Lower silver and gold cash costs and all in
sustaining costs, after by-product credits, drive strong financial
performance
Hecla Mining Company (NYSE:HL) (Hecla or the Company) today
announced first quarter financial and operating results.
HIGHLIGHTS
- Net income applicable to common
stockholders of $8.1 million, or $0.02 per basic share.
- Adjusted net income applicable to
common stockholders of $9.1 million, or $0.02 per basic
share.1
- Sales of $139.7 million.
- Cash provided by operating activities
of $16.4 million.
- Adjusted EBITDA of $58.4 million and
net debt/adjusted EBITDA (last 12 months) of 1.2x.2,3
- Cost of sales and other direct
production costs and depreciation, depletion and amortization
("cost of sales") of $100.9 million.
- Silver cash cost, after by-product
credits, of $(3.35) per ounce.4
- All in sustaining cost (AISC), after
by-product credits, of $5.66 per silver ounce.5
- Received $30.8 million investment (C$40
million) from Ressources Quebec, a wholly-owned subsidiary of
Investissement Quebec.
- Cash and cash equivalents and
short-term investments of $246.9 million.
- Agreement to acquire Klondex Mines Ltd.
("Klondex"), expected to close around the end of the second quarter
2018, subject to approval by their shareholders.
"The investments we have made to improve our mines are resulting
in more consistent operations, higher throughput, strong metals
production and lower costs, increasing the financial strength of
Hecla," said Phillips S. Baker, Jr., President and CEO. "These
improvements are reflected in the quarterly throughput which is a
record at Casa Berardi and a near-record at Greens Creek, and lower
cash costs, after by-product credits per gold and silver ounce. We
continue to benefit from strong lead and zinc prices, and are
seeing continued tightness in the concentrate markets, resulting in
significant improvement in payment terms from the smelters, so
lower costs could remain for some time.”
"We are very excited about the prospect of adding Klondex's
Nevada assets into the Hecla portfolio," Mr. Baker added. "The
exploration potential of having more than 110 square miles along
the important structural trends of a prolific mining jurisdiction
like Nevada is a key benefit of this transaction. We also see
significant upside in the potential to discover additional
resources and the subsequent conversion into reserves. We believe
we can apply our expertise in metallurgy, materials handling and
narrow vein underground mining to these assets, strengthening our
precious metals production profile and further increasing our cash
flow and financial strength."
FINANCIAL OVERVIEW
First Quarter Ended HIGHLIGHTS March
31, 2018 March 31, 2017
FINANCIAL DATA
Sales (000)
$ 139,709 $
142,544 Gross profit (000)
$ 38,786 $ 34,916 Income
applicable to common stockholders (000)
$ 8,102 $
26,696 Basic and diluted income per common share
$
0.02 $ 0.07 Net income (000)
$ 8,240 $ 26,834
Cash provided by operating activities (000)
$ 16,383
$ 38,285
Net income for the first quarter of $8.2 million, a decrease of
$18.6 million from the first quarter of 2017 impacted by the
following factors:
- Tax provision of $0.8 million compared
to a tax benefit of $29.1 million in the first quarter of 2017. The
2017 benefit was primarily related to the impact of receiving IRS
approval to accelerate the timing of deductions for the Lucky
Friday #4 Shaft development costs.
- Lucky Friday suspension costs of $4.1
million, along with $0.9 million in non-cash depreciation, related
to the strike that began in mid-March 2017, compared to $1.2
million in suspension costs and $0.4 million in non-cash
depreciation recorded in the first quarter of 2017.
- Exploration and pre-development
spending increase of $2.6 million compared to the first quarter of
2017. In 2018, exploration work continues at Greens Creek, San
Sebastian, and Casa Berardi, and on the land package near Lucky
Friday. Pre-development work is related to advancement of Montanore
and Rock Creek projects.
- $2.5 million in costs related to the
proposed acquisition of Klondex.
- Interest expense, net of amount
capitalized, of $9.8 million in the first quarter of 2018,
increased over the $8.5 million recognized in first quarter of
2017, due to lower capitalized interest as a result of completion
of #4 Shaft and the addition of the Ressources Québec financing
received in March 2018.
Operating cash flow of $16.4 million decreased 57% over the
first quarter of 2017 principally due to reduced silver and lead
production and lower silver prices, higher product inventories due
to the timing of sales at Greens Creek, and the timing of payment
of incentive compensation related to prior year performance,
partially offset by higher gold production and higher gold and base
metals prices.
Adjusted EBITDA of $58.4 million increased 8% over the first
quarter of 2017, mainly due to higher gold and base metals prices
and higher gold production at Casa Berardi.2
Capital expenditures (excluding capitalized interest) totaled
$20.0 million for the first quarter of 2018 compared to $23.3
million in the prior year period, with the decrease mainly due to
lower expenditures at Casa Berardi of $3.3 million, Lucky Friday of
$3.0 million and San Sebastian of $1.3 million, partly offset by
increased expenditures at Greens Creek of $4.2 million.
Expenditures at Greens Creek, Casa Berardi, Lucky Friday and Sans
Sebastian were $9.5 million, $9.1 million, $1.0 million, and $0.4
million respectively.
Metals Prices
The average realized silver price in the first quarter of 2018
was $16.84 per ounce, 6% lower than the $17.90 price realized in
the first quarter of 2017. Realized gold, lead and zinc prices
increased 9%, 12%, and 18%, respectively.
Base Metals Forward Sales Contracts
The following table summarizes the quantities of base metals
committed under financially settled forward sales contracts at
March 31, 2018:
Pounds Under Contract(in
thousands)
Average Price per Pound Zinc
Lead Zinc Lead Contracts on forecasted
sales 2018 settlements 26,841 15,598 $ 1.23 $ 1.07
2019 settlements 48,502 20,283 $ 1.40 $ 1.10 2020 settlements
42,329 19,401 $ 1.40 $ 1.13
The contracts represent 51% of the forecasted payable zinc
production for the three-year period 2018-2020 at an average price
of $1.36 per pound and 57% of the forecasted payable lead
production for the three-year period 2018-2020 at an average price
of $1.10 per pound.
