an average of 425 tpd
in the fourth quarter 2019 and 479 tpd for the year.
The higher cost of sales was due to the higher cost of
underground mining and depreciation. Cash cost and AISC per ounce,
after by-product credits, were lower as a result of higher
by-product credits, due to higher gold production prices, with AISC
also impacted by lower exploration spending.
For the full year of 2019, San Sebastian generated cash provided
by operating activities of approximately $19.1 million and spent
$5.0 million on additions to properties, plants and equipment,
resulting in free cash flow of $14.1 million.5
The Company is completing its study on the Hugh Zone sulfide ore
and expects a decision on development in the first quarter, which
would allow production to begin by the end of the year.
Nevada Operations
Gold production was 9% higher quarter-over-quarter. The assets
were acquired on July 20, 2018. During 2019, ore was processed at
an average of 576 tpd.
Cost of sales for the year rose primarily as a result of
reporting a full year's results, and were higher for the fourth
quarter due to higher sales volume and increased depreciation.
However, per gold ounce cash costs and AISC declined for the fourth
quarter by $305 and $996 per gold ounce because of increased gold
production resulting from higher grades, with the decrease in AISC
also due to lower exploration spending, partially offset by higher
sustaining capital.
The mining of developed ore is expected to continue at Fire
Creek until about mid-year, when the mining activities are planned
to pause. To lower the cut-off grade, the Company is studying
mining methods, processing of refractory ore and hydrology.
Production is not anticipated to begin again until these studies
are successfully completed and permitted.
Lucky Friday Mine - Idaho
Production in 2019 was similar to 2018 with the production and
capital improvements being performed by salaried staff.
Union workers at Lucky Friday ratified the collective bargaining
agreement in January 2020, and many are beginning to return to
work. The Company anticipates re-staffing of the mine to take place
in stages, with a ramp-up to full production levels expected by the
end of 2020.
Underground testing and modification of the Remote Vein Mining
(RVM) machine is underway in Sweden. The machine is expected to be
sent to Lucky Friday by late 2020.
EXPLORATION AND PRE-DEVELOPMENT
Exploration
Exploration (including corporate development) expenses were $2.4
million and $15.9 million for the fourth quarter and full year
2019, respectively. This represents a decrease of 71% and 55% over
the fourth quarter and full year 2018. These decreases were
primarily the result of lower expenses at the Nevada operations and
overall decreased site exploration during 2019.
A complete summary of exploration activities can be found in the
news release entitled "Hecla Reports Record Silver, Lead and Zinc
Reserves" released on February 5, 2020.
Pre-development
Pre-development spending was $0.6 million in the fourth quarter
and $3.2 million for the full year 2019, principally to advance the
permitting at Rock Creek and Montanore.
Rock Creek/Montanore
At Rock Creek, the Company updated and the Kootenai National
Forest partially approved its plan of operation to reflect the
Record of Decision (ROD) issued in 2018. In December 2019, the
Company submitted an amendment application to the Montana
Department of Environmental Quality to modify the existing
Exploration License to match the ROD. The Company plans to continue
the permitting process at the site despite the existence of
litigation challenging the project.
At Montanore, the Kootenai National Forest issued a draft
Supplemental Environmental Impact Study for the evaluation phase
for public comment in the third quarter of 2019. The project
remains the subject of ongoing litigation. The Company plans to
continue the permitting process at the site despite the existence
of litigation challenging the project.
METALS AND CURRENCY DERIVATIVES
Base Metals Forward Sales Contracts
The following table summarizes the quantities of base metals
committed under financially settled forward sales contracts, other
than provisional hedges (which address changes in prices between
shipment and settlement with customers), at December 31, 2019:
Pounds Under Contract (in
thousands)
Average Price per
Pound
Zinc
Lead
Zinc
Lead
Contracts on forecasted sales
2020 settlements
441
11,740
$
1.13
$
0.98
The contracts represent 1% of the forecasted payable zinc
production for the year at an average price of $1.13 per pound, and
30% of the forecasted payable lead production for the next year at
an average price of $0.98 per pound.
Precious Metals Put Option Contracts
In June 2019, we began using financially-settled put option
contracts to manage the exposure of our forecasted future gold and
silver sales to potential declines in market prices for those
metals. These put contracts give us the option, but not the
obligation, to realize established prices on quantities of silver
and gold to be sold in the future. The following table summarizes
the quantities of metals for which we have entered into put
contracts and the average exercise prices as of December 31,
2019:
Ounces under contract (in
thousands)
Average price per
ounce
Silver
Gold
Silver
Gold
(ounces)
(ounces)
(ounces)
(ounces)
Contracts on forecasted sales
2020 settlements
5,700
130
$
15.73
$
1,435
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, 2019:
Currency Under Contract (in
thousands of CAD/MXN)
Average Exchange Rate
CAD
MXN
CAD/USD
MXN/USD
2020 settlements
110,300
7,100
1.30
20.72
2021 settlements
80,700
1.29
2022 settlements
63,300
1.30
2023 settlements
24,700
1.31
2020 ESTIMATES6
2020 Production Outlook
Silver Production
(Moz)
Gold Production (Koz)
Silver Equivalent
(Moz)
Gold Equivalent (Koz)
Greens Creek *
8.9 - 9.3
46 - 48
21.5 - 22.1
240 - 246
Lucky Friday *
1.4 - 1.8
N/A
3.2 - 3.6
35 - 40
San Sebastian
0.8 - 1.0
7 - 8
1.4 - 1.7
16 - 19
Casa Berardi
N/A
135 - 140
12.1 - 12.6
135 - 140
Nevada Operations
N/A
24 - 29
2.2 - 2.6
24 - 29
Total
11.1 - 12.1
212 - 225
40.4 - 42.6
450 - 474
* Equivalent ounces includes Lead and
Zinc production
2020 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
Greens Creek
$200
$4.25 - $5.00
$8.50 - $9.75
Lucky Friday *
$15
$5.25 - $5.50
$8.75 - $9.00
San Sebastian
$25
$3.00 - $4.25
$6.25 - $8.50
Total Silver
$240
$4.00 - $5.00
$11.00 - $12.25
Casa Berardi
$185
$875 - $900
$1,225 - $1,275
Nevada Operations
$50
$825 - $1,000
$850 - $1,050
Total Gold
$235
$850 - $925
$1,150 - $1,250
* Expected cost of sales during full
production. LF cash costs and AISC are calculated using only Q4
production and costs
2020 Capital and Exploration Outlook
2020E Capital expenditures (excluding
capitalized interest)
$115 million
2020E Exploration expenditures
(includes Corporate Development)
$15 million
2020E Pre-development
expenditures
$2.5 million
2020E Research and Development
expenditures
$0 million
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held today, Thursday,
February 6, 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 Reuters Eikon, a password-protected event management
site.
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 eight 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
United States 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) 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.
(2) 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.
(3) 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.
(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 2020 include silver, gold, lead and zinc
production from Greens Creek, Lucky Friday, San Sebastian, Casa
Berardi and Nevada Operations converted using Au $1,525/oz, Ag
$17/oz, Zn $1.00/lb, and Pb $0.85/lb. Numbers may be rounded.
