Record cash margin and adjusted EBITDA and
second highest revenue in 130-year history
Hecla Mining Company (NYSE:HL) (Hecla or the Company) today
announced first quarter 2021 financial and operating results.
HIGHLIGHTS
- Sales of $210.9 million, second highest in the 130-year
history, a 54% increase over prior year.
- Gross profit of $64.8 million, an increase of $53.4 million
over prior year.
- Cash provided by operating activities of $37.9 million and
$16.5 million of quarterly free cash flow1.
- Silver production of 3.5 million ounces, a 7% increase over
prior year period.
- Net income applicable to common shareholders of $18.8 million,
or $0.04 per share (basic).
- Adjusted net income applicable to common stockholders of $30.6
million, or $0.06 per share.2
- Record Adjusted EBITDA of $86.1 million; net debt/adjusted
EBITDA (last 12 months) of 1.4x.4
- Strong liquidity with quarter-end cash position of $139.8
million and undrawn revolving credit facility.
- Increased the silver -linked dividend at the $25 per ounce
silver price threshold by 50% to $0.03 annually. Board has also
increased each level of the silver-linked dividend by $0.01 per
year.
- Greens Creek AISC6 in the first quarter of $1.59 per silver
ounce and a new estimate for the year of less than $7.25.
- Ratings upgrade from Moody's with Corporate Family Rating (CFR)
upgraded to B2 from B3.
- Continued safe management of COVID-19 across all our
operations.
- Sustainability report outlining our 2020 ESG performance and
exploration results to be released in conjunction with the
Company's Annual Meeting of Shareholders on May 19, 2021.
"The strong performance Hecla has had in five of the last six
quarters continued in the first quarter of 2021 with the second
highest sales in our history, a new record for EBITDA and gross
profit on sales that is about a third higher than the next closest
quarter," said Phillips S. Baker, Jr., President and CEO. "Free
cash flow generation was the most Hecla has had in the first
quarter in a decade. Since the first quarter is typically our
smallest quarter, we anticipate cash flow increasing over the rest
of the year. Therefore, the Board has increased the silver-linked
dividend at the $25 price threshold by 50% to $0.03 per share
annually."
Mr. Baker continued, "The backdrop for silver remains very
positive with improving industrial demand due to global policies
that support green energy where silver is a key component, strong
investment demand and tight supply. Hecla is in a key position as
the United States' largest silver producer, mining more than a
third of all U.S. production, which should increase as our U.S.
silver production is anticipated to be 15 million ounces by 2023
with the Lucky Friday's silver production expected to increase to 5
million ounces by then."
FINANCIAL OVERVIEW
First Quarter Ended
HIGHLIGHTS
March 31, 2021
March 31, 2020
FINANCIAL DATA (000s except per
share)
Sales (000)
$
210,852
$
136,925
Gross profit (000)
$
64,812
$
11,372
Income (loss) applicable to common
stockholders (000)
$
18,833
$
(17,323)
Basic income (loss) per common share
$
0.04
$
(0.03)
Diluted income (loss) per common share
$
0.03
$
(0.03)
Cash provided by operating activities
(000)
$
37,936
$
4,927
Income applicable to common shareholders for the first quarter
was $18.8 million, or $0.04 per share, compared to a loss of $17.3
million, or ($0.03 per share), in the first quarter of 2020, and
was impacted by the following factors:
- Gross profit increased by $53.4 million due primarily to higher
metal prices and production of silver, lead, and zinc. Production
increased due to higher grades and Lucky Friday being in full
production. Profit also improved due to lower treatment charges at
Greens Creek. Casa Berardi also contributed with strong gold
production from higher grades, recovery, and improved throughput in
the current period.
- Ramp-up and suspension costs decreased by $8.7 million
primarily due to Lucky Friday's return to full production in the
fourth quarter of 2020.
- Lower interest expense by $5.6 million due to the following
items in the first quarter of 2020: (i) interest recognized on both
the 7.25% Senior Notes due 2028 and since-redeemed 2021 Notes for
an overlapping period, (ii) $1.7 million in unamortized initial
purchaser discount on the 2021 Notes recognized as expense upon
their redemption, and (iii) amounts drawn on our revolving credit
facility.
- Provision for closed operations and environmental matters
increased by $3.2 million due to an increase at an historic
site.
- Exploration and pre-development expense increased by $3.6
million. In the first quarter of 2021, exploration was primarily at
our San Sebastian, Casa Berardi and Nevada Operations units.
- Higher other operating expense by $2.7 million due to
operational improvement project costs at Casa Berardi.
- A gain on metal derivatives contracts of $0.5 million compared
to a gain of $7.9 million in the first quarter of 2020.
- A net foreign exchange loss of $2.1 million versus a net gain
of $6.6 million in the first quarter of 2020, with the variance
primarily related to the impact of strengthening of the Canadian
dollar relative to the U.S. dollar.
- An income and mining tax provision of $4.6 million compared to
an income and mining tax benefit of $1.1 million in the first
quarter of 2020 due to increased income at Casa Berardi and the
inclusion of $3.1 million following reclassification of the Alaska
mine license tax. Cash income and mining taxes paid for the first
quarter totaled $2.5 million.
Cash provided by operating activities of $37.9 million increased
$33.0 million compared to the first quarter of 2020, primarily due
to higher gross profit, partially offset by negative working
capital changes of $29.3 million related to lower accounts payable
and accrued liabilities, the timing of payment of incentive
compensation related to prior-year performance and higher accounts
receivable due to the timing of concentrate shipments.
Adjusted EBITDA3 of $86.1 million increased 145% compared to the
first quarter of 2020, primarily due to higher sales partially
offset by lower gross margins at Nevada and San Sebastian. Adjusted
EBITDA is $12 million more than any quarter in Hecla's history.
Capital expenditures totaled $24.7 million compared to $20.0
million in the first quarter of 2020, with the increase primarily
due to spending at Lucky Friday and Casa Berardi. Capital
expenditures during the first quarter of 2021 at Casa Berardi,
Greens Creek, Lucky Friday, and Nevada operations were $13.8
million, $4.9 million, $5.9 million, and $0.1 million,
respectively.
Metals Prices
Three Months Ended March
31
2021
2020
AVERAGE METAL PRICES
Silver -
London PM Fix ($/oz)
$
26.29
$
16.94
Realized price per ounce
$
25.66
$
14.48
Gold -
London PM Fix ($/oz)
$
1,798
$
1,583
Realized price per ounce
$
1,770
$
1,588
Lead -
LME Cash ($/pound)
$
0.92
$
0.84
Realized price per pound
$
0.92
$
0.78
Zinc -
LME Cash ($/pound)
$
1.25
$
0.96
Realized price per pound
$
1.32
$
0.88
∗ Realized prices are calculated by dividing gross
revenues for each metal (which include the price adjustments and
gains and losses on the forward contracts discussed below) by the
payable quantities of each metal included in products sold during
the period.
