0000719413 HECLA MINING CO/DE/ false
--12-31 Q2 2022 5,000,000 5,000,000 0.25 0.25 157,816 157,816
157,816 157,816 7,891 7,891 0.25 0.25 750,000,000 750,000,000
548,037,253 545,534,760 8,132,553 7,395,295 901,215 0.0625 0.875
143,200 98,310 1,190,000 1,653,000 0.01125 0.875 217,000 3,500,000
207,000 1,789,042 0.01125 1.75 321,110 1,190,000 98,310 1,653,000
0.02 1.75 382,000 3,500,000 207,000 May 5, 2022 7.25 0 5 321.8
247.9 0.47 135 0.50 00007194132022-01-012022-06-30
0000719413us-gaap:CommonStockMember2022-01-012022-06-30
0000719413hl:SeriesBCumulativePreferredStockMember2022-01-012022-06-30
xbrli:shares 00007194132022-08-01 iso4217:USD
00007194132022-04-012022-06-30 00007194132021-04-012021-06-30
00007194132021-01-012021-06-30 iso4217:USDxbrli:shares
00007194132021-12-31 00007194132020-12-31 00007194132022-06-30
00007194132021-06-30
0000719413us-gaap:PreferredStockMember2022-03-31
0000719413us-gaap:CommonStockMember2022-03-31
0000719413us-gaap:AdditionalPaidInCapitalMember2022-03-31
0000719413us-gaap:RetainedEarningsMember2022-03-31
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-31
0000719413us-gaap:TreasuryStockMember2022-03-31
00007194132022-03-31
0000719413us-gaap:PreferredStockMember2022-04-012022-06-30
0000719413us-gaap:CommonStockMember2022-04-012022-06-30
0000719413us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-30
0000719413us-gaap:RetainedEarningsMember2022-04-012022-06-30
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-30
0000719413us-gaap:TreasuryStockMember2022-04-012022-06-30
0000719413us-gaap:PreferredStockMember2022-06-30
0000719413us-gaap:CommonStockMember2022-06-30
0000719413us-gaap:AdditionalPaidInCapitalMember2022-06-30
0000719413us-gaap:RetainedEarningsMember2022-06-30
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-30
0000719413us-gaap:TreasuryStockMember2022-06-30
0000719413us-gaap:PreferredStockMember2021-03-31
0000719413us-gaap:CommonStockMember2021-03-31
0000719413us-gaap:AdditionalPaidInCapitalMember2021-03-31
0000719413us-gaap:RetainedEarningsMember2021-03-31
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-31
0000719413us-gaap:TreasuryStockMember2021-03-31
00007194132021-03-31
0000719413us-gaap:PreferredStockMember2021-04-012021-06-30
0000719413us-gaap:CommonStockMember2021-04-012021-06-30
0000719413us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-30
0000719413us-gaap:RetainedEarningsMember2021-04-012021-06-30
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-30
0000719413us-gaap:TreasuryStockMember2021-04-012021-06-30
0000719413us-gaap:PreferredStockMember2021-06-30
0000719413us-gaap:CommonStockMember2021-06-30
0000719413us-gaap:AdditionalPaidInCapitalMember2021-06-30
0000719413us-gaap:RetainedEarningsMember2021-06-30
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-30
0000719413us-gaap:TreasuryStockMember2021-06-30
0000719413us-gaap:PreferredStockMember2021-12-31
0000719413us-gaap:CommonStockMember2021-12-31
0000719413us-gaap:AdditionalPaidInCapitalMember2021-12-31
0000719413us-gaap:RetainedEarningsMember2021-12-31
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-31
0000719413us-gaap:TreasuryStockMember2021-12-31
0000719413us-gaap:PreferredStockMember2022-01-012022-06-30
0000719413us-gaap:CommonStockMember2022-01-012022-06-30
0000719413us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-30
0000719413us-gaap:RetainedEarningsMember2022-01-012022-06-30
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-30
0000719413us-gaap:TreasuryStockMember2022-01-012022-06-30
0000719413us-gaap:PreferredStockMember2020-12-31
0000719413us-gaap:CommonStockMember2020-12-31
0000719413us-gaap:AdditionalPaidInCapitalMember2020-12-31
0000719413us-gaap:RetainedEarningsMember2020-12-31
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-31
0000719413us-gaap:TreasuryStockMember2020-12-31
0000719413us-gaap:PreferredStockMember2021-01-012021-06-30
0000719413us-gaap:CommonStockMember2021-01-012021-06-30
0000719413us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-30
0000719413us-gaap:RetainedEarningsMember2021-01-012021-06-30
0000719413us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-30
0000719413us-gaap:TreasuryStockMember2021-01-012021-06-30
0000719413hl:GreensCreekMember2022-04-012022-06-30
0000719413hl:GreensCreekMember2021-04-012021-06-30
0000719413hl:GreensCreekMember2022-01-012022-06-30
0000719413hl:GreensCreekMember2021-01-012021-06-30
0000719413hl:LuckyFridayMember2022-04-012022-06-30
0000719413hl:LuckyFridayMember2021-04-012021-06-30
0000719413hl:LuckyFridayMember2022-01-012022-06-30
0000719413hl:LuckyFridayMember2021-01-012021-06-30
0000719413hl:CasaBerardiMember2022-04-012022-06-30
0000719413hl:CasaBerardiMember2021-04-012021-06-30
0000719413hl:CasaBerardiMember2022-01-012022-06-30
0000719413hl:CasaBerardiMember2021-01-012021-06-30
0000719413hl:NevadaOperationsMember2022-04-012022-06-30
0000719413hl:NevadaOperationsMember2021-04-012021-06-30
0000719413hl:NevadaOperationsMember2022-01-012022-06-30
0000719413hl:NevadaOperationsMember2021-01-012021-06-30
0000719413us-gaap:AllOtherSegmentsMember2022-04-012022-06-30
0000719413us-gaap:AllOtherSegmentsMember2021-04-012021-06-30
0000719413us-gaap:AllOtherSegmentsMember2022-01-012022-06-30
0000719413us-gaap:AllOtherSegmentsMember2021-01-012021-06-30
0000719413hl:GreensCreekMember2022-06-30
0000719413hl:GreensCreekMember2021-12-31
0000719413hl:LuckyFridayMember2022-06-30
0000719413hl:LuckyFridayMember2021-12-31
0000719413hl:CasaBerardiMember2022-06-30
0000719413hl:CasaBerardiMember2021-12-31
0000719413hl:NevadaOperationsMember2022-06-30
0000719413hl:NevadaOperationsMember2021-12-31
0000719413us-gaap:AllOtherSegmentsMember2022-06-30
0000719413us-gaap:AllOtherSegmentsMember2021-12-31
0000719413hl:SilverContractsMember2022-04-012022-06-30
0000719413hl:SilverContractsMember2021-04-012021-06-30
0000719413hl:SilverContractsMember2022-01-012022-06-30
0000719413hl:SilverContractsMember2021-01-012021-06-30
0000719413us-gaap:GoldMember2022-04-012022-06-30
0000719413us-gaap:GoldMember2021-04-012021-06-30
0000719413us-gaap:GoldMember2022-01-012022-06-30
0000719413us-gaap:GoldMember2021-01-012021-06-30
0000719413hl:LeadMember2022-04-012022-06-30
0000719413hl:LeadMember2021-04-012021-06-30
0000719413hl:LeadMember2022-01-012022-06-30
0000719413hl:LeadMember2021-01-012021-06-30
0000719413hl:ZincMember2022-04-012022-06-30
0000719413hl:ZincMember2021-04-012021-06-30
0000719413hl:ZincMember2022-01-012022-06-30
0000719413hl:ZincMember2021-01-012021-06-30
0000719413hl:FinanciallySettledForwardContractsMember2022-04-012022-06-30
0000719413hl:FinanciallySettledForwardContractsMember2022-01-012022-06-30
0000719413hl:FinanciallySettledForwardContractsMember2021-04-012021-06-30
0000719413hl:FinanciallySettledForwardContractsMember2021-01-012021-06-30
0000719413us-gaap:NonoperatingIncomeExpenseMember2022-04-012022-06-30
0000719413us-gaap:NonoperatingIncomeExpenseMember2022-01-012022-06-30
0000719413us-gaap:NonoperatingIncomeExpenseMember2021-04-012021-06-30
0000719413us-gaap:NonoperatingIncomeExpenseMember2021-01-012021-06-30
0000719413us-gaap:PensionPlansDefinedBenefitMember2022-05-012022-05-31
0000719413us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2021-01-012021-01-31
utr:Y 0000719413us-gaap:RestrictedStockMember2022-01-012022-06-30
0000719413us-gaap:PerformanceSharesMember2022-01-012022-06-30
0000719413us-gaap:StockCompensationPlanMember2022-01-012022-06-30
thunderdome:item
0000719413hl:QuarterlyDividendsMember2022-05-052022-05-05
0000719413hl:QuarterlyDividendsMember2022-04-012022-06-30
00007194132022-01-012022-03-31 xbrli:pure
0000719413hl:The2028SeniorNotesMemberus-gaap:SeniorNotesMember2022-06-30
0000719413hl:The2028SeniorNotesMemberus-gaap:SeniorNotesMember2021-12-31
0000719413hl:IQNotesMemberus-gaap:SeniorNotesMember2022-06-30
0000719413us-gaap:SeniorNotesMember2022-06-30
0000719413hl:IQNotesMemberus-gaap:SeniorNotesMember2021-12-31
0000719413us-gaap:SeniorNotesMember2021-12-31
0000719413us-gaap:RevolvingCreditFacilityMember2018-07-31
0000719413us-gaap:RevolvingCreditFacilityMember2022-06-30
0000719413us-gaap:RevolvingCreditFacilityMember2021-12-31
0000719413us-gaap:LetterOfCreditMembersrt:MinimumMember2018-07-31
0000719413us-gaap:LetterOfCreditMembersrt:MaximumMember2018-07-31
0000719413us-gaap:LetterOfCreditMember2018-07-31
0000719413us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberhl:CasaBerardiMember2022-06-30
iso4217:CAD
0000719413us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMembersrt:MinimumMemberhl:CasaBerardiMember2022-06-30
0000719413us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMembersrt:MaximumMemberhl:CasaBerardiMember2022-06-30
0000719413us-gaap:ForeignExchangeContractMember2022-06-30
0000719413us-gaap:ForeignExchangeContractMember2021-12-31
0000719413us-gaap:ForeignExchangeForwardMember2022-06-30
0000719413us-gaap:OtherComprehensiveIncomeMember2022-06-30
0000719413us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2022-04-012022-06-30