Cautionary Statement Regarding Forward
Looking Statements, Including 2020 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 full-year 2020 silver
and gold production, cost of sales, cash costs, after by-product
credits, AISC, after by-product credits as well as estimated
spending on capital, exploration, pre-development and research and
development (which assumes metal prices of gold at $1,525/oz, Ag
$17/oz, Zn $1.00/lb, Pb $0.85/lb; USD/CAD assumed to be $0.77,
USD/MXN assumed to be $0.05; (ii) the Company’s mineral reserves
and resources; (iii) the strong second half of 2019 puts Hecla in a
better position to refinance the Senior Notes; (iv) expectations
that strong cash flow generation will continue in 2020; (v) ramp-up
of Lucky Friday to full production by the end of 2020; (vi)
potential mine life extension at San Sebastian from the Hugh zone
with production beginning later this year; (vii) improvement
studies underway at Casa Berardi in an effort to improve
throughput, recovery and cost gains to increase cash flow; (viii)
number of employees at Lucky Friday that return to work; (ix)
expectation that the RVM to be sent to Lucky Friday following
successful completion of testing, estimated to be in late 2020; and
(x) the ability to continue the permitting process at Rock Creek
and Montanore despite litigation. 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, including the Company's 2019 10-K expected to be
filed on February 10, 2020. 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, 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
Kurt D. Allen, MSc., CPG, Director - Exploration of Hecla
Limited and Keith Blair, MSc., CPG, Chief Geologist of Hecla
Limited, who serve as a Qualified Person under National Instrument
43-101("NI 43-101"), supervised the preparation of the scientific
and technical information concerning Hecla’s mineral projects in
this news release, including with respect to the newly acquired
Nevada projects. Information regarding data verification, surveys
and investigations, quality assurance program and quality control
measures and a summary of analytical or testing procedures for the
Greens Creek Mine are contained in a technical report titled
“Technical Report for the Greens Creek Mine” effective date
December 31, 2018, and for the Lucky Friday Mine are contained in a
technical report titled “Technical Report for the Lucky Friday Mine
Shoshone County, Idaho, USA” effective date April 2, 2014, for Casa
Berardi are contained in a technical report titled "Technical
Report on the mineral resource and mineral reserve estimate for
Casa Berardi Mine, Northwestern Quebec, Canada" effective date
December 31, 2018 (the "Casa Berardi Technical Report"), and for
the San Sebastian Mine, Mexico, 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. Mr. Allen and Mr.
Blair reviewed and verified information regarding drill sampling,
data verification of all digitally-collected data, drill surveys
and specific gravity determinations relating to all the mines. 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, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Sales of products
$
224,945
$
136,520
$
673,266
$
567,137
Cost of sales and other direct production
costs
139,147
102,192
450,349
353,994
Depreciation, depletion and
amortization
60,480
35,593
199,518
134,044
Total cost of sales
199,627
137,785
649,867
488,038
Gross profit (loss)
25,318
(1,265
)
23,399
79,099
Other operating expenses:
General and administrative
8,977
8,693
35,832
36,542
Exploration
2,363
8,086
15,919
35,695
Pre-development
615
1,272
3,150
4,887
Research and development
(79
)
399
535
5,441
Other operating (income) expense
1,362
(171
)
3,043
1,596
Loss (gain) on disposition of property,
plants, equipment and mineral interests
(23
)
581
4,643
(2,793
)
Suspension-related costs
3,285
2,356
12,051
20,693
Acquisition costs
52
389
645
10,045
Provision for closed operations and
reclamation
1,161
1,585
4,690
6,119
17,713
23,190
80,508
118,225
Income (loss) from operations
7,605
(24,455
)
(57,109
)
(39,126
)
Other income (expense):
(Loss) gain on derivative contracts
(1,252
)
(18
)
(3,971
)
40,253
Gain (loss) on disposition of
investments
(4
)
2
923
(34
)
Unrealized loss on investments
(1,230
)
(355
)
(2,389
)
(2,816
)
Net foreign exchange gain (loss)
(1,495
)
7,454
(8,236
)
10,310
Interest and other (expense) income
(1,022
)
(613
)
(4,429
)
(907
)
Interest expense
(14,670
)
(10,925
)
(48,447
)
(40,944
)
(19,673
)
(4,455
)
(66,549
)
5,862
(Loss) before income taxes
(12,068
)
(28,910
)
(123,658
)
(33,264
)
Income tax benefit (provision)
4,092
5,217
24,101
6,701
Net loss
(7,976
)
(23,693
)
(99,557
)
(26,563
)
Preferred stock dividends
(138
)
(138
)
(552
)
(552
)
Loss applicable to common stockholders
$
(8,114
)
$
(23,831
)
$
(100,109
)
$
(27,115
)
Basic loss per common share after
preferred dividends
$
(0.02
)
$
(0.05
)
$
(0.20
)
$
(0.06
)
Diluted loss per common share after
preferred dividends
$
(0.02
)
$
(0.05
)
$
(0.20
)
$
(0.06
)
Weighted average number of common shares
outstanding basic
502,902
480,572
490,449
433,419
Weighted average number of common shares
outstanding diluted
502,902
480,572
490,449
433,419
HECLA MINING COMPANY
Condensed Consolidated Balance
Sheets
(dollars and shares in thousands
- unaudited)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
62,452
$
27,389
Investments
—
—
Accounts receivable
38,421
25,818
Inventories
66,213
87,533
Other current assets
12,038
23,410
Total current assets
179,124
164,150
Non-current investments
6,207
6,583
Non-current restricted cash and
investments
1,025
1,025
Properties, plants, equipment and mineral
interests, net
2,423,698
2,520,004
Operating lease right-of-use assets
16,381
—
Deferred income tax asset
3,537
1,987
Other non-current assets and deferred
charges
7,336
10,195
Total assets
$
2,637,308
$
2,703,944
LIABILITIES
Current liabilities:
Accounts payable and accrued
liabilities
$
57,716
$
77,861
Accrued payroll and related benefits
26,916
30,034
Accrued taxes
4,776
7,727
Current portion of capital leases
5,429
5,264