OPERATIONS OVERVIEW
The following table provides the production summary on a
consolidated basis for the quarters ended March 31, 2018 and
2017:
First Quarter Ended
March 31, 2018 March 31, 2017
PRODUCTION
SUMMARY Silver - Ounces produced
2,534,095
3,369,427 Payable ounces sold
2,091,464 2,869,114
Gold - Ounces produced
57,808 56,113 Payable ounces sold
54,839 51,371 Lead - Tons produced
5,627 8,636
Payable tons sold
3,868 6,426 Zinc - Tons produced
15,211 15,537 Payable tons sold
10,104 11,847
The following table provides a summary of the final production,
cost of sales, cash cost, after by-product credits, per silver or
gold ounce, and AISC, after by-product credits, per silver or gold
ounce, for the quarters ended March 31, 2018 and 2017.
Greens Creek Lucky
Friday Casa Berardi San Sebastian
Silver Gold
Silver Gold Silver
Gold Silver Silver
Gold Production (ounces)
Quarter EndedMarch 31,
2018
2,534,095 57,808
1,913,232 13,118
99,780
40,177 8,891
512,192 4,513
Quarter EndedMarch 31, 2017
3,369,427 56,113 1,929,297
14,022
680,782
35,807 8,545
750,803 6,284
Increase/(decrease) (835,332 )
1,695 (16,065 ) (904 )
(581,002
) 4,370 346 (238,611 )
(1,771 )
Cost of sales and other direct production
costs and depreciation, depletion and amortization (000)
Quarter EndedMarch 31,
2018
$ 51,736 $ 49,187
$ 41,861
$
—
$ 4,100 $
49,187
$
—
$ 5,775
$
—
Quarter EndedMarch 31, 2017
$ 65,162 $ 42,466 $ 43,996
$
—
$ 14,543 $ 42,466
$
—
$ 6,623
$
—
Increase/(decrease) $ (13,426 )
$ 6,721 $ (2,135 )
$
—
$ (10,443 ) $ 6,721
$
—
$ (848 )
$
—
Cash costs, after by-product credits,
per silver or gold ounce 4,
6
Quarter EndedMarch 31,
2018
$ (3.35 ) $ 827
$ (4.99 )
$
—
$ —
$ 827
$
—
$ 2.81
$
—
Quarter EndedMarch 31, 2017
$ 0.84 $ 886 $ 0.65
$
—
$ 5.93 $ 886
$
—
$ (3.27 )
$
—
Increase/(decrease) $ (4.19 )
$ (59 ) $ (5.64 )
$
—
$
—
$ (59 )
$
—
$ 6.08
$
—
AISC, after by-product credits per silver or gold
ounce5
Quarter EndedMarch 31,
2018
$ 5.66 $ 1,086
$ 0.59
$
—
$
—
$ 1,086
$
—
$ 8.37
$
—
Quarter EndedMarch 31, 2017
$ 7.60 $ 1,256 $ 3.86
$
—
$ 12.06 $ 1,256
$
—
$ 0.43
$
—
Increase/(decrease) $ (1.94 )
$ (170 ) $ (3.27 )
$
—
$
—
$ (170 )
$
—
$ 7.94
$
—
Greens Creek Mine - Alaska
At the Greens Creek mine, 1.9 million ounces of silver and
13,118 ounces of gold were produced in the first quarter, compared
to 1.9 million ounces and 14,022 ounces, respectively, in the first
quarter of 2017. The impact of lower grades than the first quarter
of 2017 was largely offset by increased ore throughput. The mill
operated at an average of 2,349 tons per day (tpd) in the first
quarter compared to 2,190 the first quarter of 2017.
The cost of sales for the first quarter was $41.9 million, and
the cash cost, after by-product credits, per silver ounce, was
$(4.99), compared to $44.0 million and $0.65, respectively, for the
first quarter of 2017.4 The AISC, after by-product credits, was
$0.59 per silver ounce for the first quarter compared to $3.86 in
the first quarter of 2017.5 The per ounce silver costs were lower
primarily due to higher by-product metals prices and
production.
Lucky Friday Mine - Idaho
Silver production of 99,780 ounces decreased 85% over the prior
year period mainly due to the strike by the union workers that
began March 13, 2017. Cost of sales for the first quarter was $4.1
million compared to $14.5 million, with the decrease also due to
the strike.
Last week Hecla announced that it has reached an agreement with
the National Labor Relations Board in settling the unfair labor
practice charge brought by the United Steelworkers in March 2017.
The two sides have met more than 20 times since March 2017, but
have had only two negotiating sessions since Hecla presented a
Revised Final Offer (RFO) on December 15, 2017, but those meetings
resulted in no progress in reaching a new Agreement. On May 4,
2018, Hecla notified the Union that the parties are at impasse, and
that portions of the RFO were being implemented, effective
immediately.
Limited production and capital improvements continue to be
performed by salaried staff, and preparations continue for the
arrival of the remote vein miner (RVM), expected late in 2019,
which has the potential to revolutionize how the Lucky Friday is
mined.
Casa Berardi Mine - Quebec
At the Casa Berardi mine, 40,177 ounces of gold were produced in
the first quarter, including 10,655 ounces from the East Mine Crown
Pillar (EMCP) pit, compared to 35,807 ounces in the prior year
period, primarily due to higher throughput. The mill operated at an
average of 3,873 tpd in the first quarter, an increase of 19% over
the first quarter of 2017, and the highest quarterly throughput
ever recorded at the mine. The Company continues to study the
optimal mill throughput rate.
The cost of sales was $49.2 million for the first quarter and
the cash cost, after by-product credits, per gold ounce was $827,
compared to $42.5 million and $886, respectively, in the prior year
period.4,6 The decrease in cash cost, after by-product credits, per
gold ounce is partly due to higher gold production and reduced
stripping costs at the EMCP pit. The same factors, along with lower
capital spending, resulted in lower AISC, after by-product credits,
of $1,086 per gold ounce for the first quarter compared to $1,256
in the first quarter of 2017.5
The automated 985 drift project is working well, and the
delivery of a second 40-ton Sandvik autonomous haul truck is
expected later this year. This is expected to result in operating
savings of several million dollars a year.