Base Metals Forward Sales Contracts
The following table summarizes the quantities of base metals
committed under financially settled forward sales contracts, other
than provisional hedges (which address changes in prices between
shipment and settlement with customers), at March 31, 2021.
Pounds Under Contract (in
thousands)
Average Price per
Pound
Zinc
Lead
Zinc
Lead
Contracts on forecasted sales
2021 settlements
33,841
30,479
$ 1.20
$ 0.89
2022 settlements
53,407
42,715
$ 1.26
$0.96
2023 settlements
41,171
—
$ 1.27
—
The contracts represent 46% of the forecasted payable zinc
production for the next three years at an average price of $1.25
per pound, and 45% of the forecasted payable lead production for
the next two years at an average price of $0.93 per pound.
Foreign Currency Forward Purchase Contracts
The following table summarizes the Canadian dollars the Company
has committed to purchase under foreign exchange forward contracts
at March 31, 2021:
Currency Under Contract (in
thousands of CAD)
Average Exchange Rate
CAD
CAD/USD
2021 settlements
93,026
1.32
2022 settlements
84,754
1.31
2023 settlements
52,565
1.32
2024 settlements
26,446
1.33
OPERATIONS OVERVIEW
The following table provides the production summary on a
consolidated basis:
First Quarter Ended
March 31, 2021
March 31, 2020
PRODUCTION SUMMARY
Silver -
Ounces produced
3,459,446
3,245,469
Payable ounces sold
3,030,026
2,582,279
Gold -
Ounces produced
52,004
58,792
Payable ounces sold
57,286
57,103
Lead -
Tons produced
10,704
5,893
Payable tons sold
8,668
4,130
Zinc -
Tons produced
16,107
12,847
Payable tons sold
11,027
9,836
The following table provides a summary of the production, cost
of sales and other direct production costs and depreciation,
depletion and amortization (referred to herein as "cost of sales"),
cash cost, after by-product credits ("cash cost"), per silver or
gold ounce, and All In Sustaining Cost, after by-product credits
("AISC"), per silver or gold ounce, for the quarters ended March
31, 2021 and 2020.
First Quarter Ended March 31,
2021
Greens Creek
Lucky Friday
San Sebastian
Casa Berardi
Nevada Operations
Silver
Gold
Silver
Gold
Silver
Silver
Gold
Gold
Silver
Gold
Silver
Production (ounces)
3,459,446
52,004
2,584,870
13,266
863,901
—
—
36,190
10,675
2,548
—
Increase/(decrease)
7
%
(12)
%
(7)
%
8
%
802
%
(100)
%
(100)
%
35
%
80
%
(85)
%
(100)
%
Cost of sales (000)
$
76,069
$
69,971
$
53,181
$
—
$
22,794
$
94
-
$
62,516
$
—
$
7,455
-
Increase/(decrease)
26
%
7
%
8
%
N/A
705
%
(99)
%
N/A
29
%
N/A
(56)
%
N/A
Cash cost per silver or gold ounce
5
$
1.40
$
1,052
$
(0.67)
-
$
7.62
N/A
-
$
1,027
-
$
1,416
-
Increase/(decrease)
(76)
%
(1)
%
(112)
%
N/A
N/A
(100)
%
N/A
(19)
%
N/A
92
%
N/A
AISC per silver or gold ounce6
$
7.21
$
1,284
$
1.59
-
$14.24
N/A
-
1,272
-
$
1,461
-
Increase/(decrease)
(35)
%
(1)
%
(80)
%
N/A
N/A
(100)
%
N/A
(21)
%
N/A
81
%
N/A
Greens Creek Mine - Alaska
Greens Creek continued its strong performance with slightly
lower silver grades due to normal variations in the ore body and
produced 2.6 million ounces of silver and 13,266 ounces of gold
compared to 2.8 million ounces of silver and 12,273 ounces of gold
in the first quarter of 2020. The decrease in silver production was
primarily due to lower grade, with the increase in gold production
resulting from higher grade, as planned. Compared to 2020, cost per
ounce decreased primarily due to $5.7 million in lower treatment
costs as a result of favorable smelter terms, of which $4 million
are nonrecurring, and the reclassification of the Alaska mine
license tax to income and mining tax provision effective January 1,
2021. With higher by-product prices, the cash cost5 and AISC6,
after by-product credits, per silver ounce decreased by $6.30 and
$6.31 per ounce, respectively. The mill operated at an average of
2,156 tons per day (tpd) in the first quarter compared to 2,185 tpd
in the first quarter of 2020.
The Company reaffirms estimated 2021 silver production of 9.5 -
10.2 million ounces of silver and 40 - 43 thousand ounces of gold.
The estimate for 2021 cost of sales is $213 million. Estimated cash
cost, after by-product credits5, and AISC, after by-product
credits6, each per silver ounce is $1.50-$2.25 and $6.50-$7.25,
respectively, with lower costs due to anticipated higher by-product
credits, lower treatment charges, and the reclassification of mine
license tax from production costs to income and mining tax
provision effective January 1, 2021.
Casa Berardi Mine - Quebec
At the Casa Berardi Mine, 36,190 ounces of gold were produced
compared to 26,752 ounces in the first quarter of 2020. This
represents an increase of 35% due to higher tonnage, grades and
recoveries. The mill operated at an average of 4,093 tpd in the
first quarter of 2021 compared to 3,644 tpd in 2020. The increase
in cost of sales was primarily due to higher sales volume. The
decrease in cash cost and AISC, after by-product credits5,6, per
gold ounce for the first quarter of 2021 compared to the first
quarter of 2020 was primarily the result of higher gold production,
with AISC also impacted by lower sustaining capital spending,
partially offset by higher exploration spending.
Business improvement activities continued in 2021 and these
efforts are expected to reduce costs and increase cash flow over
the next two years.
Lucky Friday Mine - Idaho
At the Lucky Friday Mine, 0.9 million ounces of silver were
produced in the first quarter of 2021. Lucky Friday returned to
full production in the fourth quarter of 2020 with estimated annual
production in excess of 3.4 million ounces of silver in 2021. The
mill operated at an average of 901 tpd. We continue to test and
optimize the new mining method to improve safety and increase
productivity which could allow Lucky Friday to increase production
beyond the 5 million ounces expected by 2023 due to grade.
The cost of sales for the first quarter was $22.8 million, and
the cash cost, after by-product credits, per silver ounce5 was
$7.62. AISC6, after by-product credits, was $14.24 per silver
ounce.
Nevada Operations
At the Nevada operations, 2,548 ounces of gold were produced
from 16,459 tons of a stockpiled bulk sample of refractory material
processed at a third-party facility. Cost of sales for the first
quarter were $7.5 million and cash cost5 and AISC6, after
by-product credits, per gold ounce was $1,416 and $1,461,
respectively in the first quarter of 2021. The increase over the
prior year period was the result of the lower gold production.