Current portion of accrued reclamation and
closure costs
4,581
3,410
Current portion of operating leases
5,580
—
Accrued interest
5,804
5,961
Other current liabilities
6,172
5,937
Total current liabilities
116,974
136,194
Capital leases
7,214
7,871
Accrued reclamation and closure costs
103,793
104,979
Long-term debt
504,729
532,799
Long-term operating leases
10,818
—
Deferred income tax liability
138,282
173,537
Non-current pension liability
56,219
47,711
Other non-current liabilities
6,856
9,890
Total liabilities
944,885
1,012,981
STOCKHOLDERS’ EQUITY
Preferred stock
39
39
Common stock
132,292
121,956
Capital surplus
1,973,700
1,880,481
Accumulated deficit
(353,331
)
(248,308
)
Accumulated other comprehensive loss
(37,310
)
(42,469
)
Treasury stock
(22,967
)
(20,736
)
Total stockholders’ equity
1,692,423
1,690,963
Total liabilities and stockholders’
equity
$
2,637,308
$
2,703,944
Common shares outstanding
522,896
482,604
HECLA MINING COMPANY
Condensed Consolidated Statements
of Cash Flows
(dollars in thousands -
unaudited)
December 31, 2019
December 31, 2018
OPERATING ACTIVITIES
Net loss
$
(99,557
)
$
(26,563
)
Non-cash elements included in net
loss:
Depreciation, depletion and
amortization
204,475
140,905
Loss on disposition of investments
(927
)
—
Unrealized loss on investments
2,386
2,816
Gain on disposition of properties, plants,
equipment and mineral interests
4,643
(2,793
)
Provision for reclamation and closure
costs
6,914
6,090
Deferred income taxes
(33,387
)
(9,699
)
Stock compensation
5,668
6,278
Amortization of loan origination fees
2,637
2,077
(Gain) loss on derivative contracts
5,613
(15,366
)
Foreign exchange (gain) loss
8,025
(7,104
)
Adjustment of inventory to market
value
1,399
8,191
Fee on prepayment of debt with shares of
common stock
2,855
—
Other non-cash charges, net
49
(32
)
Change in assets and liabilities:
Accounts receivable
(10,939
)
9,843
Inventories
16,146
(27,512
)
Other current and non-current assets
15,618
(1,726
)
Accounts payable and accrued
liabilities
(24,355
)
17,795
Accrued payroll and related benefits
9,226
(2,425
)
Accrued taxes
(3,155
)
645
Accrued reclamation and closure costs and
other non-current liabilities
7,532
(7,199
)
Cash provided by operating
activities
120,866
94,221
INVESTING ACTIVITIES
Additions to properties, plants, equipment
and mineral interests
(121,421
)
(136,933
)
Purchase of other companies, net of cash
and restricted cash acquired
—
(139,326
)
Proceeds from sale of investments
1,760
—
Proceeds from disposition of properties,
plants and equipment
183
2,411
Insurance proceeds received for damaged
property
—
4,377
Purchases of investments
(389
)
(31,971
)
Maturities of investments
—
64,895
Net cash used in investing
activities
(119,867
)
(236,547
)
FINANCING ACTIVITIES
Acquisition of treasury shares
(2,231
)
(2,694
)
Proceeds from issuance of common stock and
warrants, net of related expense
49,019
6,744
Dividends paid to common stockholders
(4,914
)
(4,393
)
Dividends paid to preferred
stockholders
(552
)
(552
)
Borrowings on debt
279,500
102,024
Payments on debt
(279,500
)
(106,036
)
Debt issuance and loan origination fees
paid
(976
)
(2,638
)
Repayments of capital leases
(7,157
)
(7,339
)
Net cash provided by (used in)
financing activities
33,189
(14,884
)
Effect of exchange rates on cash
875
(1,515
)
Net increase in cash, cash equivalents and
restricted cash and cash equivalents
35,063
(158,725
)
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of year
28,414
187,139
Cash, cash equivalents and restricted cash
and cash equivalents at end of year
$
63,477
$
28,414
HECLA MINING COMPANY
Metal Prices
Fourth Quarter Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
AVERAGE METAL PRICES
Silver -
London PM Fix ($/oz)
$
17.30
$
14.55
$
16.20
$
15.71
Realized price per ounce
$
17.47
$
14.58
$
16.65
$
15.63
Gold -
London PM Fix ($/oz)
$
1,480
$
1,228
$
1,392
$
1,269
Realized price per ounce
$
1,488
$
1,237
$
1,413
$
1,265
Lead -
LME Cash ($/pound)
$
0.92
$
0.89
$
0.91
$
1.02
Realized price per pound
$
0.91
$
0.88
$
0.91
$
1.04
Zinc -
LME Cash ($/pound)
$
1.08
$
1.19
$
1.16
$
1.33
Realized price per pound
$
1.10
$
1.15
$
1.14
$
1.27
Production Data
Fourth Quarter Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
GREENS CREEK UNIT
Tons of ore processed
216,324
212,522
846,076
845,398
Mining cost per ton
$
81.82
$
77.87
$
80.57
$
71.37
Milling cost per ton
$
40.31
$
35.93
$
37.02
$
33.53
Ore grade milled - Silver (oz./ton)
15.69
12.81
14.64
12.16
Ore grade milled - Gold (oz./ton)
0.10
0.09
0.10
0.09
Ore grade milled - Lead (%)
3.07
2.67
2.92
2.80
Ore grade milled - Zinc (%)
7.88
7.12
7.43
7.47
Silver produced (oz.)
2,741,090
2,163,563
9,890,125
7,953,003
Gold produced (oz.)
15,356
13,097
56,625
51,493
Lead produced (tons)
5,444
4,608
20,112
18,960
Zinc produced (tons)
15,475
13,677
56,805
55,350
Total cash cost, after by-product credits,
per silver ounce (1)
$
2.76
$
1.79
$
1.97
$
(1.13
)
AISC, after by-product credits, per silver
ounce (1)
$
7.86
$
7.92
$
5.99
$
5.58
Capital additions (in thousands)
$
12,886
$
12,170
$
35,829
$
46,864
LUCKY FRIDAY UNIT
Tons of ore processed
16,337
1,297
57,091
17,309
Mining cost per ton
$
103.83
$
67.91
$
—
$
—
Milling cost per ton
$
32.41
$
22.32
$
—
$
—
Ore grade milled - Silver (oz./ton)
14.02
7.33
11.83
10.78
Ore grade milled - Lead (%)
9.01
6.89
7.86
7.19
Ore grade milled - Zinc (%)
5.11
3.13
4.25
4.20
Silver produced (oz.)
216,488
13,026
632,944
169,041
Lead produced (tons)
1,360
96
4,098
1,131
Zinc produced (tons)
710
34
2,052
673
Total cash cost, net of by-product
credits, per silver ounce (1)
N/A
N/A
N/A
N/A
AISC, after by-product credits, per silver
ounce (1)
N/A
N/A
N/A
N/A
Capital additions (in thousands)
$
3,043
$
7,347
$
8,989
$
14,236
SAN SEBASTIAN UNIT
Tons of ore processed
39,137
44,817
174,713
156,733
Mining cost per ton
$
107.43
$
131.16
$
111.11
$
149.77
Milling cost per ton
$
78.15
$
64.03
$
65.74
$
65.55
Ore grade milled - Silver (oz./ton)
11.80
10.85
11.78
14.07
Ore grade milled - Gold (oz./ton)
0.115
0.082
0.106
0.11
Silver produced (oz.)
422,434
443,302
1,868,884
2,037,072
Gold produced (oz.)