0000719413us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2022-01-012022-06-30
utr:oz
0000719413hl:Silver2021SettlementsForProvisionalSalesMember2022-01-012022-06-30
0000719413hl:Gold2021SettlementsForProvisionalSalesMember2022-01-012022-06-30
utr:lb
0000719413hl:Zinc2021SettlementsForProvisionalSalesMember2022-01-012022-06-30
0000719413hl:Lead2021SettlementsForProvisionalSalesMember2022-01-012022-06-30
iso4217:USDutr:oz iso4217:USDutr:lb
0000719413hl:Silver2021SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Gold2021SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Zinc2021SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Lead2021SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Silver2022SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Gold2022SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Zinc2022SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Lead2022SettlementsForForecastedSalesMember2022-01-012022-06-30
iso4217:USDthunderdome:item
0000719413hl:Silver2023SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Gold2023SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Zinc2023SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Lead2023SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Silver2024SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Gold2024SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Zinc2024SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Lead2024SettlementsForForecastedSalesMember2022-01-012022-06-30
0000719413hl:Silver2022SettlementsForProvisionalSalesMember2021-01-012021-12-31
0000719413hl:Gold2022SettlementsForProvisionalSalesMember2021-01-012021-12-31
0000719413hl:Zinc2022SettlementsForProvisionalSalesMember2021-01-012021-12-31
0000719413hl:Lead2022SettlementsForProvisionalSalesMember2021-01-012021-12-31
0000719413hl:Silver2022SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:Gold2022SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:Zinc2022SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:Lead2022SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:Silver2023SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:Gold2023SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:Zinc2023SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:Lead2023SettlementsForForecastedSalesMember2021-01-012021-12-31
0000719413hl:CurrentDerivativesAssetsMemberhl:ForwardAndPutOptionContractsMember2022-06-30
0000719413hl:CurrentDerivativesAssetsMemberhl:ForwardAndPutOptionContractsMember2021-12-31
0000719413hl:NoncurrentDerivativeAssetsMemberhl:ForwardAndPutOptionContractsMember2022-06-30
0000719413hl:NoncurrentDerivativeAssetsMemberhl:ForwardAndPutOptionContractsMember2021-12-31
0000719413hl:CurrentDerivativeLiabilitiesMemberhl:ForwardAndPutOptionContractsMember2022-06-30
0000719413hl:CurrentDerivativeLiabilitiesMemberhl:ForwardAndPutOptionContractsMember2021-12-31
0000719413us-gaap:OtherNoncurrentLiabilitiesMemberhl:ForwardAndPutOptionContractsMember2022-06-30
0000719413us-gaap:OtherNoncurrentLiabilitiesMemberhl:ForwardAndPutOptionContractsMember2021-12-31
0000719413us-gaap:PriceRiskDerivativeMember2022-06-30
0000719413hl:UnsettledConcentrateSalesContractsMember2022-04-012022-06-30
0000719413hl:UnsettledConcentrateSalesContractsMember2022-01-012022-06-30
0000719413hl:ForecastedFutureConcentrateContractsMember2021-04-012021-06-30
0000719413hl:ForecastedFutureConcentrateContractsMember2021-01-012021-06-30
0000719413us-gaap:CommodityContractMember2022-06-30
0000719413us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMember2022-04-012022-06-30
0000719413us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMember2021-04-012021-06-30
0000719413us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMember2022-01-012022-06-30
0000719413us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMember2021-01-012021-06-30
0000719413us-gaap:FairValueInputsLevel1Member2022-04-012022-06-30
0000719413us-gaap:FairValueInputsLevel1Member2021-04-012021-06-30
0000719413us-gaap:FairValueInputsLevel1Member2022-01-012022-06-30
0000719413us-gaap:FairValueInputsLevel1Member2021-01-012021-06-30
0000719413us-gaap:FairValueInputsLevel1Memberus-gaap:SecuritiesInvestmentMember2022-04-012022-06-30
0000719413us-gaap:FairValueInputsLevel1Memberus-gaap:SecuritiesInvestmentMember2021-04-012021-06-30
0000719413us-gaap:FairValueInputsLevel1Memberus-gaap:SecuritiesInvestmentMember2022-01-012022-06-30
0000719413us-gaap:FairValueInputsLevel1Memberus-gaap:SecuritiesInvestmentMember2021-01-012021-06-30
0000719413us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-30
0000719413us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31
0000719413us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-30
0000719413us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31
0000719413us-gaap:FairValueMeasurementsRecurringMember2022-06-30
0000719413us-gaap:FairValueMeasurementsRecurringMember2021-12-31
0000719413us-gaap:FairValueInputsLevel1Memberus-gaap:SeniorNotesMember2022-06-30
0000719413hl:IQNotesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:SeniorNotesMember2022-06-30
0000719413hl:IQNotesMemberus-gaap:SeniorNotesMemberhl:MeasurementInputAnnualYieldMember2022-06-30
0000719413hl:JohnnyMMineAreaNearSanMateoNewMexicoMember2012-08-012012-08-31
0000719413hl:EnvironmentalRemediationPastResponseCostsMemberhl:JohnnyMMineAreaNearSanMateoNewMexicoMember2021-01-012021-03-31
0000719413hl:JohnnyMMineAreaNearSanMateoNewMexicoMember2021-01-012021-03-31
0000719413hl:JohnnyMMineAreaNearSanMateoNewMexicoMember2018-07-012018-07-31
0000719413hl:CarpenterSnowCreekSuperfundSiteCascadeCountyMontanaMember2011-06-012011-06-30
0000719413hl:GreensCreekMember2022-06-302022-06-30
0000719413hl:LuckyFridayMemberus-gaap:SubsequentEventMember2022-07-122022-07-12
0000719413hl:PurchaseOrdersAndCommitmentMemberhl:GreensCreekMember2022-06-30
0000719413hl:PurchaseOrdersAndCommitmentMemberhl:LuckyFridayMember2022-06-30
0000719413hl:PurchaseOrdersAndCommitmentMemberhl:CasaBerardiMember2022-06-30
0000719413hl:PurchaseOrdersAndCommitmentMemberhl:NevadaOperationsMember2022-06-30
0000719413hl:LeaseCommitmentsMember2022-06-30
0000719413hl:PerformanceObligationCommitmentsMember2022-06-30
0000719413hl:AlexcoMemberus-gaap:SubsequentEventMember2022-07-05
0000719413hl:AlexcoMemberus-gaap:SubsequentEventMember2022-07-19
0000719413hl:WheatonPreciousMetalsCorporationMemberus-gaap:SubsequentEventMember2022-07-05
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMemberus-gaap:SubsequentEventMember2022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MaximumMemberus-gaap:SubsequentEventMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMemberus-gaap:SubsequentEventMemberhl:ThreeMonthSOFRMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MinimumMemberus-gaap:SubsequentEventMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMemberus-gaap:SubsequentEventMemberus-gaap:FederalFundsEffectiveSwapRateMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MinimumMembersrt:ScenarioForecastMemberus-gaap:BaseRateMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMemberus-gaap:SubsequentEventMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMemberus-gaap:SubsequentEventMemberus-gaap:BaseRateMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MaximumMembersrt:ScenarioForecastMemberus-gaap:BaseRateMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MinimumMemberus-gaap:SubsequentEventMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MaximumMemberus-gaap:SubsequentEventMember2022-07-212022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MinimumMemberus-gaap:SubsequentEventMemberhl:LeverageRatioApplicableMarginMember2022-07-21
0000719413us-gaap:RevolvingCreditFacilityMemberhl:NewCreditAgreementMembersrt:MaximumMemberus-gaap:SubsequentEventMemberhl:LeverageRatioApplicableMarginMember2022-07-21
Table
of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2022
or
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the transition period from to .
Commission file number
|
|
1-8491
|
HECLA MINING COMPANY
(Exact name of registrant as specified in its Charter)
|
Delaware
|
|
77-0664171
|
|
|
State or Other Jurisdiction of
|
|
I.R.S. Employer
|
|
|
Incorporation or Organization
|
|
Identification No.
|
|
|
|
|
|
|
|
6500 Mineral Drive, Suite 200
|
|
|
|
|
Coeur d'Alene, Idaho
|
|
83815-9408
|
|
|
Address of Principal Executive Offices
|
|
Zip Code
|
|
|
|
|
|
|
208-769-4100
|
Registrant's Telephone Number, Including Area Code
|
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
Trading Symbol(s)
|
Name of each exchange
on which registered
|
Common Stock, par value $0.25 per share
|
HL
|
New York Stock Exchange
|
Series B Cumulative Convertible Preferred Stock, par value $0.25
per share
|
HL-PB
|
New York Stock Exchange
|
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large accelerated filer
☒ |
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company ☐ |
|
|
Emerging growth company ☐ |
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable date.
