Minimal disruption to operations and solid
liquidity position Hecla for a strong second half of 2020
Hecla Mining Company (NYSE:HL) (Hecla or the Company) today
announced first quarter financial and operating results.
COVID-19 UPDATE
- Responding quickly to COVID-19 mitigated the impact.
- Four out of five mines operating, representing 95% of Hecla's
production.
- Casa Berardi restarted operations on April 16 after
government-mandated industry-wide shutdown on March 23.
- No known cases of COVID-19 at any of Hecla's sites.
- Annual guidance updated.
"Our rapid and early response to COVID-19 protected our workers,
operations, and the communities in which we operate," said Phillips
S. Baker, Jr., Hecla's President and CEO. "With our key mines
operational, we expect the second half of the year to be strong as
Casa Berardi resumes normal operations, Lucky Friday ramps-up to
full production and Greens Creek continues to deliver. Our Nevada
operations have performed well and have taken a step forward with a
third-party processing agreement for a bulk sample of refractory
ore and positive results from the hydrological study which could
result in continuing production through the end of the year and
beyond."
“While our financial position is strong, with over $200 million
in cash at quarter end, no near-term debt maturities and no large
capital projects planned for the next several years, we are
reducing 2020 capital and exploration expenditures by 25%. We also
continue to protect our revenues with put options for silver and
gold that set a floor price but don't limit upside participation,
and forward sales of our lead and zinc production," said Baker.
“Finally, we are able to re-establish production and cost
guidance. Our silver production guidance is largely unchanged with
AISC, after byproduct credits, about 10% higher due primarily to
benchmark smelter costs and lower byproduct credits from lower zinc
production and prices. Our gold production guidance is about 10%
lower, but AISC, after byproduct credits, is relatively unchanged
due to lower capital costs,” said Baker.
HIGHLIGHTS
- Silver production of 3.2 million ounces (2.6 million ounces
sold) and gold production of 58,792 ounces.
- Sales of $136.9 million and cash provided by operating
activities of $5 million.
- A gain of $7.9 million on metals derivatives contracts.
- Net loss for the quarter of $17.2 million, or $0.03 per basic
share.
- Cost of sales and other direct production costs and
depreciation, depletion and amortization ("cost of sales") of
$125.6 million.
- Gross profit of $11.4 million and adjusted EBITDA of $37.8
million; net debt/adjusted EBITDA (last 12 months) of 2.5x.1,2
- Financial results impacted by lower provisional prices for a
Greens Creek shipment, higher treatment charges, higher product
inventory and COVID-19 related shutdown of Casa Berardi.
- Bulk sample processing agreement in Nevada and hydrology study
shows existing water infrastructure may be sufficient to support a
refractory ore mining plan.
- Have put option contracts for gold and silver to establish a
floor price of $16 for silver in the second quarter and $1,450,
$1,650 and $1,600 for gold in the second through fourth quarters,
for much of the expected production but with full upside available
other than cost of the contracts.
- Cash and cash equivalents and short-term investments of $215.7
million, including a precautionary $210 million drawn on the
revolving credit facility.
- Issued $475 million of senior notes due in 2028 replacing
$506.5 million senior notes due in 2021, reducing long term debt
and extending its maturity.
- Maintaining common and preferred share dividend.
FINANCIAL OVERVIEW
First Quarter Ended
HIGHLIGHTS
March 31, 2020
March 31, 2019
FINANCIAL DATA
Sales (000)
$
136,925
$
152,617
Gross profit (000)
$
11,372
$
3,444
Loss applicable to common stockholders
(000)
$
(17,323)
$
(25,671)
Basic and diluted loss per common
share
$
(0.03)
$
(0.05)
Net loss (000)
$
(17,185)
$
(25,533)
Cash provided by operating activities
(000)
$
4,927
$
20,030
Net loss for the first quarter of $17.2 million, compared to a
net loss of $25.5 million in the first quarter of 2019, impacted by
the following factors:
- Revenue declined due to lower provisional prices for a Greens
Creek shipment, higher treatment charges and COVID-19 related loss
of production at Casa Berardi.
- Gross profit increased primarily due to higher prices and
higher gold grades in the Nevada operations, partially offset by
lower gross profit at Greens Creek.
- A net foreign exchange gain of $6.6 million versus a net loss
of $3.1 million in the first quarter of 2019, with the variance
primarily related to the impact of a weaker CAD relative to the
USD.
- A $7.9 million gain on metals derivatives contracts versus a
loss of $1.8 million in the first quarter of 2019, with the
variance due to declining base metal prices and lower prices for
silver at the end of the quarter.
- Ramp-up and suspension-related costs increased by $10.2 million
due to 1) lower production at Lucky Friday as capital investments
were prioritized and the ramp-up after the strike ended in January
2020, 2) suspension of production at the Midas and Hollister mines
and the Aurora mill in Nevada, and 3) a temporary suspension of
production at Casa Berardi to comply with the shut-down order
issued to the mining industry by the Government of Quebec as part
of the fight against the spread of COVID-19.
- Higher interest expense by $5.6 million primarily as a result
of one-time costs related to refinancing of Senior Notes, including
one month of having both the 2021 and 2028 notes outstanding.
- Lower income tax benefit by $6.2 million due to reduced losses
at Nevada and Casa Berardi.
Operating cash flow of $4.9 million decreased 75% compared to
the first quarter of 2019, primarily due to the higher ramp-up and
suspension costs and interest expense.
Adjusted EBITDA of $37.8 million increased 35% compared to the
first quarter of 2019, primarily due to lower exploration expense
and higher margins at Nevada and Casa Berardi, partially offset by
lower margins at Greens Creek as a result of the majority of
shipments in the quarter occurring in March at lower than average
silver, lead and zinc prices, as well as higher treatment
charges.1
Capital expenditures totaled $20.0 million for the first quarter
of 2020 compared to $36.4 million in the first quarter of 2019,
with the decrease primarily due to reduced spending at Nevada
operations. Capital expenditures during the first quarter 2020 at
Casa Berardi, Greens Creek, Lucky Friday, Nevada, and San Sebastian
operations were $8.5 million, $5.5 million, $4.3 million, $0.9
million, and $0.8 million, respectively.
Metals Prices
The average realized silver price in the first quarter of 2020
was $14.48 per ounce, 8% lower than the $15.70 price realized in
the first quarter of 2019. Realized gold prices were higher by 21%
while lead and zinc prices were lower by 16%, and 32%,
respectively. The lower realized silver price relative to the
average market price of $16.94 for the first quarter was the result
of a large portion of our silver sales occurring through
concentrate shipments in March, when the price hit a quarterly low.
Final settlement of the March sales is pending, and the Company
anticipates recognizing a gain upon settlement of the sales in the
second quarter as a result of either an increase in the silver
price or exercise of put contracts in place.
Three months ended March
31,
2020
2019
Silver –
London PM Fix ($/ounce)
$
16.94
$
15.57
Realized price per ounce
$
14.48
$
15.70
Gold –
London PM Fix ($/ounce)
$
1,583
$
1,304
Realized price per ounce
$
1,588
$
1,308
Lead –
LME Final Cash Buyer ($/pound)
$
0.84
$
0.92
Realized price per pound
$
0.78
$
0.93
Zinc –
LME Final Cash Buyer ($/pound)
$
0.96
$
1.23
Realized price per pound
$
0.88
$
1.30
Precious Metals Put Option Contracts and Base Metals Forward
Sales Contracts
In June 2019, Hecla began using financially settled put option
contracts to manage the exposure of its forecasted future gold and
silver sales to potential declines in market prices for those
metals. These put contracts give the Company the option, but not
the obligation, to realize contracted prices on quantities of
silver and gold put contracts. The Company also enters into
financially settled forward sales contracts to manage price
exposure to silver, gold, zinc and lead for the Greens Creek
concentrate shipments (also called provisional hedges). In
addition, the Company uses financially settled forward contracts to
manage exposure to changes in prices of zinc and lead (but not
silver and gold) contained in the forecasted future Greens Creek
concentrate shipments.
Percentage of Forecasted
Production Protected and
Average Price per
Ounce/Pound
Puts (Floor Price)
Forward Sales
Silver
Gold
Zinc
Lead
Protection as a % of Sales
Q2/2020
100%
$16.00
100%
$1,450
86%
$0.91
71%
$0.76
Q3/2020
0%
59%
$1,650
84%
$0.87
61%
$0.81
Q4/2020
0%
40%
$1,600
66%
$0.88
42%
$0.78
Q1/2021
0%
0%
2%
$0.88
1%
$0.75
OPERATIONS OVERVIEW
The following table provides the production summary on a
consolidated basis for the quarters ended March 31, 2020 and
2019:
First Quarter Ended
March 31, 2020
March 31, 2019
PRODUCTION SUMMARY
Silver -
Ounces produced
3,245,469
2,923,131
Payable ounces sold
2,582,279
2,898,083
Gold -
Ounces produced
58,792
60,021
Payable ounces sold
57,103
60,936
Lead -
Tons produced
5,893
5,784
Payable tons sold
4,130
4,848
Zinc -
Tons produced
12,847
13,944
Payable tons sold
9,836
9,533
The difference between silver ounces produced and sold in the
quarter is primarily due to the timing of concentrate shipments at
Greens Creek.
First quarter production equates to 10.8 million ounces on a
silver equivalency basis and 115,511 ounces on a gold equivalency
basis.
The following table provides a summary of the production, 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 or gold ounce, for the quarters ended March 31, 2020 and
2019.
