Hecla reports record annual revenue, gold production and silver reserves

Hecla Mining Company (NYSE:HL) today announced fourth quarter and full year 2019 financial and operating results.

HIGHLIGHTS

  • Fourth quarter sales of $225 million; cash flow from operations of $57 million; net loss of $8.0 million; and adjusted EBITDA of $62 million.1
  • 2019 silver production of 12.6 million ounces, up 22% and record gold production of 272,873 ounces, up 4%, over 2018.
  • 2019 sales of $673.3 million (the highest in the company's history); cash flow from operations of $120.9 million; net loss of $99.6 million; and adjusted EBITDA of $177.7 million.1
  • Record reserves for silver, lead and zinc; increases of 11%, 5% and 8%, respectively over 2018.
  • Net debt reduction of approximately $136 million, or more than 23%, from the peak net debt mid-year.
  • Cash and cash equivalents of $62 million at year end, an increase of $35 million with no borrowings on the revolving line of credit facility.
  • Lowest All Injury Frequency Rate (AIFR) in Company history.
  • Lucky Friday return to full production is underway and expected to be complete by the end of 2020.
  • Moody's Investors Service upgraded Hecla's Corporate Family Rating from Caa1 to B3 with a stable outlook.

"2019 was a tale of two halves where the second half had higher production, higher prices, better earnings and more cash flow," said Phillips S. Baker, Jr., President and CEO. "The strong third and fourth quarters markedly improved our financial condition, putting us in a better position to refinance the Senior Notes."

"In 2020, at current prices, we expect continued strong cash flow generation with the ongoing solid performance at Greens Creek, the ramp-up of Lucky Friday, expected improvements at Casa Berardi and the potential mine life extension at San Sebastian from the Hugh Zone," Mr. Baker added.

SILVER AND GOLD RESERVE SUMMARY

Proven and probable reserves are 212 million ounces of silver, an increase of 11% over last year and 2.71 million ounces of gold, a decrease of 5%. Proven and probable lead and zinc reserves of 810,930 tons and 1,001,930 tons are increases of 5% and 8%, respectively. The reserves for silver, lead and zinc are the highest in Company history. The price assumptions used for 2019 reserves of $14.50 for silver, $1.15 for zinc and $0.90 for lead are unchanged this year and our assumption for gold is $100 higher at $1,300 per ounce. The silver price assumption is among the lowest in the industry again this year.

Please refer to the reserves and resources tables at the end of this press release, or to the press release entitled "Hecla Reports Record Silver, Lead and Zinc Reserves" released on February 5, 2020, for the breakdown between proven and probable reserve and resource levels, as well as a detailed summary of the Company's exploration programs.

FINANCIAL OVERVIEW

 

Fourth Quarter Ended

 

Twelve Months Ended

HIGHLIGHTS

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

December 31, 2018

FINANCIAL DATA

 

 

 

 

 

 

 

Sales (000)

$

224,945

 

 

$

136,520

 

 

$

673,266

 

 

$

567,137

 

Gross profit (loss) (000)

$

25,318

 

 

$

(1,265

)

 

$

23,399

 

 

$

79,099

 

Loss applicable to common stockholders (000)

$

(8,114

)

 

$

(23,831

)

 

$

(100,109

)

 

$

(27,115

)

Basic and diluted loss per common share

$

(0.02

)

 

$

(0.05

)

 

$

(0.20

)

 

$

(0.06

)

Cash provided by operating activities (000)

$

57,257

 

 

$

19,011

 

 

$

120,866

 

 

$

94,221

 

Net loss applicable to common stockholders for the fourth quarter and full year of 2019 was $8.1 million and $100.1 million, or $0.02 and $0.20 per basic share, respectively, compared to net losses applicable to common stockholders of $23.8 million and $27.1 million, or $0.05 and $0.06 per basic share, respectively, for the fourth quarter and full year of 2018. Among items impacting the results for the 2019 periods compared to 2018 were the following:

  • Gross profit for the fourth quarter of 2019 was higher by $26.6 million. The variance was due in part to higher gross profit at Greens Creek and San Sebastian of $22.0 million and $4.2 million, respectively, and lower losses in Nevada and Lucky Friday of $3.1 million and $2.4 million, respectively, partly offset by higher losses at Casa Berardi of $5.1 million for the fourth quarter.
  • Gross profit for the full year of 2019 was $55.7 million less, principally due to depreciation expense in Nevada.
  • Losses on metal derivative contracts for the fourth quarter and full year of 2019 of $1.3 million and $4.0 million, respectively, compared to a slight loss in the fourth quarter and a gain of $40.3 million in the full year. During the third quarters of 2019 and 2018, the Company settled in-the-money contracts prior to their maturity date, for cash proceeds of approximately $6.7 million and $32.8 million, respectively.
  • Foreign exchange losses of $1.5 million and $8.2 million were recognized in the fourth quarter and full year of 2019, respectively, compared to gains of $7.5 million and $10.3 million, respectively. The variances were primarily due to changes in the value of the Canadian dollar relative to the U.S. dollar.
  • Interest expense was $14.7 million in the fourth quarter and $48.4 million for the full year of 2019 compared to $10.9 million and $40.9 million, respectively. The increase in the 2019 periods was due to a loss on the prepayment of the Ressources Quebec Note and increased amounts drawn on the revolving credit facility, which were repaid, leaving no amount drawn as of December 31, 2019.
  • Income tax benefit for the fourth quarter and full year of 2019 of $4.1 million and $24.1 million, respectively, compared to benefits of $5.2 million and $6.7 million, respectively.
  • Suspension costs for the fourth quarter of $3.3 million and $12.1 million for the full year of 2019, compared to costs of $2.4 million and $20.7 million, respectively.
  • Exploration and pre-development expense was $3.0 million for the fourth quarter and $19.1 million for the full year of 2019, compared to $9.4 million and $40.6 million, respectively due to reduced spending at all sites.

Cash provided by operating activities for the fourth quarter and full year of 2019 of $57.3 million and $120.9 million, respectively, was $38.2 million and $26.6 million higher, respectively, compared to the prior year periods. The increase in the fourth quarter of 2019 was primarily due to lower spending in Nevada, higher sales and lower exploration. The increase for the full year of 2019 was a result of the same factors, along with lower acquisition costs and Lucky Friday suspension costs and the impact of working capital changes, partially offset by lower cash proceeds from settlement of base metals derivative contracts prior to their maturity date.

Adjusted EBITDA increased $43.2 million quarter-over-quarter, and the $177.7 million in 2019 was $6.4 million more than 2018.1 The increases were primarily due to lower spending in Nevada, higher sales, and lower exploration spending.

Fourth quarter capital expenditures totaled $23.8 million, including $12.9 million at Greens Creek, $7.7 million at Casa Berardi, and $3.0 million at Lucky Friday. Capital expenditures, including non-cash items for equipment acquired under finance leases, for the year 2019 totaled $128.1 million, compared to last year's $140.6 million.

Metals Prices

Average realized silver prices in the fourth quarter and full year 2019 were $17.47 and $16.65 per ounce, respectively, compared to $14.58 and $15.63, respectively, for the prior year periods. Average realized prices for gold for the fourth quarter and full year 2019 were $1,488 and $1,413 per ounce, respectively, higher by 20% and 12%, respectively, compared to the prior year periods. Average realized prices for lead were 3% higher, with the zinc price 4% lower quarter-over-quarter. The average realized prices for lead and zinc for the full year of 2019 were 13% and 10% lower, respectively, compared to 2018.

OPERATIONS OVERVIEW

Overview

The following table provides the production summary on a consolidated basis for the fourth quarter and twelve months ended December 31, 2019 and 2018:

 

 

Fourth Quarter Ended

 

Twelve Months Ended

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

December 31, 2018

PRODUCTION SUMMARY

 

 

 

 

 

 

Silver -

Ounces produced

3,411,988

 

 

2,715,385

 

 

12,605,234

 

 

10,369,503

 

 

Payable ounces sold

3,999,013

 

 

2,260,690

 

 

11,548,373

 

 

9,254,385

 

Gold -

Ounces produced

74,773

 

 

70,987

 

 

272,873

 

 

262,103

 

 

Payable ounces sold

85,237

 

 

64,478

 

 

275,060

 

 

247,528

 

Lead -

Tons produced

6,804

 

 

4,704

 

 

24,210

 

 

20,091

 

 

Payable tons sold

7,118

 

 

3,615

 

 

19,746

 

 

16,214

 

Zinc -

Tons produced

16,185

 

 

13,711

 

 

58,857

 

 

56,023

 

 

Payable tons sold

12,147

 

 

9,201

 

 

39,381

 

 

39,273

 

The following tables provides a summary of the final production, cost of sales and other direct production costs and depreciation, depletion and amortization ("cost of sales"), cash cost, after by-product credits, per silver or gold ounce, and All in Sustaining Cost ("AISC"), after by-product credits, per silver and gold ounce, for the fourth quarter and twelve months ended December 31, 2019:

Fourth Quarter Ended

Total

Greens Creek

Lucky Friday

San Sebastian

Casa Berardi

Nevada Operations

December 31, 2019

Silver

Gold

Silver

Gold

Silver

Silver

Gold

Gold

Silver

Gold

Silver

Production (ounces)

3,411,988

 

74,773

 

2,741,090

 

15,356

 

216,488

 

422,434

 

3,897

 

34,793

 

10,499

 

20,727

 

21,477

 

Increase/(decrease) over 2018

26

%

5

%

27

%

17

%

1,562

%

(5

)%

33

%

(3

)%

43

%

9

%

(76

)%

Cost of sales & other direct production costs and depreciation, depletion and amortization (000)

 

$

91,124

 

$

108,503

 

$

71,481

 

N/A

$

5,472

 

$

14,171

 

N/A

$

60,444

 

N/A

$

48,059

 

N/A

Increase/(decrease) over 2018

45

%

45

%

48

%

N/A

40

%

33

%

N/A

28

%

N/A

74

%

N/A

Cash costs, after by-prod credits, per silver or gold ounce 2,4

$

3.58

 

$

1,003

 

$

2.76

 

N/A

N/A

$

8.89

 

N/A

$

1,037

 

N/A

$

946

 

N/A

Increase/(decrease) over 2018

$

(0.43

)

$

(45

)

$

0.97

 

N/A

N/A

$

(5.89

)

N/A

$

97

 

N/A

$

(305

)

N/A

AISC, after by-prod credits, per silver or gold ounce 3

$

11.31

 

$

1,187

 

$

7.86

 

N/A

N/A

$

11.78

 

N/A

$

1,278

 

N/A

$

1,024

 

N/A

Increase/(decrease) over 2018

$

(2.22

)

$

(395

)

$

(0.06

)

N/A

N/A

$

(7.73

)

N/A

$

(70

)

N/A

$

(996

)

N/A

Twelve Months Ended

Total

Greens Creek

Lucky Friday

San Sebastian

Casa Berardi

Nevada Operations

December 31, 2019

Silver

Gold

Silver

Gold

Silver

Silver

Gold

Gold

Silver

Gold

Silver

Production (ounces)

12,605,234

 

272,873

 

9,890,125

 

56,625

 

632,944

 

1,868,884

 

15,673

 

134,409

 

31,540

 

66,166

 

181,741

 

Increase/(decrease) over 2018

22

%

4

%

24

%

10

%

274

%

(8

)%

5

%

(17

)%

(17

)%

N/A

N/A

Cost of sales & other direct production costs and depreciation, depletion and amortization (000)

$

278,849

 

$

371,018

 

$

211,719

 

N/A

$

16,621

 

$

50,509

 

N/A

$

217,682

 

N/A

$

153,336

 

N/A

Increase/(decrease) over 2018

15

%

51

%

11

%

N/A

70

%

21

%

N/A

9

%

N/A

N/A

N/A

Cash costs, after by-prod credits, per silver or gold ounce 2,4

$

2.93

 

$

1,066

 

$

1.97

 

N/A

N/A

$

8.02

 

N/A

$

1,051

 

N/A

$

1,096

 

N/A

Increase/(decrease) over 2018

$

1.85

 

$

195

 

$

3.10

 

N/A

N/A

$

(1.67

)

N/A

$

251

 

N/A

N/A

N/A

AISC, after by-prod credits, per silver or gold ounce 3

$

10.13

 

$

1,411

 

$

5.99

 

N/A

N/A

$

12.10

 

N/A

$

1,354

 

N/A

$

1,527

 

N/A

Increase/(decrease) over 2018

$

(1.31

)

$

185

 

$

0.41

 

N/A

N/A

$

(2.58

)

N/A

$

274

 

N/A

N/A

N/A

 

Greens Creek Mine - Alaska

The increase in silver and gold production for the quarter and full year resulted from higher grades, with the quarterly increase also due to higher throughput. The mill operated at an average of 2,351 tons per day (tpd) in the fourth quarter and 2,318 tpd for the full year. The annual throughput was a record.

The higher cost of sales and per silver ounce cash costs, for the periods were primarily due to higher production costs and treatment charges. The decrease in AISC per silver ounce, for the quarter resulted from higher silver production.

For the full year of 2019, Greens Creek generated cash provided by operating activities of approximately $136.2 million and spent $29.3 million on additions to properties, plants and equipment, resulting in free cash flow of $106.9 million.5

Casa Berardi - Quebec

Lower quarterly and annual gold production was due to lower grades, as planned. Gold production was also impacted by lower mill throughput and recoveries in the first half of 2019 due to planned adjustments to a number of mill components to accommodate higher throughput, and the requirement for a new carbon in leach (CIL) tank drive-train, which was installed in May 2019. The mill operated at an average of 3,950 tpd in the fourth quarter 2019 and 3,775 tpd for the year.

Higher quarterly and annual cost of sales were due to the extension of stripping at the East Mine Crown Pillar (EMCP) pit as well as increased quantities of waste and ore extracted from the pit and higher haulage costs due to deepening of the pit. Milling costs were also higher due to costs for pre-crushing of ore to allow for increased throughput, and higher costs for mill enhancements, maintenance and reagents. These factors impacting mining and milling costs, along with lower gold production, also resulted in increased cash costs per gold ounce. However, AISC per gold ounce declined in the fourth quarter due to lower capital spending.

For the full year of 2019, Casa Berardi generated cash provided by operating activities of approximately $55.7 million and spent $35.8 million on additions to properties, plants and equipment, resulting in free cash flow of $20.0 million.5

Process improvement studies are being implemented in 2020 in an effort to improve throughput, recovery and lower costs to increase cash flow.