San Sebastian - Mexico
At the San Sebastian mine, 512,192 ounces of silver and 4,513
ounces of gold were produced in the first quarter, compared to
750,803 silver ounces and 6,284 gold ounces in the prior year
period. Although silver and gold production were lower as compared
to the first quarter of 2017, both still exceeded our estimates for
the quarter due to the amount of higher-grade stockpile material
processed. The mill operated at an average of 382 tpd in the first
quarter, a 6% decrease over the first quarter of 2017.
The cost of sales was $5.8 million for the first quarter and the
cash cost, after by-product credits, was $2.81 per silver ounce,
compared to $6.6 million and $(3.27), respectively, in the first
quarter of 2017.4 The cash cost, after by-product credits,
increased, as expected, due to lower silver production and higher
mining costs resulting from the transition of production from the
high grade, shallow open pits to underground. The AISC, after
by-product credits, was $8.37 per silver ounce for the first
quarter compared to $0.43 in the first quarter of 2017, principally
due to the same factors along with higher exploration spending,
partially offset by lower capital costs.5
The Company continues to plan on collecting a bulk sample of the
Hugh Zone material from the Francine Vein this year and process it
through Excellon's mill to determine suitability for a longer term
agreement.
EXPLORATION
Exploration (including Corporate Development) expenses were
$7.4 million in the first quarter of 2018, an increase of $2.8
million compared to the first quarter 2017. Full year exploration
(including Corporate Development) expenses for our current projects
are expected to be $30-$37 million, up from $23.5 million in
2017, in part reflecting more aggressive exploration programs at
San Sebastian, Casa Berardi and Greens Creek and continued
exploration at the Kinskuch, Little Baldy and Opinaca-Wildcat
projects.
A complete summary of exploration activities can be found in the
news release entitled "Hecla Reports Continued Discoveries at Casa
Berardi, San Sebastian and Greens Creek" released on May 8,
2018.
PRE-DEVELOPMENT
Pre-development spending was $1.0 million for the quarter,
principally to advance the permitting of Rock Creek and
Montanore.
RESEARCH AND DEVELOPMENT
Research and Development spending was $1.4 million for the
quarter, which included the fabrication for major components of the
RVM at Epiroc's facilities (former Atlas Copco) in Sweden. The
machine is expected to be assembled in the fourth quarter of 2018,
and a testing phase in Sweden during the first half of 2019 is
planned. The machine is expected to be delivered to Lucky Friday in
late 2019.
2018 ESTIMATES7
The Company's 2018 estimates remain unchanged at this time. It
is anticipated that they will be revised at the time of the second
quarter earnings results to include the expected impact from the
addition of Klondex's Nevada operations into Hecla or if by-product
metal prices remain robust.
DIVIDENDS
Common
The Board of Directors elected to declare a quarterly cash
dividend of $0.0025 per share of common stock, payable on or about
June 4, 2018, to stockholders of record on May 24, 2018.
The realized silver price was $16.84 in the first quarter and
therefore did not satisfy the criteria for a larger dividend under
the Company's dividend policy.
Preferred
The Board of Directors elected to declare a quarterly cash
dividend of $0.875 per share of preferred stock, payable on or
about July 2, 2018, to stockholders of record on June
15, 2018.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Thursday, May 10, at
11:00 a.m. Eastern Time to discuss these results. You may join the
conference call by dialing toll-free 1-855-760-8158 or for
international dialing 1-720-634-2922. The participant passcode is
HECLA. Hecla's live and archived webcast can be accessed at
www.hecla-mining.com under Investors or via Thomson StreetEvents
Network.
ABOUT HECLA
Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading
low-cost U.S. silver producer with operating mines in Alaska,
Idaho, and Mexico and is a gold producer with 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.
NOTES
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by
generally accepted accounting principles in the United States
(GAAP). These measures should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with GAAP.
(1) Adjusted net income (loss) applicable to common stockholders
is a non-GAAP measurement, a reconciliation of which to net income
(loss) applicable to common stockholders, the most comparable GAAP
measure, can be found at the end of the release. Adjusted net
income (loss) is a measure used by management to evaluate the
Company's operating performance but should not be considered an
alternative to net income (loss), 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) Adjusted EBITDA is a non-GAAP measurement, a reconciliation
of which to net income (loss), the most comparable GAAP measure,
can be found at the end of the release. Adjusted EBITDA is a
measure used by management to evaluate the Company's operating
performance but should not be considered an alternative to net
income (loss), or cash provided by operating activities as those
terms are defined by GAAP, and does not necessarily indicate
whether cash flows will be sufficient to fund cash needs. In
addition, the Company may use it when formulating performance goals
and targets under its incentive program.
(3) Net debt to adjusted EBITDA is a non-GAAP measurement, a
reconciliation of adjusted EBITDA and net debt to the closest GAAP
measurements of net income (loss) and debt can be found at the end
of the release. It is an important measure for management to
measure relative indebtedness and the ability to service the debt
relative to its peers. It is calculated as total debt outstanding
less total cash on hand divided by adjusted EBITDA.
(4) Cash cost, after by-product credits, per silver or gold
ounce is a non-GAAP measurement, a reconciliation of which to cost
of sales and other direct production costs and depreciation,
depletion and amortization (sometimes referred to as "cost of
sales" in this release), can be found at the end of the release. It
is an important operating statistic that management utilizes to
measure each mine's operating performance. It also allows the
benchmarking of performance of each mines 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, 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. Cash cost, after
by-product credits, per silver ounce is not presented for Lucky
Friday for the first quarter of 2018, as production was limited due
to the strike and results are not comparable to those from prior
periods and are not indicative of future operating results under
full production.