First Quarter Ended March 31,
2020
Greens Creek
Lucky Friday
San Sebastian
Casa Berardi
Nevada Operations
Silver
Gold
Silver
Gold
Silver
Silver
Gold
Gold
Silver
Gold
Silver
Production (ounces)
3,245,469
58,792
2,775,707
12,273
95,748
346,625
2,802
26,752
5,934
16,965
21,455
Increase/(decrease)
11
%
(2)
%
24
%
(14)
%
(45)
%
(21)
%
(21)
%
(16)
%
(28)
%
64
%
(68)
%
Cost of sales and other direct
production costs and depreciation, depletion and amortization
(000)
$
60,314
$
65,239
$
49,182
-
$
2,832
$
8,300
-
$
48,325
$
-
$
16,914
-
Increase/(decrease)
(12)
%
(19)
%
(9)
%
N/A
30
%
(33)
%
N/A
(2)
%
N/A
(46)
%
N/A
Cash costs, after by-product credits,
per silver or gold ounce 35
$
5.76
$
1,061
$
5.63
-
$
-
$
6.91
-
$
1,268
-
$
735
-
Increase/(decrease)
155
%
(17)
%
1,049
%
N/A
N/A
(38)
%
N/A
14
%
N/A
(59)
%
N/A
AISC, after by-product credits per
silver or gold ounce 4
$
11.06
$
1,302
$
7.90
-
-
$
9.59
-
1,615
-
$
808
-
Increase/(decrease)
18
%
(26)
%
144
%
N/A
N/A
(42)
%
N/A
21
%
N/A
(74)
%
N/A
Greens Creek Mine - Alaska
During the first quarter, Greens Creek began quarantining all
employees in a Juneau facility for 14 days before starting a 28-day
work rotation. No one, including local residents, is allowed on the
mine site if they have not been quarantined. The Company remains
extremely cautious during the pandemic as protecting the workers
and the local community is its highest priority. These changes at
Greens Creek are reflected in these results and the new guidance
assumptions.
At Greens Creek, the mine operated largely as expected and
in-line with last year except the cash cost and AISC, after
by-product credits increased primarily due to the following:
- There were 2 lead shipments instead of 3 in the first quarter
of 2019.
- $4 million increase in treatment costs compared to the first
quarter of 2019. Increased treatment charges will continue
throughout 2020.
- An additional 4 million of treatment costs due to a spot
customer’s failure to perform under its purchase agreement, for
which the Company is seeking remedies.
- Lower by-product prices and volumes reduced the by-product
credits almost $6.6 million.
The mill operated at an average of 2,185 tons per day (tpd) in
the first quarter compared to 2,298 tpd in the first quarter of
2019. Tonnage was lower due to the mill being down early in the
quarter for replacement of a failed SAG motor. Mill performance
exceeded plans for the remainder of the quarter and is on track to
recover the tonnage over the balance of the year.
More than 2 million ounces of silver were sold in March at a
lower price than the average for the first quarter, which impacted
revenue and cash flow generation. The shipments had not been
provisionally hedged, and subsequent higher metals prices could
increase the expected cash flow in the second quarter when sales of
these ounces settle. Due to the high value of each shipment, timing
can influence quarterly financial results.
The Company reaffirms its prior estimates for 2020 silver
production of 8.9 to 9.3 million ounces of silver and 46 to 48
thousand ounces of gold. The estimate for cost of sales is $205
million, cash cost, after by-product credits, AISC after by-product
credits, per silver ounce is $6.00-$6.75 and $9.50-$10.00,
respectively, with the cost increase a function of higher treatment
charges, lower base metals price expectations as well as
COVID-related expenses.
Casa Berardi Mine - Quebec
The Casa Berardi mine went back into partial production on April
16 after the government-mandated shutdown on March 23. The restart
is expected to take about a month to reach full production.
The closure impacted first quarter production and financial
performance of the mine due to reduced operating days and the
inability to process and sell work-in-process inventory during the
quarter. Lower gold production was also a result of lower ore
grades and recovery, mainly due to delays in two long-hole stopes
and higher-than-modeled underground dilution. The decrease in cost
of sales was primarily due to lower sales volume. The increase in
cash costs and AISC after by-product credits, per gold ounce, was
principally due to lower gold production as described above. The
mill operated at an average rate of 3,644 tpd in the first quarter,
approximately the same throughput as the first quarter of 2019.
However, when the days lost from the government-mandated shutdown
are removed, the daily run rate for the plant was 4,011 tpd, an
increase of 9% compared to the first quarter of 2019, reflective of
our process improvement initiative.
Process improvement activities will continue in 2020 in an
effort to improve mill reliability, throughput, and recovery. These
efforts are expected to lead to reduced costs and increased cash
flow when complete but are somewhat delayed by the COVID-19
restrictions on worker movement. Over the remainder of the year,
slightly more production is expected to come from the underground
which is about 30% higher grade compared to the first quarter, as
production starts in the 148 zone of the east mine.
The Company is lowering its estimates for annual gold production
to 119 to 124 thousand ounces because of the downtime and
subsequent ramping up of the mine due to government-mandated
COVID-19 closure. The cost of sales is now estimated to be $185
million, cash cost, after by-product credits, and AISC, after
by-product credits, per gold ounce is $900-$975 and $1,225-$1,275,
respectively. The projected costs per ounce are higher due to the
lower production estimates.
San Sebastian Mine - Mexico
In late March, the Government of Mexico issued an order to the
mining industry to reduce operations to a minimum level until April
30 in response to COVID-19, and the order was subsequently extended
until May 30, although it could be relaxed earlier for areas with
few cases, such as Durango. Hecla's operations at San Sebastian
have been suspended during this time. The closure is not expected
to have a material impact on full-year production as long as the
mine restarts operations in the second quarter because of planned
partial year of production.
Lower silver and gold production was due to expected lower
grades and resulted in lower cost of sales. The cash cost, after
by-product credits, per silver ounce, decreased due to higher
by-product gold price. The lower AISC, after by-product credits,
per silver ounce, was principally due to the higher by-product
credits along with lower capital and exploration spending. The mill
operated at an average of 390 tpd in the first quarter, a 21%
decrease over the first quarter of 2019.
The Company continues to study the Hugh Zone sulfide and El Toro
oxide opportunities. The remaining work on the Hugh Zone is focused
on the ability to generate a third saleable concentrate (copper)
from the ore, which has a significant impact on the potential
return of the project. Hecla continues to evaluate how the two
deposits could be sequenced. Depending on positive results from the
work on producing three concentrates, the mine could potentially
restart production in 2021 or 2022.
The Company is lowering its production estimate by 200 thousand
ounces to 0.6 million to 0.8 million ounces due to projected lower
grade in the remaining blocks to be mined. The cost of sales is now
estimated to be $25 million, cash cost, after by-product credits,
and AISC, after by-product credits, per silver ounce is $6.25-$8.00
and $8.00-$10.75, respectively. The costs are higher due to the
lower production estimates. These estimates assume that the mine
returns to production before the end of the second quarter.
Nevada Operations
The Nevada operations have continued operating during the
pandemic as an essential business in Nevada. There has been limited
impact to activities at the mine.
For the Nevada operations, higher gold production was due to
higher grades, partially offset by lower mill throughput. The cost
of sales decreased $4 million due to the suspension of production
activities at Hollister, the Midas mine and Aurora mill which are
reclassified as suspension costs. Cash cost, after by-product
credits, per gold ounce, decreased as a result of the higher gold
production. The AISC, after by-product credits, per gold ounce, was
substantially lower than the prior year period, due to higher gold
production and almost no sustaining capital. Approximately 7,000
ounces of gold was held as inventory on loaded carbon at the end of
the quarter. The mill, which is being operated on a batch basis,
processed at an average of 190 tpd in the first quarter, a 59%
decrease over the prior year period.
The Company reached agreement with Nevada Gold Mines to process
a 30,000-ton bulk sample of Fire Creek ore at one or more of their
refractory ore processing facilities. The agreement makes it
possible for the Company to move forward with a program to test
larger scale long-hole stoping of Fire Creek’s Type 2 ore
(refractory ore) and is expected to help establish recovery rates
in their process. Mining of the bulk sample is planned over the
rest of 2020 with processing of the ore continuing into early 2021.
The test is a staged, low-risk way to investigate opportunities to
lower Fire Creek’s cost structure in an effort to realize value
from the existing approximately 543,000 ton inferred resource
(0.512 oz/ton gold; 0.543 oz/ton silver). The bulk sample is
expected to be self-funding.
In addition, the Company advanced studies in support of
continuing production at Fire Creek. Results from the recently
completed hydrology study suggest that the existing water rights,
water related permits, and water treatment infrastructure may be
adequate to support a conceptual mine plan being developed for the
resource. Results from the bulk mining and processing test will be
used to refine the conceptual mine plan and economic analysis in
2021.
Alternate carbon processing arrangements allowed the Company to
idle the Aurora mill during the quarter. The Midas mill is expected
to conclude operations in the third quarter as the developed oxide
ore from Fire Creek is depleted.
The Company is affirming its production estimates of 24 to 29
thousand gold ounces this year. The cost of sales is now estimated
to be $39 million, cash cost, after by-product credits, and AISC,
after by-product credits, per gold ounce is $825-$1,000 and
$850-$1,050, respectively. The 2020 estimates do not include the
potential benefits from the bulk sample project.
Lucky Friday Mine - Idaho
The Lucky Friday operations have continued during the pandemic
as an essential business in Idaho. Shoshone County, where the mine
is located, has not had any reported cases.
Union workers at Lucky Friday ratified the collective bargaining
agreement in January 2020, and the recall is complete. The Company
is hiring new employees which it expects to complete by year end in
order to be at full production rates.
The decrease of silver production compared to the prior year
period was primarily due to focus shifting from production by the
salary staff to ramp-up activities following the end of the
strike.
The Company is reaffirming its prior estimates for annual silver
production of 1.4 to 1.8 million ounces. The cost of sales during
full production is now estimated to be $14 million, cash cost,
after by-product credits, and AISC, after by-product credits, per
silver ounce is $9.50-$10.25 and $14.00-$15.00, respectively.
EXPLORATION
Exploration expenses were $2.5 million for the first quarter,
representing a 43% decrease from the prior year period as a result
of decreased activity at all sites. At Greens Creek, core drilling
operations were suspended on March 20 to reduce risk associated
with the COVID-19 pandemic and are currently planned to resume by
third quarter. At Casa Berardi, core drilling operations were
suspended on March 26 due to the Quebec government pandemic order
but resumed on a limited basis for in-stope definition drilling on
April 21. Exploration drilling activities in Mexico were suspended
on April 10 and tentatively scheduled to restart in June.