Class
|
|
Shares Outstanding August 1, 2022
|
Common stock, par value
$0.25 per share
|
|
541,599,504 |
Hecla
Mining Company and Subsidiaries
Form 10-Q
For the Quarter Ended June 30, 2022
INDEX*
*Items 2, 3 and 5 of Part II are omitted as they are not
applicable.
Part I -
Financial Information
Item 1.
Financial Statements
Hecla
Mining Company and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive
Income (Loss) (Unaudited)
(Dollars and shares in thousands, except for per-share amounts)
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30, 2022
|
|
|
June 30, 2021
|
|
|
June 30, 2022
|
|
|
June 30, 2021
|
|
Sales
|
|
$ |
191,242 |
|
|
$ |
217,983 |
|
|
$ |
377,741 |
|
|
$ |
428,835 |
|
Cost of sales and other direct production costs
|
|
|
115,907 |
|
|
|
110,320 |
|
|
|
221,679 |
|
|
|
207,029 |
|
Depreciation, depletion and amortization
|
|
|
38,072 |
|
|
|
45,732 |
|
|
|
73,370 |
|
|
|
92,474 |
|
Total cost of sales
|
|
|
153,979 |
|
|
|
156,052 |
|
|
|
295,049 |
|
|
|
299,503 |
|
Gross profit
|
|
|
37,263 |
|
|
|
61,931 |
|
|
|
82,692 |
|
|
|
129,332 |
|
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
9,692 |
|
|
|
11,104 |
|
|
|
17,986 |
|
|
|
19,111 |
|
Exploration and pre-development
|
|
|
11,200 |
|
|
|
11,241 |
|
|
|
24,008 |
|
|
|
17,931 |
|
Care and maintenance costs
|
|
|
5,242 |
|
|
|
5,786 |
|
|
|
11,447 |
|
|
|
10,104 |
|
Provision for closed operations and environmental matters
|
|
|
1,472 |
|
|
|
1,024 |
|
|
|
2,373 |
|
|
|
4,733 |
|
Other operating expense
|
|
|
1,945 |
|
|
|
3,634 |
|
|
|
4,408 |
|
|
|
7,282 |
|
Total other operating expenses
|
|
|
29,551 |
|
|
|
32,789 |
|
|
|
60,222 |
|
|
|
59,161 |
|
Income from operations
|
|
|
7,712 |
|
|
|
29,142 |
|
|
|
22,470 |
|
|
|
70,171 |
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(10,505 |
) |
|
|
(10,271 |
) |
|
|
(20,911 |
) |
|
|
(21,015 |
) |
Fair value adjustments, net
|
|
|
(16,428 |
) |
|
|
(18,063 |
) |
|
|
(10,463 |
) |
|
|
(19,938 |
) |
Net foreign exchange gain (loss)
|
|
|
4,482 |
|
|
|
(1,907 |
) |
|
|
2,444 |
|
|
|
(3,971 |
) |
Other income (expense)
|
|
|
1,470 |
|
|
|
(287 |
) |
|
|
2,975 |
|
|
|
(439 |
) |
Total other expense
|
|
|
(20,981 |
) |
|
|
(30,528 |
) |
|
|
(25,955 |
) |
|
|
(45,363 |
) |
(Loss) income before income and mining taxes
|
|
|
(13,269 |
) |
|
|
(1,386 |
) |
|
|
(3,485 |
) |
|
|
24,808 |
|
Income and mining tax (provision) benefit
|
|
|
(254 |
) |
|
|
4,134 |
|
|
|
(5,885 |
) |
|
|
(609 |
) |
Net (loss) income
|
|
|
(13,523 |
) |
|
|
2,748 |
|
|
|
(9,370 |
) |
|
|
24,199 |
|
Preferred stock dividends
|
|
|
(138 |
) |
|
|
(138 |
) |
|
|
(276 |
) |
|
|
(276 |
) |
(Loss) income applicable to common shareholders
|
|
$ |
(13,661 |
) |
|
$ |
2,610 |
|
|
$ |
(9,646 |
) |
|
$ |
23,923 |
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$ |
(13,523 |
) |
|
$ |
2,748 |
|
|
$ |
(9,370 |
) |
|
$ |
24,199 |
|
Change in fair value of derivative contracts designated as hedge
transactions
|
|
|
65,348 |
|
|
|
1,620 |
|
|
|
32,183 |
|
|
|
3,452 |
|
Comprehensive income
|
|
$ |
51,825 |
|
|
$ |
4,368 |
|
|
$ |
22,813 |
|
|
$ |
27,651 |
|
Basic (loss) income per common share after preferred dividends
|
|
$ |
(0.03 |
) |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
0.04 |
|
Diluted (loss) income per common share after preferred
dividends
|
|
$ |
(0.03 |
) |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
0.04 |
|
Weighted average number of common shares outstanding - basic
|
|
|
539,401 |
|
|
|
535,531 |
|
|
|
538,943 |
|
|
|
534,819 |
|
Weighted average number of common shares outstanding - diluted
|
|
|
539,401 |
|
|
|
542,262 |
|
|
|
538,943 |
|
|
|
541,468 |
|
Cash dividends declared per common share
|
|
$ |
0.00625 |
|
|
$ |
0.01 |
|
|
$ |
0.01225 |
|
|
$ |
0.02 |
|
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Hecla
Mining Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
|
|
Six Months Ended
|
|
|
|
June 30, 2022
|
|
|
June 30, 2021
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$ |
(9,370 |
) |
|
$ |
24,199 |
|
Non-cash elements included in net (loss) income:
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
73,656 |
|
|
|
92,861 |
|
Write-down of inventory
|
|
|
754 |
|
|
|
6,431 |
|
Fair value adjustments, net
|
|
|
(14,185 |
) |
|
|
5,214 |
|
Provision for reclamation and closure costs
|
|
|
3,271 |
|
|
|
6,183 |
|
Stock compensation
|
|
|
2,525 |
|
|
|
3,302 |
|
Deferred income taxes
|
|
|
(1,290 |
) |
|
|
(7,745 |
) |
Foreign exchange loss
|
|
|
(3,442 |
) |
|
|
4,455 |
|
Other non-cash items, net
|
|
|
982 |
|
|
|
1,071 |
|
Change in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
19,199 |
|
|
|
(9,432 |
) |
Inventories
|
|
|
(8,352 |
) |
|
|
5,719 |
|
Other current and non-current assets
|
|
|
(894 |
) |
|
|
4,125 |
|
Accounts payable and accrued liabilities
|
|
|
17,119 |
|
|
|
(6,489 |
) |
Accrued payroll and related benefits
|
|
|
278 |
|
|
|
(5,351 |
) |
Accrued taxes
|
|
|
(5,683 |
) |
|
|
(999 |
) |
Accrued reclamation and closure costs and other non-current
liabilities
|
|
|
3,524 |
|
|
|
696 |
|
Cash provided by operating activities
|
|
|
78,092 |
|
|
|
124,240 |
|
Investing activities:
|
|
|
|
|
|
|
|
|
Additions to properties, plants, equipment and mineral
interests
|
|
|
(55,807 |
) |
|
|
(53,311 |
) |
Proceeds from disposition of properties, plants and equipment
|
|
|
730 |
|
|
|
131 |
|
Purchases of investments
|
|
|
(21,899 |
) |
|
|
— |
|
Proceeds from sale of investments
|
|
|
2,487 |
|
|
|
— |
|
Net cash used in investing activities
|
|
|
(74,489 |
) |
|
|
(53,180 |
) |
Financing activities:
|
|
|
|
|
|
|
|
|
Acquisition of treasury shares
|
|
|
(3,677 |
) |
|
|
(4,525 |
) |
Dividends paid to common and preferred stockholders
|
|
|
(7,027 |
) |
|
|
(10,991 |
) |
Credit facility fees paid
|
|
|
(74 |
) |
|
|
(82 |
) |
Repayments of finance leases
|
|
|
(3,333 |
) |
|
|
(3,770 |
) |
Net cash used in financing activities
|
|
|
(14,111 |
) |
|
|
(19,368 |
) |
Effect of exchange rates on cash
|
|
|
(1,321 |
) |
|
|
(28 |
) |
Net (decrease) increase in cash, cash equivalents and restricted
cash and cash equivalents
|
|
|
(11,829 |
) |
|
|
51,664 |
|
Cash, cash equivalents and restricted cash and cash equivalents at
beginning of period
|
|
|
211,063 |
|
|
|
130,883 |
|
Cash, cash equivalents and restricted cash and cash equivalents at
end of period
|
|
$ |
199,234 |
|
|
$ |
182,547 |
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
18,749 |
|
|
$ |
18,499 |
|
Cash paid for income and mining taxes
|
|
$ |
11,888 |
|
|
$ |
9,469 |
|
Significant non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Addition of finance lease obligations and right-of-use assets
|
|
$ |
5,051 |
|
|
$ |
3,120 |
|
Accounts receivable for proceeds on exchange of investments
|
|
$ |
— |
|
|
$ |
1,832 |
|
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Hecla
Mining Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares)
|
|
June 30, 2022
|
|
|
December 31, 2021
|
|
ASSETS
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
198,193 |
|
|
$ |
210,010 |
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
Trade
|
|
|
17,828 |
|
|
|
36,437 |
|
Other, net
|
|
|
7,696 |
|
|
|
8,149 |
|
Inventories:
|
|
|
|
|
|
|
|
|
Concentrates, doré, and stockpiled ore
|
|
|
30,167 |
|
|
|
25,906 |
|
Materials and supplies
|
|
|
45,200 |
|
|
|
41,859 |
|
Derivatives assets
|
|
|
9,923 |
|
|
|
2,709 |
|
Other current assets
|
|
|
13,389 |
|
|
|
16,557 |
|
Total current assets
|
|
|
322,396 |
|
|
|
341,627 |
|
Investments
|
|
|
23,931 |
|
|
|
10,844 |
|
Restricted cash
|
|
|
1,041 |
|
|
|
1,053 |
|
Properties, plants, equipment and mineral interests, net
|
|
|
2,295,962 |
|
|
|
2,310,810 |
|
Operating lease right-of-use assets
|
|
|
11,649 |
|
|
|
12,435 |
|
Deferred income taxes
|
|
|
45,562 |
|
|
|
45,562 |
|
Derivatives assets
|
|
|
12,897 |
|
|
|
2,503 |
|
Other non-current assets
|