San Sebastian - Mexico

San Sebastian's lower metal production was expected due to the transition from shallow, high-grade open pits to lower-grade underground production. The mill operated at an average of 425 tpd in the fourth quarter 2019 and 479 tpd for the year.

The higher cost of sales was due to the higher cost of underground mining and depreciation. Cash cost and AISC per ounce, after by-product credits, were lower as a result of higher by-product credits, due to higher gold production prices, with AISC also impacted by lower exploration spending.

For the full year of 2019, San Sebastian generated cash provided by operating activities of approximately $19.1 million and spent $5.0 million on additions to properties, plants and equipment, resulting in free cash flow of $14.1 million.5

The Company is completing its study on the Hugh Zone sulfide ore and expects a decision on development in the first quarter, which would allow production to begin by the end of the year.

Nevada Operations

Gold production was 9% higher quarter-over-quarter. The assets were acquired on July 20, 2018. During 2019, ore was processed at an average of 576 tpd.

Cost of sales for the year rose primarily as a result of reporting a full year's results, and were higher for the fourth quarter due to higher sales volume and increased depreciation. However, per gold ounce cash costs and AISC declined for the fourth quarter by $305 and $996 per gold ounce because of increased gold production resulting from higher grades, with the decrease in AISC also due to lower exploration spending, partially offset by higher sustaining capital.

The mining of developed ore is expected to continue at Fire Creek until about mid-year, when the mining activities are planned to pause. To lower the cut-off grade, the Company is studying mining methods, processing of refractory ore and hydrology. Production is not anticipated to begin again until these studies are successfully completed and permitted.

Lucky Friday Mine - Idaho

Production in 2019 was similar to 2018 with the production and capital improvements being performed by salaried staff.

Union workers at Lucky Friday ratified the collective bargaining agreement in January 2020, and many are beginning to return to work. The Company anticipates re-staffing of the mine to take place in stages, with a ramp-up to full production levels expected by the end of 2020.

Underground testing and modification of the Remote Vein Mining (RVM) machine is underway in Sweden. The machine is expected to be sent to Lucky Friday by late 2020.

EXPLORATION AND PRE-DEVELOPMENT

Exploration

Exploration (including corporate development) expenses were $2.4 million and $15.9 million for the fourth quarter and full year 2019, respectively. This represents a decrease of 71% and 55% over the fourth quarter and full year 2018. These decreases were primarily the result of lower expenses at the Nevada operations and overall decreased site exploration during 2019.

A complete summary of exploration activities can be found in the news release entitled "Hecla Reports Record Silver, Lead and Zinc Reserves" released on February 5, 2020.

Pre-development

Pre-development spending was $0.6 million in the fourth quarter and $3.2 million for the full year 2019, principally to advance the permitting at Rock Creek and Montanore.

Rock Creek/Montanore

At Rock Creek, the Company updated and the Kootenai National Forest partially approved its plan of operation to reflect the Record of Decision (ROD) issued in 2018. In December 2019, the Company submitted an amendment application to the Montana Department of Environmental Quality to modify the existing Exploration License to match the ROD. The Company plans to continue the permitting process at the site despite the existence of litigation challenging the project.

At Montanore, the Kootenai National Forest issued a draft Supplemental Environmental Impact Study for the evaluation phase for public comment in the third quarter of 2019. The project remains the subject of ongoing litigation. The Company plans to continue the permitting process at the site despite the existence of litigation challenging the project.

METALS AND CURRENCY DERIVATIVES

Base Metals Forward Sales Contracts

The following table summarizes the quantities of base metals committed under financially settled forward sales contracts, other than provisional hedges (which address changes in prices between shipment and settlement with customers), at December 31, 2019:

 

Pounds Under Contract (in thousands)

 

Average Price per Pound

 

Zinc

Lead

 

Zinc

Lead

Contracts on forecasted sales

 

 

 

 

 

2020 settlements

441

 

11,740

 

 

$

1.13

 

$

0.98

 

The contracts represent 1% of the forecasted payable zinc production for the year at an average price of $1.13 per pound, and 30% of the forecasted payable lead production for the next year at an average price of $0.98 per pound.

Precious Metals Put Option Contracts

In June 2019, we began using financially-settled put option contracts to manage the exposure of our forecasted future gold and silver sales to potential declines in market prices for those metals. These put contracts give us the option, but not the obligation, to realize established prices on quantities of silver and gold to be sold in the future. The following table summarizes the quantities of metals for which we have entered into put contracts and the average exercise prices as of December 31, 2019:

 

Ounces under contract (in thousands)

 

Average price per ounce

 

Silver

Gold

 

Silver

Gold

 

(ounces)

(ounces)

 

(ounces)

(ounces)

Contracts on forecasted sales

 

 

 

 

 

2020 settlements

5,700

 

130

 

 

$

15.73

 

$

1,435

 

Foreign Currency Forward Purchase Contracts

The following table summarizes the Canadian dollars and Mexican pesos the Company has committed to purchase under foreign exchange forward contracts at December 31, 2019:

 

Currency Under Contract (in thousands of CAD/MXN)

 

Average Exchange Rate

 

CAD

MXN

 

CAD/USD

MXN/USD

2020 settlements

110,300

 

7,100

 

 

1.30

 

20.72

 

2021 settlements

80,700

 

 

 

 

1.29

 

 

 

2022 settlements

63,300

 

 

 

 

1.30

 

 

 

2023 settlements

24,700

 

 

 

 

1.31

 

 

 

2020 ESTIMATES6

2020 Production Outlook

 

Silver Production (Moz)

Gold Production (Koz)

Silver Equivalent (Moz)

Gold Equivalent (Koz)

Greens Creek *

8.9 - 9.3

46 - 48

21.5 - 22.1

240 - 246

Lucky Friday *

1.4 - 1.8

N/A

3.2 - 3.6

35 - 40

San Sebastian

0.8 - 1.0

7 - 8

1.4 - 1.7

16 - 19

Casa Berardi

N/A

135 - 140

12.1 - 12.6

135 - 140

Nevada Operations

N/A

24 - 29

2.2 - 2.6

24 - 29

Total

11.1 - 12.1

212 - 225

40.4 - 42.6

450 - 474

* Equivalent ounces includes Lead and Zinc production

 

 

 

 

2020 Cost Outlook

 

Costs of Sales (million)

Cash cost, after by-product credits, per silver/gold ounce2,4

AISC, after by-product credits, per produced silver/gold ounce3

Greens Creek

$200

$4.25 - $5.00

$8.50 - $9.75

Lucky Friday *

$15

$5.25 - $5.50

$8.75 - $9.00

San Sebastian

$25

$3.00 - $4.25

$6.25 - $8.50

Total Silver

$240

$4.00 - $5.00

$11.00 - $12.25

Casa Berardi

$185

$875 - $900

$1,225 - $1,275

Nevada Operations

$50

$825 - $1,000

$850 - $1,050

Total Gold

$235

$850 - $925

$1,150 - $1,250

* Expected cost of sales during full production. LF cash costs and AISC are calculated using only Q4 production and costs

 

 

 

2020 Capital and Exploration Outlook

2020E Capital expenditures (excluding capitalized interest)

$115 million

2020E Exploration expenditures (includes Corporate Development)

$15 million

2020E Pre-development expenditures

$2.5 million

2020E Research and Development expenditures

$0 million

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held today, Thursday, February 6, at 10:00 a.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-855-760-8158 or for international by dialing 1-720-634-2922. The participant passcode is HECLA. Hecla's live and archived webcast can be accessed at www.hecla-mining.com under Investors or via Thomson Reuters Eikon, a password-protected event management site.

ABOUT HECLA

Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska, Idaho and Mexico, and is a growing gold producer with operating mines in Nevada and Quebec, Canada. The Company also has exploration and pre-development properties in eight world-class silver and gold mining districts in the U.S., Canada and Mexico, and an exploration office and investments in early-stage silver exploration projects in Canada.

NOTES

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by United States generally accepted accounting principles (GAAP). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The non-GAAP financial measures cited in this release and listed below are reconciled to their most comparable GAAP measure at the end of this release.

(1) Adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to net income, the most comparable GAAP measure, can be found at the end of the release. Adjusted EBITDA is a measure used by management to evaluate the Company's operating performance but should not be considered an alternative to net income, or cash provided by operating activities as those terms are defined by GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. In addition, the Company may use it when formulating performance goals and targets under its incentive program.

(2) Cash cost, after by-product credits, per silver and gold ounce is a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (sometimes referred to as "cost of sales" in this release), can be found at the end of the release. It is an important operating statistic that management utilizes to measure each mine's operating performance. It also allows the benchmarking of performance of each mine versus those of our competitors. As a primary silver mining company, management also uses the statistic on an aggregate basis - aggregating the Greens Creek, Lucky Friday and San Sebastian mines - to compare performance with that of other primary silver mining companies. With regard to Casa Berardi and Nevada Operations, management uses cash cost, after by-product credits, per gold ounce to compare its performance with other gold mines. Similarly, the statistic is useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics. In addition, the Company may use it when formulating performance goals and targets under its incentive program.

(3) All in sustaining cost (AISC), after by-product credits, is a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the closest GAAP measurement, can be found in the end of the release. AISC, after by-product credits, includes cost of sales and other direct production costs, expenses for reclamation and exploration at the mines sites, corporate exploration related to sustaining operations, and all site sustaining capital costs. AISC, after by-product credits, is calculated net of depreciation, depletion, and amortization and by-product credits.

Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. Management believes that all in sustaining costs is a non-GAAP measure that provides additional information to management, investors and analysts to help (i) in the understanding of the economics of our operations and performance compared to other producers and (ii) in the transparency by better defining the total costs associated with production. Similarly, the statistic is useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics. In addition, the Company may use it when formulating performance goals and targets under its incentive program.

(4) Cash cost, after by-product credits, per gold ounce, is a Non-GAAP measurement only applicable to Casa Berardi and Nevada Operations production. Gold produced from Greens Creek and San Sebastian is treated as a by-product credit against the silver cash cost.

(5) Free cash flow is a non-GAAP measure calculated as cash provided by operating activities less additions to properties, plants and equipment.

Other

(6) Expectations for 2020 include silver, gold, lead and zinc production from Greens Creek, Lucky Friday, San Sebastian, Casa Berardi and Nevada Operations converted using Au $1,525/oz, Ag $17/oz, Zn $1.00/lb, and Pb $0.85/lb. Numbers may be rounded.

Cautionary Statement Regarding Forward Looking Statements, Including 2020 Outlook

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian securities laws. Such forward-looking statements may include, without limitation: (i) estimates of full-year 2020 silver and gold production, cost of sales, cash costs, after by-product credits, AISC, after by-product credits as well as estimated spending on capital, exploration, pre-development and research and development (which assumes metal prices of gold at $1,525/oz, Ag $17/oz, Zn $1.00/lb, Pb $0.85/lb; USD/CAD assumed to be $0.77, USD/MXN assumed to be $0.05; (ii) the Company’s mineral reserves and resources; (iii) the strong second half of 2019 puts Hecla in a better position to refinance the Senior Notes; (iv) expectations that strong cash flow generation will continue in 2020; (v) ramp-up of Lucky Friday to full production by the end of 2020; (vi) potential mine life extension at San Sebastian from the Hugh zone with production beginning later this year; (vii) improvement studies underway at Casa Berardi in an effort to improve throughput, recovery and cost gains to increase cash flow; (viii) number of employees at Lucky Friday that return to work; (ix) expectation that the RVM to be sent to Lucky Friday following successful completion of testing, estimated to be in late 2020; and (x) the ability to continue the permitting process at Rock Creek and Montanore despite litigation. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (a) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (b) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (c) political/regulatory developments in any jurisdiction in which the Company operates being consistent with its current expectations; (d) the exchange rate for the Canadian dollar to the U.S. dollar, being approximately consistent with current levels; (e) certain price assumptions for gold, silver, lead and zinc; (f) prices for key supplies being approximately consistent with current levels; (g) the accuracy of our current mineral reserve and mineral resource estimates; and (h) the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements.” Such risks include, but are not limited to gold, silver and other metals price volatility, operating risks, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, community relations, conflict resolution and outcome of projects or oppositions, litigation, political, regulatory, labor and environmental risks, and exploration risks and results, including that mineral resources are not mineral reserves, they do not have demonstrated economic viability and there is no certainty that they can be upgraded to mineral reserves through continued exploration. For a more detailed discussion of such risks and other factors, see the Company’s 2018 Form 10-K, filed on February 22, 2019, with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings, including the Company's 2019 10-K expected to be filed on February 10, 2020. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.

Cautionary Statements to Investors on Reserves and Resources

Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in the SEC's Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (Guide 7). Although the SEC has recently issued new rules rescinding Guide 7, the new rules are not binding until January 1, 2021, and at this time the Company still reports in accordance with Guide 7. However, the Company is also a “reporting issuer” under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (NI 43-101). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is included herein to satisfy the Company's “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.

Reporting requirements in the United States for disclosure of mineral properties under Guide 7 and the requirements in Canada under NI 43-101 standards are substantially different. This document contains a summary of certain estimates of the Company, not only of proven and probable reserves within the meaning of Guide 7, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. Under Guide 7, the term "reserve" means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term "economically", as used in the definition of reserve, means that profitable extraction or production has been established or analytically demonstrated to be viable and justifiable under reasonable investment and market assumptions. The term "legally", as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, Hecla must have a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with Hecla's current mine plans. The terms “measured resources”, “indicated resources,” and “inferred resources” are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are not normally permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. The term “resource” does not equate to the term “reserve”. Under Guide 7, the material described herein as “indicated resources” and “measured resources” would be characterized as “mineralized material” and is permitted to be disclosed in tonnage and grade only, not ounces. The category of “inferred resources” is not recognized by Guide 7. Investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into proven or probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a “resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a “resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.

