Rapid operational and financial response to
COVID-19
Hecla Mining Company (NYSE:HL) today announced actions taken in
response to COVID-19, cash balances and preliminary silver and gold
production results at the end of the first quarter.1
HIGHLIGHTS
- Responded quickly to COVID-19 with changes in work schedules
and hygiene practices, eliminated most travel starting in February,
and strengthened the balance sheet.
- Three of five operations (U.S. mines) are deemed essential
businesses and remain fully operational (represent 69% of Hecla’s
2019 gold equivalent production).
- Silver production of 3 million ounces and gold production of
57,238 ounces was on plan (silver equivalent production of 10.3
million ounces or gold equivalent production of 110,210
ounces2).
- The Company is withdrawing its full-year 2020 guidance to
assess COVID-19’s impact on its production and costs.
- Quarter-end cash and cash equivalents of approximately $215
million with the revolving credit facility drawn at $210
million.
- Hecla’s charitable foundation is making an initial commitment
of up to $125,000 support to the local communities where we
operate.
“Hecla’s quick response to the COVID-19 outbreak began in
February and has protected our workforce, enabling them to continue
to safely operate our mines,” said Phillips S. Baker, Jr., Hecla’s
President and CEO. “While government orders have shut down two
mines, our U.S. mines continue to operate as planned. Our balance
sheet is strong with over $200 million in cash, and no near-term
debt maturities with our revolver debt not due until 2023 and
senior notes in 2028. Also, our charitable foundation is stepping
up to support the communities we operate in during this time of
need.”
(1)
See cautionary statement regarding
preliminary statements at the end of this release.
(2)
Silver and gold equivalent calculation
based on average actual prices for each metal in the year as
follows: $16.94 for Ag, $1,583 for Au, $0.84 for Pb, and $0.97 for
Zn.
COVID-19 PREPAREDNESS
While this pandemic is unique, over the course of Hecla’s
129-year history the Company has dealt with pandemics and had a
plan in place that was implemented in February and early March. As
the risk and government orders have increased, the plan has been
further implemented including limited site access, social
distancing, enhanced cleaning practices, temperature testing,
14-day quarantine facilities and enhancement of the supply chain.
Fortunately, all the communities where Hecla operates have a small
number or no occurrences of COVID-19 with no known cases within the
workforce or their families.
In early February, the Company noted potential impacts of the
COVID-19 virus, and issued new bonds maturing in 2028 and expanded
its revolving credit facility to $250 million. The Company
drew-down on the facility in March as a precaution to ensure that
it would have substantial liquidity. During the quarter, the cash
position was impacted by approximately $50 million associated with
refinancing the senior notes including $31 million principal
repayment of the 2021 notes, $14 million of interest on the notes
and approximately $5 million of expenses. The Company also intends
to re-establish an at-the-market equity facility.
In 2007, Hecla established its charitable foundation that has
contributed more than $3.4 million to the communities it operates
in. Given the special needs arising from the pandemic, Hecla
expects the foundation to initially contribute up to $125,000 more
than usual. An initial $20,000 matching contribution has been made
to the Southeast Alaska food bank.
OPERATIONS DISCUSSION
Greens Creek
In the second quarter, Greens Creek began quarantining all
employees in a Juneau facility for 14 days before employees start a
28-day rotation. No one, including local residents, is allowed on
the site who has not been quarantined.
At the Greens Creek mine, 2.5 million ounces of silver and
11,296 ounces of gold were produced in the first quarter compared
to 2.2 million ounces of silver and 14,328 ounces of gold in the
prior year period. Higher silver production, when compared to the
first quarter of 2019, was due to higher ore grades as well as
increased recoveries, partially offset by lower mill throughput.
The lower gold production was due to lower grades and the lower
mill throughput, partially offset by higher recoveries. The mill
operated at an average of 2,185 tons per day (tpd).
Casa Berardi
The suspension of operations at Casa Berardi, originally
expected to last until April 13th, has now been extended until May
4th, to comply with the Government of Quebec’s stay-at-home order.
Limited operations are protecting the facilities and
environment.
At the Casa Berardi mine, 26,175 ounces of gold were produced,
including 9,171 ounces from the East Mine Crown Pillar pit compared
to 31,799 ounces and 6,535 ounces, respectively, in the prior year
period. The decrease was due in part to the suspension of mining
operations as of March 24, 2020 in response to the Government of
Quebec’s order to the mining industry due to COVID-19. Prior to
suspension, the mill operated at an average of 3,847 tpd.
San Sebastian
An orderly wind-down of the operations are underway to comply
with the Government of Mexico’s order to suspend operations until
April 30, 2020. San Sebastian expects to maintain a minimum
complement of workers to protect the facilities and environment
while operations are suspended.
At the San Sebastian mine, 0.3 million ounces of silver and
2,802 ounces of gold were produced compared to 0.4 million ounces
and 3,530 ounces, respectively, in the prior year period with the
decrease due to the expected lower grades. The mill operated at an
average of 390 tpd.