|
|
3,665 |
|
|
|
3,974 |
|
Total assets
|
|
$ |
2,717,103 |
|
|
$ |
2,728,808 |
|
LIABILITIES
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$ |
84,997 |
|
|
$ |
68,100 |
|
Accrued payroll and related benefits
|
|
|
26,945 |
|
|
|
28,714 |
|
Accrued taxes
|
|
|
8,341 |
|
|
|
12,306 |
|
Finance and operating leases
|
|
|
8,580 |
|
|
|
8,098 |
|
Accrued interest
|
|
|
14,435 |
|
|
|
14,454 |
|
Derivatives liabilities
|
|
|
4,228 |
|
|
|
19,353 |
|
Other current liabilities
|
|
|
109 |
|
|
|
99 |
|
Accrued reclamation and closure costs
|
|
|
10,594 |
|
|
|
9,259 |
|
Total current liabilities
|
|
|
158,229 |
|
|
|
160,383 |
|
Finance and operating leases
|
|
|
18,154 |
|
|
|
17,726 |
|
Accrued reclamation and closure costs
|
|
|
103,747 |
|
|
|
103,972 |
|
Long-term debt
|
|
|
507,841 |
|
|
|
508,095 |
|
Deferred tax liability
|
|
|
143,213 |
|
|
|
149,706 |
|
Derivatives liabilities
|
|
|
522 |
|
|
|
18,528 |
|
Other non-current liabilities
|
|
|
2,515 |
|
|
|
9,611 |
|
Total liabilities
|
|
|
934,221 |
|
|
|
968,021 |
|
Commitments and contingencies (Notes 4, 7, 8,
and 10)
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
Preferred stock, 5,000,000
shares authorized:
|
|
|
|
|
|
|
|
|
Series B preferred stock, 25 cent par value,
157,816
shares issued and outstanding, liquidation preference —
$7,891
|
|
|
39 |
|
|
|
39 |
|
Common stock, 25 cent par value,
750,000,000 authorized
shares; issued June 30, 2022 — 548,037,253 shares and December
31, 2021 — 545,534,760 shares
|
|
|
137,241 |
|
|
|
136,391 |
|
Capital surplus
|
|
|
2,043,621 |
|
|
|
2,034,485 |
|
Accumulated deficit
|
|
|
(370,048 |
) |
|
|
(353,651 |
) |
Accumulated other comprehensive income (loss)
|
|
|
3,727 |
|
|
|
(28,456 |
) |
Less treasury stock, at cost; June 30, 2022 — 8,132,553 shares and December 31,
2021 — 7,395,295
shares issued and held in treasury
|
|
|
(31,698 |
) |
|
|
(28,021 |
) |
Total stockholders’ equity
|
|
|
1,782,882 |
|
|
|
1,760,787 |
|
Total liabilities and stockholders’ equity
|
|
$ |
2,717,103 |
|
|
$ |
2,728,808 |
|
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Hecla
Mining Company and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’
Equity (Unaudited)
(Dollars are in thousands, except for share and per share
amounts)
|
|
Three Months Ended June 30, 2022
|
|
|
|
Series B
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Capital Surplus
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss), net
|
|
|
Treasury
Stock
|
|
|
Total
|
|
Balances, April 1, 2022
|
|
$ |
39 |
|
|
$ |
136,657 |
|
|
$ |
2,036,417 |
|
|
$ |
(353,007 |
) |
|
$ |
(61,621 |
) |
|
$ |
(29,942 |
) |
|
$ |
1,728,543 |
|
Net loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13,523 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13,523 |
) |
Restricted stock units granted
|
|
|
— |
|
|
|
— |
|
|
|
837 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
837 |
|
Restricted stock units distributed (901,215 shares)
|
|
|
— |
|
|
|
225 |
|
|
|
(225 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,756 |
) |
|
|
(1,756 |
) |
Common stock dividends declared (0.0625 cents per common
share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,380 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,380 |
) |
Series B Preferred Stock dividends declared (87.5 cents per share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(138 |
) |
|
|
— |
|
|
|
— |
|
|
|
(138 |
) |
Common stock issued for 401(k) match (143,200 shares)
|
|
|
— |
|
|
|
36 |
|
|
|
928 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
964 |
|
Common stock issued to directors (98,310 shares)
|
|
|
— |
|
|
|
25 |
|
|
|
392 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
417 |
|
Common stock issued to pension plans (1,190,000 shares)
|
|
|
— |
|
|
|
298 |
|
|
|
5,272 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,570 |
|
Other comprehensive income
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
65,348 |
|
|
|
— |
|
|
|
65,348 |
|
Balances, June 30, 2022
|
|
$ |
39 |
|
|
$ |
137,241 |
|
|
$ |
2,043,621 |
|
|
$ |
(370,048 |
) |
|
$ |
3,727 |
|
|
$ |
(31,698 |
) |
|
$ |
1,782,882 |
|
|
|
Three Months Ended June 30, 2021
|
|
|
|
Series B
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Capital Surplus
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss), net
|
|
|
Treasury
Stock
|
|
|
Total
|
|
Balances, April 1, 2021
|
|
$ |
39 |
|
|
$ |
135,546 |
|
|
$ |
2,021,072 |
|
|
$ |
(351,449 |
) |
|
$ |
(31,057 |
) |
|
$ |
(23,496 |
) |
|
$ |
1,750,655 |
|
Net income
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,748 |
|
|
|
— |
|
|
|
— |
|
|
|
2,748 |
|
Restricted stock units granted
|
|
|
— |
|
|
|
— |
|
|
|
959 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
959 |
|
Restricted stock units distributed (1,653,000 shares)
|
|
|
— |
|
|
|
413 |
|
|
|
(413 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,525 |
) |
|
|
(4,525 |
) |
Common stock dividends declared (1.125 cents per common share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,027 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,027 |
) |
Series B Preferred Stock dividends declared (87.5 cents per share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(138 |
) |
|
|
— |
|
|
|
— |
|
|
|
(138 |
) |
Common stock issued for 401(k) match (217,000 shares)
|
|
|
— |
|
|
|
54 |
|
|
|
1,235 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,289 |
|
Common stock issued to pension plans (3,500,000 shares)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock issued to directors (207,000 shares)
|
|
|
— |
|
|
|
52 |
|
|
|
1,792 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,844 |
|
Other comprehensive income
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,620 |
|
|
|
— |
|
|
|
1,620 |
|
Balances, June 30, 2021
|
|
$ |
39 |
|
|
$ |
136,065 |
|
|
$ |
2,024,645 |
|
|
$ |
(354,866 |
) |
|
$ |
(29,437 |
) |
|
$ |
(28,021 |
) |
|
$ |
1,748,425 |
|
|
|
Six Months Ended June 30, 2022
|
|
|
|
Series B
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Capital
Surplus
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss), net
|
|
|
Treasury
Stock
|
|
|
Total
|
|
Balances, January 1, 2022
|
|
$ |
39 |
|
|
$ |
136,391 |
|
|
$ |
2,034,485 |
|
|
$ |
(353,651 |
) |
|
$ |
(28,456 |
) |
|
$ |
(28,021 |
) |
|
$ |
1,760,787 |
|
Net loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,370 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9,370 |
) |
Restricted stock units granted
|
|
|
— |
|
|
|
— |
|
|
|
2,108 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,108 |
|
Restricted stock units and performance stock units distributed
(1,789,042
shares)
|
|
|
— |
|
|
|
447 |
|
|
|
(447 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,677 |
) |
|
|
(3,677 |
) |
Common stock dividends declared (1.25 cents per common share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,751 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,751 |
) |
Series B Preferred Stock dividends declared ($1.75 per share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(276 |
) |
|
|
— |
|
|
|
— |
|
|
|
(276 |
) |
Common stock issued for 401(k) match (321,110 shares)
|
|
|
— |
|
|
|
80 |
|
|
|
1,811 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,891 |
|
Common stock issued to pension plans (1,190,000 shares)
|
|
|
— |
|
|
|
298 |
|
|
|
5,272 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,570 |
|
Common stock issued to directors (98,310 shares)
|
|
|
— |
|
|
|
25 |
|
|
|
392 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
417 |
|
Other comprehensive loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
32,183 |
|
|
|
— |
|
|
|
32,183 |
|
Balances, June 30, 2022
|
|
$ |
39 |
|
|
$ |
137,241 |
|
|
$ |
2,043,621 |
|
|
$ |
(370,048 |
) |
|
$ |
3,727 |
|
|
$ |
(31,698 |
) |
|
$ |
1,782,882 |
|
|
|
Six Months Ended June 30, 2021
|
|
|
|
Series B