3,897
2,928
15,673
14,979
Total cash cost, net of by-product
credits, per silver ounce (1)
$
8.89
$
14.78
$
8.02
$
9.69
AISC, after by-product credits, per silver
ounce (1)
$
11.78
$
19.51
$
12.10
$
14.68
Capital additions (in thousands)
$
(458
)
$
2,527
$
5,035
$
6,219
CASA BERARDI UNIT
Tons of ore processed - underground
201,937
187,956
784,568
744,947
Tons of ore processed - surface pit
161,430
135,436
593,497
630,771
Tons of ore processed - total
363,367
323,392
1,378,065
1,375,718
Surface tons mined - ore and waste
1,797,105
1,773,114
9,329,268
6,902,760
Mining cost per ton - underground
$
98.03
$
106.75
$
99.14
$
105.78
Mining cost per ton - combined
$
74.54
$
81.92
$
79.27
$
74.44
Mining cost per ton or ore and waste -
surface tons mined
$
4.05
$
3.10
$
3.37
$
3.56
Milling cost per ton
$
20.22
$
15.61
$
18.22
$
15.84
Ore grade milled - Gold (oz./ton) -
underground
0.164
0.189
0.168
0.203
Ore grade milled - Gold (oz./ton) -
surface pit
0.064
0.041
0.055
0.059
Ore grade milled - Gold (oz./ton) -
combined
0.119
0.129
0.120
0.136
Ore grade milled - Silver (oz./ton)
0.04
0.03
0.03
0.03
Gold produced (oz.) - underground
26,506
31,015
106,821
130,647
Gold produced (oz.) - surface pit
8,287
4,849
27,588
32,097
Gold produced (oz.) - total
34,793
35,864
134,409
162,744
Silver produced (oz.) - total
10,499
7,338
31,540
38,086
Total cash cost, net of by-product
credits, per gold ounce (1)
$
1,037
$
940
$
1,051
$
800
AISC, after by-product credits, per gold
ounce (1)
$
1,278
$
1,348
$
1,354
$
1,080
Capital additions (in thousands)
$
7,699
$
13,590
$
36,059
$
40,710
NEVADA OPERATIONS
Tons of ore processed
46,661
60,484
210,397
116,383
Mining cost per ton
$
215.05
$
245.15
$
170.85
$
216.80
Milling cost per ton
$
88.39
$
79.09
$
83.20
$
74.91
Ore grade milled - Gold (oz./ton)
0.502
0.365
0.361
0.328
Silver produced (oz.)
21,477
88,156
181,741
172,301
Gold produced (oz.)
20,727
19,098
66,166
32,887
Total cash cost, net of by-product
credits, per gold ounce (1)
$
946
$
1,251
$
1,096
$
1,221
AISC, after by-product credits, per gold
ounce (1)
$
1,024
$
2,020
$
1,527
$
1,950
Capital additions (in thousands)
$
608
$
17,589
$
42,184
$
32,587
(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, 2019 and 2018,
and for estimated amounts for the twelve months ended December 31,
2020.
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,
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
$
71,481
$
5,472
$
14,171
$
91,124
Depreciation, depletion and
amortization
(15,359
)
(284
)
(2,838
)
(18,481
)
Treatment costs
14,168
1,050
328
15,546
Change in product inventory
(10,323
)
308
(1,575
)
(11,590
)
Reclamation and other costs
(1,083
)
—
(558
)
(1,641
)
Exclusion of Lucky Friday costs
—
(6,546
)
—
(6,546
)
Cash Cost, Before By-product Credits
(1)
58,884
—
9,528
68,412
Reclamation and other costs
737
—
123
860
Exploration
357
—
215
227
799
Sustaining capital
12,886
—
884
35
13,805
General and administrative
8,977
8,977
AISC, Before By-product Credits (1)
72,864
—
10,750
92,853
By-product credits:
Zinc
(23,478
)
—
(23,478
)
Gold
(20,006
)
(5,767
)
(25,773
)
Lead
(7,825
)
—
(7,825
)
Total By-product credits
(51,309
)
—
(5,767
)
(57,076
)
Cash Cost, After By-product Credits
$
7,575
$
—
$
3,761
$
11,336
AISC, After By-product Credits
$
21,555
$
—
$
4,983
$
35,777
Divided by ounces produced
2,741
—
423
3,164
Cash Cost, Before By-product Credits, per
Silver Ounce
$
21.49
$
—
$
22.52
$
21.62
By-product credits per ounce
(18.73
)
—
(13.63
)
(18.04
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
2.76
$
—
$
8.89
$
3.58
AISC, Before By-product Credits, per
Silver Ounce
$
26.59
$
—
$
25.41
$
29.35
By-product credits per ounce
(18.73
)
—
(13.63
)
(18.04
)
AISC, After By-product Credits, per Silver
Ounce
$
7.86
$
—
$
11.78
$
11.31
In thousands (except per ounce amounts)
Three Months Ended December 31,
2019
Casa Berardi
Nevada Operations
Total Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
60,444
$
48,059
$
108,503
Depreciation, depletion and
amortization
(20,154
)
(21,845
)
(41,999
)
Treatment costs
447
39
486
Change in product inventory
(4,343
)
(5,896
)
(10,239
)
Reclamation and other costs
(130
)
(378
)
(508
)
Cash Cost, Before By-product Credits
(1)
36,264
19,979
56,243
Reclamation and other costs
129
378
507
Exploration
560
285
845
Sustaining capital
7,699
946
8,645
AISC, Before By-product Credits (1)
44,652
21,588
66,240
By-product credits:
Silver
(180
)
(371
)
(551
)
Total By-product credits
(180
)
(371
)
(551
)
Cash Cost, After By-product Credits
$
36,084
$
19,608
$
55,692
AISC, After By-product Credits
$
44,472
$
21,217
$
65,689
Divided by gold ounces produced
35
21
56
Cash Cost, Before By-product Credits, per
Gold Ounce
$
1,042
$
964
$
1,003
By-product credits per ounce
(5
)
(18
)
(10
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
1,037
$
946
$
993
AISC, Before By-product Credits, per Gold
Ounce
$
1,283
$
1,042
$
1,197
By-product credits per ounce
(5
)
(18
)
(10
)
AISC, After By-product Credits, per Gold
Ounce
$
1,278
$
1,024
$
1,187
In thousands (except per ounce amounts)
Three Months Ended December 31,
2019
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
91,124
$
108,503
$
199,627
Depreciation, depletion and
amortization
(18,481
)
(41,999
)
(60,480
)
Treatment costs
15,546
486
16,032
Change in product inventory
(11,590
)
(10,239
)
(21,829
)
Reclamation and other costs
(1,641
)
(508
)
(2,149
)
Exclusion of Lucky Friday costs
(6,546
)
(6,546
)
Cash Cost, Before By-product Credits
(1)
68,412
56,243
124,655
Reclamation and other costs
860
507
1,367
Exploration
799
845
1,644
Sustaining capital
13,805
8,645
22,450
General and administrative
8,977
—
8,977
AISC, Before By-product Credits (1)
92,853
66,240
159,093
By-product credits:
Zinc
(23,478
)
—
(23,478
)
Gold
(25,773
)
—
(25,773
)
Lead
(7,825
)
—
(7,825
)
Silver
(551
)
(551
)
Total By-product credits
(57,076
)
(551
)
(57,627
)
Cash Cost, After By-product Credits
$
11,336
$
55,692
$
67,028
AISC, After By-product Credits
$
35,777
$
65,689
$
101,466
Divided by ounces produced
3,164
56
Cash Cost, Before By-product Credits, per
Ounce
$
21.62
$
1,003
By-product credits per ounce
(18.04
)
(10
)
Cash Cost, After By-product Credits, per
Ounce
$
3.58
$
993
AISC, Before By-product Credits, per
Ounce
$
29.35
$
1,197
By-product credits per ounce
(18.04
)
(10
)
AISC, After By-product Credits, per
Ounce
$
11.31
$
1,187
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
)
Silver