In the second quarter of 2021, the Company expects to process
oxide material through the Midas mill. Over the remainder of the
year, 22,000 tons of refractory material are expected to be
processed in third-party facilities, roughly 12,000 tons in a
roaster and 10,000 tons in an autoclave. Production for the
remainder of the year is expected to be in the range of 17,000 to
19,000 ounces of gold. Fire Creek and the Midas mill are expected
to be on care and maintenance by the end of the second quarter.
Activities will be limited primarily to development at Hollister
for Hatter Graben and exploration at Midas.
PRE-DEVELOPMENT
Pre-development spending was $0.7 million for the quarter,
principally in connection with permitting of Rock Creek and
Montanore. The Federal District Court's recent ruling set aside the
U.S. Forest Service's 2018 Record of Decision and the U.S. Fish
& Wildlife Service's 2019 Supplement to the Biological Opinion
for the evaluation phase of the Rock Creek project. While we await
action by the Federal agencies on possible appeal of this decision,
the Company will reconsider its evaluation plan for the Rock Creek
project and continue to advance the Montanore evaluation
project.
At Hollister, development of the decline to allow drilling of
the Hatter Graben has commenced. The pre-development cost in 2021
is expected to be about $4 million.
2021 ESTIMATES7
The Company has updated its guidance for annual production, cost
and expenditures as follows:
2021 Production Outlook
Silver Production
(Moz)
Gold Production
(Koz)
Silver Equivalent
(Moz)
Gold Equivalent
(Koz)
Greens Creek *
9.5-10.2
40-43
20.5-21.5
227-237
Lucky Friday *
3.4-3.8
N/A
6.2-6.4
67-70
Casa Berardi
N/A
125-128
11.5-11.7
125-128
Nevada Operations
N/A
20-22
1.8-2.0
20-22
2021 Total
12.9-14.0
185-193
40.0-41.6
439-457
2022 Total
13.7-14.5
173-181
41.0-42.5
448-465
2023 Total
14.2-15.0
177-186
42.5-44.5
467-485
* Equivalent ounces include Lead and Zinc production
2021 Cost Outlook
Cost of Sales
(millions)
Cash cost, after by-product
credits, per silver/gold ounce4
AISC, after by-product
credits, per produced silver/gold ounce5
Original
Current
Original
Current
Original
Current
Greens Creek
$220
$213
$5.75-$6.25
$1.50-$2.25
$10.25-$11.00
$6.50-$7.25
Lucky Friday
$91
$91
$7.75-$9.75
$7.75-$9.75
$13.75-$16.50
$13.75-$16.50
Total Silver
$311
$304
$6.25-$7.25
$3.25-$4.25
$13.50-$15.00
$10.75-$12.50
Casa Berardi
$176
$212
$900-$975
$900-$975
$1,185-$1,275
$1,185-$1,275
Nevada Operations
$41
$41
$1,300-$1,425
$1,300-$1,425
$1,385-$1,525
$1,385-$1,525
Total Gold
$217
$253
$950-$1,050
$950-$1,050
$1,200-$1,300
$1,200-$1,300
2021 Capital and Exploration Outlook
(millions)
Original
Current
Capital expenditures
$110
$110
Exploration expenditures (including
Corporate Development)
$30
$30
Pre-development expenditures
$4.5
$8.5
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Thursday, May 6, at
10:00 a.m. Eastern Time to discuss these results. You may join the
conference call by dialing toll-free 1-833-350-1380 or for
international dialing 1-647-689-6934. The Conference ID is 7584113.
Please dial-in and provide the Conference ID number at least 10
minutes prior to the start time to join the call and mitigate any
hold times.
Hecla's live and archived webcast can be accessed at
www.hecla-mining.com under Investors/Events & Webcasts
(https://ir.hecla-mining.com/news-events/events-webcasts/default.aspx).
The webcast will also be archived on the site.
ABOUT HECLA
Founded in 1891, Hecla Mining Company (NYSE:HL) is the largest
U.S. silver producer with operating mines in Alaska and Idaho and
is a growing gold producer with an operating mine in Quebec,
Canada. The Company also has exploration and pre-development
properties in seven world-class silver and gold mining districts
throughout North America.
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) Free cash flow is a non-GAAP measure calculated as cash
provided by operating activities less additions to properties,
plants and equipment.
(2) Adjusted net income (loss) applicable to common stockholders
is a non-GAAP measurement, a reconciliation of which to net income
(loss) applicable to common stockholders, the most comparable GAAP
measure, can be found at the end of the release. Adjusted net
income (loss) is a measure used by management to evaluate the
Company's operating performance but should not be considered an
alternative to net income (loss) as defined by GAAP. They exclude
certain impacts which are of a nature which we believe are not
reflective of our underlying performance. Management believes that
adjusted net income (loss) per common share provides investors with
the ability to better evaluate our underlying operating
performance.
(3) 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.
(4) 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.
(5) 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 primary silver mining company, management also
uses cash cost, after by-product credits, per silver ounce on an
aggregate basis - aggregating the Greens Creek, Lucky Friday and
San Sebastian mines - to compare performance with that of other
primary silver mining companies. Gold, lead and zinc produced have
been treated as by-product credits in calculating silver costs per
ounce. With regard to Casa Berardi and Nevada Operations,
management uses cash cost, after by-product credits, per gold ounce
to compare its performance with other gold mines with a by-product
credit recognized for the value of their silver production.
Similarly, the statistic is useful in identifying acquisition and
investment opportunities as it provides a common tool for measuring
the financial performance of other mines with varying geologic,
metallurgical and operating characteristics. In addition, the
Company may use it when formulating performance goals and targets
under its incentive program.
(6) 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.
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.
Other
(7) Calculations for 2021 include silver, gold, lead and zinc
production from Greens Creek, San Sebastian, Casa Berardi and
Nevada Operations converted using Au $1,525/oz, Ag $17/oz, Zn
$1.00/lb, and Pb $0.85/lb.
Numbers may be rounded.