(5) 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. AISC, after
by-product credits, per silver ounce is not presented for Lucky
Friday for the first quarter of 2018, as production was limited due
to the strike and results are not comparable to those from prior
periods and are not indicative of future operating results under
full production.
Current GAAP measures used in the mining industry, such as cost
of goods sold, do not capture all the expenditures incurred to
discover, develop and sustain silver and gold production.
Management believes that all in sustaining costs is a non-GAAP
measure that provides additional information to management,
investors and analysts to help in the understanding of the
economics of our operations and performance compared to other
producers and in the investor's visibility by better defining the
total costs associated with production. Similarly, the statistic is
useful in identifying acquisition and investment opportunities as
it provides a common tool for measuring the financial performance
of other mines with varying geologic, metallurgical and operating
characteristics. In addition, the Company may use it when
formulating performance goals and targets under its incentive
program.
(6) Cash cost, after by-product credits, per gold ounce is only
applicable to Casa Berardi production. Gold produced from Greens
Creek and San Sebastian is treated as a by-product credit against
the silver cash cost.
Other
(7) Expectations for 2018 includes silver, gold, lead and zinc
production from Greens Creek, San Sebastian and Casa Berardi
converted using Au $1,225/oz, Ag $17.25/oz, Zn $1.30/lb, and Pb
$1.00/lb. Lucky Friday expectations are currently suspended as
there is currently a strike. Numbers may be rounded.
Cautionary Statements to Investors on Forward-Looking
Statements
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbor
created by such sections and other applicable laws, including
Canadian securities laws. Such forward-looking statements may
include, without limitation: (i) estimates of future production and
sales; (ii) successful completion of the Klondex acquisition and
its impact on Hecla's operations and results; (iii) expectations
regarding the development, growth potential, financial performance
of the Company’s projects, including the EMCP pit in Quebec and San
Sebastian operations; (iv) the Company’s mineral reserves and
resources; (v) ability to optimize operations at Casa Berardi; (vi)
ability to complete construction of the remote vein miner and for
it to operate successfully; (vii) impact of the Lucky Friday strike
on production and cash flow; (viii) ability to generate value from
innovations being introduced into the mines; (ix) impact of metals
prices on cash costs, after by-product credits; and (x) estimates
of future smelter demand. 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: (i) there being no significant change to current
geotechnical, metallurgical, hydrological and other physical
conditions; (ii) permitting, development, operations and expansion
of the Company’s projects being consistent with current
expectations and mine plans; (iii) political/regulatory
developments in any jurisdiction in which the Company operates
being consistent with its current expectations; (iv) the exchange
rate for the Canadian dollar to the U.S. dollar, being
approximately consistent with current levels; (v) certain price
assumptions for gold, silver, lead and zinc; (vi) prices for key
supplies being approximately consistent with current levels; (vii)
the accuracy of our current mineral reserve and mineral resource
estimates; and (viii) the Company’s plans for development and
production will proceed as expected and will not require revision
as a result of risks or uncertainties, whether known, unknown or
unanticipated. 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 2017
Form 10-K, filed on February 15, 2018, and Form 10-Q filed on May
10, 2018 with the Securities and Exchange Commission (SEC), as well
as the Company’s other SEC filings. The Company does not undertake
any obligation to publicly release 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). 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 being included here 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, which requires the preparation of a “final” or “bankable”
feasibility study demonstrating the economic feasibility of mining
and processing the mineralization using the three-year historical
average price for any reserve or cash flow analysis to designate
reserves and that the primary environmental analysis or report be
filed with the appropriate governmental authority, 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. 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
Dean McDonald, PhD. P.Geo., Senior Vice President - Exploration
of Hecla Mining Company, who serves as a Qualified Person under
National Instrument 43-101, supervised the preparation of the
scientific and technical information concerning Hecla’s mineral
projects in this news release. 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 Greens Creek Mine are contained in a
technical report prepared for Hecla titled “Technical Report for
the Greens Creek Mine, Juneau, Alaska, USA” effective date March
28, 2013, and for the Lucky Friday Mine are contained in a
technical report prepared for Hecla titled “Technical Report on the
Lucky Friday Mine Shoshone County, Idaho, USA” effective date April
2, 2014, for the Casa Berardi Mine are contained in a technical
report prepared for Hecla titled "Technical Report on the Mineral
Resource and Mineral Reserve Estimate for the Casa Berardi Mine,
Northwestern Quebec, Canada" effective date March 31, 2014 (the
"Casa Berardi Technical Report"), and for the San Sebastian Mine
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
three 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. Copies of these technical reports are available
under Hecla's profile on SEDAR at www.sedar.com.
The current Casa Berardi drill program was performed on core
sawed in half and included the insertion of blanks and standards of
variable grade in every 24 core samples. Standards were generally
provided by Analytical Solutions Ltd and prepared in 30-gram bags.
Samples were sent to the Swastika Laboratories in Swastika,
Ontario, a registered accredited laboratory, where they were dried,
crushed, and split for gold analysis. Analysis for gold was
completed by fire assay with AA finish. Gold over-limits were
analyzed by fire assay with gravimetric finish. Data received from
the lab were subject to validation using in-built program triggers
to identify outside limit blank or standard assays that require
re-analysis. Over 5% of the original pulps and rejects are sent for
re-assay to ALS Chemex in Val d’Or for quality control.