Qualified Person (QP) Pursuant to Canadian National Instrument 43-101

Kurt D. Allen, MSc., CPG, Director - Exploration of Hecla Limited and Keith Blair, MSc., CPG, Chief Geologist of Hecla Limited, who serve as a Qualified Person under National Instrument 43-101("NI 43-101"), supervised the preparation of the scientific and technical information concerning Hecla’s mineral projects in this news release, including with respect to the newly acquired Nevada projects. Information regarding data verification, surveys and investigations, quality assurance program and quality control measures and a summary of analytical or testing procedures for the Greens Creek Mine are contained in a technical report titled “Technical Report for the Greens Creek Mine” effective date December 31, 2018, and for the Lucky Friday Mine are contained in a technical report titled “Technical Report for the Lucky Friday Mine Shoshone County, Idaho, USA” effective date April 2, 2014, for Casa Berardi are contained in a technical report titled "Technical Report on the mineral resource and mineral reserve estimate for Casa Berardi Mine, Northwestern Quebec, Canada" effective date December 31, 2018 (the "Casa Berardi Technical Report"), and for the San Sebastian Mine, Mexico, are contained in a technical report prepared for Hecla titled “Technical Report for the San Sebastian Ag-Au Property, Durango, Mexico” effective date September 8, 2015 . Also included in these four technical reports is a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors. Information regarding data verification, surveys and investigations, quality assurance program and quality control measures and a summary of sample, analytical or testing procedures for the Fire Creek Mine are contained in a technical report prepared for Klondex Mines, dated March 31, 2018; the Hollister Mine dated May 31, 2017, amended August 9, 2017; and the Midas Mine dated August 31, 2014, amended April 2, 2015. Copies of these technical reports are available under Hecla's and Klondex's profiles on SEDAR at www.sedar.com. Mr. Allen and Mr. Blair reviewed and verified information regarding drill sampling, data verification of all digitally-collected data, drill surveys and specific gravity determinations relating to all the mines. The review encompassed quality assurance programs and quality control measures including analytical or testing practice, chain-of-custody procedures, sample storage procedures and included independent sample collection and analysis. This review found the information and procedures meet industry standards and are adequate for Mineral Resource and Mineral Reserve estimation and mine planning purposes.

HECLA MINING COMPANY

Condensed Consolidated Statements of (Loss) Income

(dollars and shares in thousands, except per share amounts - unaudited)

 

 

Fourth Quarter Ended

 

Twelve Months Ended

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

December 31, 2018

Sales of products

 

$

224,945

 

 

$

136,520

 

 

$

673,266

 

 

$

567,137

 

Cost of sales and other direct production costs

 

139,147

 

 

102,192

 

 

450,349

 

 

353,994

 

Depreciation, depletion and amortization

 

60,480

 

 

35,593

 

 

199,518

 

 

134,044

 

Total cost of sales

 

199,627

 

 

137,785

 

 

649,867

 

 

488,038

 

Gross profit (loss)

 

25,318

 

 

(1,265

)

 

23,399

 

 

79,099

 

 

 

 

 

 

 

 

 

 

Other operating expenses:

 

 

 

 

 

 

 

 

General and administrative

 

8,977

 

 

8,693

 

 

35,832

 

 

36,542

 

Exploration

 

2,363

 

 

8,086

 

 

15,919

 

 

35,695

 

Pre-development

 

615

 

 

1,272

 

 

3,150

 

 

4,887

 

Research and development

 

(79

)

 

399

 

 

535

 

 

5,441

 

Other operating (income) expense

 

1,362

 

 

(171

)

 

3,043

 

 

1,596

 

Loss (gain) on disposition of property, plants, equipment and mineral interests

 

(23

)

 

581

 

 

4,643

 

 

(2,793

)

Suspension-related costs

 

3,285

 

 

2,356

 

 

12,051

 

 

20,693

 

Acquisition costs

 

52

 

 

389

 

 

645

 

 

10,045

 

Provision for closed operations and reclamation

 

1,161

 

 

1,585

 

 

4,690

 

 

6,119

 

 

 

17,713

 

 

23,190

 

 

80,508

 

 

118,225

 

Income (loss) from operations

 

7,605

 

 

(24,455

)

 

(57,109

)

 

(39,126

)

Other income (expense):

 

 

 

 

 

 

 

 

(Loss) gain on derivative contracts

 

(1,252

)

 

(18

)

 

(3,971

)

 

40,253

 

Gain (loss) on disposition of investments

 

(4

)

 

2

 

 

923

 

 

(34

)

Unrealized loss on investments

 

(1,230

)

 

(355

)

 

(2,389

)

 

(2,816

)

Net foreign exchange gain (loss)

 

(1,495

)

 

7,454

 

 

(8,236

)

 

10,310

 

Interest and other (expense) income

 

(1,022

)

 

(613

)

 

(4,429

)

 

(907

)

Interest expense

 

(14,670

)

 

(10,925

)

 

(48,447

)

 

(40,944

)

 

 

(19,673

)

 

(4,455

)

 

(66,549

)

 

5,862

 

(Loss) before income taxes

 

(12,068

)

 

(28,910

)

 

(123,658

)

 

(33,264

)

Income tax benefit (provision)

 

4,092

 

 

5,217

 

 

24,101

 

 

6,701

 

Net loss

 

(7,976

)

 

(23,693

)

 

(99,557

)

 

(26,563

)

Preferred stock dividends

 

(138

)

 

(138

)

 

(552

)

 

(552

)

Loss applicable to common stockholders

 

$

(8,114

)

 

$

(23,831

)

 

$

(100,109

)

 

$

(27,115

)

Basic loss per common share after preferred dividends

 

$

(0.02

)

 

$

(0.05

)

 

$

(0.20

)

 

$

(0.06

)

Diluted loss per common share after preferred dividends

 

$

(0.02

)

 

$

(0.05

)

 

$

(0.20

)

 

$

(0.06

)

Weighted average number of common shares outstanding basic

 

502,902

 

 

480,572

 

 

490,449

 

 

433,419

 

Weighted average number of common shares outstanding diluted

 

502,902

 

 

480,572

 

 

490,449

 

 

433,419

 

HECLA MINING COMPANY

Condensed Consolidated Balance Sheets

(dollars and shares in thousands - unaudited)

 

December 31, 2019

 

December 31, 2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

62,452

 

 

$

27,389

 

Investments

 

 

 

Accounts receivable

38,421

 

 

25,818

 

Inventories

66,213

 

 

87,533

 

Other current assets

12,038

 

 

23,410

 

Total current assets

179,124

 

 

164,150

 

Non-current investments

6,207

 

 

6,583

 

Non-current restricted cash and investments

1,025

 

 

1,025

 

Properties, plants, equipment and mineral interests, net

2,423,698

 

 

2,520,004

 

Operating lease right-of-use assets

16,381

 

 

 

Deferred income tax asset

3,537

 

 

1,987

 

Other non-current assets and deferred charges

7,336

 

 

10,195

 

Total assets

$

2,637,308

 

 

$

2,703,944

 

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

57,716

 

 

$

77,861

 

Accrued payroll and related benefits

26,916

 

 

30,034

 

Accrued taxes

4,776

 

 

7,727

 

Current portion of capital leases

5,429

 

 

5,264

 

Current portion of accrued reclamation and closure costs

4,581

 

 

3,410

 

Current portion of operating leases

 

5,580

 

 

 

Accrued interest

5,804

 

 

5,961

 

Other current liabilities

6,172

 

 

5,937

 

Total current liabilities

116,974

 

 

136,194

 

Capital leases

7,214

 

 

7,871

 

Accrued reclamation and closure costs

103,793

 

 

104,979

 

Long-term debt

504,729

 

 

532,799

 

Long-term operating leases

10,818

 

 

 

Deferred income tax liability

138,282

 

 

173,537

 

Non-current pension liability

56,219

 

 

47,711

 

Other non-current liabilities

6,856

 

 

9,890

 

Total liabilities

944,885

 

 

1,012,981

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Preferred stock

39

 

 

39

 

Common stock

132,292

 

 

121,956

 

Capital surplus

1,973,700

 

 

1,880,481

 

Accumulated deficit

(353,331

)

 

(248,308

)

Accumulated other comprehensive loss

(37,310

)

 

(42,469

)

Treasury stock

(22,967

)

 

(20,736

)

Total stockholders’ equity

1,692,423

 

 

1,690,963

 

Total liabilities and stockholders’ equity

$

2,637,308

 

 

$

2,703,944

 

Common shares outstanding

522,896

 

 

482,604

 

HECLA MINING COMPANY

Condensed Consolidated Statements of Cash Flows

(dollars in thousands - unaudited)

 

December 31, 2019

 

December 31, 2018

OPERATING ACTIVITIES

 

 

 

Net loss

$

(99,557

)

 

$

(26,563

)

Non-cash elements included in net loss:

 

 

 

Depreciation, depletion and amortization

204,475

 

 

140,905

 

Loss on disposition of investments

(927

)

 

 

Unrealized loss on investments

2,386

 

 

2,816

 

Gain on disposition of properties, plants, equipment and mineral interests

4,643

 

 

(2,793

)

Provision for reclamation and closure costs

6,914

 

 

6,090

 

Deferred income taxes

(33,387

)

 

(9,699

)

Stock compensation

5,668

 

 

6,278

 

Amortization of loan origination fees

2,637

 

 

2,077

 

(Gain) loss on derivative contracts

5,613

 

 

(15,366

)

Foreign exchange (gain) loss

8,025

 

 

(7,104

)

Adjustment of inventory to market value

1,399

 

 

8,191

 

Fee on prepayment of debt with shares of common stock

2,855

 

 

 

Other non-cash charges, net

49

 

 

(32

)

Change in assets and liabilities:

 

 

 

Accounts receivable

(10,939

)

 

9,843

 

Inventories

16,146

 

 

(27,512

)

Other current and non-current assets

15,618

 

 

(1,726

)

Accounts payable and accrued liabilities

(24,355

)

 

17,795

 

Accrued payroll and related benefits

9,226

 

 

(2,425

)

Accrued taxes

(3,155

)

 

645

 

Accrued reclamation and closure costs and other non-current liabilities

7,532

 

 

(7,199

)

Cash provided by operating activities

120,866

 

 

94,221

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

Additions to properties, plants, equipment and mineral interests

(121,421

)

 

(136,933

)

Purchase of other companies, net of cash and restricted cash acquired

 

 

(139,326

)

Proceeds from sale of investments

1,760

 

 

 

Proceeds from disposition of properties, plants and equipment

183

 

 

2,411

 

Insurance proceeds received for damaged property

 

 

4,377

 

Purchases of investments

(389

)

 

(31,971

)

Maturities of investments

 

 

64,895

 

Net cash used in investing activities

(119,867

)

 

(236,547

)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Acquisition of treasury shares

(2,231

)

 

(2,694

)

Proceeds from issuance of common stock and warrants, net of related expense

49,019

 

 

6,744

 

Dividends paid to common stockholders

(4,914

)

 

(4,393

)

Dividends paid to preferred stockholders

(552

)

 

(552

)

Borrowings on debt

279,500

 

 

102,024

 

Payments on debt

(279,500

)

 

(106,036

)

Debt issuance and loan origination fees paid

(976

)

 

(2,638

)

Repayments of capital leases

(7,157

)

 

(7,339

)

Net cash provided by (used in) financing activities

33,189

 

 

(14,884

)

Effect of exchange rates on cash

875

 

 

(1,515

)

Net increase in cash, cash equivalents and restricted cash and cash equivalents

35,063

 

 

(158,725

)

Cash, cash equivalents and restricted cash and cash equivalents at beginning of year

28,414

 

 

187,139

 

Cash, cash equivalents and restricted cash and cash equivalents at end of year

$

63,477

 

 

$

28,414

 

HECLA MINING COMPANY

Metal Prices

 

 

Fourth Quarter Ended

 

Twelve Months Ended

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

December 31, 2018

AVERAGE METAL PRICES

 

 

 

 

 

 

 

Silver -

London PM Fix ($/oz)

$

17.30

 

 

$

14.55

 

 

$

16.20

 

 

$

15.71

 

 

Realized price per ounce

$

17.47

 

 

$

14.58

 

 

$

16.65

 

 

$

15.63

 

Gold -

London PM Fix ($/oz)

$

1,480

 

 

$

1,228

 

 

$

1,392

 

 

$

1,269

 

 

Realized price per ounce

$

1,488

 

 

$

1,237

 

 

$

1,413

 

 

$

1,265

 

Lead -

LME Cash ($/pound)

$

0.92

 

 

$

0.89

 

 

$

0.91

 

 

$

1.02

 

 

Realized price per pound

$

0.91

 

 

$

0.88

 

 

$

0.91

 

 

$

1.04

 

Zinc -

LME Cash ($/pound)

$

1.08

 

 

$

1.19

 

 

$

1.16

 

 

$

1.33

 

 

Realized price per pound

$

1.10

 

 

$

1.15

 

 

$

1.14

 

 

$

1.27

 

Production Data

 

Fourth Quarter Ended

Twelve Months Ended

 

December 31, 2019

 

December 31, 2018

December 31, 2019

 

December 31, 2018

GREENS CREEK UNIT

 

 

 

 

 

 

Tons of ore processed

216,324

 

 

212,522

 

846,076

 

 

845,398

 

Mining cost per ton

$

81.82

 

 

$

77.87

 

$

80.57

 

 

$

71.37

 

Milling cost per ton

$

40.31

 

 

$

35.93

 

$

37.02

 

 

$

33.53

 

Ore grade milled - Silver (oz./ton)

15.69

 

 

12.81

 

14.64

 

 

12.16

 

Ore grade milled - Gold (oz./ton)

0.10

 

 

0.09

 

0.10

 

 

0.09

 

Ore grade milled - Lead (%)

3.07

 

 

2.67

 

2.92

 

 

2.80

 

Ore grade milled - Zinc (%)

7.88

 

 

7.12

 

7.43

 

 

7.47

 

Silver produced (oz.)

2,741,090

 

 

2,163,563

 

9,890,125

 

 

7,953,003

 

Gold produced (oz.)

15,356

 

 

13,097

 

56,625

 

 

51,493

 

Lead produced (tons)

5,444

 

 

4,608

 

20,112

 

 

18,960

 

Zinc produced (tons)

15,475

 

 

13,677

 

56,805

 

 

55,350

 

Total cash cost, after by-product credits, per silver ounce (1)

$

2.76

 

 

$

1.79

 

$

1.97

 

 

$

(1.13

)

AISC, after by-product credits, per silver ounce (1)

$

7.86

 

 

$

7.92

 

$

5.99

 

 

$

5.58

 

Capital additions (in thousands)

$

12,886

 

 

$

12,170

 

$

35,829

 

 

$

46,864

 

LUCKY FRIDAY UNIT

 

 

 

 

 

 

Tons of ore processed

16,337

 

 

1,297

 

57,091

 

 

17,309

 

Mining cost per ton

$

103.83

 

 

$

67.91

 

$

 

 

$

 

Milling cost per ton

$

32.41

 

 

$

22.32

 

$

 

 

$

 

Ore grade milled - Silver (oz./ton)

14.02

 

 

7.33

 

11.83

 

 

10.78

 

Ore grade milled - Lead (%)

9.01

 

 

6.89

 

7.86

 

 

7.19

 

Ore grade milled - Zinc (%)

5.11

 

 

3.13

 

4.25

 

 

4.20

 

Silver produced (oz.)