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 silver 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 Silver 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 Silver 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 Gold 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 Gold 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)
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
$
211,719
$
16,621
$
50,509
$
278,849
Depreciation, depletion and
amortization
(47,587
)
(1,175
)
(9,772
)
(58,534
)
Treatment costs
48,487
2,884
760
52,131
Change in product inventory
(1,155
)
1,016
(2,953
)
(3,092
)
Reclamation and other costs
(2,523
)
—
(1,588
)
(4,111
)
Exclusion of Lucky Friday costs
—
(19,346
)
—
(19,346
)
Cash Cost, Before By-product Credits
(1)
208,941
—
36,956
245,897
Reclamation and other costs
2,949
—
492
3,441
Exploration
982
—
4,667
1,332
6,981
Sustaining capital
35,829
—
2,461
108
38,398
General and administrative
35,832
35,832
AISC, Before By-product Credits (1)
248,701
—
44,576
330,549
By-product credits:
Zinc
(91,435
)
—
(91,435
)
Gold
(69,391
)
—
(21,960
)
(91,351
)
Lead
(28,589
)
—
(28,589
)
Total By-product credits
(189,415
)
—
(21,960
)
(211,375
)
Cash Cost, After By-product Credits
$
19,526
$
—
$
14,996
$
34,522
AISC, After By-product Credits
$
59,286
$
—
$
22,616
$
119,174
Divided by silver ounces produced
9,890
—
1,869
11,759
Cash Cost, Before By-product Credits, per
Silver Ounce
$
21.12
$
—
$
19.77
$
20.91
By-product credits per Silver ounce
(19.15
)
—
(11.75
)
(17.98
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
1.97
$
—
$
8.02
$
2.93
AISC, Before By-product Credits, per
Silver Ounce
$
25.14
$
—
$
23.85
$
28.11
By-product credits per Silver ounce
(19.15
)
—
(11.75
)
(17.98
)
AISC, After By-product Credits, per Silver
Ounce
$
5.99
$
—
$
12.10
$
10.13
In thousands (except per ounce amounts)
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
$
217,682
$
153,336
$
371,018
Depreciation, depletion and
amortization
(73,960
)
(67,024
)
(140,984
)
Treatment costs
1,876
158
2,034
Change in product inventory
(3,371
)
(9,008
)
(12,379
)
Reclamation and other costs
(515
)
(2,019
)
(2,534
)
Cash Cost, Before By-product Credits
(1)
141,712
75,443
217,155
Reclamation and other costs
515
1,512
2,027
Exploration
3,450
2,333
5,783
Sustaining capital
36,825
24,652
61,477
AISC, Before By-product Credits (1)
182,502
103,940
286,442
By-product credits:
Silver
(508
)
(2,922
)
(3,430
)
Total By-product credits
(508
)
(2,922
)
(3,430
)
Cash Cost, After By-product Credits
$
141,204
$
72,521
$
213,725
AISC, After By-product Credits
$
181,994
$
101,018
$
283,012
Divided by gold ounces produced
134
66
200
Cash Cost, Before By-product Credits, per
Gold Ounce
$
1,055
$
1,140
$
1,083
By-product credits per Gold ounce
(4
)
(44
)
(17
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
1,051
$
1,096
$
1,066
AISC, Before By-product Credits, per Gold
Ounce
$
1,358
$
1,571
$
1,428
By-product credits per Gold ounce
(4
)
(44
)
(17
)
AISC, After By-product Credits, per Gold
Ounce
$
1,354
$
1,527
$
1,411
In thousands (except per ounce amounts)
Twelve Months Ended December 31,
2019
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
278,849
$
371,018
$
649,867
Depreciation, depletion and
amortization
(58,534
)
(140,984
)
(199,518
)
Treatment costs
52,131
2,034
54,165
Change in product inventory
(3,092
)
(12,379
)
(15,471
)
Reclamation and other costs
(4,111
)
(2,534
)
(6,645
)
Exclusion of Lucky Friday costs
(19,346
)
(19,346
)
Cash Cost, Before By-product Credits
(1)
245,897
217,155
463,052
Reclamation and other costs
3,441
2,027
5,468
Exploration
6,981
5,783
12,764
Sustaining capital
38,398
61,477
99,875
General and administrative
35,832
—
35,832
AISC, Before By-product Credits (1)
330,549
286,442
616,991
By-product credits:
Zinc
(91,435
)
(91,435
)
Gold
(91,351
)
(91,351
)
Lead
(28,589
)
(28,589
)
Silver
(3,430
)
(3,430
)
Total By-product credits
(211,375
)
(3,430
)
(214,805
)
Cash Cost, After By-product Credits
$
34,522
$
213,725
$
248,247
AISC, After By-product Credits
$
119,174
$
283,012
$
402,186
Divided by ounces produced
11,759
200
Cash Cost, Before By-product Credits, per
Ounce
$
20.91
$
1,083
By-product credits per ounce
(17.98
)
(17
)
Cash Cost, After By-product Credits, per
Ounce
$
2.93
$
1,066
AISC, Before By-product Credits, per
Ounce
$
28.11
$
1,428
By-product credits per ounce
(17.98
)
(17
)
AISC, After By-product Credits, per
Ounce
$
10.13
$
1,411
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
)
Silver
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 silver 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 silver 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:
Zinc
Gold
Lead
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 gold 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 ounces produced
9,990
196
Cash Cost, Before By-product Credits, per
Ounce
$
22.10
$
887
By-product credits per ounce
(21.02
)
(16
)
Cash Cost, After By-product Credits, per
Ounce
$
1.08
$
871
AISC, Before By-product Credits, per
Ounce
$
32.46
$
1,242
By-product credits per ounce
(21.02
)
(16
)
AISC, After By-product Credits, per
Ounce
$
11.44
$
1,226
In thousands (except per ounce amounts)
Estimate for Twelve Months Ended
December 31, 2020
Greens Creek
Lucky Friday(2)
San Sebastian
Corporate(3)
Total Silver
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
200,000
$
14,500
$
25,000
$
239,500
Depreciation, depletion and
amortization
(42,000
)
(3,500
)
(7,000
)
(52,500
)
Treatment costs
33,700
2,750
850
37,300
Change in product inventory
15,500
—
(5,200
)
10,300
Reclamation and other costs
3,500
250
1,300
5,050
Cash Cost, Before By-product Credits
(1)
210,700
14,000
14,950
239,650
Reclamation and other costs
5,000
—
500
5,500
Exploration
800
—
2,300
3,100
Sustaining capital
35,500
2,500
600
38,600
General and administrative
—
—
29,000
29,000
AISC, Before By-product Credits (1)
252,000
16,500
18,350
315,850
By-product credits:
Zinc
(79,000
)
(2,700
)
(81,700
)
Gold
(63,000
)
(12,000
)
(75,000
)
Lead
(29,000
)
(7,600
)
(36,600
)
Total By-product credits
(171,000
)
(10,300
)
(12,000
)
(193,300
)
Cash Cost, After By-product Credits
$
39,700
$
3,700
$
2,950
$
46,350
AISC, After By-product Credits
$
81,000
$
6,200
$
6,350
$
122,550
Divided by silver ounces produced
9,100
700
900
10,700
Cash Cost, Before By-product Credits, per
Silver Ounce
$
23.15
$
20.00
$
16.61
$
22.40
By-product credits per silver ounce
(18.79
)
(14.71
)
(13.33
)
(18.07
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
4.36
$
5.29
$
3.28
$
4.33
AISC, Before By-product Credits, per
Silver Ounce
$
27.69
$
23.57
$
20.39
$
29.52