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Capital
Surplus
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss), net
|
|
|
Treasury
Stock
|
|
|
Total
|
|
Balances, January 1, 2021
|
|
$ |
39 |
|
|
$ |
134,629 |
|
|
$ |
2,003,576 |
|
|
$ |
(368,074 |
) |
|
$ |
(32,889 |
) |
|
$ |
(23,496 |
) |
|
$ |
1,713,785 |
|
Net income
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
24,199 |
|
|
|
— |
|
|
|
— |
|
|
|
24,199 |
|
Restricted stock units granted
|
|
|
— |
|
|
|
— |
|
|
|
1,459 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,459 |
|
Restricted stock units distributed (1,653,000 shares)
|
|
|
— |
|
|
|
413 |
|
|
|
(413 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,525 |
) |
|
|
(4,525 |
) |
Common stock dividends declared (2 cents per common share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,715 |
) |
|
|
— |
|
|
|
— |
|
|
|
(10,715 |
) |
Series B Preferred Stock dividends declared ($1.75 per share)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(276 |
) |
|
|
— |
|
|
|
— |
|
|
|
(276 |
) |
Common stock issued for 401(k) match (382,000 shares)
|
|
|
— |
|
|
|
96 |
|
|
|
2,306 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,402 |
|
Common stock issued to pension plans (3,500,000 shares)
|
|
|
— |
|
|
|
875 |
|
|
|
15,925 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,800 |
|
Common stock issued to directors (207,000 shares)
|
|
|
— |
|
|
|
52 |
|
|
|
1,792 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,844 |
|
Other comprehensive loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,452 |
|
|
|
— |
|
|
|
3,452 |
|
Balances, June 30, 2021
|
|
$ |
39 |
|
|
$ |
136,065 |
|
|
$ |
2,024,645 |
|
|
$ |
(354,866 |
) |
|
$ |
(29,437 |
) |
|
$ |
(28,021 |
) |
|
$ |
1,748,425 |
|
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Note
1. Basis of
Preparation of Financial Statements
The accompanying unaudited interim condensed consolidated financial
statements of Hecla Mining Company and its subsidiaries
(collectively, “Hecla,” “the Company,” “we,” “our,” or “us,” except
where the context requires otherwise) have been prepared in
accordance with the instructions to Form 10-Q and do not include all information and disclosures
required annually by generally accepted accounting principles in
the United States (“GAAP”). Therefore, this information should be
read in conjunction with Hecla Mining Company’s consolidated
financial statements and notes contained in our annual report on
Form 10-K for the year ended
December 31, 2021
(“2021 Form 10-K”). The consolidated December 31, 2021
balance sheet data was derived from our audited consolidated
financial statements. The information furnished herein reflects all
adjustments that are, in the opinion of management, necessary for a
fair statement of the results for the interim periods reported. All
such adjustments are, in the opinion of management, of a normal
recurring nature. Operating results for the three- and six-month periods ended June 30,
2022 are not necessarily indicative of the results
that may be expected for the year
ending December 31, 2022.
The 2019 novel strain of
coronavirus (“COVID-19”) was
characterized as a global pandemic by the World Health Organization
on March 11, 2020. We continue to
take precautionary measures to mitigate the impact of
COVID-19, including implementing
operational plans and practices. As long as they are required, the
operational practices implemented could continue to have an adverse
impact on our operating results due to deferred production and
revenues or additional costs. We incurred $0.1 million and $0.4
million in COVID-19 mitigation
costs during the three and
six months ended June 30, 2022 compared to $1.4 million and
$3.0 million during the three and
six months ended June 30, 2021, respectively. We continue to
monitor the rapidly evolving situation and guidance from federal,
state, local and foreign governments and public health authorities
and may take additional actions
based on their recommendations. The extent of the impact of
COVID-19 on our business and
financial results will also depend on future developments,
including the duration and spread of the outbreak and the success
of the current vaccination programs and the related impact on
prices, demand, creditworthiness and other market conditions and
governmental reactions, all of which are highly uncertain.
Note 2. Business
Segments and Sales of Products
We discover, acquire and develop mines and other mineral interests
and produce and market (i) concentrates, containing silver, gold,
lead and zinc, (ii) carbon material containing silver and gold, and
(iii) doré containing silver and gold. We are currently organized
and managed in four segments:
Greens Creek, Lucky Friday, Casa Berardi and Nevada Operations.
General corporate activities not
associated with operating mines and their various exploration
activities, as well as discontinued operations and idle properties,
are presented as “other.” Interest expense, interest
income and income and mining taxes are considered general corporate
items, and are not allocated to our
segments.
The following tables present information about our reportable
segments for the three and
six months ended June 30,
2022 and 2021 (in thousands):
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net sales to unaffiliated customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greens Creek
|
|
$ |
92,723 |
|
|
$ |
113,763 |
|
|
$ |
178,813 |
|
|
$ |
212,172 |
|
Lucky Friday
|
|
|
35,880 |
|
|
|
39,645 |
|
|
|
73,920 |
|
|
|
68,767 |
|
Casa Berardi
|
|
|
62,639 |
|
|
|
56,122 |
|
|
|
124,740 |
|
|
|
129,033 |
|
Nevada Operations
|
|
|
— |
|
|
|
8,450 |
|
|
|
268 |
|
|
|
18,687 |
|
Other
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
176 |
|
|
|
$ |
191,242 |
|
|
$ |
217,983 |
|
|
$ |
377,741 |
|
|
$ |
428,835 |
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greens Creek
|
|
$ |
27,803 |
|
|
$ |
56,433 |
|
|
$ |
62,389 |
|
|
$ |
101,033 |
|
Lucky Friday
|
|
|
5,528 |
|
|
|
11,737 |
|
|
|
14,299 |
|
|
|
18,060 |
|
Casa Berardi
|
|
|
(572 |
) |
|
|
(529 |
) |
|
|
(3,271 |
) |
|
|
11,177 |
|
Nevada Operations
|
|
|
(9,728 |
) |
|
|
(20,341 |
) |
|
|
(21,963 |
) |
|
|
(23,481 |
) |
Other
|
|
|
(15,319 |
) |
|
|
(18,158 |
) |
|
|
(28,984 |
) |
|
|
(36,618 |
) |
|
|
$ |
7,712 |
|
|
$ |
29,142 |
|
|
$ |
22,470 |
|
|
$ |
70,171 |
|
The following table presents identifiable assets by reportable
segment as of June 30, 2022 and
December 31, 2021 (in
thousands):
|
|
June 30, 2022
|
|
|
December 31, 2021
|
|
Identifiable assets:
|
|
|
|
|
|
|
|
|
Greens Creek
|
|
$ |
580,692 |
|
|
$ |
589,944 |
|
Lucky Friday
|
|
|
524,734 |
|
|
|
516,545 |
|
Casa Berardi
|
|
|
699,134 |
|
|
|
701,868 |
|
Nevada Operations
|
|
|
468,901 |
|
|
|
468,985 |
|
Other
|
|
|
443,642 |
|
|
|
451,466 |
|
|
|
$ |
2,717,103 |
|
|
$ |
2,728,808 |
|
Sales by metal for the three- and
six-month periods ended June 30,
2022 and 2021 were as follows (in thousands):
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
$ |
70,050 |
|
|
$ |
92,765 |
|
|
$ |
136,382 |
|
|
$ |
170,525 |
|
Gold
|
|
|
82,018 |
|
|
|
86,078 |
|
|
|
159,186 |
|
|
|
187,487 |
|
Lead
|
|
|
21,314 |
|
|
|
22,223 |
|
|
|
40,878 |
|
|
|
38,116 |
|
Zinc
|
|
|
31,176 |
|
|
|
30,037 |
|
|
|
66,814 |
|
|
|
59,228 |
|
Less: Smelter and refining charges
|
|
|
(13,316 |
) |
|
|
(13,120 |
) |
|
|
(25,519 |
) |
|
|
(26,521 |
) |
|
|
$ |
191,242 |
|
|
$ |
217,983 |
|
|
$ |
377,741 |
|
|
$ |
428,835 |
|
Sales included net gains of $11.3 million and $6.6 million for the
second quarter and first half of 2022, respectively, on financially-settled
forward contracts for silver, gold, lead and zinc contained in our
sales. Sales included net losses of $3.3 million and $0.5 million
for the second quarter and
first half of 2021, respectively, on such contracts. See
Note 8 for more
information.