216,488

 

 

13,026

 

632,944

 

 

169,041

 

Lead produced (tons)

1,360

 

 

96

 

4,098

 

 

1,131

 

Zinc produced (tons)

710

 

 

34

 

2,052

 

 

673

 

Total cash cost, net of by-product credits, per silver ounce (1)

N/A

 

N/A

N/A

 

N/A

AISC, after by-product credits, per silver ounce (1)

N/A

 

N/A

N/A

 

N/A

Capital additions (in thousands)

$

3,043

 

 

$

7,347

 

$

8,989

 

 

$

14,236

 

SAN SEBASTIAN UNIT

 

 

 

 

 

 

Tons of ore processed

39,137

 

 

44,817

 

174,713

 

 

156,733

 

Mining cost per ton

$

107.43

 

 

$

131.16

 

$

111.11

 

 

$

149.77

 

Milling cost per ton

$

78.15

 

 

$

64.03

 

$

65.74

 

 

$

65.55

 

Ore grade milled - Silver (oz./ton)

11.80

 

 

10.85

 

11.78

 

 

14.07

 

Ore grade milled - Gold (oz./ton)

0.115

 

 

0.082

 

0.106

 

 

0.11

 

Silver produced (oz.)

422,434

 

 

443,302

 

1,868,884

 

 

2,037,072

 

Gold produced (oz.)

3,897

 

 

2,928

 

15,673

 

 

14,979

 

Total cash cost, net of by-product credits, per silver ounce (1)

$

8.89

 

 

$

14.78

 

$

8.02

 

 

$

9.69

 

AISC, after by-product credits, per silver ounce (1)

$

11.78

 

 

$

19.51

 

$

12.10

 

 

$

14.68

 

Capital additions (in thousands)

$

(458

)

 

$

2,527

 

$

5,035

 

 

$

6,219

 

CASA BERARDI UNIT

 

 

 

 

 

 

Tons of ore processed - underground

201,937

 

 

187,956

 

784,568

 

 

744,947

 

Tons of ore processed - surface pit

161,430

 

 

135,436

 

593,497

 

 

630,771

 

Tons of ore processed - total

363,367

 

 

323,392

 

1,378,065

 

 

1,375,718

 

Surface tons mined - ore and waste

1,797,105

 

 

1,773,114

 

9,329,268

 

 

6,902,760

 

Mining cost per ton - underground

$

98.03

 

 

$

106.75

 

$

99.14

 

 

$

105.78

 

Mining cost per ton - combined

$

74.54

 

 

$

81.92

 

$

79.27

 

 

$

74.44

 

Mining cost per ton or ore and waste - surface tons mined

$

4.05

 

 

$

3.10

 

$

3.37

 

 

$

3.56

 

Milling cost per ton

$

20.22

 

 

$

15.61

 

$

18.22

 

 

$

15.84

 

Ore grade milled - Gold (oz./ton) - underground

0.164

 

 

0.189

 

0.168

 

 

0.203

 

Ore grade milled - Gold (oz./ton) - surface pit

0.064

 

0.041

 

0.055

 

 

0.059

 

Ore grade milled - Gold (oz./ton) - combined

0.119

 

0.129

 

0.120

 

0.136

 

Ore grade milled - Silver (oz./ton)

0.04

 

0.03

 

0.03

 

 

0.03

 

Gold produced (oz.) - underground

26,506

 

 

31,015

 

106,821

 

 

130,647

 

Gold produced (oz.) - surface pit

8,287

 

 

4,849

 

27,588

 

 

32,097

 

Gold produced (oz.) - total

34,793

 

 

35,864

 

134,409

 

 

162,744

 

Silver produced (oz.) - total

10,499

 

 

7,338

 

31,540

 

 

38,086

 

Total cash cost, net of by-product credits, per gold ounce (1)

$

1,037

 

 

$

940

 

$

1,051

 

 

$

800

 

AISC, after by-product credits, per gold ounce (1)

$

1,278

 

 

$

1,348

 

$

1,354

 

 

$

1,080

 

Capital additions (in thousands)

$

7,699

 

 

$

13,590

 

$

36,059

 

 

$

40,710

 

NEVADA OPERATIONS

 

 

 

 

 

 

Tons of ore processed

46,661

 

 

60,484

 

210,397

 

 

116,383

 

Mining cost per ton

$

215.05

 

 

$

245.15

 

$

170.85

 

 

$

216.80

 

Milling cost per ton

$

88.39

 

 

$

79.09

 

$

83.20

 

 

$

74.91

 

Ore grade milled - Gold (oz./ton)

0.502

 

 

0.365

 

0.361

 

 

0.328

 

Silver produced (oz.)

21,477

 

 

88,156

 

181,741

 

 

172,301

 

Gold produced (oz.)

20,727

 

 

19,098

 

66,166

 

 

32,887

 

Total cash cost, net of by-product credits, per gold ounce (1)

$

946

 

 

$

1,251

 

$

1,096

 

 

$

1,221

 

AISC, after by-product credits, per gold ounce (1)

$

1,024

 

 

$

2,020

 

$

1,527

 

 

$

1,950

 

Capital additions (in thousands)

$

608

 

 

$

17,589

 

$

42,184

 

 

$

32,587

 

(1) Cash cost, after by-product credits, per ounce and AISC, after by-product credits. per ounce represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements. A reconciliation of cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) to cash cost, after by-product credits can be found in the cash cost per ounce reconciliation section of this news release. Gold, lead and zinc produced have been treated as by-product credits in calculating silver costs per ounce. The primary metal produced at Casa Berardi and Nevada Operations is gold, with a by-product credit for the value of silver production.

Non-GAAP Measures (Unaudited)

Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)

The tables below present reconciliations between the most comparable GAAP measure of cost of sales and other direct production costs and depreciation, depletion and amortization to the non-GAAP measures of (i) Cash Cost, Before By-product Credits, (ii) Cash Cost, After By-product Credits, (iii) AISC, Before By-product Credits and (iv) AISC, After By-product Credits for our operations at the Greens Creek, Lucky Friday, San Sebastian, Casa Berardi and Nevada Operations units and for the Company for the three- and twelve-month periods ended December 31, 2019 and 2018, and for estimated amounts for the twelve months ended December 31, 2020.

Cash Cost, After By-product Credits, per Ounce is a measure developed by precious metals companies (including the Silver Institute) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that these non-GAAP measures as we report them are the same as those reported by other mining companies.

Cash Cost, After By-product Credits, per Ounce is an important operating statistic that we utilize to measure each mine's operating performance. We have recently started reporting AISC, After By-product Credits, per Ounce which we use as a measure of our mines' net cash flow after costs for exploration, pre-development, reclamation, and sustaining capital. This is similar to the Cash Cost, After By-product Credits, per Ounce non-GAAP measure we report, but also includes on-site exploration, reclamation, and sustaining capital costs. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce also allow us to benchmark the performance of each of our mines versus those of our competitors. As a primary silver and gold mining company, we also use these statistics on an aggregate basis. We aggregate the Greens Creek, Lucky Friday and San Sebastian mines to compare our performance with that of other primary silver mining companies and aggregate the Casa Berardi and Nevada Operations units to compare our performance with that of other primary gold mining companies. Similarly, these statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.

Cash Cost, Before By-product Credits and AISC, Before By-product Credits include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. AISC, Before By-product Credits for each mine also includes on-site exploration, reclamation, and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense, exploration and sustaining capital projects. By-product credits include revenues earned from all metals other than the primary metal produced at each unit. As depicted in the tables below, by-product credits comprise an essential element of our silver unit cost structure, distinguishing our silver operations due to the polymetallic nature of their orebodies.

In addition to the uses described above, Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce provide management and investors an indication of operating cash flow, after consideration of the average price, received from production. We also use these measurements for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective.

The Casa Berardi and Nevada Operations sections below report Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce for the production of gold, their primary product, and by-product revenues earned from silver, which is a by-product at Casa Berardi and Nevada Operations. Only costs and ounces produced relating to units with the same primary product are combined to represent Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce. Thus, the gold produced at our Casa Berardi and Nevada Operations units is not included as a by-product credit when calculating Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the total of Greens Creek, Lucky Friday and San Sebastian, our combined silver properties. Similarly, the silver produced at our other three units is not included as a by-product credit when calculating the similar gold metrics for Casa Berardi.

In thousands (except per ounce amounts)

Three Months Ended December 31, 2019

 

Greens Creek

 

Lucky Friday(2)

 

San Sebastian

 

Corporate(3)

 

Total Silver

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

71,481

 

 

$

5,472

 

 

$

14,171

 

 

 

 

$

91,124

 

Depreciation, depletion and amortization

(15,359

)

 

(284

)

 

(2,838

)

 

 

 

(18,481

)

Treatment costs

14,168

 

 

1,050

 

 

328

 

 

 

 

15,546

 

Change in product inventory

(10,323

)

 

308

 

 

(1,575

)

 

 

 

(11,590

)

Reclamation and other costs

(1,083

)

 

 

 

(558

)

 

 

 

(1,641

)

Exclusion of Lucky Friday costs

 

 

(6,546

)

 

 

 

 

 

(6,546

)

Cash Cost, Before By-product Credits (1)

58,884

 

 

 

 

9,528

 

 

 

 

68,412

 

Reclamation and other costs

737

 

 

 

 

123

 

 

 

 

860

 

Exploration

357

 

 

 

 

215

 

 

227

 

 

799

 

Sustaining capital

12,886

 

 

 

 

884

 

 

35

 

 

13,805

 

General and administrative

 

 

 

 

 

 

8,977

 

 

8,977

 

AISC, Before By-product Credits (1)

72,864

 

 

 

 

10,750

 

 

 

 

92,853

 

By-product credits:

 

 

 

 

 

 

 

 

 

Zinc

(23,478

)

 

 

 

 

 

 

 

(23,478

)

Gold

(20,006

)

 

 

 

(5,767

)

 

 

 

(25,773

)

Lead

(7,825

)

 

 

 

 

 

 

 

(7,825

)

Total By-product credits

(51,309

)

 

 

 

(5,767

)

 

 

 

(57,076

)

Cash Cost, After By-product Credits

$

7,575

 

 

$

 

 

$

3,761

 

 

 

 

$

11,336

 

AISC, After By-product Credits

$

21,555

 

 

$

 

 

$

4,983

 

 

 

 

$

35,777

 

Divided by ounces produced

2,741

 

 

 

 

423

 

 

 

 

3,164

 

Cash Cost, Before By-product Credits, per Silver Ounce

$

21.49

 

 

$

 

 

$

22.52

 

 

 

 

$

21.62

 

By-product credits per ounce

(18.73

)

 

 

 

(13.63

)

 

 

 

(18.04

)

Cash Cost, After By-product Credits, per Silver Ounce

$

2.76

 

 

$

 

 

$

8.89

 

 

 

 

$

3.58

 

AISC, Before By-product Credits, per Silver Ounce

$

26.59

 

 

$

 

 

$

25.41

 

 

 

 

$

29.35

 

By-product credits per ounce

(18.73

)

 

 

 

(13.63

)

 

 

 

(18.04

)

AISC, After By-product Credits, per Silver Ounce

$

7.86

 

 

$

 

 

$

11.78

 

 

 

 

$

11.31

 

In thousands (except per ounce amounts)

Three Months Ended December 31, 2019

 

Casa Berardi

 

Nevada Operations

 

Total Gold

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

60,444

 

 

$

48,059

 

 

$

108,503

 

Depreciation, depletion and amortization

(20,154

)

 

(21,845

)

 

(41,999

)

Treatment costs

447

 

 

39

 

 

486

 

Change in product inventory

(4,343

)

 

(5,896

)

 

(10,239

)

Reclamation and other costs

(130

)

 

(378

)

 

(508

)

Cash Cost, Before By-product Credits (1)

36,264

 

 

19,979

 

 

56,243

 

Reclamation and other costs

129

 

 

378

 

 

507

 

Exploration

560

 

 

285

 

 

845

 

Sustaining capital

7,699

 

 

946

 

 

8,645

 

AISC, Before By-product Credits (1)

44,652

 

 

21,588

 

 

66,240

 

By-product credits:

 

 

 

 

 

Silver

(180

)

 

(371

)

 

(551

)

Total By-product credits

(180

)

 

(371

)

 

(551

)

Cash Cost, After By-product Credits

$

36,084

 

 

$

19,608

 

 

$

55,692

 

AISC, After By-product Credits

$

44,472

 

 

$

21,217

 

 

$

65,689

 

Divided by gold ounces produced

35

 

 

21

 

 

56

 

Cash Cost, Before By-product Credits, per Gold Ounce

$

1,042

 

 

$

964

 

 

$

1,003

 

By-product credits per ounce

(5

)

 

(18

)

 

(10

)

Cash Cost, After By-product Credits, per Gold Ounce

$

1,037

 

 

$

946

 

 

$

993

 

AISC, Before By-product Credits, per Gold Ounce

$

1,283

 

 

$

1,042

 

 

$

1,197

 

By-product credits per ounce

(5

)

 

(18

)

 

(10

)

AISC, After By-product Credits, per Gold Ounce

$

1,278

 

 

$

1,024

 

 

$

1,187

 

In thousands (except per ounce amounts)

Three Months Ended December 31, 2019

 

Total Silver

 

Total Gold

 

Total

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

91,124

 

 

$

108,503

 

 

$

199,627

 

Depreciation, depletion and amortization

(18,481

)

 

(41,999

)

 

(60,480

)

Treatment costs

15,546

 

 

486

 

 

16,032

 

Change in product inventory

(11,590

)

 

(10,239

)

 

(21,829

)

Reclamation and other costs

(1,641

)

 

(508

)

 

(2,149

)

Exclusion of Lucky Friday costs

(6,546

)

 

 

 

(6,546

)

Cash Cost, Before By-product Credits (1)

68,412

 

 

56,243

 

 

124,655

 

Reclamation and other costs

860

 

 

507

 

 

1,367

 

Exploration

799

 

 

845

 

 

1,644

 

Sustaining capital

13,805

 

 

8,645

 

 

22,450

 

General and administrative

8,977

 

 

 

 

8,977

 

AISC, Before By-product Credits (1)

92,853

 

 

66,240

 

 

159,093

 