Cautionary Statements to Investors on Forward-Looking
Statements
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbor
created by such sections and other applicable laws, including
Canadian securities laws. 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) the Company will
increase cash flow generation over the rest of the year; (ii)
expected increase of the Company’s silver production to 15 million
ounces by 2023; (iii) expected increase in Lucky Friday’s silver
production to 5 million ounces by 2023; (iv) the new mining method
being tested at Lucky Friday could improve safety and productivity
at the mine beyond the 5 million ounces expected by 2023 due to
grade; (v) Greens Creek estimates of full-year 2021 silver and gold
production reaffirmed at 9.5 -10.2 million and 40-43 thousand,
respectively, estimated 2021 cost of sales updated to $213 million,
estimated cash costs, after by-product credits, and AISC, after
by-product credits, each per silver ounce updated to $1.50 - $2.25
and $6.50 - $7.25, respectively; (vi) ability of business
improvement activities at Casa Berardi to reduce costs and increase
cash flow over the next two years; (vii) expectation of the Company
to process 25,000 ore tons through the Midas mill and roughly
12,000 tons through a third-party roasting facility, and an
additional 10,000 tons for processing at a third-party autoclave
facility in the second half of the year with production in the
range of 17,000 to 19,000 ounces of gold at the Nevada operations;
and (viii) Company-wide estimates of future production, sales,
costs of sales, cash costs, after by-product credits, AISC, after
by-product credits, as well as estimated spending on capital,
exploration and pre-development for 2021. 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; (x) we take a material impairment charge on
our Nevada operations; (xi) we are unable to remain in compliance
with all terms of the credit agreement in order to maintain
continued access to the revolver, and (xii) we are unable to
refinance the maturing senior notes. For a more detailed discussion
of such risks and other factors, see the Company’s 2020 Form 10-K,
filed on February 18, 2021, with the Securities and Exchange
Commission (SEC), as well as the Company’s other SEC filings. The
Company does not undertake any obligation to release publicly
revisions to any “forward-looking statement,” including, without
limitation, outlook, to reflect events or circumstances after the
date of this news release or to reflect the occurrence of
unanticipated events, except as may be required under applicable
securities laws. Investors should not assume that any lack of
update to a previously issued “forward-looking statement”
constitutes a reaffirmation of that statement. Continued reliance
on “forward-looking statements” is at investors’ own risk.
HECLA MINING COMPANY
Condensed Consolidated Statements
of Operations
(dollars and shares in thousands,
except per share amounts - unaudited)
Three Months Ended
March 31, 2021
March 31, 2020
Sales of products
$
210,852
$
136,925
Cost of sales and other direct production
costs
96,709
85,887
Depreciation, depletion and
amortization
49,331
39,666
146,040
125,553
Gross profit
64,812
11,372
Other operating expenses:
General and administrative
8,007
8,939
Exploration
5,951
2,530
Pre-development
739
535
Other operating expense
3,639
920
Provision for closed operations and
environmental matters
3,709
516
Ramp-up and suspension costs
4,318
12,996
26,363
26,436
Income (loss) from operations
38,449
(15,064
)
Other income (expense):
Gain on derivative contracts
473
7,893
Other expense
(161
)
(423
)
Gain on exchange of investments
1,158
—
Unrealized loss on investments
(3,506
)
(978
)
Net foreign exchange (loss) gain
(2,064
)
6,636
Interest expense
(10,744
)
(16,311
)
(14,844
)
(3,183
)
Income (loss) before income and mining
taxes
23,605
(18,247
)
Income and mining tax (provision)
benefit
(4,634
)
1,062
Net income (loss)
18,971
(17,185
)
Preferred stock dividends
(138
)
(138
)
Income (loss) applicable to common
stockholders
$
18,833
$
(17,323
)
Basic earnings (loss) per common share
after preferred dividends
$
0.04
$
(0.03
)
Diluted earnings (loss) per common share
after preferred dividends
$
0.03
$
(0.03
)
Weighted average number of common shares
outstanding - basic
534,101
523,215
Weighted average number of common shares
outstanding - diluted
540,527
523,215
HECLA MINING COMPANY
Condensed Consolidated Statements
of Cash Flows
(dollars in thousands -
unaudited)
Three Months Ended
March 31, 2021
March 31, 2020
OPERATING ACTIVITIES
Net income (loss)
$
18,971
$
(17,185)
Non-cash elements included in net income
(loss):
Depreciation, depletion and
amortization
49,546
41,630
Gain on exchange of investments
(1,158)
—
Unrealized loss on investments
3,506
978
Provision for reclamation and closure
costs
4,529
1,548
Stock compensation
500
1,219
Deferred taxes
32
(3,252)
Amortization of loan origination fees
539
2,140
Gain on derivative contracts
(10,962)
(10,437)
Foreign exchange (gain) loss
1,755
(8,066)
Other non-cash charges, net
8
(104)
Change in assets and liabilities:
Accounts receivable
(2,664)
9,955
Inventories
2,120
(6,602)
Other current and non-current assets
1,528
(2,642)
Accounts payable and accrued
liabilities
(24,545)
(11,879)
Accrued payroll and related benefits
(7,995)
9,495
Accrued taxes
2,031
1,332
Accrued reclamation and closure costs and
other non-current liabilities
195
(3,203)
Cash provided by operating
activities
37,936
4,927
INVESTING ACTIVITIES
Additions to properties, plants, equipment
and mineral interests
(21,413)
(19,870)
Proceeds from disposition of properties,
plants and equipment
19
154
Net cash used in investing
activities
(21,394)
(19,716)
FINANCING ACTIVITIES
Dividends paid to common stockholders
(4,688)
(1,304)
Dividends paid to preferred
stockholders
(138)
(138)
Debt origination fees
(82)
(458)
Borrowings on debt
—
679,500
Payments on debt
—
(506,500)
Repayments of finance leases
(1,881)
(1,284)
Net cash (used in) provided by
financing activities
(6,789)
169,816
Effect of exchange rates on cash
167
(1,736)
Net increase in cash, cash equivalents and
restricted cash and cash equivalents
9,920
153,291
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
130,883
63,477
Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$
140,803
$
216,768
HECLA MINING COMPANY
Condensed Consolidated Balance
Sheets
(dollars and shares in thousands
- unaudited)
March 31, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
139,750
$
129,830
Accounts receivable:
Trade
35,274
27,864
Other, net
8,475
11,329
Inventories
94,252
96,544
Derivative assets
7,195
3,470
Other current assets
12,971
15,644
Total current assets
297,917
284,681
Investments
11,717
15,148
Restricted cash and investments
1,053
1,053
Properties, plants, equipment and mineral
interests, net
2,320,547
2,345,219
Operating lease right-of-use asset
9,775
10,628
Deferred taxes
3,886
2,912
Derivatives assets
6,346
4,558
Other non-current assets
3,836
3,525
Total assets
$
2,655,077
$
2,667,724
LIABILITIES
Current liabilities:
Accounts payable and accrued
liabilities
$
53,130
$
68,516
Accrued payroll and related benefits
22,800
31,807
Accrued taxes
7,854
8,349
Finance leases
6,706
6,491
Operating leases
2,832
3,008
Accrued reclamation and closure costs
6,592
5,582
Derivatives liabilities
3,906
11,737
Other current liabilities
5,298
14,295
Total current liabilities
109,118
149,785
Finance leases
10,304
9,274
Operating leases
6,954
7,634
Long-term debt - Senior Notes
507,992
507,242
Deferred tax liability
149,220
144,330
Accrued reclamation and closure costs
113,671
110,466
Pension liability
28,797
44,144
Other non-current liabilities
4,146
4,364
Total liabilities
930,202
977,239
STOCKHOLDERS’ EQUITY
Preferred stock
39
39
Common stock
135,546
134,629
Capital surplus
2,021,072
2,003,576
Accumulated deficit
(377,229
)
(391,374
)
Accumulated other comprehensive loss
(31,057
)
(32,889
)
Treasury stock
(23,496
)
(23,496
)
Total stockholders’ equity
1,724,875
1,690,485
Total liabilities and stockholders’
equity
$
2,655,077
$
2,667,724
Common shares outstanding
535,334
531,666
HECLA MINING COMPANY
Production Data
Three Months Ended
March 31, 2021
March 31, 2020
GREENS CREEK UNIT
Tons of ore milled
194,080
198,804
Total production cost per ton
$
182.61
$
185.92
Ore grade milled - Silver (oz./ton)
16.01
16.87
Ore grade milled - Gold (oz./ton)
0.09
0.08
Ore grade milled - Lead (%)
3.06
3.12
Ore grade milled - Zinc (%)
7.62
6.89
Silver produced (oz.)