Note 3. Income and Mining
Taxes
Major components of our income and mining tax benefit (provision)
for the three and six months ended June 30, 2022 and 2021 are as follows (in thousands):
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$ |
(446 |
) |
|
$ |
(3,036 |
) |
|
$ |
(2,549 |
) |
|
$ |
(5,313 |
) |
Foreign
|
|
|
(1,346 |
) |
|
|
(826 |
) |
|
|
(3,087 |
) |
|
|
(3,112 |
) |
Total current income and mining tax provision
|
|
|
(1,792 |
) |
|
|
(3,862 |
) |
|
|
(5,636 |
) |
|
|
(8,425 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
(2,150 |
) |
|
|
4,117 |
|
|
|
(7,241 |
) |
|
|
4,436 |
|
Foreign
|
|
|
3,688 |
|
|
|
3,879 |
|
|
|
6,992 |
|
|
|
3,380 |
|
Total deferred income and mining tax benefit
|
|
|
1,538 |
|
|
|
7,996 |
|
|
|
(249 |
) |
|
|
7,816 |
|
Total income and mining tax benefit (provision)
|
|
$ |
(254 |
) |
|
$ |
4,134 |
|
|
$ |
(5,885 |
) |
|
$ |
(609 |
) |
The income and mining tax benefit (provision) for the three and six
months ended June 30, 2022 and
2021 varies from the amounts that
would have resulted from applying the statutory tax rates to
pre-tax income due primarily to the impact of taxation in foreign
jurisdictions and non-recognition of net operating losses and
foreign exchange gains and losses in certain jurisdictions.
For the three-month and six-month periods ended June 30, 2022, we used the annual effective
tax rate method to calculate the tax provision, a change from the
discrete method used for the three-
and six-month periods ended
June 30, 2021, due to reversal of
valuation allowance in the fourth
quarter of 2021. Valuation
allowances on Nevada, Mexico and certain Canadian net operating
losses were treated as discrete adjustments to the annual effective
tax rate method calculation, partially causing the increase in the
income tax rate for the three and
six months ended June 30, 2022, as compared to the three and six
months ended June 30, 2021.
Note 4. Employee Benefit
Plans
We sponsor defined benefit pension plans covering substantially all
U.S. employees. Net periodic pension cost for the plans
consisted of the following for the three and six
months ended June 30, 2022 and
2021 (in thousands):
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Service cost
|
|
$ |
1,566 |
|
|
$ |
1,455 |
|
|
$ |
3,131 |
|
|
$ |
2,910 |
|
Interest cost
|
|
|
1,369 |
|
|
|
1,248 |
|
|
|
2,738 |
|
|
|
2,496 |
|
Expected return on plan assets
|
|
|
(3,363 |
) |
|
|
(2,313 |
) |
|
|
(6,726 |
) |
|
|
(4,626 |
) |
Amortization of prior service cost
|
|
|
128 |
|
|
|
99 |
|
|
|
256 |
|
|
|
198 |
|
Amortization of net loss
|
|
|
512 |
|
|
|
1,125 |
|
|
|
1,024 |
|
|
|
2,250 |
|
Net periodic pension cost
|
|
$ |
212 |
|
|
$ |
1,614 |
|
|
$ |
423 |
|
|
$ |
3,228 |
|
For the three- and six-month periods ended June 30,
2022 and 2021, the service cost component of net
periodic pension cost is included in the same line items of our
condensed consolidated financial statements as other employee
compensation costs. The net expense related to all other components
of net periodic pension cost of $1.4 million and $2.7 million,
respectively, for the three- and
six-month periods ended June 30,
2022, and $0.2 million and $0.3
million for the three- and
six-month periods ended June 30,
2021, respectively, is included in
other (expense) income on our condensed consolidated statements of
operations and comprehensive income (loss).
During May 2022, we contributed
$5.6 million in shares of our common stock to two of our defined benefit plans. In
January 2021, we contributed $16.8
million in shares of our common stock to our supplemental executive
retirement plan. We do not expect
to be required to make additional contributions to our defined
benefit pension plans in 2022, but
may elect to do so.
Note 5. (Loss)
Income Per Common Share
We calculate basic (loss) income per common share on the basis of
the weighted average number of shares of common stock outstanding
during the period. Diluted income per share is calculated using the
weighted average number of shares of common stock outstanding
during the period plus the effect of potential dilutive common
shares during the period using the treasury stock and if-converted
methods.
Potential dilutive shares of common stock include outstanding
unvested restricted stock awards, stock units, warrants and
convertible preferred stock for periods in which we have reported
net income. For periods in which we report net losses, potential
dilutive shares of common stock are excluded, as their conversion
and exercise would be anti-dilutive.
The following table represents net (loss) income per common share –
basic and diluted (in thousands, except income (loss) per
share):
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$ |
(13,523 |
) |
|
$ |
2,748 |
|
|
$ |
(9,370 |
) |
|
$ |
24,199 |
|
Preferred stock dividends
|
|
|
(138 |
) |
|
|
(138 |
) |
|
|
(276 |
) |
|
|
(276 |
) |
Net (loss) income applicable to common shares
|
|
$ |
(13,661 |
) |
|
$ |
2,610 |
|
|
$ |
(9,646 |
) |
|
$ |
23,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares
|
|
|
539,401 |
|
|
|
535,531 |
|
|
|
538,943 |
|
|
|
534,819 |
|
Dilutive restricted stock units, warrants and deferred shares
|
|
|
— |
|
|
|
6,731 |
|
|
|
— |
|
|
|
6,649 |
|
Diluted weighted average common shares
|
|
|
539,401 |
|
|
|
542,262 |
|
|
|
538,943 |
|
|
|
541,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per common share
|
|
$ |
(0.03 |
) |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
0.04 |
|
Diluted (loss) income per common share
|
|
$ |
(0.03 |
) |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
0.04 |
|
For the three and six months ended June 30, 2022, all outstanding restricted
stock units, warrants and deferred shares were excluded from the
computation of diluted loss per share, as our reported net losses
for those periods would cause their conversion and exercise to have
no effect on the calculation of
loss per share. For the three
months ended June 30, 2021, the
calculation of diluted income per common share included (i)
2,960,950 restricted stock units, (ii) 1,635,675 warrants to
purchase one share of common stock
and (iii) 2,134,009 deferred shares of common stock that were
dilutive. For the six months ended
June 30, 2021, the calculation of
diluted income per common share included (i) 2,923,515 restricted
stock units, (ii) 1,591,935 warrants to purchase one share of common stock and (iii) 2,134,009
deferred shares that were dilutive.
Note 6. Stockholders’
Equity
Stock-based Compensation Plans
The Company has stock incentive plans for executives, directors and
eligible employees. Stock awards include performance shares,
restricted stock and stock options. Stock-based compensation
expense for restricted stock unit and performance-based grants
(collectively "incentive compensation") to employees and shares
issued to non-employee directors totaled $1.3 million and $2.5
million for the three and
six months ended June 30,
2022, respectively, and $2.8
million and $3.3 million for the three and six
months ended June 30, 2021,
respectively. At June 30, 2022,
there was $9.1 million of unrecognized stock-based compensation
cost which is expected to be recognized over a weighted-average
remaining vesting period of 2.4 years.
The following table summarizes the grants awarded during the
six months ended June 30, 2022:
Grant date
|
Award type
|
|
Number granted
|
|
|
Grant date fair value
|
|
June 21, 2022
|
Restricted stock
|
|
|
1,103,801 |
|
|
|
$4.43 |
|
June 21, 2022
|
Performance based
|
|
|
322,799 |
|
|
|
$3.78 |
|
June 28, 2022
|
Directors retainer
|
|
|
98,310 |
|
|
|
$4.24 |
|
In connection with the vesting of incentive compensation, employees
have in the past, at their election and when permitted by us,
chosen to satisfy their minimum tax withholding obligations through
net share settlement, pursuant to which the Company withholds the
number of shares necessary to satisfy such withholding obligations
and pays the obligations in cash. As a result, in the
first six months of 2022 we withheld 737,258 shares valued at
approximately $3.7 million, or approximately $4.99 per share. In
the first six months of 2021 we withheld 574,251 shares valued at
approximately $4.5 million, or approximately $7.88 per share.
Common Stock Dividends
On May 5, 2022, our Board of
Directors declared a quarterly cash dividend of $0.00625 per share
of common stock, consisting of $0.00375 per share for the minimum
dividend component of our common stock dividend policy and $0.0025
per share for the silver-linked dividend component of the policy,
for a total dividend of $3.4 million paid in June 2022. The realized silver price of
$24.68 in the first quarter of
2022 satisfied the criterion for
the silver-linked dividend component of our common stock dividend
policy.
Note 7. Debt, Credit
Facility and Leases
Our debt as of June 30, 2022 and
December 31, 2021
consisted of our 7.25% Senior Notes due February 15, 2028 (“Senior Notes”) and our
Series 2020-A Senior Notes due
July 9, 2025 (the “IQ Notes”). The
following tables summarize our long-term debt balances, excluding
interest, as of June 30,
2022 and December 31, 2021 (in
thousands):
|
|
June 30, 2022
|
|
|
|
Senior Notes
|
|
|
IQ Notes
|
|
|
Total
|
|
Principal
|
|
$ |
475,000 |
|
|
$ |
37,433 |
|
|
$ |
512,433 |
|
Unamortized discount/premium and issuance costs
|
|
|
(5,096 |
) |
|
|
504 |
|
|
|
(4,592 |
) |
Long-term debt balance
|
|
$ |
469,904 |
|
|
$ |
37,937 |
|
|
$ |
507,841 |
|
|
|
December 31, 2021
|
|
|
|
Senior Notes
|
|
|
IQ Notes
|
|
|
Total
|
|
Principal
|
|
$ |
475,000 |
|
|
$ |
38,051 |
|
|
$ |
513,051 |
|
Unamortized discount/premium and issuance costs
|
|
|
(5,552 |
) |
|
|
596 |
|
|
|
(4,956 |
) |
Long-term debt balance
|
|
$ |
469,448 |
|
|
$ |
38,647 |
|
|
$ |
508,095 |
|
The following table summarizes the scheduled annual future
payments, including interest, for our Senior Notes, IQ Notes, and
finance and operating leases as of June 30,
2022 (in thousands). The amounts
for the IQ Notes are stated in U.S. dollars (“USD”) based on the
USD/Canadian dollar (“CAD”) exchange rate as of June 30,
2022.