By-product credits:

 

 

 

 

 

Zinc

(23,478

)

 

 

 

(23,478

)

Gold

(25,773

)

 

 

 

(25,773

)

Lead

(7,825

)

 

 

 

(7,825

)

Silver

 

 

(551

)

 

(551

)

Total By-product credits

(57,076

)

 

(551

)

 

(57,627

)

Cash Cost, After By-product Credits

$

11,336

 

 

$

55,692

 

 

$

67,028

 

AISC, After By-product Credits

$

35,777

 

 

$

65,689

 

 

$

101,466

 

Divided by ounces produced

3,164

 

 

56

 

 

 

Cash Cost, Before By-product Credits, per Ounce

$

21.62

 

 

$

1,003

 

 

 

By-product credits per ounce

(18.04

)

 

(10

)

 

 

Cash Cost, After By-product Credits, per Ounce

$

3.58

 

 

$

993

 

 

 

AISC, Before By-product Credits, per Ounce

$

29.35

 

 

$

1,197

 

 

 

By-product credits per ounce

(18.04

)

 

(10

)

 

 

AISC, After By-product Credits, per Ounce

$

11.31

 

 

$

1,187

 

 

 

In thousands (except per ounce amounts)

Three Months Ended December 31, 2018

 

Greens Creek

 

Lucky Friday(2)

 

San Sebastian

 

Corporate(3)

 

Total Silver

 

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

48,302

 

 

$

3,906

 

 

$

10,638

 

 

 

 

$

62,846

 

 

Depreciation, depletion and amortization

(11,631

)

 

(209

)

 

(1,016

)

 

 

 

(12,856

)

 

Treatment costs

9,038

 

 

78

 

 

180

 

 

 

 

9,296

 

 

Change in product inventory

2,092

 

 

(148

)

 

527

 

 

 

 

2,471

 

 

Reclamation and other costs

(587

)

 

 

 

(185

)

 

 

 

(772

)

 

Exclusion of Lucky Friday costs

 

 

(3,627

)

 

 

 

 

 

(3,627

)

 

Cash Cost, Before By-product Credits (1)

47,214

 

 

 

 

10,144

 

 

 

 

57,358

 

 

Reclamation and other costs

849

 

 

 

 

105

 

 

 

 

954

 

 

Exploration

242

 

 

 

 

1,164

 

 

608

 

 

2,014

 

 

Sustaining capital

12,170

 

 

 

 

828

 

 

157

 

 

13,155

 

 

General and administrative

 

 

 

 

 

 

8,693

 

 

8,693

 

 

AISC, Before By-product Credits (1)

60,475

 

 

 

 

12,241

 

 

 

 

82,174

 

 

By-product credits:

 

 

 

 

 

 

 

 

 

 

Zinc

(22,788

)

 

 

 

 

 

 

 

(22,788

)

 

Gold

(14,079

)

 

 

 

(3,595

)

 

 

 

(17,674

)

 

Lead

(6,475

)

 

 

 

 

 

 

 

(6,475

)

 

Silver

 

 

 

 

 

 

 

 

 

 

Total By-product credits

(43,342

)

 

 

 

(3,595

)

 

 

 

(46,937

)

 

Cash Cost, After By-product Credits

$

3,872

 

 

$

 

 

$

6,549

 

 

 

 

$

10,421

 

 

AISC, After By-product Credits

$

17,133

 

 

$

 

 

$

8,646

 

 

 

 

$

35,237

 

 

Divided by silver ounces produced

2,164

 

 

 

 

443

 

 

 

 

2,607

 

 

Cash Cost, Before By-product Credits, per Silver Ounce

$

21.83

 

 

$

 

 

$

22.90

 

 

 

 

$

22.01

 

 

By-product credits per Silver ounce

(20.04

)

 

 

 

(8.12

)

 

 

 

(18.00

)

 

Cash Cost, After By-product Credits, per Silver Ounce

$

1.79

 

 

$

 

 

$

14.78

 

 

 

 

$

4.01

 

 

AISC, Before By-product Credits, per Silver Ounce

$

27.96

 

 

$

 

 

$

27.63

 

 

 

 

$

31.53

 

 

By-product credits per Silver ounce

(20.04

)

 

 

 

(8.12

)

 

 

 

(18.00

)

 

AISC, After By-product Credits, per Silver Ounce

$

7.92

 

 

$

 

 

$

19.51

 

 

 

 

$

13.53

 

 

In thousands (except per ounce amounts)

Three Months Ended December 31, 2018

 

Casa Berardi

 

Nevada Operations

 

Total Gold

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

47,253

 

 

$

27,686

 

 

$

74,939

 

Depreciation, depletion and amortization

(16,423

)

 

(6,314

)

 

(22,737

)

Treatment costs

440

 

 

48

 

 

488

 

Change in product inventory

2,686

 

 

4,711

 

 

7,397

 

Reclamation and other costs

(137

)

 

(954

)

 

(1,091

)

Cash Cost, Before By-product Credits (1)

33,819

 

 

25,177

 

 

58,996

 

Reclamation and other costs

137

 

 

567

 

 

704

 

Exploration

903

 

 

4,101

 

 

5,004

 

Sustaining capital

13,591

 

 

10,018

 

 

23,609

 

AISC, Before By-product Credits (1)

48,450

 

 

39,863

 

 

88,313

 

By-product credits:

 

 

 

 

 

Silver

(106

)

 

(1,280

)

 

(1,386

)

Total By-product credits

(106

)

 

(1,280

)

 

(1,386

)

Cash Cost, After By-product Credits

$

33,713

 

 

$

23,897

 

 

$

57,610

 

AISC, After By-product Credits

$

48,344

 

 

$

38,583

 

 

$

86,927

 

Divided by gold ounces produced

36

 

 

19

 

 

55

 

Cash Cost, Before By-product Credits, per Gold Ounce

$

943

 

 

$

1,318

 

 

$

1,073

 

By-product credits per Gold Ounce

(3

)

 

(67

)

 

(25

)

Cash Cost, After By-product Credits, per Gold Ounce

$

940

 

 

$

1,251

 

 

$

1,048

 

AISC, Before By-product Credits, per Gold Ounce

$

1,351

 

 

$

2,087

 

 

$

1,607

 

By-product credits per Gold Ounce

(3

)

 

(67

)

 

(25

)

AISC, After By-product Credits, per Gold Ounce

$

1,348

 

 

$

2,020

 

 

$

1,582

 

In thousands (except per ounce amounts)

Three Months Ended December 31, 2018

 

Total Silver

 

Total Gold

 

Total

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

62,846

 

 

74,939

 

 

$

137,785

 

Depreciation, depletion and amortization

(12,856

)

 

(22,737

)

 

(35,593

)

Treatment costs

9,296

 

 

488

 

 

9,784

 

Change in product inventory

2,471

 

 

7,397

 

 

9,868

 

Reclamation and other costs

(772

)

 

(1,091

)

 

(1,863

)

Exclusion of Lucky Friday costs

(3,627

)

 

 

 

(3,627

)

Cash Cost, Before By-product Credits (1)

57,358

 

 

58,996

 

 

116,354

 

Reclamation and other costs

954

 

 

704

 

 

1,658

 

Exploration

2,014

 

 

5,004

 

 

7,018

 

Sustaining capital

13,155

 

 

23,609

 

 

36,764

 

General and administrative

8,693

 

 

 

 

8,693

 

AISC, Before By-product Credits (1)

82,174

 

 

88,313

 

 

170,487

 

By-product credits:

 

 

 

 

 

Zinc

(22,788

)

 

 

 

(22,788

)

Gold

(17,674

)

 

 

 

(17,674

)

Lead

(6,475

)

 

 

 

(6,475

)

Silver

 

 

(1,386

)

 

(1,386

)

Total By-product credits

(46,937

)

 

(1,386

)

 

(48,323

)

Cash Cost, After By-product Credits

$

10,421

 

 

$

57,610

 

 

$

68,031

 

AISC, After By-product Credits

$

35,237

 

 

$

86,927

 

 

$

122,164

 

Divided by ounces produced

2,607

 

 

55

 

 

 

Cash Cost, Before By-product Credits, per Ounce

$

22.01

 

 

$

1,073

 

 

 

By-product credits per ounce

(18.00

)

 

(25

)

 

 

Cash Cost, After By-product Credits, per Ounce

$

4.01

 

 

$

1,048

 

 

 

AISC, Before By-product Credits, per Ounce

$

31.53

 

 

$

1,607

 

 

 

By-product credits per ounce

(18.00

)

 

(25

)

 

 

AISC, After By-product Credits, per Ounce

$

13.53

 

 

$

1,582

 

 

 

In thousands (except per ounce amounts)

Twelve Months Ended December 31, 2019

 

Greens Creek

 

Lucky Friday(2)

 

San Sebastian

 

Corporate(3)

 

Total Silver

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

211,719

 

 

$

16,621

 

 

$

50,509

 

 

 

 

$

278,849

 

Depreciation, depletion and amortization

(47,587

)

 

(1,175

)

 

(9,772

)

 

 

 

(58,534

)

Treatment costs

48,487

 

 

2,884

 

 

760

 

 

 

 

52,131

 

Change in product inventory

(1,155

)

 

1,016

 

 

(2,953

)

 

 

 

(3,092

)

Reclamation and other costs

(2,523

)

 

 

 

(1,588

)

 

 

 

(4,111

)

Exclusion of Lucky Friday costs

 

 

(19,346

)

 

 

 

 

 

(19,346

)

Cash Cost, Before By-product Credits (1)

208,941

 

 

 

 

36,956

 

 

 

 

245,897

 

Reclamation and other costs

2,949

 

 

 

 

492

 

 

 

 

3,441

 

Exploration

982

 

 

 

 

4,667

 

 

1,332

 

 

6,981

 

Sustaining capital

35,829

 

 

 

 

2,461

 

 

108

 

 

38,398

 

General and administrative

 

 

 

 

 

 

35,832

 

 

35,832

 

AISC, Before By-product Credits (1)

248,701

 

 

 

 

44,576

 

 

 

 

330,549

 

By-product credits:

 

 

 

 

 

 

 

 

 

Zinc

(91,435

)

 

 

 

 

 

 

 

(91,435

)

Gold

(69,391

)

 

 

 

(21,960

)

 

 

 

(91,351

)

Lead

(28,589

)

 

 

 

 

 

 

 

(28,589

)

Total By-product credits

(189,415

)

 

 

 

(21,960

)

 

 

 

(211,375

)

Cash Cost, After By-product Credits

$

19,526

 

 

$

 

 

$

14,996

 

 

 

 

$

34,522

 

AISC, After By-product Credits

$

59,286

 

 

$

 

 

$

22,616

 

 

 

 

$

119,174

 

Divided by silver ounces produced

9,890

 

 

 

 

1,869

 

 

 

 

11,759

 

Cash Cost, Before By-product Credits, per Silver Ounce

$

21.12

 

 

$

 

 

$

19.77

 

 

 

 

$

20.91

 

By-product credits per Silver ounce

(19.15

)

 

 

 

(11.75

)

 

 

 

(17.98

)

Cash Cost, After By-product Credits, per Silver Ounce

$

1.97

 

 

$

 

 

$

8.02

 

 

 

 

$

2.93

 

AISC, Before By-product Credits, per Silver Ounce

$

25.14

 

 

$

 

 

$

23.85

 

 

 

 

$

28.11

 

By-product credits per Silver ounce

(19.15

)

 

 

 

(11.75

)

 

 

 

(17.98

)

AISC, After By-product Credits, per Silver Ounce

$

5.99

 

 

$

 

 

$

12.10

 

 

 

 

$

10.13

 

In thousands (except per ounce amounts)

Twelve Months Ended December 31, 2019

 

Casa Berardi

 

Nevada Operations

 

Total Gold

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

217,682

 

 

$

153,336

 

 

$

371,018

 

Depreciation, depletion and amortization

(73,960

)

 

(67,024

)

 

(140,984

)

Treatment costs

1,876

 

 

158

 

 

2,034

 

Change in product inventory

(3,371

)

 

(9,008

)

 

(12,379

)

Reclamation and other costs

(515

)

 

(2,019

)

 

(2,534

)

Cash Cost, Before By-product Credits (1)

141,712

 

 

75,443

 

 

217,155

 

Reclamation and other costs

515

 

 

1,512

 

 

2,027

 

Exploration

3,450

 

 

2,333

 

 

5,783

 

Sustaining capital

36,825

 

 

24,652

 

 

61,477

 

AISC, Before By-product Credits (1)

182,502

 

 

103,940

 

 

286,442

 

By-product credits:

 

 

 

 

 

Silver

(508

)

 

(2,922

)

 

(3,430

)

Total By-product credits

(508

)

 

(2,922

)

 

(3,430

)

Cash Cost, After By-product Credits

$

141,204

 

 

$

72,521

 

 

$

213,725

 

AISC, After By-product Credits

$

181,994

 

 

$

101,018

 

 

$

283,012

 

Divided by gold ounces produced

134

 

 

66

 

 

200

 

Cash Cost, Before By-product Credits, per Gold Ounce

$

1,055

 

 

$

1,140

 

 

$

1,083

 

By-product credits per Gold ounce

(4

)

 

(44

)

 

(17

)

Cash Cost, After By-product Credits, per Gold Ounce

$

1,051

 

 

$

1,096

 

 

$

1,066

 

AISC, Before By-product Credits, per Gold Ounce

$

1,358

 

 

$

1,571

 

 

$

1,428

 

By-product credits per Gold ounce

(4

)

 

(44

)

 

(17

)

AISC, After By-product Credits, per Gold Ounce

$

1,354

 

 

$

1,527

 

 

$

1,411

 

In thousands (except per ounce amounts)

Twelve Months Ended December 31, 2019

 

Total Silver

 

Total Gold

 

Total

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

278,849

 

 

$

371,018

 

 

$

649,867

 

Depreciation, depletion and amortization

(58,534

)

 

(140,984

)

 

(199,518

)

Treatment costs

52,131

 

 

2,034

 

 

54,165

 

Change in product inventory

(3,092

)

 

(12,379

)

 

(15,471

)

Reclamation and other costs

(4,111

)

 

(2,534

)

 

(6,645

)

Exclusion of Lucky Friday costs

(19,346

)

 

 

 

(19,346

)

Cash Cost, Before By-product Credits (1)

245,897

 

 

217,155

 

 

463,052

 

Reclamation and other costs

3,441

 

 

2,027

 

 

5,468

 

Exploration

6,981

 

 

5,783

 