2,584,870
2,775,707
Gold produced (oz.)
13,266
12,273
Lead produced (tons)
4,924
5,198
Zinc produced (tons)
13,354
12,487
Cash cost, after by-product credits, per
silver ounce (1)
$
(0.67
)
$
5.63
AISC, after by-product credits, per silver
ounce (1)
$
1.59
$
7.90
Capital additions (in thousands)
$
4,892
$
5,510
LUCKY FRIDAY UNIT
Tons of ore processed
81,071
10,219
Total production cost per ton
$
181.28
$
—
Ore grade milled - Silver (oz./ton)
11.18
9.87
Ore grade milled - Lead (%)
7.51
7.23
Ore grade milled - Zinc (%)
3.70
3.85
Silver produced (oz.)
863,901
95,748
Lead produced (tons)
5,780
695
Zinc produced (tons)
2,753
360
Cash cost, after by-product credits, per
silver ounce (1)
$
7.62
$
—
AISC, after by-product credits, per silver
ounce (1)
$
14.24
$
—
Capital additions (in thousands)
$
5,912
$
4,295
CASA BERARDI UNIT
Tons of ore milled - underground
186,919
160,937
Tons of ore milled - surface pit
181,484
170,681
Tons of ore milled - total
368,403
331,618
Surface tons mined - ore and waste
1,991,087
1,724,974
Total production cost per ton
$
99.67
$
102.45
Ore grade milled - Gold (oz./ton) -
underground
0.147
0.170
Ore grade milled - Gold (oz./ton) -
surface pit
0.048
0.068
Ore grade milled - Gold (oz./ton) -
combined
0.120
0.102
Ore grade milled - Silver (oz./ton)
0.04
0.02
Gold produced (oz.) - underground
27,569
17,581
Gold produced (oz.) - surface pit
8,621
9,171
Gold produced (oz.) - total
36,190
26,752
Silver produced (oz.)
10,675
5,934
Cash cost, after by-product credits, per
gold ounce (1)
$
1,027
$
1,268
AISC, after by-product credits, per gold
ounce (1)
$
1,272
$
1,615
Capital additions (in thousands)
$
13,847
$
8,506
SAN SEBASTIAN UNIT
Tons of ore milled
—
35,476
Total production cost per ton
$
—
$
178.02
Ore grade milled - Silver (oz./ton)
—
10.64
Ore grade milled - Gold (oz./ton)
—
0.091
Silver produced (oz.)
—
346,625
Gold produced (oz.)
—
2,802
Cash cost, after by-product credits, per
silver ounce (1)
$
—
$
6.91
AISC, after by-product credits, per silver
ounce (1)
$
—
$
9.59
Capital additions (in thousands)
$
—
$
803
NEVADA OPERATIONS UNIT
Tons of ore milled
16,459
17,298
Total production cost per ton
$
360.72
$
745.14
Ore grade milled - Gold (oz./ton)
0.185
1.055
Ore grade milled - Silver (oz./ton)
—
1.470
Gold produced (oz.)
2,548
16.965
Silver produced (oz.)
—
21.455
Cash cost, after by-product credits, per
gold ounce (1)
$
1,416
$
735
AISC, after by-product credits, per gold
ounce (1)
$
1,461
$
808
Capital additions (in thousands)
$
89
$
857
(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 Total cost of sales (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, Casa Berardi and Nevada
Operations units for the three-month periods ended March 31, 2021
and 2020.
Cash Cost, After By-product Credits, per Ounce and AISC, After
By-product Credits, per Ounce are measures developed by precious
metals companies (including the Silver Institute and the World Gold
Council) in an effort to provide a uniform standard for comparison
purposes. There can be no assurance, however, that these non-GAAP
measures as we report them are the same as those reported by other
mining companies.
Cash Cost, After By-product Credits, per Ounce is an important
operating statistic that we utilize to measure each mine's
operating performance. 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, and
royalties. AISC, Before By-product Credits for each mine also
includes on-site exploration, reclamation, and sustaining capital
costs. AISC, Before By-product Credits for our consolidated silver
properties also includes corporate costs for general and
administrative expense, reclamation, exploration, and
pre-development. By-product credits include revenues earned from
all metals other than the primary metal produced at each unit. As
depicted in the tables below, by-product credits comprise an
essential element of our silver unit cost structure, distinguishing
our silver operations due to the polymetallic nature of their
orebodies. Cash Cost, After By-product Credits, per Ounce and AISC,
After By-product Credits, per Ounce provide management and
investors an indication of operating cash flow, after consideration
of the average price, received from production. We also use these
measurements for the comparative monitoring of performance of our
mining operations period-to-period from a cash flow perspective.
Cash Cost, After By-product Credits, per Ounce is a measure
developed by precious metals companies (including the Silver
Institute) in an effort to provide a uniform standard for
comparison purposes. There can be no assurance, however, that our
reporting of these non-GAAP measures are the same as those reported
by other mining companies.
The Casa Berardi, Nevada Operations and combined gold properties
information below reports Cash Cost, After By-product Credits, per
Gold Ounce and AISC, After By-product Credits, per Gold Ounce for
the production of gold, its primary product, and by-product
revenues earned from silver, which is a by-product at Casa Berardi
and Nevada Operations. Only costs and ounces produced relating to
units with the same primary product are combined to represent Cash
Cost, After By-product Credits, per Ounce and AISC, After
By-product Credits, per Ounce. Thus, the gold produced at our Casa
Berardi and Nevada Operations units is not included as a by-product
credit when calculating Cash Cost, After By-product Credits, per
Silver Ounce and AISC, After By-product Credits, per Silver Ounce
for the total of Greens Creek, Lucky Friday and San Sebastian, our
combined silver properties. Similarly, the silver produced at our
other three units is not included as a by-product credit when
calculating the gold metrics for Casa Berardi and Nevada
Operations.