Greens Creek – Alaska
At Greens Creek, strong definition drilling assay results
received in the first quarter have upgraded East Ore and 200 South
zone resources. In the East Ore Zone, intersections
targeting the middle portion of the zone along 600 feet of strike
length, included 8.3 oz/ton silver, 0.13 oz/ton gold, 16.0% zinc
and 5.0% lead over 21.6 feet, and 13.1 oz/ton silver, 0.54 oz/ton
gold, 33.4% zinc and 9.1% lead over 10.0 feet. These results
confirm previously modeled Inferred resource estimates. In the
200 South Zone, drilling intersections at the southern end
of the 200 South Bench over 550 feet of strike length included 27.5
oz/ton silver, 0.11 oz/ton gold, 0.7% zinc and 0.4% lead over 20.2
feet, 16.2 oz/ton silver, 0.05 oz/ton gold, 1.3% zinc and 0.6% lead
over 15.5 feet and 13.9 oz/ton silver, 0.05 oz/ton gold, 1.3% zinc
and 0.6% lead over 20.0 feet. Once drilling operations resume, the
planned activity in the second quarter of 2020 is to further define
the East Ore and 200 South zones. More complete drill assay
highlights from Greens Creek can be found in Table A at the end of
the release.
Casa Berardi – Quebec
At Casa Berardi, drilling in the East Mine focused on
defining continuity and expanding mineralization in the high-grade
148 Zone. Definition drilling in the 148 Zone targeted the
eastern and western down-plunge extensions of the known high-grade
resources of the 148-01 lens below current infrastructure within
the East Mine. Intersections from this drilling included 0.52
oz/ton gold over 24.0 feet, 0.13 oz/ton gold over 19.7 feet
including 0.43 oz/ton gold over 2.3 feet and 0.15 oz/ton gold over
10.5 feet including 0.47 oz/ton gold over 2.6 feet. Exploration
drilling targeted the eastern and western down-plunge trend of the
known high-grade mineralization in the 148-01 lens. Intersections
include 0.40 oz/ton gold over 13.1 feet including 0.53 oz/ton gold
over 5.9 feet, 0.19 oz/ton gold over 8.5 feet including 0.52 oz/ton
gold over 2.3 feet and 0.21 oz/ton gold over 15.7 feet including
0.46 oz/ton gold over 2.3 feet.
In the West Mine area, drilling in the 118 and 119
zones targeted multiple 118 lenses along the Casa Berardi Fault
with the goal of extending known mineralization at depth and to the
east outside of the current resources. It also targeted the 119-02
lens, converting resources from the inferred to indicated resource
category. Recent intersections in the 118 Zone, including 0.14
oz/ton gold over 9.5 feet and 0.15 oz/ton gold over 12.8 feet,
suggest this zone continues to be open at depth. Recent
intersections in the 119 Zone include 0.10 oz/ton gold over 9.8
feet including 0.35 oz/ton gold over 2.6 feet and 0.18 oz/ton gold
over 14.4 feet including 0.93 oz/ton gold over 2.3 feet expanding
mineralization in the 119-02 lens.
In the second quarter of 2020, underground drilling is planned
in an effort to expand and refine resources in 123 Zone in the West
Mine and the high-grade 148 Zone in the East Mine.
More complete drill assay highlights from Casa Berardi can be
found in Table A at the end of the release.
San Sebastian - Mexico
During the quarter, one surface reverse circulation drill rig
operated at San Sebastian and focused on grid pattern Short
Vertical Reverse Circulation (SVRC) drilling to explore through
cover for new veins and near-surface oxide mineralization by
sampling overburden and bedrock west of the current El Toro
resource area.
PRE-DEVELOPMENT
Pre-development spending was $0.5 million for the quarter,
principally in connection with permitting of Rock Creek and
Montanore.
2020 ESTIMATES6
The Company has set new guidance for annual production, cost and
expenditures as follows:
2020 Production Outlook
Silver Production
(Moz)
Gold Production
(Koz)
Silver Equivalent
(Moz)
Gold Equivalent
(Koz)
Original
Current
Original
Current
Original
Current
Original
Current
Greens Creek *
8.9-9.3
8.9-9.3
46-48
46-48
21.5-22.1
21.5-22.1
240-246
240-246
Lucky Friday *
1.4-1.8
1.4-1.8
N/A
N/A
3.2-3.6
3.2-3.6
35-40
35-40
San Sebastian
0.8-1.0
0.6-0.8
7-8
6-7
1.4-1.7
1.1-1.4
16-19
12.5-16
Casa Berardi
N/A
135-140
119-124
12.1-12.6
10.7-11.1
135-140
119-124
Nevada Operations
N/A
24-29
24-29
2.2-2.6
2.2-2.6
24-29
24-29
Total8
11.1-12.1
10.9-11.9
212-225
195-208
40.4-42.6
38.7-40.8
450-474
430.5-455
* Equivalent ounces include lead
and zinc production.
2020 Cost Outlook
Cost of Sales
(millions)
Cash cost, after by-product
credits, per silver/gold ounce3
AISC, after by-product
credits, per produced silver/gold ounce4
Original
Current
Original
Current
Original
Current
Greens Creek
$200
$205
$4.25-$5.00
$6.00-$6.75
$8.50-$9.75
$9.50-$10.00
Lucky Friday *
$15
$14
$5.25-$5.50
$9.50-$10.25
$8.75-$9.00
$14.00 - $15.00
San Sebastian
$25
$25
$3.00-$4.25
$6.25-$8.50
$6.25-$8.50
$8.00-$10.75
Total Silver
$240
$244
$4.00-$5.00
$6.50-$7.00
$11.00-$12.25
$12.25-$13.25
Casa Berardi
$180
$185
$875-$900
$900-$975
$1,225-$1,275
$1,225-$1,275
Nevada Operations
$40
$39
$825-$1,000
$825-$1,000
$850-$1,050
$850-$1,050
Total Gold
$220
$224
$850-$925
$900-$975
$1,150-$1,250
$1,150-$1,250
* Expected cost of sales during
full production. Lucky Friday cash costs and AISC, after by-product
credits, per silver ounce are calculated using only Fourth Quarter,
2020 production and cost estimates.
2020 Capital and Exploration Outlook
(millions)
Original
Current
2020E Capital expenditures
$115
$90
2020E Exploration expenditures
(excluding Corporate Development)
$15
$11
2020E Pre-development
expenditures
$2.5
$2.2
DIVIDENDS
Common
The Board of Directors elected to declare a quarterly cash
dividend of $0.0025 per share of common stock, payable on or about
June 2, 2020, to stockholders of record on May 22, 2020. The
realized silver price was $14.48 in the first quarter and therefore
did not satisfy the criteria for a larger dividend under the
Company's dividend policy.
Preferred
The Board of Directors elected to declare a quarterly cash
dividend of $0.875 per share of preferred stock, payable on or
about July 1, 2020, to stockholders of record on June 15, 2020.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Thursday, May 7, at
10:00 a.m. Eastern Time to discuss these results. You may join the
conference call by dialing toll-free 1-855-760-8158 or for
international dialing 1-720-634-2922. The participant passcode is
HECLA. Hecla's live and archived webcast can be accessed at
www.hecla-mining.com under Investors
or via Thomson StreetEvents Network.
ABOUT HECLA
Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading
low-cost U.S. silver producer with operating mines in Alaska,
Idaho, and Mexico and is a gold producer with operating mines in
Quebec, Canada and Nevada. The Company also has exploration and
pre-development properties in 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
generally accepted accounting principles in the United States
(GAAP). These measures should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with GAAP.
(1) Adjusted EBITDA is a non-GAAP measurement, a reconciliation
of which to net income (loss), the most comparable GAAP measure,
can be found at the end of the release. Adjusted EBITDA is a
measure used by management to evaluate the Company's operating
performance but should not be considered an alternative to net
income (loss), or cash provided by operating activities as those
terms are defined by GAAP, and does not necessarily indicate
whether cash flows will be sufficient to fund cash needs. In
addition, the Company may use it when formulating performance goals
and targets under its incentive program.
(2) Net debt to adjusted EBITDA is a non-GAAP measurement, a
reconciliation of adjusted EBITDA and net debt to the closest GAAP
measurements of net income (loss) and debt can be found at the end
of the release. It is an important measure for management to
measure relative indebtedness and the ability to service the debt
relative to its peers. It is calculated as total debt outstanding
less total cash on hand divided by adjusted EBITDA.
(3) Cash cost, after by-product credits, per silver or gold
ounce is a non-GAAP measurement, a reconciliation of which to cost
of sales and other direct production costs and depreciation,
depletion and amortization (sometimes referred to as "cost of
sales" in this release), can be found at the end of the release. It
is an important operating statistic that management utilizes to
measure each mine's operating performance. It also allows the
benchmarking of performance of each mine versus those of our
competitors. As a silver and gold mining company, management also
uses the statistic on an aggregate basis - aggregating the Greens
Creek, Lucky Friday and San Sebastian mines - to compare
performance with that of other silver mining companies, and
aggregating Casa Berardi and Nevada Operations to compare
performance with other gold companies. Similarly, the statistic is
useful in identifying acquisition and investment opportunities as
it provides a common tool for measuring the financial performance
of other mines with varying geologic, metallurgical and operating
characteristics. In addition, the Company may use it when
formulating performance goals and targets under its incentive
program. Cash cost, after by-product credits, per silver ounce is
not presented for Lucky Friday for the first quarter of 2020 and
2019, as production was limited due to the strike and ramp-up after
the end of the strike and results are not comparable to those from
prior periods and are not indicative of future operating results
under full production.
(4) All in sustaining cost (AISC), after by-product credits, is
a non-GAAP measurement, a reconciliation of which to cost of sales
and other direct production costs and depreciation, depletion and
amortization, the closest GAAP measurement, can be found in the end
of the release. AISC, after by-product credits, includes cost of
sales and other direct production costs, expenses for reclamation
and exploration at the mine sites, corporate exploration related to
sustaining operations, and all site sustaining capital costs. AISC,
after by-product credits, is calculated net of depreciation,
depletion, and amortization and by-product credits. AISC, after
by-product credits, per silver ounce is not presented for Lucky
Friday for the first quarter of 2020 and 2019, as production was
limited due to the strike and ramp-up after the end of the strike
and results are not comparable to those from prior periods and are
not indicative of future operating results under full
production.