 

12,764

 

Sustaining capital

38,398

 

 

61,477

 

 

99,875

 

General and administrative

35,832

 

 

 

 

35,832

 

AISC, Before By-product Credits (1)

330,549

 

 

286,442

 

 

616,991

 

By-product credits:

 

 

 

 

 

Zinc

(91,435

)

 

 

 

(91,435

)

Gold

(91,351

)

 

 

 

(91,351

)

Lead

(28,589

)

 

 

 

(28,589

)

Silver

 

 

(3,430

)

 

(3,430

)

Total By-product credits

(211,375

)

 

(3,430

)

 

(214,805

)

Cash Cost, After By-product Credits

$

34,522

 

 

$

213,725

 

 

$

248,247

 

AISC, After By-product Credits

$

119,174

 

 

$

283,012

 

 

$

402,186

 

Divided by ounces produced

11,759

 

 

200

 

 

 

Cash Cost, Before By-product Credits, per Ounce

$

20.91

 

 

$

1,083

 

 

 

By-product credits per ounce

(17.98

)

 

(17

)

 

 

Cash Cost, After By-product Credits, per Ounce

$

2.93

 

 

$

1,066

 

 

 

AISC, Before By-product Credits, per Ounce

$

28.11

 

 

$

1,428

 

 

 

By-product credits per ounce

(17.98

)

 

(17

)

 

 

AISC, After By-product Credits, per Ounce

$

10.13

 

 

$

1,411

 

 

 

In thousands (except per ounce amounts)

Twelve Months Ended December 31, 2018

 

 

Greens Creek

 

Lucky Friday(2)

 

San Sebastian

 

Corporate(3)

 

Total Silver

 

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

190,066

 

 

$

9,750

 

 

$

41,815

 

 

 

 

$

241,631

 

 

Depreciation, depletion and amortization

(46,511

)

 

(1,012

)

 

(4,602

)

 

 

 

(52,125

)

 

Treatment costs

38,174

 

 

839

 

 

807

 

 

 

 

39,820

 

 

Change in product inventory

3,087

 

 

(2,330

)

 

2,385

 

 

 

 

3,142

 

 

Reclamation and other costs

(2,911

)

 

 

 

(1,559

)

 

 

 

(4,470

)

 

Exclusion of Lucky Friday costs

 

 

(7,247

)

 

 

 

 

 

(7,247

)

 

Cash Cost, Before By-product Credits (1)

181,905

 

 

 

 

38,846

 

 

 

 

220,751

 

 

Reclamation and other costs

3,397

 

 

 

 

419

 

 

 

 

3,816

 

 

Exploration

3,151

 

 

 

 

7,792

 

 

1,959

 

 

12,902

 

 

Sustaining capital

46,864

 

 

 

 

1,947

 

 

1,495

 

 

50,306

 

 

General and administrative

 

 

 

 

 

 

36,542

 

 

36,542

 

 

AISC, Before By-product Credits (1)

235,317

 

 

 

 

49,004

 

 

 

 

324,317

 

 

By-product credits:

 

 

 

 

 

 

 

 

 

 

Zinc

(103,096

)

 

 

 

 

 

 

 

(103,096

)

 

Gold

(57,316

)

 

 

 

(19,100

)

 

 

 

(76,416

)

 

Lead

(30,512

)

 

 

 

 

 

 

 

(30,512

)

 

Silver

 

 

 

 

 

 

 

 

 

 

Total By-product credits

(190,924

)

 

 

 

(19,100

)

 

 

 

(210,024

)

 

Cash Cost, After By-product Credits

$

(9,019

)

 

$

 

 

$

19,746

 

 

 

 

$

10,727

 

 

AISC, After By-product Credits

$

44,393

 

 

$

 

 

$

29,904

 

 

 

 

$

114,293

 

 

Divided by silver ounces produced

7,953

 

 

 

 

2,037

 

 

 

 

9,990

 

 

Cash Cost, Before By-product Credits, per Silver Ounce

$

22.88

 

 

$

 

 

$

19.07

 

 

 

 

$

22.10

 

 

By-product credits per silver ounce

(24.01

)

 

 

 

(9.38

)

 

 

 

(21.02

)

 

Cash Cost, After By-product Credits, per Silver Ounce

$

(1.13

)

 

$

 

 

$

9.69

 

 

 

 

$

1.08

 

 

AISC, Before By-product Credits, per Silver Ounce

$

29.59

 

 

$

 

 

$

24.06

 

 

 

 

$

32.46

 

 

By-product credits per silver ounce

(24.01

)

 

 

 

(9.38

)

 

 

 

(21.02

)

 

AISC, After By-product Credits, per Silver Ounce

$

5.58

 

 

$

 

 

$

14.68

 

 

 

 

$

11.44

 

 

In thousands (except per ounce amounts)

Twelve Months Ended December 31, 2018

 

Casa Berardi

 

Nevada Operations

 

Total Gold

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

199,402

 

 

$

47,005

 

 

$

246,407

 

Depreciation, depletion and amortization

(71,302

)

 

(10,617

)

 

(81,919

)

Treatment costs

2,068

 

 

90

 

 

2,158

 

Change in product inventory

1,205

 

 

7,138

 

 

8,343

 

Reclamation and other costs

(558

)

 

(954

)

 

(1,512

)

Cash Cost, Before By-product Credits (1)

130,815

 

 

42,662

 

 

173,477

 

Reclamation and other costs

558

 

 

567

 

 

1,125

 

Exploration

4,277

 

 

6,345

 

 

10,622

 

Sustaining capital

40,711

 

 

17,079

 

 

57,790

 

AISC, Before By-product Credits (1)

176,361

 

 

66,653

 

 

243,014

 

By-product credits:

 

 

 

 

 

Zinc

 

 

 

 

 

Gold

 

 

 

 

 

Lead

 

 

 

 

 

Silver

(597

)

 

(2,512

)

 

(3,109

)

Total By-product credits

(597

)

 

(2,512

)

 

(3,109

)

Cash Cost, After By-product Credits

$

130,218

 

 

$

40,150

 

 

$

170,368

 

AISC, After By-product Credits

$

175,764

 

 

$

64,141

 

 

$

239,905

 

Divided by gold ounces produced

163

 

 

33

 

 

196

 

Cash Cost, Before By-product Credits, per Gold Ounce

$

804

 

 

$

1,297

 

 

$

887

 

By-product credits per gold ounce

(4

)

 

(76

)

 

(16

)

Cash Cost, After By-product Credits, per Gold Ounce

$

800

 

 

$

1,221

 

 

$

871

 

AISC, Before By-product Credits, per Gold Ounce

$

1,084

 

 

$

2,026

 

 

$

1,242

 

By-product credits per ounce

(4

)

 

(76

)

 

(16

)

AISC, After By-product Credits, per Gold Ounce

$

1,080

 

 

$

1,950

 

 

$

1,226

 

In thousands (except per ounce amounts)

Twelve Months Ended December 31, 2018

 

Total Silver

 

Total Gold

 

Total

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

241,631

 

 

$

246,407

 

 

$

488,038

 

Depreciation, depletion and amortization

(52,125

)

 

(81,919

)

 

(134,044

)

Treatment costs

39,820

 

 

2,158

 

 

41,978

 

Change in product inventory

3,142

 

 

8,343

 

 

11,485

 

Reclamation and other costs

(4,470

)

 

(1,512

)

 

(5,982

)

Exclusion of Lucky Friday costs

(7,247

)

 

 

 

(7,247

)

Cash Cost, Before By-product Credits (1)

220,751

 

 

173,477

 

 

394,228

 

Reclamation and other costs

3,816

 

 

1,125

 

 

4,941

 

Exploration

12,902

 

 

10,622

 

 

23,524

 

Sustaining capital

50,306

 

 

57,790

 

 

108,096

 

General and administrative

36,542

 

 

 

 

36,542

 

AISC, Before By-product Credits (1)

324,317

 

 

243,014

 

 

567,331

 

By-product credits:

 

 

 

 

 

Zinc

(103,096

)

 

 

 

(103,096

)

Gold

(76,416

)

 

 

 

(76,416

)

Lead

(30,512

)

 

 

 

(30,512

)

Silver

 

 

(3,109

)

 

(3,109

)

Total By-product credits

(210,024

)

 

(3,109

)

 

(213,133

)

Cash Cost, After By-product Credits

$

10,727

 

 

$

170,368

 

 

$

181,095

 

AISC, After By-product Credits

$

114,293

 

 

$

239,905

 

 

$

354,198

 

Divided by ounces produced

9,990

 

 

196

 

 

 

Cash Cost, Before By-product Credits, per Ounce

$

22.10

 

 

$

887

 

 

 

By-product credits per ounce

(21.02

)

 

(16

)

 

 

Cash Cost, After By-product Credits, per Ounce

$

1.08

 

 

$

871

 

 

 

AISC, Before By-product Credits, per Ounce

$

32.46

 

 

$

1,242

 

 

 

By-product credits per ounce

(21.02

)

 

(16

)

 

 

AISC, After By-product Credits, per Ounce

$

11.44

 

 

$

1,226

 

 

 

In thousands (except per ounce amounts)

Estimate for Twelve Months Ended December 31, 2020

 

Greens Creek

 

Lucky Friday(2)

 

San Sebastian

 

Corporate(3)

 

Total Silver

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

200,000

 

 

$

14,500

 

 

$

25,000

 

 

 

 

$

239,500

 

Depreciation, depletion and amortization

(42,000

)

 

(3,500

)

 

(7,000

)

 

 

 

(52,500

)

Treatment costs

33,700

 

 

2,750

 

 

850

 

 

 

 

37,300

 

Change in product inventory

15,500

 

 

 

(5,200

 

 

 

10,300

Reclamation and other costs

3,500

 

 

250

 

 

1,300

 

 

 

 

5,050

 

Cash Cost, Before By-product Credits (1)

210,700

 

 

14,000

 

 

14,950

 

 

 

 

239,650

 

Reclamation and other costs

5,000

 

 

 

 

500

 

 

 

 

5,500

 

Exploration

800

 

 

 

 

2,300

 

 

 

 

3,100

 

Sustaining capital

35,500

 

 

2,500

 

 

600

 

 

 

 

38,600

 

General and administrative

 

 

 

 

 

 

29,000

 

 

29,000

 

AISC, Before By-product Credits (1)

252,000

 

 

16,500

 

 

18,350

 

 

 

 

315,850

 

By-product credits:

 

 

 

 

 

 

 

 

 

Zinc

(79,000

)

 

(2,700

)

 

 

 

 

 

(81,700

)

Gold

(63,000

)

 

 

 

(12,000

)

 

 

 

(75,000

)

Lead

(29,000

)

 

(7,600

)

 

 

 

 

 

(36,600

)

Total By-product credits

(171,000

)

 

(10,300

)

 

(12,000

)

 

 

 

(193,300

)

Cash Cost, After By-product Credits

$

39,700

 

 

$

3,700

 

 

$

2,950

 

 

 

 

$

46,350

 

AISC, After By-product Credits

$

81,000

 

 

$

6,200

 

 

$

6,350

 

 

 

 

$

122,550

 

Divided by silver ounces produced

9,100

 

 

700

 

 

900

 

 

 

 

10,700

 

Cash Cost, Before By-product Credits, per Silver Ounce

$

23.15

 

 

$

20.00

 

 

$

16.61

 

 

 

 

$

22.40

 

By-product credits per silver ounce

(18.79

)

 

(14.71

)

 

(13.33

)

 

 

 

(18.07

)

Cash Cost, After By-product Credits, per Silver Ounce

$

4.36

 

 

$

5.29

 

 

$

3.28

 

 

 

 

$

4.33

 

AISC, Before By-product Credits, per Silver Ounce

$

27.69

 

 

$

23.57

 

 

$

20.39

 

 

 

 

$

29.52

 

By-product credits per silver ounce

(18.79

)

 

(14.71

)

 

(13.33

)

 

 

 

(18.07

)

AISC, After By-product Credits, per Silver Ounce

$

8.90

 

 

$

8.86

 

 

$

7.06

 

 

 

 

$

11.45

 

In thousands (except per ounce amounts)

Estimate for Twelve Months Ended December 31, 2020

 

Casa Berardi

 

Nevada Operations

 

Total Gold

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

185,000

 

 

$

50,000

 

 

$

235,000

 

Depreciation, depletion and amortization

(57,000

)

 

(23,000

)

 

(80,000

)

Treatment costs

 

 

 

 

 

Change in product inventory

(7,000

)

 

(4,000

 

(11,000

Reclamation and other costs

1,000

 

 

1,250

 

 

2,250

 

Cash Cost, Before By-product Credits (1)

122,000

 

 

24,250

 

 

146,250

 

Reclamation and other costs

600

 

 

200

 

 

800

 

Exploration

2,600

 

 

 

 

2,600

 

Sustaining capital

46,000

 

 

1,000

 

 

47,000

 

AISC, Before By-product Credits (1)

171,200

 

 

25,450

 

 

196,650

 

By-product credits:

 

 

 

 

 

Silver

(500

)

 

(500

)

 

(1,000

)

Total By-product credits

(500

)

 

(500

)

 

(1,000

)

Cash Cost, After By-product Credits

$

121,500

 

 

$

23,750

 

 

$

145,250

 

AISC, After By-product Credits

$

170,700

 

 

$

24,950

 

 

$

195,650

 

Divided by gold ounces produced

137

 

 

27

 

 

164

 

Cash Cost, Before By-product Credits, per Gold Ounce

$

891

 

 

$

898

 

 

$

892

 

By-product credits per gold ounce

(4

)

 

(19

)

 

(6

)

Cash Cost, After By-product Credits, per Gold Ounce

$

887

 

 

$

879

 

 

$

886

 

AISC, Before By-product Credits, per Gold Ounce

$

1,250

 

 

$

943

 

 

$

1,199

 

By-product credits per gold ounce

(4

)

 

(19

)

 

(6

)

AISC, After By-product Credits, per Gold Ounce

$

1,246

 

 

$

924

 

 

$

1,193

 

In thousands (except per ounce amounts)

Estimate for Twelve Months Ended December 31, 2020

 

Total Silver

 

Total Gold

 

Total

Cost of sales and other direct production costs and depreciation, depletion and amortization

$

252,500

 

 

$

220,000

 

 

$

472,500

 

Depreciation, depletion and amortization

(52,500

)

 

(80,000

)

 

(132,500

)

Treatment costs

37,300

 

 

 

 

37,300

 

Change in product inventory

(2,700

)

 

4,000

 

 

1,300

 

Reclamation and other costs

5,050

 

 

2,250

 

 

7,300

 

Cash Cost, Before By-product Credits (1)

239,650

 

 

146,250

 

 

385,900

 

Reclamation and other costs

5,500

 

 

800

 

 

6,300

 

Exploration

3,100

 

 

2,600

 

 

5,700

 

Sustaining capital

38,600

 

 

47,000

 

 

85,600

 

General and administrative

29,000

 

 

 

 

29,000

 

AISC, Before By-product Credits (1)

315,850

 

 

196,650

 

 

512,500

 

By-product credits:

 

 

 

 

 

Zinc

(81,700

)

 

 

 

(81,700

)

Gold

(75,000

)

 

 

 

(75,000

)

Lead

(36,600

)

 

 

 

(36,600

)

Silver

 

 

(1,000

)

 

(1,000

)

Total By-product credits

(193,300

)

 

(1,000

)

 

(194,300

)

Cash Cost, After By-product Credits

$

46,350

 

 

$

145,250

 

 

$

191,600

 

AISC, After By-product Credits

$

122,550

 

 

$

195,650

 

 

$

318,200

 

Divided by ounces produced

10,700

 

 

164

 

 

 

Cash Cost, Before By-product Credits, per Ounce

$

22.40

 

 

$

892

 

 

 

By-product credits per ounce

(18.07

)

 

(6

)

 

 

Cash Cost, After By-product Credits, per Ounce

$

4.33

 

 

$

886

 

 

 

AISC, Before By-product Credits, per Ounce

$

29.52

 

 

$

1,199

 

 

 

By-product credits per ounce

(18.07

)

 

(6

)

 

 

AISC, After By-product Credits, per Ounce

$

11.45

 

 

$

1,193

 

 

 

(1)

Includes all direct and indirect operating costs related to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, before by-product revenues earned from all metals other than the primary metal produced at each unit. AISC, Before By-product Credits also includes on-site exploration, reclamation, and sustaining capital costs.