By-product credits per silver ounce
(18.79
)
(14.71
)
(13.33
)
(18.07
)
AISC, After By-product Credits, per Silver
Ounce
$
8.90
$
8.86
$
7.06
$
11.45
In thousands (except per ounce amounts)
Estimate for Twelve Months Ended
December 31, 2020
Casa Berardi
Nevada Operations
Total Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
185,000
$
50,000
$
235,000
Depreciation, depletion and
amortization
(57,000
)
(23,000
)
(80,000
)
Treatment costs
—
—
—
Change in product inventory
(7,000
)
(4,000
)
(11,000
)
Reclamation and other costs
1,000
1,250
2,250
Cash Cost, Before By-product Credits
(1)
122,000
24,250
146,250
Reclamation and other costs
600
200
800
Exploration
2,600
—
2,600
Sustaining capital
46,000
1,000
47,000
AISC, Before By-product Credits (1)
171,200
25,450
196,650
By-product credits:
—
Silver
(500
)
(500
)
(1,000
)
Total By-product credits
(500
)
(500
)
(1,000
)
Cash Cost, After By-product Credits
$
121,500
$
23,750
$
145,250
AISC, After By-product Credits
$
170,700
$
24,950
$
195,650
Divided by gold ounces produced
137
27
164
Cash Cost, Before By-product Credits, per
Gold Ounce
$
891
$
898
$
892
By-product credits per gold ounce
(4
)
(19
)
(6
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
887
$
879
$
886
AISC, Before By-product Credits, per Gold
Ounce
$
1,250
$
943
$
1,199
By-product credits per gold ounce
(4
)
(19
)
(6
)
AISC, After By-product Credits, per Gold
Ounce
$
1,246
$
924
$
1,193
In thousands (except per ounce amounts)
Estimate for Twelve Months Ended
December 31, 2020
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
252,500
$
220,000
$
472,500
Depreciation, depletion and
amortization
(52,500
)
(80,000
)
(132,500
)
Treatment costs
37,300
—
37,300
Change in product inventory
(2,700
)
4,000
1,300
Reclamation and other costs
5,050
2,250
7,300
Cash Cost, Before By-product Credits
(1)
239,650
146,250
385,900
Reclamation and other costs
5,500
800
6,300
Exploration
3,100
2,600
5,700
Sustaining capital
38,600
47,000
85,600
General and administrative
29,000
—
29,000
AISC, Before By-product Credits (1)
315,850
196,650
512,500
By-product credits:
Zinc
(81,700
)
—
(81,700
)
Gold
(75,000
)
—
(75,000
)
Lead
(36,600
)
—
(36,600
)
Silver
(1,000
)
(1,000
)
Total By-product credits
(193,300
)
(1,000
)
(194,300
)
Cash Cost, After By-product Credits
$
46,350
$
145,250
$
191,600
AISC, After By-product Credits
$
122,550
$
195,650
$
318,200
Divided by ounces produced
10,700
164
Cash Cost, Before By-product Credits, per
Ounce
$
22.40
$
892
By-product credits per ounce
(18.07
)
(6
)
Cash Cost, After By-product Credits, per
Ounce
$
4.33
$
886
AISC, Before By-product Credits, per
Ounce
$
29.52
$
1,199
By-product credits per ounce
(18.07
)
(6
)
AISC, After By-product Credits, per
Ounce
$
11.45
$
1,193
(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
had been on strike from March 13, 2017, until January 7, 2020, and
production at Lucky Friday has been limited since that time. For
2019 and 2018, costs related to suspension of full production
totaling approximately $7.8 million and $14.6 million,
respectively, along with $4.3 million and $5.0 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 Income (Loss) Applicable to
Common Shareholders (non-GAAP)
This release refers to a non-GAAP measure of adjusted net income
(loss) 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 income (loss) 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,
2019
2018
2019
2018
Net loss applicable to common stockholders
(GAAP)
$
(8,114
)
$
(23,831
)
$
(100,109
)
$
(27,115
)
Adjusting items:
Loss (gain) on derivatives contracts
1,252
18
3,971
(40,253
)
Provisional price (gain) loss
(855
)
531
(597
)
3,803
Suspension-related costs
3,285
2,356
12,051
20,693
Environmental accruals
—
250
472
250
Foreign exchange loss (gain)
1,495
(7,454
)
8,236
(10,310
)
Acquisition costs
52
389
645
10,045
Unrealized loss on investments
1,230
355
2,389
2,816
Loss on prepayment of debt with shares
2,855
—
2,855
—
(Gain) loss on disposition of properties,
plants, equipment and mineral interests
(23
)
581
4,643
(2,793
)
Change in deferred tax asset valuation
allowance
—
(862
)
—
(862
)
Adjusted net income (loss) applicable to
common stockholders
$
1,177
$
(27,667
)
$
(65,444
)
$
(43,726
)
Weighted average shares - basic
502,902
480,572
490,449
433,419
Weighted average shares - diluted
502,902
480,572
490,449
433,419
Basic adjusted net (loss) income per
common share
$
—
$
(0.06
)
$
(0.13
)
$
(0.10
)
Diluted adjusted net (loss) income per
common share
$
—
$
(0.06
)
$
(0.13
)
$
(0.10
)
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, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Net loss
$
(7,976
)
$
(23,693
)
$
(99,557
)
$
(26,563
)
Plus: Interest expense
14,670
10,925
48,447
40,944
Plus (Less): Income taxes
(4,092
)
(5,217
)
(24,101
)
(6,701
)
Plus: Depreciation, depletion and
amortization
60,480
35,593
199,518
134,044
Plus: Acquisition costs
52
389
645
10,045
Plus: Suspension-related costs
3,285
2,356
12,051
20,693
Less: Deferred revenue net of production
costs
(10,912
)
—
—
—
(Less)/Plus: (Gain) loss on disposition of
properties, plants, equipment, and mineral interests
(23
)
581
4,643
(2,793
)
Plus/(Less): Foreign exchange (gain)
loss
1,495
(7,454
)
8,236
(10,310
)
Plus/(Less): Unrealized loss (gain) on
derivative contracts
1,035
18
9,959
(7,936
)
(Less)/Plus: Provisional price (gain)
loss
(855
)
531
(597
)
3,803
Plus: Provision for closed operations and
environmental matters
1,616
2,133
6,914
6,090
Plus: Stock-based compensation
910
1,606
5,668
6,242
Plus: Unrealized loss on investments
1,230
355
2,389
2,816
Plus/(Less): Other
1,026
611
3,506
941
Adjusted EBITDA
$
61,941
$
18,734
$
177,721
$
171,315
Total debt
$
517,372
$
545,934
Less: Cash, cash equivalents and
short-term investments
62,452
27,389
Net debt
$
454,920
$
518,545
Net debt/LTM adjusted EBITDA
(non-GAAP)
2.6
3.0
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
Friday1
Dollars are in thousands
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
Twelve Months Ended December
31, 2019
Cash provided (used) by operating
activities 2
$
57,257
$
19,011
$
120,866
$
94,221
$
136,204
$
55,726
$
25,204
$
19,136
$
(12,603
)
Less: Additions to properties, plants
equipment and mineral interests
(24,083
)
(53,648
)
(121,421
)
(136,933
)
(29,323
)
(35,762
)
(42,893
)
(5,035
)
(8,232
)
Free cash flow
$
33,174
$
(34,637
)
$
(555
)
$
(42,712
)
$
106,881
$
19,964
$
(17,689
)
$
14,101
$
(20,835
)
(1)
Cash used by operating activities for
Lucky Friday includes $7.8 million for suspension costs incurred
during the strike.