Dr. McDonald reviewed and verified information regarding drill
sampling, data verification of all digitally-collected data, drill
surveys and specific gravity determinations relating to the Casa
Berardi mine. 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
Income (Loss)
(dollars and shares in thousands, except
per share amounts - unaudited)
Three Months Ended
March 31, 2018 March
31, 2017 Sales of products
$ 139,709 $ 142,544
Cost of sales and other direct production costs
72,869 78,676 Depreciation, depletion and amortization
28,054 28,952
100,923 107,628
Gross profit
38,786 34,916 Other
operating expenses: General and administrative
7,735 9,206
Exploration
7,360 4,514 Pre-development
1,005 1,252
Research and development
1,436 683 Other operating expense
515 663 Provision for closed operations and environmental
matters
1,262 1,119 Lucky Friday suspension-related costs
5,017 1,581 Acquisition costs
2,507 27
26,837 19,045 Income from operations
11,949 15,871 Other income (expense): Gain
(loss) on derivative contracts
4,007 (7,809 ) Interest and
other (expense) income
(56 ) 325 Loss on disposal of
investments
— (167 ) Unrealized gain on investments
310 327 Net foreign exchange gain (loss)
2,592 (2,262
) Interest expense, net of amounts capitalized
(9,794
) (8,522 )
(2,941 ) (18,108 ) Income (loss)
before income taxes
9,008 (2,237 ) Income tax (provision)
benefit
(768 ) 29,071 Net income
8,240
26,834 Preferred stock dividends
(138 ) (138 ) Income
applicable to common stockholders
$ 8,102 $
26,696 Basic income per common share after preferred
dividends
$ 0.02 $ 0.07 Diluted income
per common share after preferred dividends
$ 0.02
$ 0.07 Weighted average number of common shares
outstanding - basic
399,322 395,370 Weighted
average number of common shares outstanding - diluted
401,923 398,149
HECLA MINING
COMPANY
Condensed Consolidated Balance Sheets
(dollars and shares in thousands -
unaudited)
March 31, 2018 December
31, 2017
ASSETS Current assets:
Cash and cash equivalents
$ 212,569 $ 186,107
Investments
34,358 33,758 Accounts receivable: Trade
19,713 14,805 Other, net
19,293 17,385 Inventories
62,803 54,555 Other current assets
17,369
13,715 Total current assets
366,105 320,325
Non-current investments
7,652 7,561 Non-current restricted
cash and investments
1,005 1,032 Properties, plants,
equipment and mineral interests, net
2,008,704 2,020,021
Non-current deferred income taxes
671 1,509 Other
non-current assets
13,954 14,509
Total
assets $ 2,398,091 $ 2,364,957
LIABILITIES
Current liabilities: Accounts payable and accrued
liabilities
$ 51,636 $ 46,549 Accrued payroll and
related benefits
21,420 31,259 Accrued taxes
7,273
5,919 Current portion of capital leases
5,669 5,608 Current
portion of accrued reclamation and closure costs
8,315 6,679
Other current liabilities
21,621 16,116 Total
current liabilities
115,934 112,130 Capital leases
7,094 6,193 Long-term debt
533,566 502,229
Non-current deferred tax liability
116,866 121,546 Accrued
reclamation and closure costs
78,887 79,366 Non-current
pension liability
48,459 46,628 Other non-current
liabilities
2,784 12,983
Total
liabilities 903,590 881,075
STOCKHOLDERS’ EQUITY
Preferred stock
39 39 Common stock
101,290 100,926 Capital surplus
1,626,298 1,619,816
Accumulated deficit
(187,092 ) (195,484 ) Accumulated
other comprehensive loss
(26,767 ) (23,373 ) Treasury
stock
(19,267 ) (18,042 )
Total stockholders’
equity 1,494,501 1,483,882
Total
liabilities and stockholders’ equity $ 2,398,091
$ 2,364,957 Common shares outstanding
400,302
399,176
HECLA MINING COMPANY
Condensed Consolidated Statements of Cash
Flows
(dollars in thousands - unaudited)
Three Months Ended
March 31, 2018
March 31, 2017
OPERATING ACTIVITIES
Net income
$ 8,240 $ 26,834
Non-cash elements included in net income: Depreciation, depletion
and amortization
29,490 29,590 Loss on disposal of
investments
— 167 Unrealized gain on investments
(310
) (327 ) Gain on disposition of properties, plants,
equipment and mineral interests
(129 ) (32 )
Provision for reclamation and closure costs
1,323 1,026
Stock compensation
1,127 1,349 Deferred income taxes
(438 ) (21,234 ) Amortization of loan origination
fees
449 480 (Gain) loss on derivative contracts
(9,094 ) 7,343 Foreign exchange (gain) loss
(3,399 ) 506 Other non-cash charges, net
(36
) 2 Change in assets and liabilities: Accounts receivable
(7,266 ) (8,738 ) Inventories
(6,762 )
(3,358 ) Other current and non-current assets
(3,171
) 1,363 Accounts payable and accrued liabilities
13,956 (1,510 ) Accrued payroll and related benefits
(3,927 ) 6,881 Accrued taxes
218 1,754 Accrued
reclamation and closure costs and other non-current liabilities
(3,888 ) (3,811 )
Cash provided by
operating activities 16,383 38,285
INVESTING ACTIVITIES
Additions to properties, plants,
equipment and mineral interests
(17,635 ) (21,658 )
Maturities of investments
30,501 3,634 Proceeds from
disposition of properties, plants and equipment
151 61
Purchases of investments
(31,182 ) (11,113 )
Net cash used in investing activities (18,165
) (29,076 )
FINANCING ACTIVITIES Acquisition
of treasury shares
(1,225 ) (731 ) Dividends paid to
common stockholders
(998 ) (989 ) Dividends paid to
preferred stockholders
(138 ) (138 ) Debt origination
fees
— (91 ) Borrowings on debt
31,024 — Payments on
debt
— (470 ) Repayments of capital leases
(1,322
) (1,595 )
Net cash provided by (used in)
financing activities 27,341 (4,014 )
Effect of exchange rates on cash
876 1,814 Net increase in
cash, cash equivalents and restricted cash and cash equivalents
26,435 7,009 Cash, cash equivalents and restricted cash and
cash equivalents at beginning of period
187,139
171,977 Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$ 213,574
$ 178,986
HECLA MINING COMPANY
Production Data
Three Months Ended
March 31,
2018 March 31, 2017
GREENS CREEK UNIT
Tons of ore milled
211,430
197,129 Mining cost per ton of ore
$ 68.99 $ 71.41
Milling cost per ton of ore
$ 32.64 $ 33.72 Ore grade
milled - Silver (oz./ton)
11.71 12.71 Ore grade milled -
Gold (oz./ton)
0.10 0.10 Ore grade milled - Lead (%)
2.96 3.06 Ore grade milled - Zinc (%)
8.05 7.82
Silver produced (oz.)