(2)

The unionized employees at Lucky Friday had been on strike from March 13, 2017, until January 7, 2020, and production at Lucky Friday has been limited since that time. For 2019 and 2018, costs related to suspension of full production totaling approximately $7.8 million and $14.6 million, respectively, along with $4.3 million and $5.0 million, respectively, in non-cash depreciation expense for that period, have been excluded from the calculations of cost of sales and other direct production costs and depreciation, depletion and amortization, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

(3)

AISC, Before By-product Credits for our consolidated silver properties includes corporate costs for general and administrative expense, exploration and sustaining capital.

Reconciliation of Net (Loss) Income Applicable to Common Shareholders (GAAP) to Adjusted Net Income (Loss) Applicable to Common Shareholders (non-GAAP)

This release refers to a non-GAAP measure of adjusted net income (loss) applicable to common stockholders and adjusted net income (loss) per share, which are indicators of our performance. They exclude certain impacts which are of a nature which we believe are not reflective of our underlying performance. Management believes that adjusted net income (loss) per common share provides investors with the ability to better evaluate our underlying operating performance.

Dollars in thousands (except per share amounts)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

Net loss applicable to common stockholders (GAAP)

$

(8,114

)

 

$

(23,831

)

 

$

(100,109

)

 

$

(27,115

)

Adjusting items:

 

 

 

 

 

 

 

Loss (gain) on derivatives contracts

1,252

 

 

18

 

 

3,971

 

 

(40,253

)

Provisional price (gain) loss

(855

)

 

531

 

 

(597

)

 

3,803

 

Suspension-related costs

3,285

 

 

2,356

 

 

12,051

 

 

20,693

 

Environmental accruals

 

 

250

 

 

472

 

 

250

 

Foreign exchange loss (gain)

1,495

 

 

(7,454

)

 

8,236

 

 

(10,310

)

Acquisition costs

52

 

 

389

 

 

645

 

 

10,045

 

Unrealized loss on investments

1,230

 

 

355

 

 

2,389

 

 

2,816

 

Loss on prepayment of debt with shares

2,855

 

 

 

 

2,855

 

 

 

(Gain) loss on disposition of properties, plants, equipment and mineral interests

(23

)

 

581

 

 

4,643

 

 

(2,793

)

Change in deferred tax asset valuation allowance

 

 

(862

)

 

 

 

(862

)

Adjusted net income (loss) applicable to common stockholders

$

1,177

 

 

$

(27,667

)

 

$

(65,444

)

 

$

(43,726

)

Weighted average shares - basic

502,902

 

 

480,572

 

 

490,449

 

 

433,419

 

Weighted average shares - diluted

502,902

 

 

480,572

 

 

490,449

 

 

433,419

 

Basic adjusted net (loss) income per common share

$

 

 

$

(0.06

)

 

$

(0.13

)

 

$

(0.10

)

Diluted adjusted net (loss) income per common share

$

 

 

$

(0.06

)

 

$

(0.13

)

 

$

(0.10

)

Reconciliation of Net Loss (GAAP) and Debt (GAAP) to Adjusted EBITDA (non-GAAP) and Net Debt (non-GAAP)

This release refers to the non-GAAP measures of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), which is a measure of our operating performance, and net debt to adjusted EBITDA for the last 12 months (or "LTM adjusted EBITDA"), which is a measure of our ability to service our debt. Adjusted EBITDA is calculated as net income (loss) before the following items: interest expense, income tax provision, depreciation, depletion, and amortization expense, exploration expense, pre-development expense, acquisition costs, interest and other income (expense), foreign exchange gains and losses, gains and losses on derivative contracts, unrealized gains on investments, provisions for environmental matters, stock-based compensation, and provisional price gains and losses. Net debt is calculated as total debt, which consists of the liability balances for our Senior Notes, capital leases, and other notes payable, less the total of our cash and cash equivalents and short-term investments. Management believes that, when presented in conjunction with comparable GAAP measures, adjusted EBITDA and net debt to LTM adjusted EBITDA are useful to investors in evaluating our operating performance and ability to meet our debt obligations. The following table reconciles net loss and debt to adjusted EBITDA and net debt:

Dollars are in thousands

Three Months Ended

 

Twelve Months Ended

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

December 31, 2018

Net loss

$

(7,976

)

 

$

(23,693

)

 

$

(99,557

)

 

$

(26,563

)

Plus: Interest expense

14,670

 

 

10,925

 

 

48,447

 

 

40,944

 

Plus (Less): Income taxes

(4,092

)

 

(5,217

)

 

(24,101

)

 

(6,701

)

Plus: Depreciation, depletion and amortization

60,480

 

 

35,593

 

 

199,518

 

 

134,044

 

Plus: Acquisition costs

52

 

 

389

 

 

645

 

 

10,045

 

Plus: Suspension-related costs

3,285

 

 

2,356

 

 

12,051

 

 

20,693

 

Less: Deferred revenue net of production costs

(10,912

)

 

 

 

 

 

 

(Less)/Plus: (Gain) loss on disposition of properties, plants, equipment, and mineral interests

(23

)

 

581

 

 

4,643

 

 

(2,793

)

Plus/(Less): Foreign exchange (gain) loss

1,495

 

 

(7,454

)

 

8,236

 

 

(10,310

)

Plus/(Less): Unrealized loss (gain) on derivative contracts

1,035

 

 

18

 

 

9,959

 

 

(7,936

)

(Less)/Plus: Provisional price (gain) loss

(855

)

 

531

 

 

(597

)

 

3,803

 

Plus: Provision for closed operations and environmental matters

1,616

 

 

2,133

 

 

6,914

 

 

6,090

 

Plus: Stock-based compensation

910

 

 

1,606

 

 

5,668

 

 

6,242

 

Plus: Unrealized loss on investments

1,230

 

 

355

 

 

2,389

 

 

2,816

 

Plus/(Less): Other

1,026

 

 

611

 

 

3,506

 

 

941

 

Adjusted EBITDA

$

61,941

 

 

$

18,734

 

 

$

177,721

 

 

$

171,315

 

Total debt

 

 

 

 

$

517,372

 

 

$

545,934

 

Less: Cash, cash equivalents and short-term investments

 

 

 

 

62,452

 

 

27,389

 

Net debt

 

 

 

 

$

454,920

 

 

$

518,545

 

Net debt/LTM adjusted EBITDA (non-GAAP)

 

 

 

 

2.6

 

 

3.0

 

Reconciliation of Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)

This release refers to a non-GAAP measure of free cash flow, calculated as cash provided by operating activities, less additions to properties, plants, equipment and mineral interests and a one-time item for settlement of an insurance policy for reclamation of the Troy Mine. Management believes that, when presented in conjunction with comparable GAAP measures, free cash flow is useful to investors in evaluating our operating performance. The following table reconciles cash provided by operating activities to free cash flow:

 

Hecla Consolidated

 

Greens Creek

 

Casa Berardi

 

Nevada Operations

 

San Sebastian

 

Lucky

Friday1

Dollars are in thousands

Three Months Ended

 

Twelve Months Ended

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

2019

 

2018

 

2019

 

2018

 

Twelve Months Ended December 31, 2019

Cash provided (used) by operating activities 2

$

57,257

 

 

$

19,011

 

 

$

120,866

 

 

$

94,221

 

 

$

136,204

 

 

$

55,726

 

 

$

25,204

 

 

$

19,136

 

 

$

(12,603

)

Less: Additions to properties, plants equipment and mineral interests

(24,083

)

 

(53,648

)

 

(121,421

)

 

(136,933

)

 

(29,323

)

 

(35,762

)

 

(42,893

)

 

(5,035

)

 

(8,232

)

Free cash flow

$

33,174

 

 

$

(34,637

)

 

$

(555

)

 

$

(42,712

)

 

$

106,881

 

 

$

19,964

 

 

$

(17,689

)

 

$

14,101

 

 

$

(20,835

)

(1)

Cash used by operating activities for Lucky Friday includes $7.8 million for suspension costs incurred during the strike.

(2)

 

Cash provided (used) by operating activities for the operating segments excludes exploration expense, as it is a discretionary expenditure and not a component of the mines’ operating performance. Consolidated cash provided by operating activities for the twelve months ended December 31, 2019 includes exploration expense of $1.0 million for Greens Creek, $4.3 million for Casa Berardi, $3.0 million for Nevada Operations and $4.8 million for San Sebastian.

Reserves - 12/31/19(1)

Proven Reserves

 

Tons

Silver

Gold

Lead

Zinc

Copper

Silver

Gold

Lead

Zinc

Copper

Asset

(000)

(oz/ton)

(oz/ton)

%

%

%

(000 oz)

(000 oz)

(Tons)

(Tons)

(Tons)

Greens Creek (2)

7

14.8

 

0.08

 

2.6

 

5.4

 

 

106

 

1

 

180

 

390

 

 

Lucky Friday (2)

4,185

15.4

 

 

9.6

 

4.1

 

 

64,506

 

 

401,020

 

172,880

 

 

Casa Berardi Open Pit (3)

5,873

 

0.08

 

 

 

 

 

447

 

 

 

 

Casa Berardi Underground (3)

974

 

0.16

 

 

 

 

 

156

 

 

 

 

San Sebastian (2)

35

4.8

 

0.08

 

 

 

 

166

 

3

 

 

 

 

Fire Creek (2,4)

22

1.2

 

1.51

 

 

 

 

28

 

33

 

 

 

 

Total

11,096

 

 

 

 

 

64,805

 

640

 

401,200

 

173,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Probable Reserves

 

Tons

Silver

Gold

Lead

Zinc

Copper

Silver

Gold

Lead

Zinc

Copper

Asset

(000)

(oz/ton)

(oz/ton)

%

%

%

(000 oz)

(000 oz)

(Tons)

(Tons)

(Tons)

Greens Creek (2)

10,713

12.2

 

0.09

 

2.8

 

7.3

 

 

130,791

 

932

 

305,010

 

778,020

 

 

Lucky Friday (2)

1,386

11.4

 

 

7.6

 

3.7

 

 

15,815

 

 

104,720

 

50,640

 

 

Casa Berardi Open Pit (3)

11,802

 

0.07

 

 

 

 

 

809

 

 

 

 

Casa Berardi Underground (3)

1,978

 

0.15

 

 

 

 

 

305

 

 

 

 

San Sebastian (2)

66

10.9

 

0.07

 

 

 

 

716

 

5

 

 

 

 

Fire Creek (2,4)

37

0.6

 

0.56

 

 

 

 

23

 

21

 

 

 

 

Total

25,983

 

 

 

 

 

147,346

 

2,072

 

409,730

 

828,660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proven and Probable Reserves

 

Tons

Silver

Gold

Lead

Zinc

Copper

Silver

Gold

Lead

Zinc

Copper

Asset

(000)

(oz/ton)

(oz/ton)

%

%

%

(000 oz)

(000 oz)

(Tons)

(Tons)

(Tons)

Greens Creek (2)

10,721

12.2

 

0.09

 

2.8

 

7.3

 

 

130,897

 

932

 

305,190

 

778,410

 

 

Lucky Friday (2)

5,571

14.4

 

 

9.1

 

4.0

 

 

80,321

 

 

505,740

 

223,520

 

 

Casa Berardi Open Pit (3)

17,675

 

0.07

 

 

 

 

 

1,257

 

 

 

 

Casa Berardi Underground (3)

2,952

 

0.16

 

 

 

 

 

461

 

 

 

 

San Sebastian (2)

100

8.8

 

0.08

 

 

 

 

881

 

8

 

 

 

 

Fire Creek (2,4)

59

0.9

 

0.92

 

 

 

 

51

 

54

 

 

 

 

Total

37,078

 

 

 

 

 

212,151

 

2,712

 

810,930

 

1,001,930

 

 

(1)

The term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term “economically,” as used in the definition of reserve, means that profitable extraction or production has been established or analytically demonstrated to be viable and justifiable under reasonable investment and market assumptions. The term “legally,” as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, Hecla must have a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with Hecla’s current mine plans.

(2)

Mineral reserves are based on $1300 gold, $14.50 silver, $0.90 lead, $1.15 zinc, unless otherwise stated. The NSR cut-off grades are $190/ton for Greens Creek, $216.19 for the 30 Vein and $230.98 for the Intermediate Veins at Lucky Friday, and $127/ton ($140/tonne) for underground and $90.72/ton ($100/tonne) for open pit reserves at San Sebastian.