Current GAAP measures used in the mining industry, such as cost
of goods sold, do not capture all the expenditures incurred to
discover, develop and sustain silver and gold production.
Management believes that AISC is a non-GAAP measure that provides
additional information to management, investors and analysts to
help in the understanding of the economics of our operations and
performance compared to other producers and in the investor's
visibility by better defining the total costs associated with
production. Similarly, the statistic is useful in identifying
acquisition and investment opportunities as it provides a common
tool for measuring the financial performance of other mines with
varying geologic, metallurgical and operating characteristics. In
addition, the Company may use it when formulating performance goals
and targets under its incentive program.
(5) Cash cost, after by-product credits, per gold ounce is only
applicable to Casa Berardi and Nevada Operations production. Gold
produced from Greens Creek and San Sebastian is treated as a
by-product credit against the silver cash cost.
Other
(6) Expectations for 2020 include silver, gold, lead and zinc
production from Greens Creek, San Sebastian, Casa Berardi and
Nevada Operations converted using $1,525 gold, $17 silver, $.85
lead, $1.00 zinc, these haven’t changed from year-end and for
by-product credits used $1,650 gold, $15 silver, $0.85 zinc, $0.75
lead.
Numbers may be rounded.
Cautionary Statements to Investors on Forward-Looking
Statements
This 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. When a forward-looking statement 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.
Forward-looking statements often address our expected future
business and financial performance and financial condition and
often contain words such as “anticipate,” “intend,” “plan,” “will,”
“could,” “would,” “estimate,” “should,” “expect,” “believe,”
“project,” “target,” “indicative,” “preliminary,” “potential” and
similar expressions. Forward-looking statements in this news
release may include, without limitation: (i) estimates of future
production, sales, cost of sales, cash costs, after by-product
credits, AISC, after by-product credits, as well as estimated
spending on capital, exploration and pre-development; (ii) the
Company will receive minimum expected prices on the Company’s
projected silver and gold production through the use of put
contracts second quarter and gold production through the third
quarter of 2020; (iii) the Company will successfully manage price
exposure at Greens Creek for concentrate shipments and forecasted
future concentrate shipments through the use of provisional hedges
and forward contracts; (iv) expectation that higher metals prices
could increase the expected cash flow for Greens Creek in the
second quarter when sales of prior shipments settle; (v) the Greens
Creek mill will recover lost tonnage due to the replacement of a
failed SAG motor during the rest of 2020; (vi) ability to bring
mines back into full production in the timeframes stated after
COVID-19 related shutdowns; (vii) ability of process improvement
studies underway at Casa Berardi in 2020 to improve mill
reliability, throughput, and recovery, leading to reduced costs and
increased cash flow when they are completed; (viii) ability for San
Sebastian to go back into production in the second quarter; (ix)
ability of third party milling agreement to enable the Company to
move forward with a program to test larger scale long-hole stoping
of Fire Creek’s Type 2 ore and to help establish recovery rates at
the third party mill and for the mine to continue producing through
2020 and processing of ore to continue into early 2021, and that
the test is expected to be self-funding and may reveal
opportunities to realize value from the existing approximately
543,000 ton inferred resource; (x) adequacy of the existing water
rights, water related permits, and water treatment infrastructure
to support a conceptual mine plan being developed for the Fire
Creek resource; (xi) the potential for ongoing production at Fire
Creek; (xii) ability to complete the #2 shaft hoist upgrade in the
second quarter at the Lucky Friday; (xiii) ability to ramp up Lucky
Friday to full production by year end; (xiv) ability to
successfully make a third concentrate of Hugh Zone material and
then restart the mine in 2021 or 2022, and (xv) improved financial
performance in the second half of 2020. The material factors or
assumptions used to develop such forward-looking statements or
forward-looking information include that the Company’s plans for
development and production will proceed as expected and will not
require revision as a result of risks or uncertainties, whether
known, unknown or unanticipated, to which the Company’s operations
are subject.
Estimates or expectations of future events or results are based
upon certain assumptions, which may prove to be incorrect, which
could cause actual results to differ from forward-looking
statements. Such assumptions, include, but are not limited to: (i)
there being no significant change to current geotechnical,
metallurgical, hydrological and other physical conditions; (ii)
permitting, development, operations and expansion of the Company’s
projects being consistent with current expectations and mine plans;
(iii) political/regulatory developments in any jurisdiction in
which the Company operates being consistent with its current
expectations; (iv) the exchange rate for the USD/CAD and USD/MXN,
being approximately consistent with current levels; (v) certain
price assumptions for gold, silver, lead and zinc; (vi) prices for
key supplies being approximately consistent with current levels;
(vii) the accuracy of our current mineral reserve and mineral
resource estimates; (viii) the Company’s plans for development and
production will proceed as expected and will not require revision
as a result of risks or uncertainties, whether known, unknown or
unanticipated; (ix) counterparties performing their obligations
under hedging instruments and put option contracts; (x) sufficient
workforce is available and trained to perform assigned tasks; (xi)
weather patterns and rain/snowfall within normal seasonal ranges so
as not to impact operations; (xii) relations with interested
parties, including Native Americans, remain productive; (xiii)
economic terms can be reached with third-party mill operators who
have capacity to process our ore; (xiv) maintaining availability of
water rights; (xv) factors do not arise that reduce available cash
balances; and (xvi) there being no material increases in our
current requirements to post or maintain reclamation and
performance bonds or collateral related thereto.
In addition, material risks that could cause actual results to
differ from forward-looking statements include, but are not limited
to: (i) gold, silver and other metals price volatility; (ii)
operating risks; (iii) currency fluctuations; (iv) increased
production costs and variances in ore grade or recovery rates from
those assumed in mining plans; (v) community relations; (vi)
conflict resolution and outcome of projects or oppositions; (vii)
litigation, political, regulatory, labor and environmental risks;
(viii) 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; (ix)
the failure of counterparties to perform their obligations under
hedging instruments, including put option contracts; (x) our plans
for improvements at our Casa Berardi operations and our Nevada
operations, including at Fire Creek with respect to refractory ore
and otherwise, are not successful; (xi) our estimates for the third
and fourth quarter results are inaccurate; (xii) we take a material
impairment charge on our Nevada operations; and (xiii) we are
unable to remain in compliance with all terms of the credit
agreement in order to maintain continued access to borrowings under
it. For a more detailed discussion of such risks and other factors,
see the Company’s 2019 Form 10-K, filed on February 9, 2020, and
Form 10-Q filed on May 7, 2020 with the Securities and Exchange
Commission (SEC), as well as the Company’s other SEC filings. The
Company does not undertake any obligation to release publicly
revisions to any “forward-looking statement,” including, without
limitation, outlook, to reflect events or circumstances after the
date of this presentation, 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
(dollars and shares in thousands,
except per share amounts - unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
Sales of products
$
136,925
$
152,617
Cost of sales and other direct production
costs
85,887
110,386
Depreciation, depletion and
amortization
39,666
38,787
125,553
149,173
Gross profit
11,372
3,444
Other operating expenses:
General and administrative
8,939
9,959
Exploration
2,530
4,402
Pre-development
535
856
Research and development
—
403
Other operating expense
915
587
(Gain)/loss on sale of PP&E
(104)
—
Provision for closed operations and
environmental matters
516
570
Ramp-up and suspension-related costs
12,996
2,778
Acquisition costs
5
13
26,332
19,568
Loss from operations
(14,960)
(16,124)
Other income (expense):
Gain (loss) on derivative contracts
7,893
(1,799)
Other expense
(527)
(1,124)
Unrealized (loss) gain on investments
(978)
96
Net foreign exchange gain (loss)
6,636
(3,133)
Interest expense
(16,311)
(10,665)
(3,287)
(16,625)
Loss before income taxes
(18,247)
(32,749)
Income tax benefit
1,062
7,216
Net loss
(17,185)
(25,533)
Preferred stock dividends
(138)
(138)
Loss applicable to common stockholders
$
(17,323)
$
(25,671)
Basic loss per common share after
preferred dividends
$
(0.03)
$
(0.05)
Diluted loss per common share after
preferred dividends
$
(0.03)
$
(0.05)
Weighted average number of common shares
outstanding - basic
523,215
482,829
Weighted average number of common shares
outstanding - diluted
523,215
482,829
HECLA MINING COMPANY
Condensed Consolidated Balance
Sheets
(dollars and shares in thousands
- unaudited)
March 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
215,715
$
62,452
Accounts receivable:
Trade
6,062
11,952
Taxes
12,547
20,048
Other, net
9,188
6,421
Inventories
75,122
66,213
Prepaid taxes
5,114
107
Other current assets
18,794
11,931
Total current assets
342,542
179,124
Non-current investments
4,919
6,207
Non-current restricted cash and
investments
1,053
1,025
Properties, plants, equipment and mineral
interests, net
2,393,187
2,423,698
Operating lease right-of-use asset
14,909
16,381
Non-current deferred income taxes
3,007
3,537
Other non-current assets
4,507
7,336
Total assets
$
2,764,124
$
2,637,308
LIABILITIES
Current liabilities:
Accounts payable and accrued
liabilities
$
49,437
$
57,716
Accrued payroll and related benefits
34,478
26,916