1,913,232 1,929,297 Gold produced
(oz.)
13,118 14,022 Lead produced (tons)
5,021 4,809
Zinc produced (tons)
14,799 13,406 Cash cost, after
by-product credits, per silver ounce (1)
$ (4.99
) $ 0.65 AISC, after by-product credits, per silver ounce
(1)
$ 0.59 $ 3.86 Capital additions (in thousands)
$ 9,482 $ 5,234
LUCKY
FRIDAY UNIT Tons of ore processed
9,559 57,069 Mining cost per ton of ore
$
114.76 $ 104.72 Milling cost per ton of ore
$
21.67 $ 27.16 Ore grade milled - Silver (oz./ton)
11.10 12.39 Ore grade milled - Lead (%)
6.92 7.05 Ore
grade milled - Zinc (%)
4.79 3.99 Silver produced (oz.)
99,780 680,782 Lead produced (tons)
606 3,827 Zinc
produced (tons)
412 2,131 Cash cost, after by-product
credits, per silver ounce (1)
$ — $ 5.93 AISC, after
by-product credits, per silver ounce (1)
$ — $ 12.06
Capital additions (in thousands)
$ 988
$ 3,987
CASA BERARDI UNIT
Tons of ore milled - underground
191,333 204,957 Tons
of ore milled - surface pit
157,216 88,739
Tons of ore milled - total
348,549
293,696 Surface tons mined - ore and waste
1,676,434
2,310,235 Mining cost per ton of ore - underground
$
108.50 $ 98.14 Mining cost per ton of ore - combined
$ 76.95 $ 86.58 Mining cost per ton of ore and waste
- surface tons mined
$ 3.62 $ 2.61 Milling cost per
ton of ore
$ 15.96 $ 17.26 Ore grade milled - Gold
(oz./ton) - underground
0.180 0.16 Ore grade milled - Gold
(oz./ton) - surface pit
0.079 0.09 Ore grade milled - Gold
(oz./ton) - combined
0.135 0.14 Ore grade milled - Silver
(oz./ton)
0.03 0.03 Gold produced (oz.) - underground
29,522 28,650 Gold produced (oz.) - surface pit
10,655 7,157 Gold produced (oz.) -
total
40,177 35,807 Silver produced
(oz.)
8,891 8,545 Cash cost, after by-product credits, per
gold ounce (1)
$ 827 $ 886 AISC, after by-product
credits, per gold ounce (1)
$ 1,086 $ 1,256 Capital
additions (in thousands)
$ 9,067
$ 12,411
SAN SEBASTIAN UNIT
Tons of ore milled
34,397 36,663 Mining cost per ton
of ore
$ 115.12 $ 38.99 Milling cost per ton of ore
$ 67.13 $ 64.15 Ore grade milled - Silver (oz./ton)
16.10 21.78 Ore grade milled - Gold (oz./ton)
0.142
0.183 Silver produced (oz.)
512,192 750,803 Gold produced
(oz.)
4,513 6,284 Cash cost, after by-product credits, per
silver ounce (1)
$ 2.81 $ (3.27 ) AISC, after
by-product credits, per silver ounce (1)
$ 8.37 $
0.43 Capital additions (in thousands)
$ 430 $ 1,707
(1) Cash cost, after by-product credits, per ounce and AISC,
after by-products credits, per ounce represent a non-U.S. Generally
Accepted Accounting Principles (GAAP) measurement. A reconciliation
of cash cost, after by-product credits and AISC, after by-products
credits to cost of sales and other direct production costs and
depreciation, depletion and amortization (GAAP) can be found in the
cash cost per ounce reconciliation section of this news release.
Gold, lead and zinc produced have been treated as by-product
credits in calculating silver costs per ounce. The primary metal
produced at Casa Berardi is gold, with a by-product credit for the
value of silver production.
Reconciliation of Cost of Sales and Other Direct Production
Costs and Depreciation, Depletion and Amortization (GAAP) to Cash
Cost, Before By-product Credits and Cash Cost, After By-product
Credits (non-GAAP) and All-In Sustaining Costs, Before By-product
Credits and All-In Sustaining Costs, After By-product Credits
(non-GAAP)
The tables below present reconciliations between the most
comparable GAAP measure of cost of sales and other direct
production costs and depreciation, depletion and amortization to
the non-GAAP measures of Cash Cost, Before By-product Credits, Cash
Cost, After By-product Credits, AISC, Before By-product Credits and
AISC, After By-product Credits for our operations at the Greens
Creek, Lucky Friday, San Sebastian and Casa Berardi units for the
three-month periods ended March 31, 2018 and 2017.
Cash Cost, After By-product Credits, per Ounce is an important
operating statistic that we utilize to measure each mine's
operating performance. AISC, After By-product Credits, per Ounce is
an important operating statistic that we utilize as a measures of
our mines' net cash flow after costs for exploration,
pre-development, reclamation, and sustaining capital. Current GAAP
measures used in the mining industry, such as cost of goods sold,
do not capture all the expenditures incurred to discover, develop
and sustain silver and gold production. Cash Cost, After By-product
Credits, per Ounce and AISC, After By-product Credits, per Ounce
also allow us to benchmark the performance of each of our mines
versus those of our competitors. As a primary silver mining
company, we also use these statistics on an aggregate basis -
aggregating the Greens Creek, Lucky Friday and San Sebastian mines
- to compare our performance with that of other primary silver
mining companies. With regard to Casa Berardi, we use Cash Cost,
After By-product Credits, per Gold Ounce AISC, After By-product
Credits, per Gold Ounce to compare its performance with other gold
mines. Similarly, these statistics are useful in identifying
acquisition and investment opportunities as they provide a common
tool for measuring the financial performance of other mines with
varying geologic, metallurgical and operating characteristics.