Nevada Operations
Nevada has a stay-at-home order, but mines are essential
infrastructure operations. Nevada operations have daily temperature
testing and questionnaires, with significant social distancing by
staggering the buses.
At the Nevada operations, gold production was 60% higher with
16,965 ounces of gold produced compared to 10,364 ounces of gold in
the prior year period due to planned higher grades. The mining of
developed oxide ore is expected to continue at Fire Creek until
about mid-year, when the mining activities will stop while studies
are completed.
Lucky Friday
While the State of Idaho has a stay-at-home order, the Lucky
Friday is an essential business to the state and in a county that
has no known cases of COVID-19. The mine has daily temperature
testing and a questionnaire, as well as social distancing measures
to access the mine.
At the Lucky Friday mine, few ounces were produced principally
due to the focus on calling back and training the returning
workforce, as well as advancing critical infrastructure projects.
The 5370-loading pocket capital project is nearing completion. The
#2 shaft hoist project has been delayed until July because a key
vendor determined they would be unable to currently support the
work as a result of the COVID-19 virus.
PRODUCTION SUMMARY
First Quarter Ended
March 31, 2020
March 31, 2019
% increase
(decrease)
PRODUCTION
Silver (oz)
2,983,349
2,923,131
2%
Gold (oz)
57,238
60,021
(5)%
Lead (tons)1
5,316
5,785
(8)%
Zinc (tons)
12,576
13,943
(10)%
Greens Creek – Silver (oz)
2,513,713
2,232,747
13%
Greens Creek – Gold (oz)
11,296
14,328
(21)%
Lucky Friday – Silver (oz)1
95,748
173,627
(45)%
San Sebastian – Silver (oz)
346,625
441,079
(21)%
San Sebastian – Gold (oz)
2,802
3,530
(21)%
Casa Berardi – Gold (oz)2
26,175
31,799
(18)%
Nevada Operations – Silver (oz)
21,455
67,438
(68)%
Nevada Operations – Gold (oz)
16,965
10,364
64%
(1)
Union workers at Lucky Friday were on
strike in 2019.
(2)
Casa Berardi also produced 5,808 ounces of
silver in the first quarter 2020 compared to 8,240 ounces of silver
for first quarter of 2019.
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 an operating mine
in Quebec, Canada. The Company also has exploration and
pre-development properties in seven world-class silver and gold
mining districts in the U.S., Canada, and Mexico, and an
exploration office and investments in early-stage silver
exploration projects in Canada.
Cautionary Statements Regarding Preliminary Results
All measures of the Company's first quarter 2020 operating and
financial results contained in this news release, including cash
and cash equivalents and revolving line of credit draw-down are
preliminary and reflect the Company’s expected results as of the
date of this news release. Actual reported first quarter 2020
results are subject to management's final review as well as review
by the Company's independent registered public accounting firm and
may vary significantly from those expectations because of a number
of factors, including, without limitation, additional or revised
information and changes in accounting standards or policies or in
how those standards are applied.
Cautionary Statements Regarding Forward-Looking
Statements
Statements made or information provided in this news release
that are not historical facts are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995 and "forward-looking information" within the meaning of
Canadian securities laws. Words such as “may”, “will”, “should”,
“expects”, “intends”, “projects”, “believes”, “estimates”,
“targets”, “anticipates” and similar expressions are used to
identify these forward-looking statements. Forward-looking
statements in this news release may include, without limitations,
(i) estimates of silver production for the first quarter of 2020 on
a consolidated basis and at each of the Greens Creek, Lucky Friday,
San Sebastian, and Nevada Operations mines; first quarter of 2020
gold production at Casa Berardi and Nevada operations; (iii)
quarter-end cash position and revolver draw-down and (iv) timeline
for mines to return to production from government-imposed bans due
to the COVID-19 virus. The material factors or assumptions used to
develop such forward-looking statements or forward-looking
information include that the Company’s plans for development and
production will proceed as expected and will not require revision
as a result of risks or uncertainties, whether known, unknown or
unanticipated, to which the Company’s operations are subject.
Forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated, expected or implied. These risks
and uncertainties include, but are not limited to, metals price
volatility, volatility of metals production and costs, litigation,
regulatory and environmental risks, operating risks, project
development risks, political risks, labor issues, ability to raise
financing and exploration risks and results. Refer to the Company's
Form 10-K and 10-Q reports for a more detailed discussion of
factors that may impact expected future results. The Company
undertakes no obligation and has no intention of updating
forward-looking statements other than as may be required by
law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200407005243/en/
Mike Westerlund Vice President – Investor Relations 800-HECLA91
(800-432-5291) Investor Relations Email: hmc-info@hecla-mining.com
Website: www.hecla-mining.com
Hecla Mining (NYSE:HL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Hecla Mining (NYSE:HL)
Historical Stock Chart
From Sep 2023 to Sep 2024