(3)

Mineral reserves are based on $1300 gold and a US$/CAN$ exchange rate of 1:1.35 Reserve diluted to an average of 34.7% to minimum width of 9.8 feet (3 m). The average cut-off grades at Casa Berardi are 0.105 oz/ton gold (3.49 g/tonne) for underground mineral reserves and 0.025 oz/ton gold (0.85 g/tonne) for open pit mineral reserves.

(4)

Fire Creek mineral reserves are based on a cut-off grade of 0.433 gold equivalent oz/ton and incremental cut-off grade of 0.135 gold equivalent oz/ton. Unplanned dilution of 10% to 17% included depending on mining method.

 

* Totals may not represent the sum of parts due to rounding

Mineral Resources - 12/31/2019

Measured Resources

 

Tons

Silver

Gold

Lead

Zinc

Copper

Silver

Gold

Lead

Zinc

Copper

Asset

(000)

(oz/ton)

(oz/ton)

%

%

%

(000 oz)

(000 oz)

(Tons)

(Tons)

(Tons)

Greens Creek (5)

76

 

12.5

 

0.09

 

2.6

 

9.4

 

 

949

 

7

 

2,000

 

7,140

 

 

Lucky Friday (5,6)

8,060

 

7.5

 

 

4.8

 

2.6

 

 

60,788

 

 

385,040

 

210,730

 

 

Casa Berardi

Open Pit (7)

193

 

 

0.02

 

 

 

 

 

4

 

 

 

 

Casa Berardi Underground (7)

1,841

 

 

0.15

 

 

 

 

 

273

 

 

 

 

San Sebastian (5,8)

 

 

 

 

 

 

 

 

 

 

 

Fire Creek (5,9)

47

 

0.7

 

0.92

 

 

 

 

34

 

43

 

 

 

 

Hollister (5,10)

103

 

3.6

 

0.57

 

 

 

 

376

 

59

 

 

 

 

Midas (5,11)

134

 

6.9

 

0.44

 

 

 

 

927

 

59

 

 

 

 

Heva (12)

5,480

 

 

0.06

 

 

 

 

 

304

 

 

 

 

Hosco (12)

33,070

 

 

0.04

 

 

 

 

 

1,296

 

 

 

 

Rio Grande Silver (13)

 

 

 

 

 

 

 

 

 

 

 

Star (14)

 

 

 

 

 

 

 

 

 

 

 

Total

49,004

 

 

 

 

 

 

63,073

 

2,044

 

387,040

 

217,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indicated Resources

 

Tons

Silver

Gold

Lead

Zinc

Copper

Silver

Gold

Lead

Zinc

Copper

Asset

(000)

(oz/ton)

(oz/ton)

%

%

%

(000 oz)

(000 oz)

(Tons)

(Tons)

(Tons)

Greens Creek (5)

8,569

11.7

 

0.1

 

2.8

 

8.1

 

 

100,187

 

828

 

242,010

 

691,750

 

 

Lucky Friday (5,6)

2,720

8.0

 

 

5.1

 

2.4

 

 

21,641

 

 

138,620

 

65,930

 

 

Casa Berardi

Open Pit (7)

3,341

 

0.05

 

 

 

 

 

155

 

 

 

 

Casa Berardi Underground (7)

4,463

 

0.14

 

 

 

 

 

631

 

 

 

 

San Sebastian (5,8)

2,846

6.3

 

0.05

 

2.2

 

3.3

 

1.4

 

17,952

 

155

 

30,300

 

45,660

 

19,900

 

Fire Creek (5,9)

211

0.7

 

0.66

 

 

 

 

142

 

140

 

 

 

 

Hollister (5,10)

182

2.2

 

0.58

 

 

 

 

410

 

105

 

 

 

 

Midas (5,11)

616

5.0

 

0.37

 

 

 

 

3,064

 

229

 

 

 

 

Heva (12)

5,570

 

0.07

 

 

 

 

 

369

 

 

 

 

Hosco (12)

31,620

 

0.04

 

 

 

 

 

1,151

 

 

 

 

Rio Grande Silver (13)

516

14.8

 

 

2.1

 

1.1

 

 

7,620

 

 

10,760

 

5,820

 

 

Star (14)

1,126

2.9

 

 

6.2

 

7.4

 

 

3,301

 

 

69,900

 

83,410

 

 

Total

61,779

 

 

 

 

 

154,315

 

3,762

 

491,590

 

892,570

 

19,900

 

Measured & Indicated Resources

 

Tons

Silver

Gold

Lead

Zinc

Copper

Silver

Gold

Lead

Zinc

Copper

Asset

(000)

(oz/ton)

(oz/ton)

%

%

%

(000 oz)

(000 oz)

(Tons)

(Tons)

(Tons)

Greens Creek (5)

8,645

 

11.7

 

0.1

 

2.8

 

8.1

 

 

101,135

 

835

 

244,010

 

698,880

 

 

Lucky Friday (5,6)

10,780

 

7.6

 

 

4.9

 

2.6

 

 

82,428

 

 

523,670

 

276,660

 

 

Casa Berardi

Open Pit (7)

3,534

 

 

0.04

 

 

 

 

 

158

 

 

 

 

Casa Berardi Underground (7)

6,304

 

 

0.14

 

 

 

 

 

904

 

 

 

 

San Sebastian (5,8)

2,846

 

6.3

 

0.05

 

2.2

 

3.3

 

1.4

 

17,952

 

155

 

30,300

 

45,660

 

19,900

 

Fire Creek (5,9)

257

 

0.7

 

0.71

 

 

 

 

176

 

182

 

 

 

 

Hollister (5,10)

285

 

2.8

 

0.58

 

 

 

 

786

 

164

 

 

 

 

Midas (5,11)

750

 

5.3

 

0.38

 

 

 

 

3,990

 

288

 

 

 

 

Heva (12)

11,050

 

 

0.06

 

 

 

 

 

672

 

 

 

 

Hosco (12)

64,690

 

 

0.04

 

 

 

 

 

2,447

 

 

 

 

Rio Grande Silver (13)

516

 

14.8

 

 

2.1

 

1.1

 

 

7,620

 

 

10,760

 

5,820

 

 

Star (14)

1,126

 

2.9

 

 

6.2

 

7.4

 

 

3,301

 

 

69,900

 

83,410

 

 

Total

110,782

 

 

 

 

 

 

217,388

 

5,805

 

878,640

 

1,110,430

 

19,900

 

Inferred Resources

 

Tons

Silver

Gold

Lead

Zinc

Copper

Silver

Gold

Lead

Zinc

Copper

Asset

(000)

(oz/ton)

(oz/ton)

%

%

%

(000 oz)

(000 oz)

(Tons)

(Tons)

(Tons)

Greens Creek (5)

1,848

13.7

 

0.09

 

3.1

 

7.4

 

 

25,393

 

159

 

56,670

 

135,880

 

 

Lucky Friday (5,6)

3,050

8.6

 

 

6.2

 

2.7

 

 

26,155

 

 

190,500

 

82,250

 

 

Casa Berardi

Open Pit (7)

11,724

 

0.04

 

 

 

 

 

498

 

 

 

 

Casa Berardi Underground (7)

2,485

 

0.19

 

 

 

 

 

471

 

 

 

 

San Sebastian (5,15)

3,518

6.3

 

0.04

 

1.7

 

2.4

 

0.9

 

22,189

 

147

 

13,250

 

19,200

 

7,440

 

Fire Creek (5,9)

543

0.5

 

0.51

 

 

 

 

295

 

278

 

 

 

 

Fire Creek - Open Pit (16)

74,584

0.1

 

0.03

 

 

 

 

5,232

 

2,178

 

 

 

 

Hollister (5,10,17)

466

2.7

 

0.4

 

 

 

 

1,247

 

185

 

 

 

 

Midas (5,11)

552

2.7

 

0.33

 

 

 

 

1,489

 

183

 

 

 

 

Heva (12)

4,210

 

0.08

 

 

 

 

 

350

 

 

 

 

Hosco (12)

7,650

 

0.04

 

 

 

 

 

314

 

 

 

 

Rio Grande Silver (18)

3,078

10.7

 

0.01

 

1.3

 

1.1

 

 

33,097

 

36

 

40,990

 

34,980

 

 

Star (14)

3,157

2.9

 

 

5.6

 

5.5

 

 

9,432

 

 

178,670

 

174,450

 

 

Monte Cristo (19)

913

0.3

 

0.14

 

 

 

 

271

 

131

 

 

 

 

Rock Creek (20)

100,086

1.5

 

 

 

 

0.7

 

148,736

 

 

 

 

658,680

 

Montanore (21)

112,185

1.6

 

 

 

 

0.7

 

183,346

 

 

 

 

759,420

 

Total

330,050

 

 

 

 

 

456,881

4,929

480,080

 

446,760

 

1,425,540

 

Note: All estimates are in-situ except for the proven reserves at Greens Creek and San Sebastian which are in surface stockpiles. Resources are exclusive of reserves.

(5)

Mineral resources are based on $1500 gold, $21 silver, $1.15 lead, $1.35 zinc and $3.00 copper, unless otherwise stated. Cut-off grades are as above unless otherwise stated.

(6)

Measured and indicated resources from Gold Hunter and Lucky Friday vein systems are diluted and factored for expected mining recovery using NSR cut-off grades of $170.18 for the 30 Vein, $184.97 for the Intermediate Veins and $207.15 for the Lucky Friday Vein.

(7)

Measured, indicated and inferred resources are based on $1,500 gold and a US$/CAN$ exchange rate of 1:1.35 Underground resources are reported at a minimum mining width of 6.6 to 9.8 feet (2 m to 3 m). The average cut-off grades at Casa Berardi are 0.105 oz/ton gold (3.49 g/tonne) for underground mineral resources and 0.025 oz/ton gold (0.85 g/tonne) for open pit mineral resources.

(8)

Indicated resources reported at a minimum mining width of 5.9 feet (1.8 m) for Hugh Zone, Middle Vein, North Vein, and East Francine Vein and 4.9 feet (1.5 m) for Andrea Vein using a cut-off grade of $90.72/ton ($100/tonne). San Sebastian lead, zinc and copper grades are for 1,376,500 tons of indicated resource within the Middle Vein and the Hugh Zone of the Francine Vein.

(9)

Fire Creek mineral resources are reported at a gold equivalent cut-off grade of 0.306 oz/ton. The minimum mining width is defined as four feet or the vein true thickness plus two feet, whichever is greater.

(10)

Hollister mineral resources are reported at a gold equivalent cut-off grade of 0.294 oz/ton. The minimum mining width is defined as four feet or the vein true thickness plus two feet, whichever is greater.

(11)

Midas mineral resources are reported at a gold equivalent cut-off grade of 0.223 oz/ton. The minimum mining width is defined as four feet or the vein true thickness plus two feet, whichever is greater.

(12)

Measured, indicated and inferred resources were estimated in by Goldminds Geoservices Inc. with effective date 12-July-2013, and are based on $1,300 gold and a US$/CAN$ exchange rate of 1:1. The resources are in-situ without dilution and material loss at a cut-off grade of 0.011 oz/ton gold (0.37 g/tonne) for open pit and 0.06 oz/ton gold (2.0 g/tonne) for underground.

 

NI43-101 Technical Report, Mineral Resource Update, Heva-Hosco Gold Projects, Rouyn-Noranda, Quebec, Hecla Quebec, December 2013

 

Prepared by: Claude Duplessis, Eng. Project Manager - GoldMinds Geoservices Inc.; Maxime Dupéré, P.Geo - SGS Canada Inc. (Geostat)

(13)

Indicated resources reported at a minimum mining width of 6.0 feet for Bulldog; resources based on $26.5 Ag, $0.85 Pb, and $0.85 Zn and a cut-off grade of 6.0 silver equivalent oz/ton.

(14)

Indicated and Inferred resources reported using $21 silver, $0.95 lead, $1.10 lead minimum mining width of 4.3 feet and a cut-off grade of $100/ton.

(15)

Inferred resources reported at a minimum mining width of 5.9 feet (1.8 m) for Hugh Zone, Middle Vein, North Vein, and East Francine Vein and 4.9 feet (1.5 ) for Andrea Vein using a cut-off grade of $90.72/ton ($100/tonne).

San Sebastian lead, zinc and copper grades are for 792,900 tons of inferred resource within the Middle Vein and the Hugh Zone of the Francine Vein.

(16)

Inferred open-pit resources for Fire Creek calculated November 30, 2017 using gold and silver recoveries of 65% and 30% for oxide material and 60% and 25% for mixed oxide-sulfide material. Indicated Resources reclassified as Inferred for 2019.

 

Open pit resources are calculated at $1400 gold and $19.83 silver and cut-off grade of 0.01 Au Equivalent oz/ton and is inclusive of 10% mining dilution and 5% ore loss. Open pit mineral resources exclusive of underground mineral resources.

 

NI43-101 Technical Report for the Fire Creek Project, Lander County, Nevada; Effective Date March 31, 2018; prepared by Practical Mining LLC, Mark Odell, P.E. for Hecla Mining Company, June28, 2018

(17)

Inferred resources for the Hatter Project at the Hollister Mine calculated using recoveries for gold and silver of 82.7% and 71.8% and an Au equivalent cut-off grade of 0.294 oz/ton

(18)

Inferred resources reported at a minimum mining width of 6.0 feet for Bulldog and a cut-off grade of 6.0 equivalent oz/ton silver and 5.0 feet for Equity and North Amethyst vein at a cut-off grade of $50/ton and $100/ton; based on $1400 Au, $26.5 Ag, $0.85 Pb, and $0.85 Zn.

(19)

Inferred resource reported at a minimum mining width of 5.0 feet; resources based on $1400 Au, $26.5 Ag using a 0.06 oz/ton gold cut-off grade.

(20)

Inferred resource at Rock Creek reported at a minimum thickness of 15 feet and a cut-off grade of $24.50/ton NSR and adjusted given mining restrictions as defined by U.S. Forest Service, Kootenai National Forest in the June 2003 'Record of Decision, Rock Creek Project'.

(21)

Inferred resource at Montanore reported at a minimum thickness of 15 feet and a cut-off grade of $24.50/ton NSR and adjusted given mining restrictions defined by U.S. Forest Service, Kootenai National Forest, Montana DEQ in December 2015 'Joint Final EIS, Montanore Project' and the February 2016 U.S Forest Service - Kootenai National Forest 'Record of Decision, Montanore Project'.

* Totals may not represent the sum of parts due to rounding

 

Mike Westerlund Vice President - Investor Relations 800-HECLA91 (800-432-5291) Investor Relations Email: hmc-info@hecla-mining.com Website: http://www.hecla-mining.com

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