Accrued taxes
5,842
4,776
Current portion of finance leases
5,391
5,429
Current portion of operating leases
4,792
5,580
Current portion of accrued reclamation and
closure costs
5,277
4,581
Other current liabilities
11,966
11,976
Total current liabilities
117,183
116,974
Non-current finance leases
5,810
7,214
Non-current operating leases
10,139
10,818
Long-term debt - Senior Notes
469,021
504,729
Long-term debt - revolving credit
facility
210,000
—
Non-current deferred tax liability
126,237
138,282
Accrued reclamation and closure costs
97,509
103,793
Non-current pension liability
57,309
56,219
Other non-current liabilities
14,033
6,856
Total liabilities
1,107,241
944,885
STOCKHOLDERS’ EQUITY
Preferred stock
39
39
Common stock
132,381
132,292
Capital surplus
1,976,033
1,973,700
Accumulated deficit
(371,958)
(353,331)
Accumulated other comprehensive loss
(56,645)
(37,310)
Treasury stock
(22,967)
(22,967)
Total stockholders’ equity
1,656,883
1,692,423
Total liabilities and stockholders’
equity
$
2,764,124
$
2,637,308
Common shares outstanding
523,247
522,896
HECLA MINING COMPANY
Condensed Consolidated Statements
of Cash Flows
(dollars in thousands -
unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
OPERATING ACTIVITIES
Net loss
$
(17,185)
$
(25,533)
Non-cash elements included in net
loss:
Depreciation, depletion and
amortization
41,630
40,267
Unrealized loss (gain) on investments
978
(96)
Adjustment of inventory to market
value
—
1,399
Gain on disposition of properties, plants,
equipment and mineral interests
(104)
—
Provision for reclamation and closure
costs
1,548
1,594
Stock compensation
1,219
1,580
Deferred income taxes
(3,252)
(8,293)
Amortization of loan origination fees
2,140
625
Gain (loss) on derivative contracts
(10,437)
3,686
Foreign exchange (gain) loss
(8,066)
5,550
Other non-cash charges, net
—
2
Change in assets and liabilities:
Accounts receivable
9,955
(5,063)
Inventories
(6,602)
3,171
Other current and non-current assets
(2,642)
1,124
Accounts payable and accrued
liabilities
(11,879)
(9,496)
Accrued payroll and related benefits
9,495
7,212
Accrued taxes
1,332
1,237
Accrued reclamation and closure costs and
other non-current liabilities
(3,203)
1,064
Cash provided by operating
activities
4,927
20,030
INVESTING ACTIVITIES
Additions to properties, plants, equipment
and mineral interests
(19,870)
(33,071)
Proceeds from disposition of properties,
plants and equipment
154
1
Net cash used in investing
activities
(19,716)
(33,070)
FINANCING ACTIVITIES
Dividends paid to common stockholders
(1,304)
(1,209)
Dividends paid to preferred
stockholders
(138)
(138)
Debt origination fees
(458)
(39)
Borrowings on debt
679,500
58,000
Payments on debt
(506,500)
(58,000)
Repayments of finance leases
(1,284)
(1,261)
Net cash provided by (used in)
financing activities
169,816
(2,647)
Effect of exchange rates on cash
(1,736)
95
Net increase (decrease) in cash, cash
equivalents and restricted cash and cash equivalents
153,291
(15,592)
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
63,477
28,414
Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$
216,768
$
12,822
HECLA MINING COMPANY
Production Data
Three Months Ended
March 31, 2020
March 31, 2019
GREENS CREEK UNIT
Tons of ore milled
198,804
206,825
Mining cost per ton of ore
$
83.75
$
78.83
Milling cost per ton of ore
$
42.64
$
35.86
Ore grade milled - Silver (oz./ton)
16.87
13.46
Ore grade milled - Gold (oz./ton)
0.08
0.10
Ore grade milled - Lead (%)
3.12
2.83
Ore grade milled - Zinc (%)
6.89
7.32
Silver produced (oz.)
2,775,707
2,232,747
Gold produced (oz.)
12,273
14,328
Lead produced (tons)
5,198
4,782
Zinc produced (tons)
12,487
13,518
Cash cost, after by-product credits, per
silver ounce (1)
$
5.63
$
0.49
AISC, after by-product credits, per silver
ounce (1)
$
7.90
$
3.24
Capital additions (in thousands)
$
5,510
$
5,312
LUCKY FRIDAY UNIT
Tons of ore processed
10,219
13,803
Mining cost per ton of ore
$
120.37
$
131.25
Milling cost per ton of ore
$
42.47
$
36.45
Ore grade milled - Silver (oz./ton)
9.87
13.33
Ore grade milled - Lead (%)
7.23
7.97
Ore grade milled - Zinc (%)
3.85
3.54
Silver produced (oz.)
95,748
173,627
Lead produced (tons)
695
1,002
Zinc produced (tons)
360
426
Capital additions (in thousands)
$
4,295
$
1,726
CASA BERARDI UNIT
Tons of ore milled - underground
160,937
189,352
Tons of ore milled - surface pit
170,681
140,399
Tons of ore milled - total
331,618
329,751
Surface tons mined - ore and waste
1,724,974
2,160,123
Mining cost per ton of ore -
underground
$
117.81
$
106.47
Mining cost per ton of ore - combined
$
76.35
$
86.14
Mining cost per ton of ore and waste -
surface tons mined
3.67
$
3.82
Milling cost per ton of ore
$
21,97
$
15.77
Ore grade milled - Gold (oz./ton) -
underground
0.17
0.13
Ore grade milled - Gold (oz./ton) -
surface pit
0.07
0.05
Ore grade milled - Gold (oz./ton) -
combined
0.102
0.12
Ore grade milled - Silver (oz./ton)
0.02
0.03
Gold produced (oz.) - underground
17,581
25,264
Gold produced (oz.) - surface pit
9,171
6,535
Gold produced (oz.) - total
26,752
31,799
Silver produced (oz.)
5,934
8,240
Cash cost, after by-product credits, per
gold ounce (1)
$
1,268
$
1,113
AISC, after by-product credits, per gold
ounce (1)
$
1,615
$
1,338
Capital additions (in thousands)
$
8,506
$
5,679
SAN SEBASTIAN UNIT
Tons of ore milled
35,476
44,475
Mining cost per ton of ore
$
90.08
$
125.59
Milling cost per ton of ore
$
63.38
$
62.21
Ore grade milled - Silver (oz./ton)
10.64
10.94
Ore grade milled - Gold (oz./ton)
0.091
0.095
Silver produced (oz.)
346,625
441,079
Gold produced (oz.)
2,802
3,530
Cash cost, after by-product credits, per
silver ounce (1)
$
6.91
$
11.23
AISC, after by-product credits, per silver
ounce (1)
$
9.59
$
16.55
Capital additions (in thousands)
$
803
$
1,896
NEVADA OPERATIONS UNIT
Tons of ore milled
17,298
41,365
Mining cost per ton of ore
$
366.60
$
212.56
Milling cost per ton of ore
$
150.25
$
112.35
Ore grade milled - Gold (oz./ton)
1.055
0.300
Ore grade milled - Silver (oz./ton)
1.47
2.49
Gold produced (oz.)
16,965
10,364
Silver produced (oz.)
21,455
67,438
Cash cost, after by-product credits, per
gold ounce (1)
$
735
$
1,782
AISC, after by-product credits, per gold
ounce (1)
$
808
$
3,056
Capital additions (in thousands)
$
857
$
21,805
(1)
Cash cost, after by-product credits, per
ounce and AISC, after by-products credits, per ounce represent a
non-U.S. Generally Accepted Accounting Principles (GAAP)
measurement. A reconciliation of cash cost, after by-product
credits and AISC, after by-products credits to cost of sales and
other direct production costs and depreciation, depletion and
amortization (GAAP) can be found in the cash cost per ounce
reconciliation section of this news release. Gold, lead and zinc
produced have been treated as by-product credits in calculating
silver costs per ounce. The primary metal produced at Casa Berardi
and Nevada Operations is gold, with a by-product credit for the
value of silver production.
Reconciliation of Cost of Sales and Other Direct Production
Costs and Depreciation, Depletion and Amortization (GAAP) to Cash
Cost, Before By-product Credits and Cash Cost, After By-product
Credits (non-GAAP) and All-In Sustaining Costs, Before By-product
Credits and All-In Sustaining Costs, After By-product Credits
(non-GAAP)
The tables below present reconciliations between the most
comparable GAAP measure of cost of sales and other direct
production costs and depreciation, depletion and amortization to
the non-GAAP measures of Cash Cost, Before By-product Credits, Cash
Cost, After By-product Credits, AISC, Before By-product Credits and
AISC, After By-product Credits for our operations at the Greens
Creek, Lucky Friday, San Sebastian and Casa Berardi units for the
three-month periods ended March 31, 2020 and 2019.
Cash Cost, After By-product Credits, per Ounce is an important
operating statistic that we utilize to measure each mine's
operating performance. AISC, After By-product Credits, per Ounce is
an important operating statistic that we utilize as a measures of
our mines' net cash flow after costs for exploration,
pre-development, reclamation, and sustaining capital. Current GAAP
measures used in the mining industry, such as cost of goods sold,
do not capture all the expenditures incurred to discover, develop
and sustain silver and gold production. Cash Cost, After By-product
Credits, per Ounce and AISC, After By-product Credits, per Ounce
also allow us to benchmark the performance of each of our mines
versus those of our competitors. As a silver and gold mining
company, we also use these statistics on an aggregate basis -
aggregating the Greens Creek, Lucky Friday and San Sebastian mines
- to compare our performance with that of other silver mining
companies, and aggregating Casa Berardi and Nevada Operations for
comparison to other gold mining companies. Similarly, these
statistics are useful in identifying acquisition and investment
opportunities as they provide a common tool for measuring the
financial performance of other mines with varying geologic,
metallurgical and operating characteristics.
Cash Cost, Before By-product Credits and AISC, Before By-product
Credits include all direct and indirect operating cash costs
related directly to the physical activities of producing metals,
including mining, processing and other plant costs, third-party
refining expense, on-site general and administrative costs,
royalties and mining production taxes. AISC, Before By-product
Credits for each mine also includes on-site exploration,
reclamation, and sustaining capital costs. AISC, Before By-product
Credits for our consolidated silver properties also includes
corporate costs for general and administrative expense,
reclamation, exploration, and pre-development. By-product credits
include revenues earned from all metals other than the primary
metal produced at each unit. As depicted in the tables below,
by-product credits comprise an essential element of our silver unit
cost structure, distinguishing our silver operations due to the
polymetallic nature of their orebodies. Cash Cost, After By-product
Credits, per Ounce and AISC, After By-product Credits, per Ounce
provide management and investors an indication of operating cash
flow, after consideration of the average price, received from
production. We also use these measurements for the comparative
monitoring of performance of our mining operations period-to-period
from a cash flow perspective. Cash Cost, After By-product Credits,
per Ounce is a measure developed by precious metals companies
(including the Silver Institute) in an effort to provide a uniform
standard for comparison purposes. There can be no assurance,
however, that our reporting of these non-GAAP measures is the same
as those reported by other mining companies.