Twelve-month
period ending
June 30,
|
|
Senior Notes
|
|
|
IQ Notes
|
|
|
Finance Leases
|
|
|
Operating Leases
|
|
2023
|
|
$ |
34,438 |
|
|
$ |
2,441 |
|
|
$ |
6,424 |
|
|
$ |
3,011 |
|
2024
|
|
|
34,438 |
|
|
|
2,441 |
|
|
|
5,220 |
|
|
|
2,041 |
|
2025
|
|
|
34,438 |
|
|
|
2,441 |
|
|
|
3,070 |
|
|
|
1,072 |
|
2026
|
|
|
34,438 |
|
|
|
37,528 |
|
|
|
1,213 |
|
|
|
1,059 |
|
2027
|
|
|
34,438 |
|
|
|
— |
|
|
|
— |
|
|
|
1,010 |
|
Thereafter
|
|
|
496,521 |
|
|
|
— |
|
|
|
— |
|
|
|
6,043 |
|
Total
|
|
$ |
668,711 |
|
|
$ |
44,851 |
|
|
$ |
15,927 |
|
|
$ |
14,236 |
|
Credit Facility
In July 2018, we entered into a
$250 million senior secured revolving credit facility which has a
term ending on February 7, 2023. As
of June 30, 2022 and
December 31, 2021, no
amounts were outstanding under the facility.
We are also able to obtain letters of credit under the facility,
and for any such letters we are required to pay a participation fee
of between 2.25% and 4.00% of the amount of the letters of credit
based on our total leverage ratio, as well as a fronting fee to
each issuing bank of 0.20% annually on the average daily dollar
amount of any outstanding letters of credit. There were $14.9
million in letters of credit outstanding as of June 30,
2022. Letters of credit that are
outstanding reduce availability under the revolving credit
facility. See Note 12
regarding the termination of this Credit Facility and entry into a
new facility.
We believe we were in compliance with all covenants under the
credit agreement as of June 30,
2022.
Note 8. Derivative
Instruments
General
Our current risk management policy provides that up to 75% of
five years foreign
currency, lead and zinc metals price and silver and gold price
exposure may be covered under a
derivatives program with certain other limitations. The silver and
gold price program can only establish a floor (puts). We are
currently do not have a silver and
gold program. Our program also utilizes derivatives to manage price
risk exposure created from when revenue is recognized from a
shipment of concentrate until final settlement.
These instruments expose us to (i) credit risk in the form of
non-performance by counterparties for contracts in which the
contract price exceeds the spot price of the hedged commodity or
foreign currency and (ii) price risk to the extent that the spot
price exceeds the contract price for quantities of our production
and/or forecasted costs covered under contract positions.
Foreign Currency
Our wholly-owned subsidiary owning the Casa Berardi operation is a
USD-functional entity which routinely incurs expenses denominated
in CAD. Such expenses expose us to exchange rate fluctuations
between the USD and CAD. We have a program to manage our
exposure to fluctuations in the exchange rate between the USD and
CAD for this subsidiary's future operating costs denominated in
CAD. The program utilizes forward contracts to buy CAD, and
each contract is designated as a cash flow hedge. As of
June 30, 2022, we
have 161 forward contracts outstanding to buy a total of
CAD$321.8 million
having a notional amount of USD$247.9 million. The CAD
contracts are related to forecasted cash operating costs at Casa
Berardi to be incurred from 2021
through 2024 and have CAD-to-USD
exchange rates ranging between 1.2702 and 1.3333.
As of June 30, 2022 and
December 31, 2021, we
recorded the following balances for the fair value of the contracts
(in millions):
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
Balance sheet line item: |
|
|
|
|
|
|
Current derivatives assets
|
|
$ |
1.1 |
|
|
$ |
2.7 |
|
Non-current derivatives assets
|
|
|
1.3 |
|
|
|
2.5 |
|
Current derivative liabilities
|
|
|
0.3 |
|
|
|
— |
|
Non-current derivative liabilities
|
|
|
0.2 |
|
|
|
— |
|
Net unrealized gains of approximately $2.0 million related to the
effective portion of the hedges were included in accumulated other
comprehensive income (loss) as of June 30,
2022. Unrealized gains and
losses will be transferred from accumulated other comprehensive
income (loss) to current earnings as the underlying operating
expenses are recognized. We estimate approximately 0.8
million in net unrealized gains included in accumulated other
comprehensive income (loss) as of June 30,
2022, will be reclassified to
current earnings in the next twelve
months. Net realized gains of approximately $0.8 million and
$1.8 million on contracts related to underlying expenses which have
been recognized were transferred from accumulated other
comprehensive income (loss) and included in cost of sales and other
direct production costs for the three and six
months ended June 30, 2022,
respectively. No net unrealized gains or losses related to
ineffectiveness of the hedges were included in current earnings for
the six months ended June 30,
2022. Net gains of approximately
$0.3 million and $0.7 million for the three and six
months ended June 30, 2022, related
to contracts not designated as
hedges were included in fair value adjustments, net on our
consolidated statements of operations and comprehensive income for
the three and six months ended June 30, 2022.
Metals Prices
We are currently using financially-settled forward contracts to
manage the exposure to:
|
•
|
changes in prices of silver, gold, zinc and lead contained in our
concentrate shipments between the time of shipment and final
settlement; and
|
|
•
|
changes in prices of zinc and lead (but not silver and gold) contained in our
forecasted future concentrate shipments.
|
The following tables summarize the quantities of metals committed
under forward sales contracts at June 30,
2022 and December 31, 2021:
June 30, 2022
|
|
Ounces/pounds under contract (in 000's)
|
|
|
Average price per ounce/pound
|
|
|
|
Silver
|
|
|
Gold
|
|
|
Zinc
|
|
|
Lead
|
|
|
Silver
|
|
|
Gold
|
|
|
Zinc
|
|
|
Lead
|
|
|
|
(ounces)
|
|
|
(ounces)
|
|
|
(pounds)
|
|
|
(pounds)
|
|
|
(ounces)
|
|
|
(ounces)
|
|
|
(pounds)
|
|
|
(pounds)
|
|
Contracts on provisional sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 settlements
|
|
|
1,729 |
|
|
|
3 |
|
|
|
6,504 |
|
|
|
3,638 |
|
|
$ |
22.19 |
|
|
$ |
1,836 |
|
|
$ |
1.58 |
|
|
$ |
0.90 |
|
Contracts on forecasted sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 settlements
|
|
|
— |
|
|
|
— |
|
|
|
38,030 |
|
|
|
34,778 |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
1.31 |
|
|
$ |
0.98 |
|
2023 settlements
|
|
|
— |
|
|
|
— |
|
|
|
78,264 |
|
|
|
75,618 |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
1.30 |
|
|
$ |
1.00 |
|
2024 settlements
|
|
|
— |
|
|
|
— |
|
|
|
78,760 |
|
|
|
31,526 |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
1.34 |
|
|
$ |
1.01 |
|
2025 settlements
|
|
|
— |
|
|
|
— |
|
|
|
1,157 |
|
|
|
— |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
1.37 |
|
|
|
N/A |
|
December 31, 2021
|
|
Ounces/pounds under contract (in 000's)
|
|
|
Average price per ounce/pound
|
|
|
|
Silver
|
|
|
Gold
|
|
|
Zinc
|
|
|
Lead
|
|
|
Silver
|
|
|
Gold
|
|
|
Zinc
|
|
|
Lead
|
|
|
|
(ounces)
|
|
|
(ounces)
|
|
|
(pounds)
|
|
|
(pounds)
|
|
|
(ounces)
|
|
|
(ounces)
|
|
|
(pounds)
|
|
|
(pounds)
|
|
Contracts on provisional sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 settlements
|
|
|
1,814 |
|
|
|
6 |
|
|
|
13,371 |
|
|
|
4,575 |
|
|
$ |
23.02 |
|
|
$ |
1,812 |
|
|
$ |
1.39 |
|
|
$ |
0.96 |
|
Contracts on forecasted sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 settlements
|
|
|
— |
|
|
|
— |
|
|
|
57,706 |
|
|
|
59,194 |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
1.28 |
|
|
$ |
0.98 |
|
2023 settlements
|
|
|
— |
|
|
|
— |
|
|
|
76,280 |
|
|
|
71,650 |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
1.29 |
|
|
$ |
1.00 |
|
Effective November 1, 2021, we
designated the contracts for lead and zinc contained in our
forecasted future shipments as hedges for accounting purposes, with
gains and losses deferred to accumulated other comprehensive loss
until the hedged product ships. Prior to November 1, 2021, these contracts had
not been designated as hedges for
hedge accounting and were therefore marked-to-market through
earnings each period. The forward contracts for silver and gold
contained in our concentrate shipments have not been designated as hedges and are
marked-to-market through earnings each period.