(2)
Cash provided (used) by operating
activities for the operating segments excludes exploration expense,
as it is a discretionary expenditure and not a component of the
mines’ operating performance. Consolidated cash provided by
operating activities for the twelve months ended December 31, 2019
includes exploration expense of $1.0 million for Greens Creek, $4.3
million for Casa Berardi, $3.0 million for Nevada Operations and
$4.8 million for San Sebastian.
Reserves - 12/31/19(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)
7
14.8
0.08
2.6
5.4
—
106
1
180
390
—
Lucky Friday (2)
4,185
15.4
—
9.6
4.1
—
64,506
—
401,020
172,880
—
Casa Berardi Open Pit (3)
5,873
—
0.08
—
—
—
—
447
—
—
—
Casa Berardi Underground (3)
974
—
0.16
—
—
—
—
156
—
—
—
San Sebastian (2)
35
4.8
0.08
—
—
—
166
3
—
—
—
Fire Creek (2,4)
22
1.2
1.51
—
—
—
28
33
—
—
—
Total
11,096
64,805
640
401,200
173,270
—
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)
10,713
12.2
0.09
2.8
7.3
—
130,791
932
305,010
778,020
—
Lucky Friday (2)
1,386
11.4
—
7.6
3.7
—
15,815
—
104,720
50,640
—
Casa Berardi Open Pit (3)
11,802
—
0.07
—
—
—
—
809
—
—
—
Casa Berardi Underground (3)
1,978
—
0.15
—
—
—
—
305
—
—
—
San Sebastian (2)
66
10.9
0.07
—
—
—
716
5
—
—
—
Fire Creek (2,4)
37
0.6
0.56
—
—
—
23
21
—
—
—
Total
25,983
147,346
2,072
409,730
828,660
—
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)
10,721
12.2
0.09
2.8
7.3
—
130,897
932
305,190
778,410
—
Lucky Friday (2)
5,571
14.4
—
9.1
4.0
—
80,321
—
505,740
223,520
—
Casa Berardi Open Pit (3)
17,675
—
0.07
—
—
—
—
1,257
—
—
—
Casa Berardi Underground (3)
2,952
—
0.16
—
—
—
—
461
—
—
—
San Sebastian (2)
100
8.8
0.08
—
—
—
881
8
—
—
—
Fire Creek (2,4)
59
0.9
0.92
—
—
—
51
54
—
—
—
Total
37,078
212,151
2,712
810,930
1,001,930
—
(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 timeframe consistent with Hecla’s current mine plans.
(2)
Mineral reserves are based on $1300 gold,
$14.50 silver, $0.90 lead, $1.15 zinc, unless otherwise stated. The
NSR cut-off grades are $190/ton for Greens Creek, $216.19 for the
30 Vein and $230.98 for the Intermediate Veins at Lucky Friday, and
$127/ton ($140/tonne) for underground and $90.72/ton ($100/tonne)
for open pit reserves at San Sebastian.
(3)
Mineral reserves are based on $1300 gold
and a US$/CAN$ exchange rate of 1:1.35 Reserve diluted to an
average of 34.7% to minimum width of 9.8 feet (3 m). The average
cut-off grades at Casa Berardi are 0.105 oz/ton gold (3.49 g/tonne)
for underground mineral reserves and 0.025 oz/ton gold (0.85
g/tonne) for open pit mineral reserves.
(4)
Fire Creek mineral reserves are based on a
cut-off grade of 0.433 gold equivalent oz/ton and incremental
cut-off grade of 0.135 gold equivalent oz/ton. Unplanned dilution
of 10% to 17% included depending on mining method.
* Totals may not represent the sum of
parts due to rounding
Mineral Resources -
12/31/2019
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 (5)
76
12.5
0.09
2.6
9.4
—
949
7
2,000
7,140
—
Lucky Friday (5,6)
8,060
7.5
—
4.8
2.6
—
60,788
—
385,040
210,730
—
Casa Berardi
Open Pit (7)
193
—
0.02
—
—
—
—
4
—
—
—
Casa Berardi Underground (7)
1,841
—
0.15
—
—
—
—
273
—
—
—
San Sebastian (5,8)
—
—
—
—
—
—
—
—
—
—
—
Fire Creek (5,9)
47
0.7
0.92
—
—
—
34
43
—
—
—
Hollister (5,10)
103
3.6
0.57
—
—
—
376
59
—
—
—
Midas (5,11)
134
6.9
0.44
—
—
—
927
59
—
—
—
Heva (12)
5,480
—
0.06
—
—
—
—
304
—
—
—
Hosco (12)
33,070
—
0.04
—
—
—
—
1,296
—
—
—
Rio Grande Silver (13)
—
—
—
—
—
—
—
—
—
—
—
Star (14)
—
—
—
—
—
—
—
—
—
—
—
Total
49,004
63,073
2,044
387,040
217,870
—
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 (5)
8,569
11.7
0.1
2.8
8.1
—
100,187
828
242,010
691,750
—
Lucky Friday (5,6)
2,720
8.0
—
5.1
2.4
—
21,641
—
138,620
65,930
—
Casa Berardi
Open Pit (7)
3,341
—
0.05
—
—
—
—
155
—
—
—
Casa Berardi Underground (7)
4,463
—
0.14
—
—
—
—
631
—
—
—
San Sebastian (5,8)
2,846
6.3
0.05
2.2
3.3
1.4
17,952
155
30,300
45,660
19,900
Fire Creek (5,9)
211
0.7
0.66
—
—
—
142
140
—
—
—
Hollister (5,10)
182
2.2
0.58
—
—
—
410
105
—
—
—
Midas (5,11)
616
5.0
0.37
—
—
—
3,064
229
—
—
—
Heva (12)
5,570
—
0.07
—
—
—
—
369
—
—
—
Hosco (12)
31,620
—
0.04
—
—
—
—
1,151
—
—
—
Rio Grande Silver (13)
516
14.8
—
2.1
1.1
—
7,620
—
10,760
5,820
—
Star (14)
1,126
2.9
—
6.2
7.4
—
3,301
—
69,900
83,410
—
Total
61,779
154,315
3,762
491,590
892,570
19,900
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 (5)
8,645
11.7
0.1
2.8
8.1
—
101,135
835
244,010
698,880
—
Lucky Friday (5,6)
10,780
7.6
—
4.9
2.6
—
82,428
—
523,670
276,660
—
Casa Berardi
Open Pit (7)
3,534
—
0.04
—
—
—
—
158
—
—
—
Casa Berardi Underground (7)
6,304
—
0.14
—
—
—
—
904
—
—
—
San Sebastian (5,8)
2,846
6.3
0.05
2.2
3.3
1.4
17,952
155
30,300
45,660
19,900
Fire Creek (5,9)
257
0.7
0.71
—
—
—
176
182
—
—
—
Hollister (5,10)
285
2.8
0.58
—
—
—
786
164
—
—
—
Midas (5,11)
750
5.3
0.38
—
—
—
3,990
288
—
—
—
Heva (12)
11,050
—
0.06
—
—
—
—
672
—
—
—
Hosco (12)
64,690
—
0.04
—
—
—
—
2,447
—
—
—
Rio Grande Silver (13)
516
14.8
—
2.1
1.1
—
7,620
—
10,760
5,820
—
Star (14)
1,126
2.9
—
6.2
7.4
—
3,301
—
69,900
83,410
—
Total
110,782
217,388
5,805
878,640