The Casa Berardi, Nevada Operations and combined gold properties
information below reports Cash Cost, After By-product Credits, per
Gold Ounce and AISC, After By-product Credits, per Gold Ounce for
the production of gold, its primary product, and by-product
revenues earned from silver, which is a by-product at Casa Berardi
and Nevada Operations. Only costs and ounces produced relating to
units with the same primary product are combined to represent Cash
Cost, After By-product Credits, per Ounce and AISC, After
By-product Credits, per Ounce. Thus, the gold produced at our Casa
Berardi and Nevada Operations units is not included as a by-product
credit when calculating Cash Cost, After By-product Credits, per
Silver Ounce and AISC, After By-product Credits, per Silver Ounce
for the total of Greens Creek, Lucky Friday and San Sebastian, our
combined silver properties. Similarly, the silver produced at our
other three units is not included as a by-product credit when
calculating the gold metrics for Casa Berardi and Nevada
Operations.
In thousands (except per ounce
amounts)
Three Months Ended March 31,
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
$
49,182
$
2,832
$
8,300
$
60,314
Depreciation, depletion and
amortization
(12,429)
(302)
(1,473)
(14,204)
Treatment costs
15,826
432
104
16,362
Change in product inventory
2,870
914
253
4,037
Reclamation and other costs
319
—
(361)
(42)
Exclusion of Lucky Friday costs
—
(3,876)
—
(3,876)
Cash Cost, Before By-product Credits
(1)
55,768
—
6,823
62,591
Reclamation and other costs
788
—
114
902
Exploration
4
—
767
350
1,121
Sustaining capital
5,510
—
56
—
5,566
General and administrative
8,939
8,939
AISC, Before By-product Credits (1)
62,070
—
7,760
79,119
By-product credits:
Zinc
(16,026)
—
—
(16,026)
Gold
(17,197)
—
(4,429)
(21,626)
Lead
(6,926)
—
—
(6,926)
Total By-product credits
(40,149)
—
(4,429)
(44,578)
Cash Cost, After By-product Credits
$
15,619
$
—
$
2,394
$
18,013
AISC, After By-product Credits
$
21,921
$
—
$
3,331
$
34,541
Divided by ounces produced
2,776
—
347
3,123
Cash Cost, Before By-product Credits, per
Ounce
$
20.09
$
—
$
19.67
$
20.03
By-product credits per ounce
(14.46)
—
(12.76)
(14.27)
Cash Cost, After By-product Credits, per
Ounce
$
5.63
$
—
$
6.91
$
5.76
AISC, Before By-product Credits, per
Ounce
$
22.36
$
—
$
22.35
$
25.33
By-product credits per ounce
(14.46)
—
(12.76)
(14.27)
AISC, After By-product Credits, per
Ounce
$
7.90
$
—
$
9.59
$
11.06
In thousands (except per ounce amounts)
Three Months Ended March 31,
2020
Casa Berardi (4)
Nevada Operations (5)
Total Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
48,325
$
16,914
$
65,239
Depreciation, depletion and
amortization
(16,397)
(9,065)
(25,462)
Treatment costs
574
26
600
Change in product inventory
1,608
5,280
6,888
Reclamation and other costs
(97)
(326)
(423)
Cash Cost, Before By-product Credits
(1)
34,013
12,829
46,842
Reclamation and other costs
96
327
423
Exploration
691
85
776
Sustaining capital
8,506
826
9,332
General and administrative
—
AISC, Before By-product Credits (1)
43,306
14,067
57,373
By-product credits:
Zinc
—
—
—
Gold
—
—
—
Lead
—
—
—
Silver
(100)
(353)
(453)
Total By-product credits
(100)
(353)
(453)
Cash Cost, After By-product Credits
$
33,913
$
12,476
$
46,389
AISC, After By-product Credits
$
43,206
$
13,714
$
56,920
Divided by ounces produced
27
17
44
Cash Cost, Before By-product Credits, per
Ounce
$
1,272
$
756
$
1,071
By-product credits per ounce
(4)
(21)
(10)
Cash Cost, After By-product Credits, per
Ounce
$
1,268
$
735
$
1,061
AISC, Before By-product Credits, per
Ounce
$
1,619
$
829
$
1,312
By-product credits per ounce
(4)
(21)
(10)
AISC, After By-product Credits, per
Ounce
$
1,615
$
808
$
1,302
In thousands (except per ounce amounts)
Three Months Ended March 31,
2020
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
60,314
$
65,239
$
125,553
Depreciation, depletion and
amortization
(14,204)
(25,462)
(39,666)
Treatment costs
16,362
600
16,962
Change in product inventory
4,037
6,888
10,925
Reclamation and other costs
(42)
(423)
(465)
Exclusion of Lucky Friday costs
(3,876)
—
(3,876)
Cash Cost, Before By-product Credits
(1)
62,591
46,842
109,433
Reclamation and other costs
902
423
1,325
Exploration
1,121
776
1,897
Sustaining capital
5,566
9,332
14,898
General and administrative
8,939
—
8,939
AISC, Before By-product Credits (1)
79,119
57,373
136,492
By-product credits:
Zinc
(16,026)
—
(16,026)
Gold
(21,626)
—
(21,626)
Lead
(6,926)
—
(6,926)
Silver
—
(453)
(453)
Total By-product credits
(44,578)
(453)
(45,031)
Cash Cost, After By-product Credits
$
18,013
$
46,389
$
64,402
AISC, After By-product Credits
$
34,541
$
56,920
$
91,461
Divided by ounces produced
3,123
44
Cash Cost, Before By-product Credits, per
Ounce
$
20.03
$
1,071
By-product credits per ounce
(14.27)
(10)
Cash Cost, After By-product Credits, per
Ounce
$
5.76
$
1,061
AISC, Before By-product Credits, per
Ounce
$
25.33
$
1,312
By-product credits per ounce
(14.27)
(10)
AISC, After By-product Credits, per
Ounce
$
11.06
$
1,302
In thousands (except per ounce amounts)
Three Months Ended March 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
$
54,113
$
2,181
$
12,351
$
68,645
Depreciation, depletion and
amortization
(12,370)
(169)
(1,760)
(14,299)
Treatment costs
10,352
810
131
11,293
Change in product inventory
(3,865)
1,483
(853)
(3,235)
Reclamation and other costs
(415)
—
(312)
(727)
Exclusion of Lucky Friday costs
—
(4,305)
—
(4,305)
Cash Cost, Before By-product Credits
(1)
47,815
—
9,557
57,372
Reclamation and other costs
737
—
123
860
Exploration
81
—
1,717
441
2,239
Sustaining capital
5,312
—
506
61
5,879
General and administrative
9,959
9,959
AISC, Before By-product Credits (1)
53,945
—
11,903
76,309
By-product credits:
Zinc
(23,285)
—
—
(23,285)
Gold
(16,518)
—
(4,602)
(21,120)
Lead
(6,917)
—
—
(6,917)
Total By-product credits
(46,720)
—
(4,602)
(51,322)
Cash Cost, After By-product Credits
$
1,095
$
—
$
4,955
$
6,050
AISC, After By-product Credits
$
7,225
$
—
$
7,301
$
24,987
Divided by ounces produced
2,233
—
441
2,674
Cash Cost, Before By-product Credits, per
Ounce
$
21.41
$
—
$
21.67
$
21.45
By-product credits per ounce
(20.92)
—
(10.44)
(19.19)
Cash Cost, After By-product Credits, per
Ounce
$
0.49
$
—
$
11.23
$
2.26
AISC, Before By-product Credits, per
Ounce
$
24.16
$
—
$
26.99
$
28.53
By-product credits per ounce
(20.92)
—
(10.44)
(19.19)
AISC, After By-product Credits, per
Ounce
$
3.24
$
—
$
16.55
$
9.34
In thousands (except per ounce amounts)
Three Months Ended March 31,
2019
Casa Berardi
Nevada Operations
Total Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
49,081
$
31,447
$
80,528
Depreciation, depletion and
amortization
(16,155)
(8,333)
(24,488)
Treatment costs
442
38
480
Change in product inventory
2,268
(3,246)
(978)
Reclamation and other costs
(129)
(379)
(508)
Cash Cost, Before By-product Credits
(1)
35,507
19,527
55,034
Reclamation and other costs
129
378
507
Exploration
1,346
118
1,464
Sustaining capital
5,692
12,707
18,399
AISC, Before By-product Credits (1)
42,674
32,730
75,404
By-product credits:
Silver
(126)
(1,057)
(1,183)
Total By-product credits
(126)
(1,057)
(1,183)
Cash Cost, After By-product Credits
$
35,381
$
18,470
$
53,851
AISC, After By-product Credits
$
42,548
$
31,673
$
74,221
Divided by ounces produced
32
10
42
Cash Cost, Before By-product Credits, per
Ounce
$
1,117
$
1,884
$
1,305
By-product credits per ounce
(4)
(102)
(28)
Cash Cost, After By-product Credits, per
Ounce
$
1,113
$
1,782
$
1,277
AISC, Before By-product Credits, per
Ounce
$
1,342
$
3,158
$
1,788
By-product credits per ounce
(4)
(102)
(28)
AISC, After By-product Credits, per
Ounce
$
1,338
$
3,056
$
1,760
In thousands (except per ounce amounts)
Three Months Ended March 31,
2019
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
68,645
$
80,528
$
149,173
Depreciation, depletion and
amortization
(14,299)
(24,488)
(38,787)
Treatment costs
11,293
480
11,773
Change in product inventory
(3,235)
(978)
(4,213)
Reclamation and other costs
(727)
(508)
(1,235)
Exclusion of Lucky Friday costs
(4,305)
—
(4,305)
Cash Cost, Before By-product Credits
(1)
57,372
55,034