In thousands (except per ounce
amounts)
Three Months Ended March 31,
2021
Greens Creek
Lucky Friday
San
Sebastian
Corporate(3)
Total Silver
Total cost of sales
$
53,181
$
22,794
$
94
$
76,069
Depreciation, depletion and
amortization
(14,821
)
(6,336
)
—
(21,157
)
Treatment costs
10,541
4,978
—
15,519
Change in product inventory
401
(93
)
—
308
Reclamation and other costs
(261
)
(233
)
(94
)
(588
)
Cash Cost, Before By-product Credits
(1)
49,041
21,110
—
70,151
Reclamation and other costs
848
264
—
1,112
Exploration
123
—
—
435
558
Sustaining capital
4,892
5,454
—
—
10,346
General and administrative
—
—
—
8,007
8,007
AISC, Before By-product Credits (1)
54,904
26,828
—
90,174
By-product credits:
Zinc
(22,767
)
(4,753
)
—
(27,520
)
Gold
(20,996
)
—
—
(20,996
)
Lead
(7,020
)
(9,775
)
—
(16,795
)
Total By-product credits
(50,783
)
(14,528
)
—
(65,311
)
Cash Cost, After By-product Credits
$
(1,742
)
$
6,582
$
—
$
4,840
AISC, After By-product Credits
$
4,121
$
12,300
$
—
$
24,863
Divided by ounces produced
2,585
864
—
3,449
Cash Cost, Before By-product Credits, per
Silver Ounce
$
18.98
$
24.43
$
—
$
20.34
By-product credits per ounce
(19.65
)
(16.81
)
—
(18.94
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
(0.67
)
$
7.62
$
—
$
1.40
AISC, Before By-product Credits, per
Silver Ounce
$
21.24
$
31.05
$
—
$
26.15
By-product credits per ounce
(19.65
)
(16.81
)
—
(18.94
)
AISC, After By-product Credits, per Silver
Ounce
$
1.59
$
14.24
$
—
$
7.21
In thousands (except per ounce
amounts)
Three Months Ended March 31,
2021
Casa Berardi (4)
Nevada Operations (5)
Total Gold
Total cost of sales
$
62,516
$
7,455
$
69,971
Depreciation, depletion and
amortization
(25,541
)
(2,633
)
(28,174
)
Treatment costs
714
11
725
Change in product inventory
(47
)
(1,084
)
(1,131
)
Reclamation and other costs
(208
)
(27
)
(235
)
Cash costs excluded
—
(115
)
(115
)
Cash Cost, Before By-product Credits
(1)
37,434
3,607
41,041
Reclamation and other costs
208
27
235
Exploration
907
—
907
Sustaining capital
7,758
89
7,847
General and administrative
—
AISC, Before By-product Credits (1)
46,307
3,723
50,030
By-product credits:
Silver
(278
)
—
(278
)
Total By-product credits
(278
)
—
(278
)
Cash Cost, After By-product Credits
$
37,156
$
3,607
$
40,763
AISC, After By-product Credits
$
46,029
$
3,723
$
49,752
Divided by ounces produced
36
3
39
Cash Cost, Before By-product Credits, per
Gold Ounce
$
1,035
$
1,416
$
1,059
By-product credits per ounce
$
(8
)
$
—
$
(7
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
1,027
$
1,416
$
1,052
AISC, Before By-product Credits, per Gold
Ounce
$
1,280
$
1,461
$
1,291
By-product credits per ounce
$
(8
)
$
—
$
(7
)
AISC, After By-product Credits, per Gold
Ounce
$
1,272
$
1,461
$
1,284
In thousands (except per ounce
amounts)
Three Months Ended March 31,
2021
Total Silver
Total Gold
Total
Total cost of sales
$
76,069
$
69,971
$
146,040
Depreciation, depletion and
amortization
(21,157
)
(28,174
)
(49,331
)
Treatment costs
15,519
725
16,244
Change in product inventory
308
(1,131
)
(823
)
Reclamation and other costs
(588
)
(235
)
(823
)
Cash costs excluded
—
(115
)
(115
)
Cash Cost, Before By-product Credits
(1)
70,151
41,041
111,192
Reclamation and other costs
1,112
235
1,347
Exploration
558
907
1,465
Sustaining capital
10,346
7,847
18,193
General and administrative
8,007
—
8,007
AISC, Before By-product Credits (1)
90,174
50,030
140,204
By-product credits:
Zinc
(27,520
)
—
(27,520
)
Gold
(20,996
)
—
(20,996
)
Lead
(16,795
)
—
(16,795
)
Silver
—
(278
)
(278
)
Total By-product credits
(65,311
)
(278
)
(65,589
)
Cash Cost, After By-product Credits
$
4,840
$
40,763
$
45,603
AISC, After By-product Credits
$
24,863
$
49,752
$
74,615
Divided by ounces produced
3,449
39
Cash Cost, Before By-product Credits, per
Ounce
$
20.34
$
1,059
By-product credits per ounce
(18.94
)
$
(7
)
Cash Cost, After By-product Credits, per
Ounce
$
1.40
$
1,052
AISC, Before By-product Credits, per
Ounce
$
26.15
$
1,291
By-product credits per ounce
(18.94
)
$
(7
)
AISC, After By-product Credits, per
Ounce
$
7.21
$
1,284
In thousands (except per ounce
amounts)
Three Months Ended March 31,
2020
Greens Creek
Lucky Friday(2)
San Sebastian
Corporate(3)
Total Silver
Total cost of sales
$
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
$
20.04
By-product credits per ounce
(14.46
)
—
(12.76
)
(14.27
)
Cash Cost, After By-product Credits, per
Ounce
$
5.63
$
—
$
6.91
$
5.77
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
Nevada Operations
Total Gold
Total cost of sales
$
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
AISC, Before By-product Credits (1)
43,306
14,067
57,373
By-product credits:
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
Total cost of sales
$
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
$
20.04
$
1,071
By-product credits per ounce
(14.27)
(10)
Cash Cost, After By-product Credits, per
Ounce
$
5.77
$
1,061
AISC, Before By-product Credits, per
Ounce
$
25.33
$
1,312
(14.27)
(10)
AISC, After By-product Credits, per
Ounce
$
11.06
$
1,302
In thousands (except per ounce
amounts)
Original Estimate for Twelve
Months Ended December 31, 2021
Greens Creek
Lucky Friday
San Sebastian
Corporate(3)
Total Silver
Total cost of sales
$
220,000
$
90,400
$
—
$
310,400
Depreciation, depletion and
amortization
(46,000
)
(26,000
)
—
(72,000
)
Treatment costs
49,000
17,100
—
66,100
Change in product inventory
(5,700
)
—
—
(5,700
)
Reclamation and other costs
1,500
1,000
—
2,500
Cash Cost, Before By-product Credits
(1)
218,800
82,500
—
301,300
Reclamation and other costs
3,400
500
—
3,900
Exploration
4,000
—
—
4,000
Sustaining capital
38,000
22,000
—
60,000
General and administrative
—
—
—
32,000
32,000
AISC, Before By-product Credits (1)
264,200
105,000
—
401,200
By-product credits:
Zinc
(70,000
)
(14,500
)
—
(84,500
)
Gold
(62,000
)
—
—
(62,000
)
Lead
(28,000
)
(38,900
)
—
(66,900
)
Total By-product credits
(160,000
)
(53,400
)
—
(213,400
)
Cash Cost, After By-product Credits
$