Cash Cost, Before By-product Credits and AISC, Before By-product
Credits include all direct and indirect operating cash costs
related directly to the physical activities of producing metals,
including mining, processing and other plant costs, third-party
refining expense, on-site general and administrative costs,
royalties and mining production taxes. AISC, Before By-product
Credits for each mine also includes on-site exploration,
reclamation, and sustaining capital costs. AISC, Before By-product
Credits for our consolidated silver properties also includes
corporate costs for general and administrative expense,
reclamation, exploration, and pre-development. By-product credits
include revenues earned from all metals other than the primary
metal produced at each unit. As depicted in the tables below,
by-product credits comprise an essential element of our silver unit
cost structure, distinguishing our silver operations due to the
polymetallic nature of their orebodies. Cash Cost, After By-product
Credits, per Ounce and AISC, After By-product Credits, per Ounce
provide management and investors an indication of operating cash
flow, after consideration of the average price, received from
production. We also use these measurements for the comparative
monitoring of performance of our mining operations period-to-period
from a cash flow perspective. Cash Cost, After By-product Credits,
per Ounce is a measure developed by precious metals companies
(including the Silver Institute) in an effort to provide a uniform
standard for comparison purposes. There can be no assurance,
however, that our reporting of these non-GAAP measures are the same
as those reported by other mining companies.
The Casa Berardi section below reports Cash Cost, After
By-product Credits, per Gold Ounce and AISC, After By-product
Credits, per Gold Ounce for the production of gold, its primary
product, and by-product revenues earned from silver, which is a
by-product at Casa Berardi. 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 unit 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.
In thousands (except per ounce amounts) Three Months Ended
March 31, 2018 Greens Creek Lucky Friday(2) San
Sebastian Corporate(3) Total Silver Casa
Berardi (Gold) Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$ 41,861 $ 4,100 $ 5,775 $ 51,736 $ 49,187 $ 100,923 Depreciation,
depletion and amortization (10,639 ) (621 ) (684 ) (11,944 )
(16,110 ) (28,054 ) Treatment costs 11,388 572 204 12,164 535
12,699 Change in product inventory 5,154 (1,022 ) 2,638 6,770 (101
) 6,669 Reclamation and other costs (912 ) (45 ) (494 ) (1,451 )
(142 ) (1,593 ) Exclusion of Lucky Friday costs — (2,984 ) —
(2,984 ) — (2,984 ) Cash Cost, Before By-product
Credits (1) 46,852 — 7,439 54,291 33,369 87,660 Reclamation and
other costs 849 — 106 955 143 1,098 Exploration 360 — 2,312 444
3,116 1,190 4,306 Sustaining capital 9,482 — 430 117 10,029 9,067
19,096 General and administrative 7,735 7,735
7,735 AISC, Before By-product Credits (1)
57,543 — 10,287 76,126 43,769 119,895 By-product credits: Zinc
(32,142 ) — (32,142 ) (32,142 ) Gold (15,292 ) — (5,998 ) (21,290 )
(21,290 ) Lead (8,974 ) — (8,974 ) (8,974 ) Silver
(148 ) (148 ) Total By-product credits (56,408 ) —
(5,998 ) (62,406 ) (148 ) (62,554 ) Cash Cost, After
By-product Credits $ (9,556 ) $ — $ 1,441 $ (8,115 )
$ 33,221 $ 25,106 AISC, After By-product Credits $
1,135 $ — $ 4,289 $ 13,720 $ 43,621
$ 57,341 Divided by ounces produced 1,913 — 512 2,425
40 Cash Cost, Before By-product Credits, per Ounce $ 24.49 $ — $
14.52 $ 22.38 $ 831 By-product credits per ounce (29.48 ) —
(11.71 ) (25.73 ) (4 ) Cash Cost, After By-product Credits, per
Ounce $ (4.99 ) $ — $ 2.81 $ (3.35 ) $ 827
AISC, Before By-product Credits, per Ounce $ 30.07 $ — $ 20.08 $
31.39 $
1,090
By-product credits per ounce (29.48 ) — (11.71 ) (25.73 ) (4
) AISC, After By-product Credits, per Ounce $ 0.59 $ —
$ 8.37 $ 5.66 $ 1,086 In
thousands (except per ounce amounts) Three Months Ended
March 31, 2017 Greens Creek Lucky Friday(2) San
Sebastian Corporate(3) Total Silver Casa
Berardi (Gold) Total Cost of sales and other direct
production costs and depreciation, depletion and amortization $
43,996 $ 14,543 $ 6,623 $ 65,162 $ 42,466 $ 107,628 Depreciation,
depletion and amortization (13,332 ) (2,433 ) (673 ) (16,438 )
(12,514 ) (28,952 ) Treatment costs 14,131 3,817 225 18,173 571
18,744 Change in product inventory 3,265 (149 ) (380 ) 2,736 1,381
4,117 Reclamation and other costs (386 ) (182 ) (590 ) (1,158 ) (17
) (1,175 ) Cash Cost, Before By-product Credits (1) 47,674 15,596
5,205 68,475 31,887 100,362 Reclamation and other costs 666 179 117
962 17 979 Exploration 278 1 1,532 378 2,189 797 2,986 Sustaining
capital 5,234 3,990 1,132 5 10,361 12,411 22,772 General and
administrative 9,206 9,206 9,206
AISC, Before By-product Credits (1) 53,852 19,766 7,986
91,193 45,112 136,305 By-product credits: Zinc (23,779 ) (4,060 )
(27,839 ) (27,839 ) Gold (14,852 ) (7,657 ) (22,509 ) (22,509 )
Lead (7,782 ) (7,496 ) (15,278 ) (15,278 ) Silver
(147 ) (147 ) Total By-product credits (46,413 )
(11,556 ) (7,657 ) (65,626 ) (147 ) (65,773 ) Cash Cost, After
By-product Credits $ 1,261 $ 4,040 $ (2,452 ) $ 2,849
$ 31,740 $ 34,589 AISC, After By-product
Credits $ 7,439 $ 8,210 $ 329 $ 25,567
$ 44,965 $ 70,532 Divided by ounces produced 1,929
681 751 3,361 36 Cash Cost, Before By-product Credits, per Ounce $