112,406
Reclamation and other costs
860
507
1,367
Exploration
2,239
1,464
3,703
Sustaining capital
5,879
18,399
24,278
General and administrative
9,959
—
9,959
AISC, Before By-product Credits (1)
76,309
75,404
151,713
By-product credits:
Zinc
(23,285)
—
(23,285)
Gold
(21,120)
—
(21,120)
Lead
(6,917)
—
(6,917)
Silver
—
(1,183)
(1,183)
Total By-product credits
(51,322)
(1,183)
(52,505)
Cash Cost, After By-product Credits
$
6,050
$
53,851
$
59,901
AISC, After By-product Credits
$
24,987
$
74,221
$
99,208
Divided by ounces produced
2,674
42
Cash Cost, Before By-product Credits, per
Ounce
$
21.45
$
1,305
By-product credits per ounce
(19.19)
(28)
Cash Cost, After By-product Credits, per
Ounce
$
2.26
$
1,277
AISC, Before By-product Credits, per
Ounce
$
28.53
$
1,788
(19.19)
(28)
AISC, After By-product Credits, per
Ounce
$
9.34
$
1,760
In thousands (except per ounce amounts)
Original 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)
Original 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)
Original 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
$
239,500
$
235,000
$
474,500
Depreciation, depletion and
amortization
(52,500)
(80,000)
(132,500)
Treatment costs
37,300
2,000
37,300
Change in product inventory
10,300
(11,000)
(700)
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
$
185,650
$
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
In thousands (except per ounce amounts)
Current 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
$
205,000
$
14,000
$
25,000
$
244,000
Depreciation, depletion and
amortization
(40,000)
(2,500)
(4,300)
(46,800)
Treatment costs
47,700
3,000
—
50,700
Change in product inventory
6,600
—
(5,600)
1,000
Reclamation and other costs
2,500
200
500
3,200
Cash Cost, Before By-product Credits
(1)
221,800
14,700
15,600
252,100
Reclamation and other costs
3,500
200
500
4,200
Exploration
500
—
775
1,275
Sustaining capital
25,500
2,850
75
28,425
General and administrative
—
—
29,000
29,000
AISC, Before By-product Credits (1)
251,300
17,750
16,950
315,000
By-product credits:
Zinc
(67,000)
(2,000)
(69,000)
Gold
(68,000)
(10,500)
(78,500)
Lead
(27,000)
(6,000)
(33,000)
Total By-product credits
(162,000)
(8,000)
(10,500)
(180,500)
Cash Cost, After By-product Credits
$
59,800
$
6,700
$
5,100
$
71,600
AISC, After By-product Credits
$
89,300
$
9,750
$
6,450
$
134,500
Divided by silver ounces produced
9,100
675
700
10,475
Cash Cost, Before By-product Credits, per
Silver Ounce
$
24.37
$
21.78
$
22.29
$
24.07
By-product credits per silver ounce
(17.80)
(11.85)
(15.00)
(17.23)
Cash Cost, After By-product Credits, per
Silver Ounce
$
6.57
$
9.93
$
7.29
$
6.84
AISC, Before By-product Credits, per
Silver Ounce
$
27.62
$
26.30
$
24.21
$
30.07
By-product credits per silver ounce
(17.80)
(11.85)
(15.00)
(17.23)
AISC, After By-product Credits, per Silver
Ounce
$
9.81
$
14.44
$
9.21
$
12.84
In thousands (except per ounce amounts)
Current 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
$
39,000
$
224,000
Depreciation, depletion and
amortization
(66,000)
(14,000)
(80,000)
Treatment costs
—
2,000
2,000
Change in product inventory
(5,000)
(3,550)
(8,550)
Reclamation and other costs
1,000
1,250
2,250
Cash Cost, Before By-product Credits
(1)
115,000
24,700
139,700
Reclamation and other costs
600
500
1,100
Exploration
2,600
85
2,685
Sustaining capital
34,500
1,000
35,500
AISC, Before By-product Credits (1)
152,700
26,285
178,985
By-product credits:
Silver
(1,400)
(650)
(2,050)
Total By-product credits
(1,400)
(650)
(2,050)
Cash Cost, After By-product Credits
$
113,600
$
24,050
$
137,650
AISC, After By-product Credits
$
151,300
$
25,635
$
176,935
Divided by gold ounces produced
122
27
149
Cash Cost, Before By-product Credits, per
Gold Ounce
$
943
$
915
$
938
By-product credits per gold ounce
(11)
(24)
(14)
Cash Cost, After By-product Credits, per
Gold Ounce
$
931
$
891
$
924
AISC, Before By-product Credits, per Gold
Ounce
$
1,252
$
974
$
1,201
By-product credits per gold ounce
(11)
(24)
(14)
AISC, After By-product Credits, per Gold
Ounce
$
1,240
$
949
$
1,187
In thousands (except per ounce amounts)
Current 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
$
244,000
$
224,000
$
468,000
Depreciation, depletion and
amortization
(46,800)
(80,000)
(126,800)
Treatment costs
50,700
2,000
52,700
Change in product inventory
1,000
(8,550)
(7,550)
Reclamation and other costs
3,200
2,250
5,450
Cash Cost, Before By-product Credits
(1)
252,100
139,700
391,800
Reclamation and other costs
4,200
1,100
5,300
Exploration
1,275
2,685
3,960
Sustaining capital
28,425
35,500
63,925
General and administrative
29,000
—
29,000
AISC, Before By-product Credits (1)
315,000
178,985
493,985
By-product credits:
Zinc
(69,000)
—
(69,000)
Gold
(78,500)
—
(78,500)
Lead
(33,000)
—
(33,000)
Silver
(2,050)
(2,050)
Total By-product credits
(180,500)
(2,050)
(182,550)
Cash Cost, After By-product Credits
$
71,600
$
137,650
$
209,250
AISC, After By-product Credits
$
134,500
$
176,935
$
311,435
Divided by ounces produced
10,475
149
Cash Cost, Before By-product Credits, per
Ounce
$
24.07
$
938
By-product credits per ounce
(17.23)
(14)
Cash Cost, After By-product Credits, per
Ounce
$
6.84
$
924
AISC, Before By-product Credits, per
Ounce
$
30.07
$
1,201
By-product credits per ounce
(17.23)
(14)
AISC, After By-product Credits, per
Ounce
$
12.84
$
1,187
(1)
Includes all direct and indirect operating costs related
directly to the physical activities of producing metals, including
mining, processing and other plant costs, third-party refining and
marketing expense, on-site general and administrative costs,
royalties and mining production taxes, after by-product revenues
earned from all metals other than the primary metal produced at
each unit. AISC, Before By-product Credits also includes
on-site exploration, reclamation, and sustaining capital cost.
(2)
The unionized employees at Lucky Friday were on strike from
March 2017 until January 2020, and production at Lucky Friday has
been limited since the start of the strike. Costs related to
ramp-up activities totaling $6.3 million in the first quarter of
2020, and suspension-related costs totaling $1.9 million during the
strike in the first quarter of 2019, along with $1.8 million and
$0.9 million, respectively, in non-cash depreciation expense for
those periods, 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.
(4)
In late March, the Government of Quebec ordered the mining
industry to reduce to minimum operations as part of the fight
against the COVID-19 virus, causing us to suspend our Casa Berardi
operations from approximately March 24 until April 15, when limited
mining operations resumed, resulting in the reduced mill
throughput. Suspension-related costs totaling $0.9 million
for the first quarter of 2020 are reported in a separate line item
on our consolidated statements of operations and excluded from the
calculations of cost of sales and other direct production costs and
depreciation, depletion and amortization and Cash Cost and AISC,
After By-product Credits, per Gold Ounce.
(5)
Production was suspended at the Hollister mine in the third
quarter of 2019 and at the Midas mine and Aurora mill in
late-2019. Suspension-related costs at Hollister, Midas and
Aurora totaling $4.0 million for the first quarter of 2020
are reported in a separate line item on our consolidated statements
of operations and excluded from the calculations of cost of sales
and other direct production costs and depreciation, depletion and
amortization and Cash Cost and AISC, After By-product Credits, per
Gold Ounce.
Reconciliation of Net Loss Applicable to Common Stockholders
(GAAP) to Adjusted Net Loss Applicable to Common Stockholders
(non-GAAP)
This release refers to a non-GAAP measure of adjusted net loss
applicable to common stockholders and adjusted net loss per share,
which are indicators of our performance. They exclude certain
impacts which are of a nature which we believe are not reflective
of our underlying performance. Management believes that adjusted
net loss per common share provides investors with the ability to
better evaluate our underlying operating performance.