58,800
$
29,100
$
—
$
87,900
AISC, After By-product Credits
$
104,200
$
51,600
$
—
$
187,800
Divided by silver ounces produced
9,850
3,600
—
13,450
Cash Cost, Before By-product Credits, per
Silver Ounce
$
22.21
$
22.92
$
—
$
22.40
By-product credits per silver ounce
(16.24
)
(14.83
)
—
(15.87
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
5.97
$
8.09
$
—
$
6.53
AISC, Before By-product Credits, per
Silver Ounce
$
26.82
$
29.17
$
—
$
29.83
By-product credits per silver ounce
(16.24
)
(14.83
)
—
(15.87
)
AISC, After By-product Credits, per Silver
Ounce
$
10.58
$
14.34
$
—
$
13.96
In thousands (except per ounce
amounts)
Original Estimate for Twelve
Months Ended
December 31, 2021
Casa Berardi
Nevada Operations
Total Gold
Total cost of sales
$
175,900
$
41,000
$
216,900
Depreciation, depletion and
amortization
(61,000
)
(5,600
)
(66,600
)
Treatment costs
400
4,600
5,000
Change in product inventory
600
(11,600
)
(11,000
)
Reclamation and other costs
300
500
800
Cash Cost, Before By-product Credits
(1)
116,200
28,900
145,100
Reclamation and other costs
500
100
600
Exploration
3,800
—
3,800
Sustaining capital
31,500
2,000
33,500
AISC, Before By-product Credits (1)
152,000
31,000
183,000
By-product credits:
Silver
(600
)
(550
)
(1,150
)
Total By-product credits
(600
)
(550
)
(1,150
)
Cash Cost, After By-product Credits
$
115,600
$
28,350
$
143,950
AISC, After By-product Credits
$
151,400
$
30,450
$
181,850
Divided by gold ounces produced
127
21
148
Cash Cost, Before By-product Credits, per
Gold Ounce
$
919
$
1,376
$
984
By-product credits per gold ounce
(5
)
(26
)
(8
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
914
$
1,350
$
976
AISC, Before By-product Credits, per Gold
Ounce
$
1,201
$
1,476
$
1,241
By-product credits per gold ounce
(5
)
(26
)
(8
)
AISC, After By-product Credits, per Gold
Ounce
$
1,196
$
1,450
$
1,233
In thousands (except per ounce
amounts)
Original Estimate for Twelve
Months Ended
December 31, 2021
Total Silver
Total Gold
Total
Total cost of sales
$
310,400
$
216,900
$
527,300
Depreciation, depletion and
amortization
(72,000
)
(66,600
)
(138,600
)
Treatment costs
66,100
5,000
71,100
Change in product inventory
(5,700
)
(11,000
)
(16,700
)
Reclamation and other costs
2,500
800
3,300
Cash Cost, Before By-product Credits
(1)
301,300
145,100
446,400
Reclamation and other costs
3,900
600
4,500
Exploration
4,000
3,800
7,800
Sustaining capital
60,000
33,500
93,500
General and administrative
32,000
—
32,000
AISC, Before By-product Credits (1)
401,200
183,000
584,200
By-product credits:
Zinc
(84,500
)
—
(84,500
)
Gold
(62,000
)
—
(62,000
)
Lead
(66,900
)
—
(66,900
)
Silver
(1,150
)
(1,150
)
Total By-product credits
(213,400
)
(1,150
)
(214,550
)
Cash Cost, After By-product Credits
$
87,900
$
143,950
$
231,850
AISC, After By-product Credits
$
187,800
$
181,850
$
369,650
Divided by ounces produced
13,450
148
Cash Cost, Before By-product Credits, per
Ounce
$
22.40
$
984
By-product credits per ounce
(15.87
)
(8
)
Cash Cost, After By-product Credits, per
Ounce
$
6.53
$
976
AISC, Before By-product Credits, per
Ounce
$
29.83
$
1,241
By-product credits per ounce
(15.87
)
(8
)
AISC, After By-product Credits, per
Ounce
$
13.96
$
1,233
In thousands (except per ounce
amounts)
Current Estimate for Twelve
Months Ended December 31, 2021
Greens Creek
Lucky Friday
San Sebastian
Corporate(3)
Total Silver
Total cost of sales
$
213,000
$
90,400
$
—
$
303,400
Depreciation, depletion and
amortization
(55,000)
(26,000)
—
(81,000)
Treatment costs
38,000
17,100
—
55,100
Change in product inventory
4,000
—
—
4,000
Reclamation and other costs
4,500
1,000
—
5,500
Cash Cost, Before By-product Credits
(1)
204,500
82,500
—
287,000
Reclamation and other costs
4,500
500
—
5,000
Exploration
4,000
—
—
4,000
Sustaining capital
36,000
22,000
—
58,000
General and administrative
—
—
—
34,500
34,500
AISC, Before By-product Credits (1)
249,000
105,000
—
388,500
By-product credits:
Zinc
(86,000)
(14,500)
—
(100,500)
Gold
(70,000)
—
—
(70,000)
Lead
(28,000)
(38,900)
—
(66,900)
Total By-product credits
(184,000)
(53,400)
—
(237,400)
Cash Cost, After By-product Credits
$
20,500
$
29,100
$
—
$
49,600
AISC, After By-product Credits
$
65,000
$
51,600
$
—
$
151,100
Divided by silver ounces produced
9,850
3,600
—
13,450
Cash Cost, Before By-product Credits, per
Silver Ounce
$
20.76
$
22.92
$
—
$
21.34
By-product credits per silver ounce
(18.68)
(14.83)
—
(17.65)
Cash Cost, After By-product Credits, per
Silver Ounce
$
2.08
$
8.09
$
—
$
3.69
AISC, Before By-product Credits, per
Silver Ounce
$
25.28
$
29.17
$
—
$
28.88
By-product credits per silver ounce
(18.68)
(14.83)
—
(17.65)
AISC, After By-product Credits, per Silver
Ounce
$
6.60
$
14.34
$
—
$
11.23
In thousands (except per ounce
amounts)
Current Estimate for Twelve
Months Ended
December 31, 2021
Casa Berardi
Nevada Operations
Total Gold
Total cost of sales
$
212,000
$
41,000
$
253,000
Depreciation, depletion and
amortization
(87,500
)
(5,600
)
(93,100
)
Treatment costs
400
4,600
5,000
Change in product inventory
(9,000
)
(11,600
)
(20,600
)
Reclamation and other costs
300
500
800
Cash Cost, Before By-product Credits
(1)
116,200
28,900
145,100
Reclamation and other costs
500
100
600
Exploration
3,800
—
3,800
Sustaining capital
31,500
2,000
33,500
AISC, Before By-product Credits (1)
152,000
31,000
183,000
By-product credits:
Silver
(600
)
(550
)
(1,150
)
Total By-product credits
(600
)
(550
)
(1,150
)
Cash Cost, After By-product Credits
$
115,600
$
28,350
$
143,950
AISC, After By-product Credits
$
151,400
$
30,450
$
181,850
Divided by gold ounces produced
127
21
148
Cash Cost, Before By-product Credits, per
Gold Ounce
$
919
$
1,376
$
984
By-product credits per gold ounce
(5
)
(26
)
(8
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
914
$
1,350
$
976
AISC, Before By-product Credits, per Gold
Ounce
$
1,201
$
1,476
$
1,241
By-product credits per gold ounce
(5
)
(26
)
(8
)
AISC, After By-product Credits, per Gold
Ounce
$
1,196
$
1,450
$
1,233