24.71 $ 22.90 $ 6.93 $ 20.37 $ 890 By-product credits per ounce
(24.06 ) (16.97 ) (10.20 ) (19.53 ) (4 ) Cash Cost, After
By-product Credits, per Ounce $ 0.65 $ 5.93 $ (3.27 )
$ 0.84 $ 886 AISC, Before By-product Credits, per
Ounce $ 27.92 $ 29.03 $ 10.63 $ 27.13 $ 1,260 By-product credits
per ounce (24.06 ) (16.97 ) (10.20 ) (19.53 ) (4 ) AISC, After
By-product Credits, per Ounce $ 3.86 $ 12.06 $ 0.43
$ 7.60 $ 1,256 (1) Includes all
direct and indirect operating costs related directly to the
physical activities of producing metals, including mining,
processing and other plant costs, third-party refining and
marketing expense, on-site general and administrative costs,
royalties and mining production taxes, after by-product revenues
earned from all metals other than the primary metal produced at
each unit. AISC, Before By-product Credits also includes on-site
exploration, reclamation, and sustaining capital cost. (2)
The unionized employees at Lucky Friday have been on strike since
March 13, 2017, and production at Lucky Friday has been limited
since that time. As a result, for the first quarter of 2018 Cash
Cost, Before By-product Credits, Cash Cost, After By-product
Credits, AISC, Before By-product Credits, and AISC, After
By-product Credits are not presented for Lucky Friday, and costs
related to the limited production at Lucky Friday are excluded from
the calculation of Cash Cost, Before By-product Credits, Cash Cost,
After By-product Credits, AISC, Before By-product Credits, and
AISC, After By-product Credits for our combined silver operations.
(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 Income Applicable to Common
Stockholders (GAAP) to Adjusted Net Income Applicable to Common
Stockholders (non-GAAP)
This release refers to a non-GAAP measure of adjusted net income
applicable to common stockholders and adjusted net income 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 per common share provides investors with the
ability to better evaluate our underlying operating
performance.
Dollars are in thousands (except per share amounts) Three
Months Ended March 31,
2018 2017 Net income
applicable to common stockholders (GAAP)
$ 8,102
$ 26,696 Adjusting items: (Gain) loss on derivatives
contracts
(4,007 ) 7,809 Lucky Friday suspension
costs
5,017 1,581
Provisional price losses (gains)
65 (627 ) Net foreign exchange (gain) loss
(2,592
) 2,262 Acquisition costs
2,507 27 Nonrecurring
deferred income tax adjustments — (17,486 ) Adjusted net
income applicable to common stockholders
$ 9,092
$ 20,262 Weighted average shares - basic
399,322 395,370 Weighted average shares - diluted
401,923 398,149 Basic and diluted adjusted net income per
common share
$ 0.02 $ 0.05
Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to
Adjusted EBITDA (non-GAAP) and Net Debt (non-GAAP)
This release refers to the non-GAAP measures of adjusted
earnings before interest, taxes, depreciation and amortization
("Adjusted EBITDA"), which is a measure of our operating
performance, and net debt to adjusted EBITDA for the last 12 months
(or "LTM adjusted EBITDA"), which is a measure of our ability to
service our debt. Adjusted EBITDA is calculated as net income
(loss) before the following items: interest expense, income tax
provision, depreciation, depletion, and amortization expense,
exploration expense, pre-development expense, acquisition costs,
foreign exchange gains and losses, gains and losses on derivative
contracts, Lucky Friday suspension-related costs, acquisition
costs, provisional price gains and losses, stock-based
compensation, unrealized gains on investments, provisions for
closed operations, and interest and other income (expense). Net
debt is calculated as total debt, which consists of the liability
balances for our Senior Notes and 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 income (loss) and debt to
Adjusted EBITDA and net debt:
Dollars are in thousands
Three Months EndedMarch 31,
Twelve Months EndedMarch 31,
2018 2017
2018 2017 Net income
(loss)
$ 8,240 $ 26,834
$
(42,113 ) $ 96,999 Plus: Interest expense
9,794 8,522
39,284 24,607 Plus: Income taxes
768 (29,071 )
49,718 (3,297 ) Plus: Depreciation,
depletion and amortization
28,054 28,952
115,164
119,203 Plus: Exploration expense
7,360 4,514
26,356
16,284 Plus: Pre-development expense
1,005 1,252
5,201 3,985 Plus: Acquisition costs
2,507 27
2,505 2,722 Plus/(Less): Foreign exchange (gain) loss
(2,592 ) 2,262
5,446 (3,015 ) Plus/(Less):
Loss (gain) on derivative contracts
(4,007 ) 7,809
9,434 3,386 Plus: Lucky Friday suspension costs
5,017
1,581
24,737 1,581 Plus/(Less): Provisional price losses
(gains)
65 (627 )
(50 ) 797 Plus: Stock-based
compensation
1,090 1,349
6,072 6,109 Plus: Provision
for closed operations and environmental matters
1,323 1,026
4,805 5,839 Plus/(Less): Unrealized loss (gain) on
investments
(310 ) (327 )
264 (861 )
Plus/(Less): Other
56 (158 )
(1,312 )
(1,576 ) Adjusted EBITDA
$ 58,370 $ 53,945
$ 245,511 $ 272,763 Total debt
$ 546,329 $ 513,027 Less: Cash, cash equivalents and
short-term investments
$ (246,927 ) $ (213,291
) Net debt
$ 299,402 $ 299,736 Net
debt/LTM adjusted EBITDA (non-GAAP)
1.2 1.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180510005323/en/
Hecla Mining CompanyMike Westerlund, 800-HECLA91
(800-432-5291)Vice President - Investor
Relationshmc-info@hecla-mining.comwww.hecla-mining.com/
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