Dollars are in thousands (except per share
amounts)
Three Months Ended March 31,
2020
2019
Net (loss) income applicable to common
stockholders (GAAP)
$
(17,323)
$
(25,671)
Adjusting items:
Loss (gain) on derivatives contracts
(7,893)
1,799
Ramp-up and suspension costs
12,996
2,778
Provisional price gains
(2,610)
(524)
Additional interest associated with early
repayment of long-term debt
2,902
—
Loss on extinguishment of debt
1,666
—
Net foreign exchange (gain) loss
(6,636)
3,133
Gain on disposition of properties, plants,
equipment and mineral interests
(104)
—
Acquisition costs
5
13
Adjusted net loss applicable to common
stockholders
$
(16,997)
$
(18,472)
Weighted average shares - basic
523,215
482,829
Weighted average shares - diluted
523,215
482,829
Basic and diluted adjusted net loss per
common share
$
(0.03)
$
(0.04)
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 loss before
the following items: interest expense, income tax (benefit)
provision, depreciation, depletion, and amortization expense,
acquisition costs, foreign exchange gains and losses, unrealized
gains and losses on derivative contracts, ramp-up and
suspension-related costs, provisional price gains and losses,
stock-based compensation, unrealized gains and losses on
investments, provisions for closed operations, and interest and
other income (expense). Net debt is calculated as total debt, which
consists of the liability balances for our Senior Notes and 2021
Notes and capital leases, 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 March 31,
Twelve Months Ended March 31,
2020
2019
2020
2019
Net loss
$
(17,185)
$
(25,533)
$
(91,209)
$
(60,336)
Plus: Interest expense
16,311
10,665
54,093
41,815
Plus: Income taxes
(1,062)
(7,216)
(17,947)
(14,685)
Plus: Depreciation, depletion and
amortization
39,666
38,787
200,397
144,777
Plus: Acquisition costs
5
13
637
7,551
(Less)/Plus: Foreign exchange (gain)
loss
(6,636)
3,133
(1,533)
(4,585)
(Less)/Plus: (Gain) loss on derivative
contracts
(7,827)
1,799
333
517
Plus: Ramp-up and suspension costs
12,996
2,778
22,269
18,454
Less: (Gain) loss on disposition of
properties, plants, equipment and mineral interests
(104)
—
4,539
(2,664)
(Less)/Plus: Provisional price (gains)
losses
(2,610)
(524)
(2,683)
3,214
Plus: Stock-based compensation
1,219
1,580
5,307
6,732
Plus: Provision for closed operations and
environmental matters
1,548
1,594
6,868
6,361
Plus/(Less): Unrealized loss (gain) on
investments
978
(96)
3,463
3,030
Plus: Other
527
1,124
2,909
2,009
Adjusted EBITDA
$
37,826
$
28,104
$
187,443
$
152,190
Total debt
$
690,222
$
548,883
Less: Cash and cash equivalents
$
(215,715)
$
(11,797)
Net debt
$
474,507
$
537,086
Net debt/LTM adjusted EBITDA
(non-GAAP)
2.5
3.5
Table A - Assay Results
Greens Creek (Alaska)
Zone
Drill Hole Number
Drill Hole Azm/Dip
Sample From (feet)
Sample To (feet)
True Width (feet)
Silver (oz/ton)
Gold
(oz/ton)
Zinc (%)
Lead (%)
Depth From Mine Portal
(feet)
East Ore Definition
GC5367
243/-52
537.5
541.0
3.1
27.1
0.03
11.8
2.3
241
GC5369
243/-78
477.0
478.5
1.5
30.8
0.09
7.4
3.2
195
GC5371
243/-62
502.0
507.0
4.8
11.1
0.02
7.3
2.9
216
GC5372
63/-67
459.9
465.0
4.7
18.4
0.29
3.1
0.6
239
GC5375
63/-77
503.0
518.0
11.5
21.3
0.13
27.4
9.5
163
GC5380
63/-58
412.4
415.0
2.0
19.8
0.03
6.2
3.3
311
GC5386
63/-37
324.0
327.5
3.4
11.6
0.07
5.8
2.6
539
GC5386
63/-37
330.3
331.3
1.0
10.6
0.14
3.2
0.9
463
GC5386
63/-37
393.2
394.3
1.0
10.4
0.14
7.2
4.0
426
GC5390
63/1
365.5
368.0
2.5
11.6
0.08
1.7
0.9
638
GC5393
63/10
401.5
403.0
1.3
15.7
0.19
7.0
1.8
723
GC5393
63/10
438.0
441.0
2.3
21.7
0.52
15.4
7.4
728
GC5396
63/-10
356.0
367.0
11.0
10.6
0.09
3.7
1.7
583
GC5400
63/-76
481.3
503.0
21.6
8.3
0.13
16.0
5.0
185
GC5403
63/-88
483.0
493.0
10.0
13.1
0.54
33.4
9.1
169
GC5409
243/-81
472.5
478.5
6.0
14.1
0.39
23.2
7.8
189
200 South Definition
GC5379
243/-73
694.0
700.0
6.0
15.0
0.13
0.8
0.4
-1948
GC5379
243/-73
708.0
713.0
4.8
8.4
0.17
0.6
0.3
-1962
GC5379
243/-73
720.5
729.0
8.2
9.3
0.14
0.5
0.3
-1978
GC5383
243/-62
253.0
273.0
20.0
13.9
0.05
1.3
0.6
-1515
GC5383
243/-62
329.5
333.0
3.1
35.2
0.03
1.1
0.5
-1577
GC5388
243/-51
194.5
215.0
15.5
16.2
0.05
1.3
0.6
-1443
GC5388
243/-51
240.0
242.0
1.0
34.9
0.03
0.3
0.1
-1472
GC5388
243/-51
287.0
293.0
5.5
33.1
0.02
1.7
0.7
-1509
GC5388
243/-51
541.0
542.0
1.0
17.0
0.01
0.6
0.3
-1702
GC5392
243/-18
204.0
225.5
20.2
27.5
0.11
0.7
0.4
-1344
GC5402
243/-36
193.4
194.4
1.0
28.9
0.18
0.8
0.4
-1386
GC5410
243/-42
194.0
197.0
2.3
52.3
0.04
0.7
0.3
-1407
GC5410
243/-42
361.0
363.5
1.6
16.4
0.02
0.8
0.4
-1517
GC5410
243/-42
447.0
463.8
4.3
26.7
0.01
1.5
0.8
-1579
GC5410
243/-42
595.2
600.7
5.5
57.5
0.09
1.7
0.8
-1670
GC5413
243/-34
199.0
201.5
2.4
16.3
0.03
0.6
0.3
-1389
9A Definition
GC5370
50/13
477.0
478.0
0.7
26.9
0.02
22.2
11.4
-120
GC5373
66/-37
89.5
90.5
0.6
25.6
0.08
3.9
2.4
-285
GC5391
36/12
256.0
258.0
1.9
13.8
0.02
16.8
2.8
-176
GC5391
36/12
333.0
364.0
26.0
31.2
0.17
8.2
3.5
-158
GC5395
36/4
301.0
330.0
25.1
15.2
0.06
4.4
2.8
-208
GC5397
33/-9
249.0
253.0
2.4
15.1
0.12
19.1
11.4
-271
GC5401
66/38
289.5
290.5
1.0
14.2
0.02
11.7
3.9
-47
GC5401
66/38
332.0
334.8
2.6
13.0
0.02
16.5
4.5
-21
Deep Southwest Exploration
GC5357
4/-66
391.5
395.0
3.5
39.2
0.55
8.4
3.8
-1030
Casa Berardi (Quebec)
Zone
Drill Hole Number
Drill Hole Section
Drill Hole Azm/Dip
Sample From (feet)
Sample To (feet)
True Width (feet)
Gold (oz/ton)
Depth From Mine Surface
(feet)
UG Lower Principal 118 Zone
CBP-0860
11940
4/-55
457.9
472.3
9.5
0.14
-3577
118
CBP-0861
11940
4/-50
457.6
472.3
10.2
0.08
-3546
118
CBP-0867
11985
16/-53
869.2
888.9
12.8
0.15
-3875
UG Upper Principal 119 Zone
CBP-0795
11760
190/-28
688.1
707.2
16.7
0.06
-1223
119
Including
190/-28
691.4
694.7
2.6
0.18
-1222
119
CBP-0796
11805
179/-10
555.3
565.1
9.8
0.10
-982
119
Including
179/-10
562.5
565.1
2.6
0.35
-982
119
CBP-0799
11805
179/0
549.1
563.8
14.4
0.18
-923
119
Including
179/0
553.3
556.0
2.3
0.93
-923
UG Upper Principal 128 Zone
Exploration
CBP-0854
12840
180/-36
1367.4
1372.4
9.5
0.37
-1468
128
CBP-0854
12840
180/-36
1374.0
1378.3
2.8
0.92
-1467
UG East Mine 148 Zone
CBE-0203
14820
358/-42
1173.6
1203.8
24.0
0.52
-2277
148
CBE-0204
14820
355/-46
1219.2
1243.1
18.0
0.14
-2364
148
Including
355/-46
1235.6
1243.1
5.6
0.30
-2369
148
CBE-0209
14820
358/-45
1203.8
1229.0
19.7
0.13
-2358
148
Including
358/-45
1224.4
1227.4
2.3
0.43
-2364
148
CBE-0209
14820
358/-45
1253.0
1265.8
10.5
0.15
-2382
148
CBE-0209 INC
14820
358/-45
1262.1
1265.8
2.6
0.47
-2387
148
CBE-0213
14775
349/-53
1346.4
1374.3
20.3
0.13
-2565
148
CBE-0213 INC
349/-53
1351.7
1356.3
3.3
0.29
-2561
UG East Mine 148 Zone
Exploratio
CBE-0207
14850
358/-57
1157.8
1167.7
7.2
0.11
-2499
148 Exploration
CBE-0207
14850
358/-57
1672.8
1685.9
11.2
0.12
-2885
148 Exploration
CBE-0214
14790
355/-52
1343.2
1372.7
23.0
0.31
-2549
148 Exploration
Including
355/-52
1357.9
1362.8
3.6
0.74
-2549
148 Exploration
CBE-0215
14820
345/-56
1416.0
1428.4
9.2
0.13
-2631
148 Exploration
CBE-0215
14820
345/-56
1439.3
1457.3
13.1
0.40
-2653
148 Exploration
Including
345/-56
1445.8
1454.0
5.9
0.53
-2641
148 Exploration
CBE-0216
14835
355/-63
1618.7
1630.2
8.5
0.19
-2859
148 Exploration
Including
355/-63
1622.3
1625.4
2.3
0.52
-2859
148 Exploration
CBE-0216
14835
355/-63
1640.0
1663.0
15.7
0.21
-2879
148 Exploration
Including
355/-63
1653.1
1656.4
2.3
0.46
-2882
148 Exploration
CBE-0217
14820
355/-68
1694.1
1703.3
5.9
0.15
-2982
148 Exploration
CBE-0217
14820
355/-68
1799.1
1815.5
10.5
0.13
-3068
148 Exploration
CBE-0217
14820
355/-68
1830.2
1845.0
8.5
0.19
-3092
148 Exploration
CBE-0217
14820
355/-68
1928.6
1945.0
9.8
0.12
-3171
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005361/en/
For further information, please contact:
Mike Westerlund Vice President - Investor Relations 800-HECLA91
(800-432-5291) Email: hmc-info@hecla-mining.com Website:
www.hecla-mining.com
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