In thousands (except per ounce
amounts)
Current Estimate for Twelve
Months Ended
December 31, 2021
Total Silver
Total Gold
Total
Total cost of sales
$
303,400
$
253,000
$
556,400
Depreciation, depletion and
amortization
(81,000)
(93,100)
(174,100)
Treatment costs
55,100
5,000
60,100
Change in product inventory
4,000
(20,600)
(16,600)
Reclamation and other costs
5,500
800
6,300
Cash Cost, Before By-product Credits
(1)
287,000
145,100
432,100
Reclamation and other costs
5,000
600
5,600
Exploration
4,000
3,800
7,800
Sustaining capital
58,000
33,500
91,500
General and administrative
34,500
—
34,500
AISC, Before By-product Credits (1)
388,500
183,000
571,500
By-product credits:
Zinc
(100,500)
—
(100,500)
Gold
(70,000)
—
(70,000)
Lead
(66,900)
—
(66,900)
Silver
—
(1,150)
(1,150)
Total By-product credits
(237,400)
(1,150)
(238,550)
Cash Cost, After By-product Credits
$
49,600
$
143,950
$
193,550
AISC, After By-product Credits
$
151,100
$
181,850
$
332,950
Divided by ounces produced
13,450
148
Cash Cost, Before By-product Credits, per
Ounce
$
21.34
$
984
By-product credits per ounce
(17.65)
(8)
Cash Cost, After By-product Credits, per
Ounce
$
3.69
$
976
AISC, Before By-product Credits, per
Ounce
$
28.88
$
1,241
By-product credits per ounce
(17.65)
(8)
AISC, After By-product Credits, per
Ounce
$
11.23
$
1,233
(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, and royalties, 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 had been limited from the start of the strike until
the ramp-up was substantially completed in the fourth quarter of
2020. Costs related to ramp-up activities totaling $6.3 million,
along with $1.8 million in non-cash depreciation expense, in the
first quarter of 2020 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
and Midas mines and Aurora mill in the latter part of 2019.
Suspension-related costs at Nevada Operations totaling $3.6 million
and $4.0 million for the first quarters of 2021 and 2020,
respectively, 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 Income (Loss) Applicable to Common
Stockholders (GAAP) to Adjusted Net Income (Loss) Applicable to
Common Stockholders (non-GAAP)
This release refers to a non-GAAP measure of adjusted net income
(loss) applicable to common stockholders and adjusted net income
(loss) per share, which are indicators of our performance. They
exclude certain impacts which are of a nature which we believe are
not reflective of our underlying performance. Management believes
that adjusted net income (loss) per common share provides investors
with the ability to better evaluate our underlying operating
performance.
Dollars are in thousands (except per share
amounts)
Three Months Ended March 31,
2021
2020
Income (loss) income applicable to common
stockholders (GAAP)
$
18,833
$
(17,323
)
Adjusting items:
Gain on derivatives contracts
(473
)
(7,893
)
Ramp-up and suspension costs
4,318
12,996
Provisional price gains
(552
)
(2,610
)
Environmental accruals
2,882
—
Additional interest associated with early
repayment of long-term debt
—
2,902
Loss on extinguishment of debt
—
1,666
Net foreign exchange loss (gain)
2,064
(6,636
)
Unrealized loss on investments
3,506
978
Gain on disposition of properties, plants,
equipment and mineral interests
9
(104
)
Adjusted net income (loss) applicable to
common stockholders
$
30,587
$
(16,024
)
Weighted average shares - basic
534,101
523,215
Weighted average shares - diluted
540,527
523,215
Basic and diluted adjusted net income
(loss) per common share
$
0.06
$
(0.03
)
Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to
Adjusted EBITDA (non-GAAP) and Net Debt (non-GAAP)
This release refers to the non-GAAP measures of adjusted
earnings before interest, taxes, depreciation and amortization
("Adjusted EBITDA"), which is a measure of our operating
performance, and net debt to adjusted EBITDA for the last 12 months
(or "LTM adjusted EBITDA"), which is a measure of our ability to
service our debt. Adjusted EBITDA is calculated as net income
(loss) before the following items: interest expense, income and
mining tax provision (benefit), depreciation, depletion, and
amortization expense, acquisition costs,, foreign exchange gains
and losses, unrealized gains and losses on derivative contracts,
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) income and debt to Adjusted EBITDA and net debt:
Dollars are in thousands
Three Months Ended March 31,
Twelve Months Ended March 31,
2021
2020
2021
2020
Net income (loss)
$
18,971
$
(17,185
)
$
19,366
$
(91,209
)
Plus: Interest expense
10,744
16,311
44,002
54,093
Plus: Income and mining taxes
4,634
(1,062
)
5,831
(17,947
)
Plus: Depreciation, depletion and
amortization
49,331
39,666
166,795
200,397
Plus: Acquisition costs
—
—
20
632
(Less)/Plus: Foreign exchange (gain)
loss
2,064
(6,636
)
13,305
(1,533
)
(Less)/Plus: (Gain) loss on derivative
contracts
(10,962
)
(10,437
)
5,053
(6,623
)
Plus: Ramp-up and suspension costs
4,318
12,996
16,233
22,269
(Less)/Plus: Provisional price gains
(552
)
(2,610
)
(5,950
)
(2,683
)
Plus/(Less): (Loss) gain on disposition of
properties, plants, equipment and mineral interests
9
(104
)
685
4,539
Plus: Stock-based compensation
500
1,219
5,739
5,307
Plus: Provision for closed operations and
environmental matters
4,529
1,548
9,170
6,868
Plus/(Less): Unrealized loss (gain) on
investments
3,506
978
(7,740
)
3,463
Plus: Other
(997
)
423
2,806
2,805
Adjusted EBITDA
$
86,095
$
35,107
$
275,315
$
180,378
Total debt
$
525,002
$
690,222
Less: Cash, cash equivalents and
short-term investments
$
(139,750
)
$
(215,715
)
Net debt
$
385,252
$
474,507
Net debt/LTM adjusted EBITDA
(non-GAAP)
1.4
2.6
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005366/en/
Russell Lawlar Senior Vice President, CFO and Treasurer
Jeanne DuPont Senior Communication Coordinator
800-HECLA91 (800-432-5291) Investor Relations Email:
hmc-info@hecla-mining.com Website: www.hecla-mining.com
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