1,110,430
19,900
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 (5)
1,848
13.7
0.09
3.1
7.4
—
25,393
159
56,670
135,880
—
Lucky Friday (5,6)
3,050
8.6
—
6.2
2.7
—
26,155
—
190,500
82,250
—
Casa Berardi
Open Pit (7)
11,724
—
0.04
—
—
—
—
498
—
—
—
Casa Berardi Underground (7)
2,485
—
0.19
—
—
—
—
471
—
—
—
San Sebastian (5,15)
3,518
6.3
0.04
1.7
2.4
0.9
22,189
147
13,250
19,200
7,440
Fire Creek (5,9)
543
0.5
0.51
—
—
—
295
278
—
—
—
Fire Creek - Open Pit (16)
74,584
0.1
0.03
—
—
—
5,232
2,178
—
—
—
Hollister (5,10,17)
466
2.7
0.4
—
—
—
1,247
185
—
—
—
Midas (5,11)
552
2.7
0.33
—
—
—
1,489
183
—
—
—
Heva (12)
4,210
—
0.08
—
—
—
—
350
—
—
—
Hosco (12)
7,650
—
0.04
—
—
—
—
314
—
—
—
Rio Grande Silver (18)
3,078
10.7
0.01
1.3
1.1
—
33,097
36
40,990
34,980
—
Star (14)
3,157
2.9
—
5.6
5.5
—
9,432
—
178,670
174,450
—
Monte Cristo (19)
913
0.3
0.14
—
—
—
271
131
—
—
—
Rock Creek (20)
100,086
1.5
—
—
—
0.7
148,736
—
—
—
658,680
Montanore (21)
112,185
1.6
—
—
—
0.7
183,346
—
—
—
759,420
Total
330,050
456,881
4,929
480,080
446,760
1,425,540
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.
(5)
Mineral resources are based on $1500 gold,
$21 silver, $1.15 lead, $1.35 zinc and $3.00 copper, unless
otherwise stated. Cut-off grades are as above unless otherwise
stated.
(6)
Measured and indicated resources from Gold
Hunter and Lucky Friday vein systems are diluted and factored for
expected mining recovery using NSR cut-off grades of $170.18 for
the 30 Vein, $184.97 for the Intermediate Veins and $207.15 for the
Lucky Friday Vein.
(7)
Measured, indicated and inferred resources
are based on $1,500 gold and a US$/CAN$ exchange rate of 1:1.35
Underground resources are reported at a minimum mining width of 6.6
to 9.8 feet (2 m to 3 m). The average cut-off grades at Casa
Berardi are 0.105 oz/ton gold (3.49 g/tonne) for underground
mineral resources and 0.025 oz/ton gold (0.85 g/tonne) for open pit
mineral resources.
(8)
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
using a cut-off grade of $90.72/ton ($100/tonne). San Sebastian
lead, zinc and copper grades are for 1,376,500 tons of indicated
resource within the Middle Vein and the Hugh Zone of the Francine
Vein.
(9)
Fire Creek mineral resources are reported
at a gold equivalent cut-off grade of 0.306 oz/ton. The minimum
mining width is defined as four feet or the vein true thickness
plus two feet, whichever is greater.
(10)
Hollister mineral resources are reported
at a gold equivalent cut-off grade of 0.294 oz/ton. The minimum
mining width is defined as four feet or the vein true thickness
plus two feet, whichever is greater.
(11)
Midas mineral resources are reported at a
gold equivalent cut-off grade of 0.223 oz/ton. The minimum mining
width is defined as four feet or the vein true thickness plus two
feet, whichever is greater.
(12)
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 at a cut-off grade of 0.011 oz/ton gold (0.37
g/tonne) for open pit and 0.06 oz/ton gold (2.0 g/tonne) for
underground.
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)
(13)
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 and a cut-off grade of 6.0 silver equivalent
oz/ton.
(14)
Indicated and Inferred resources reported
using $21 silver, $0.95 lead, $1.10 lead minimum mining width of
4.3 feet and a cut-off grade of $100/ton.
(15)
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 ) for Andrea Vein
using a cut-off grade of $90.72/ton ($100/tonne).
San Sebastian lead, zinc and copper grades
are for 792,900 tons of inferred resource within the Middle Vein
and the Hugh Zone of the Francine Vein.
(16)
Inferred open-pit resources for Fire Creek
calculated November 30, 2017 using gold and silver recoveries of
65% and 30% for oxide material and 60% and 25% for mixed
oxide-sulfide material. Indicated Resources reclassified as
Inferred for 2019.
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, June28, 2018
(17)
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 cut-off grade of
0.294 oz/ton
(18)
Inferred resources reported at a minimum
mining width of 6.0 feet for Bulldog and a cut-off grade of 6.0
equivalent oz/ton silver and 5.0 feet for Equity and North Amethyst
vein at a cut-off grade of $50/ton and $100/ton; based on $1400 Au,
$26.5 Ag, $0.85 Pb, and $0.85 Zn.
(19)
Inferred resource reported at a minimum
mining width of 5.0 feet; resources based on $1400 Au, $26.5 Ag
using a 0.06 oz/ton gold cut-off grade.
(20)
Inferred resource at Rock Creek reported
at a minimum thickness of 15 feet and a cut-off grade of $24.50/ton
NSR 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'.
(21)
Inferred resource at Montanore reported at
a minimum thickness of 15 feet and a cut-off grade of $24.50/ton
NSR 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'.
* Totals may not represent the sum of
parts due to rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200206005328/en/
Mike Westerlund Vice President - Investor Relations 800-HECLA91
(800-432-5291) Investor Relations Email: hmc-info@hecla-mining.com
Website: http://www.hecla-mining.com
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