We recorded the following balances for the fair value of the
forward contracts as of June 30,
2022 and forward and put option
contracts as of December 31, 2021 (in
millions):
|
|
June 30, 2022
|
|
|
December 31, 2021
|
|
|
|
Contracts in an
asset position
|
|
|
Contracts in
a liability
position
|
|
|
Net asset
(liability)
|
|
|
Contracts in
an asset
position
|
|
|
Contracts in a
liability
position
|
|
|
Net asset
(liability)
|
|
Balance sheet line item: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current derivatives assets
|
|
$ |
8.8 |
|
|
$ |
— |
|
|
$ |
8.8 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Non-current derivative assets
|
|
$ |
11.6 |
|
|
$ |
— |
|
|
|
11.6 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Current derivatives liabilities
|
|
|
— |
|
|
|
(3.9 |
) |
|
|
(3.9 |
) |
|
|
0.7 |
|
|
|
(20.1 |
) |
|
|
(19.4 |
) |
Non-current derivatives liabilities
|
|
|
— |
|
|
|
(0.4 |
) |
|
|
(0.4 |
) |
|
|
0.4 |
|
|
|
(18.9 |
) |
|
|
(18.5 |
) |
Net unrealized gains of approximately $15.6 million related to the
effective portion of the contracts designated as hedges were
included in accumulated other comprehensive income (loss) as of
June 30, 2022. Unrealized gains and
losses will be transferred from accumulated other comprehensive
income (loss) to current earnings as the underlying sales are
recognized. We estimate approximately $6.0 million in net
unrealized gains included in accumulated other comprehensive income
(loss) as of June 30, 2022 would be
reclassified to current earnings in the next twelve months. We recognized a net gain of
$11.3 million, including a $4.2 million loss transferred from
accumulated other comprehensive income (loss), during the
three months ended June 30, 2022. For the six months ended June 30, 2022, we recognized a net gain of
$6.6 million, including a $3.8 million loss transferred from
accumulated other comprehensive income (loss). These losses were
recognized on the contracts utilized to manage exposure to prices
of metals in our concentrate shipments, which is included in
sales. The net losses and gains recognized on the
contracts offset gains and losses related to price adjustments on
our provisional concentrate sales due to changes to silver, gold,
lead and zinc prices between the time of sale and final
settlement.
We recognized net losses of $17.3 million and $16.8 million
during the second quarter and
first half of 2021, respectively, on the contracts utilized
to manage exposure to prices for forecasted future sales, which
were not designated as hedges. The
net losses on these contracts are included as a separate line item
under other income (expense), as they relate to forecasted future
sales, as opposed to sales that have already taken place but are
subject to final pricing as discussed in the preceding
paragraph.
Credit-risk-related Contingent Features
Certain of our derivative contracts contain cross default
provisions which provide that a default under our revolving credit
agreement would cause a default under the derivative contract. As
of June 30, 2022, we
have not posted any collateral
related to these contracts. The fair value of derivatives in a net
liability position related to these agreements was $12.2 million as
of June 30, 2022,
which includes accrued interest but excludes any adjustment for
nonperformance risk. If we were in breach of any of these
provisions at June 30, 2022, we
could have been required to settle our obligations under the
agreements at their termination value of $12.2 million.
Note 9. Fair Value
Measurement
Fair value adjustments, net is comprised of the following:
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
(Loss) gain on derivative contracts
|
|
$ |
(689 |
) |
|
$ |
(17,313 |
) |
|
$ |
(893 |
) |
|
$ |
(16,840 |
) |
Unrealized gain (loss) on investments in equity securities
|
|
|
(15,739 |
) |
|
|
(750 |
) |
|
|
(9,639 |
) |
|
|
(4,256 |
) |
Gain on disposition or exchange of investments
|
|
|
— |
|
|
|
— |
|
|
|
69 |
|
|
|
1,158 |
|
Total fair value adjustments, net
|
|
$ |
(16,428 |
) |
|
$ |
(18,063 |
) |
|
$ |
(10,463 |
) |
|
$ |
(19,938 |
) |
Accounting guidance has established a hierarchy for inputs used to
measure assets and liabilities at fair value on a recurring basis.
The three levels included in the
hierarchy are:
Level 1: quoted prices in active
markets for identical assets or liabilities;
Level 2: significant other
observable inputs; and
Level 3: significant unobservable
inputs.
The table below sets forth our assets and liabilities that were
accounted for at fair value on a recurring basis and the fair value
calculation input hierarchy level that we have determined applies
to each asset and liability category (in
thousands).
Description
|
|
Balance at
June 30, 2022
|
|
|
Balance at
December 31, 2021
|
|
Input
Hierarchy Level
|
Assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
Money market funds and other bank deposits
|
|
$ |
198,193 |
|
|
$ |
210,010 |
|
Level 1
|
Current and non-current investments
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
23,931 |
|
|
|
14,470 |
|
Level 1
|
Trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
Receivables from provisional concentrate sales
|
|
|
17,828 |
|
|
|
36,437 |
|
Level 2
|
Restricted cash balances:
|
|
|
|
|
|
|
|
|
|
Certificates of deposit and other deposits
|
|
|
1,041 |
|
|
|
1,053 |
|
Level 1
|
Derivative contracts - current and non-current derivatives
assets:
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
2,414 |
|
|
|
5,207 |
|
Level 2
|
Metal forward and put option contracts
|
|
|
20,406 |
|
|
|
— |
|
Level 2
|
Total assets
|
|
$ |
263,813 |
|
|
$ |
267,177 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Derivative contracts - current derivatives liabilities and other
non-current liabilities:
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
$ |
529 |
|
|
$ |
8 |
|
Level 2
|
Metal forward and put option contracts
|
|
|
4,221 |
|
|
|
37,873 |
|
Level 2
|
Total liabilities
|
|
$ |
4,750 |
|
|
$ |
37,881 |
|
|
Cash and cash equivalents consist primarily of money market funds
and are valued at cost, which approximates fair value, and a small
portion consists of municipal bonds having maturities of less than
90 days, which are recorded at fair
value.
Current and non-current restricted cash balances consist primarily
of certificates of deposit, U.S. Treasury securities, and other
deposits and are valued at cost, which approximates fair value.
Our non-current available for sale securities consist of marketable
equity securities of companies in the mining industry which are
valued using quoted market prices for each security.
Trade accounts receivable from provisional concentrate sales are
subject to final pricing and valued using quoted prices based on
forward curves for the particular metals. The embedded
derivative contained in our concentrate sales is adjusted to fair
market value through earnings each period prior to final
settlement.
We use financially-settled forward contracts to manage exposure to
changes in the exchange rate between USD and CAD, and the impact on
CAD-denominated operating costs incurred at our Casa Berardi unit
(see Note 8 for more
information). The fair value of each contract represents the
present value of the difference between the forward exchange rate
for the contract settlement period as of the measurement date and
the contract settlement exchange rate.
We use financially-settled forward contracts to manage the exposure
to changes in prices of silver, gold, zinc and lead contained in
our concentrate shipments that have not reached final settlement. We
also use financially-settled forward contracts to manage the
exposure to changes in prices of silver, gold, zinc and lead
contained in our forecasted future sales (see Note 8 for more information). The
fair value of each forward contract represents the present value of
the difference between the forward metal price for the contract
settlement period as of the measurement date and the contract
settlement metal price.
At June 30, 2022, our
Senior Notes and IQ Notes were recorded at their carrying value of
$469.9 million and $37.9 million, respectively, net of unamortized
initial purchaser discount/premium and issuance costs. The
estimated fair values of our Senior Notes and IQ Notes were $453.3
million and $35.8 million, respectively, at June 30, 2022. Quoted market prices, which we
consider to be Level 1 inputs, are
utilized to estimate fair values of the Senior Notes. Unobservable
inputs which we consider to be Level 3, including an assumed current annual yield
of 8.2%, are utilized to estimate the fair value of the IQ Notes.
See Note 7 for more
information.
Note 10. Commitments,
Contingencies and Obligations
General
We follow GAAP guidance in determining our accruals and disclosures
with respect to loss contingencies, and evaluate such accruals and
contingencies for each reporting period. Accordingly, estimated
losses from loss contingencies are accrued by a charge to income
when information available prior to issuance of the financial
statements indicates that it is probable that a liability could be
incurred and the amount of the loss can be reasonably estimated.
Legal expenses associated with the contingency are expensed as
incurred. If a loss contingency is not probable or reasonably estimable,
disclosure of the loss contingency is made in the financial
statements when it is at least reasonably possible that a material
loss could be incurred.
Johnny M Mine Area near San Mateo, McKinley County and San Mateo
Creek Basin, New Mexico
In August 2012, Hecla Limited and
the EPA entered into a Settlement Agreement and Administrative
Order on Consent for Removal Action (“Consent Order”) regarding the
Johnny M Mine Area near San Mateo, McKinley County, New Mexico.
Mining at the Johnny M Mine was conducted for a limited period of
time by a predecessor of Hecla Limited, and the EPA had previously
asserted that Hecla Limited may be
responsible under the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”) for environmental
remediation and past costs incurred by the EPA at the site. Under
the Consent Order, Hecla Limited agreed to pay (i) $1.1 million to
the EPA for its past response costs at the site and (ii) any future
response costs at the site under the Consent Order, in exchange for
a covenant not to sue by the EPA.
In December 2014, Hecla Limited
submitted to the EPA the Engineering Evaluation and Cost Analysis
(“EE/CA”) for the site which recommended on-site disposal of
mine-related material. In January
2021, the parties began negotiating a new consent order to
design and implement the on-site disposal response action
recommended in the EE/CA. Based on the foregoing, we believe it is
probable that Hecla Limited will incur a liability for the CERCLA
removal action and we increased our accrual by $2.9 million to $9.0
million in the first quarter of
2021, primarily representing
estimated costs to begin design and implementation of the remedy.
It is possible that Hecla Limited’s liability will be more than
$9.0 million, and any increase in liability could have a material
adverse effect on Hecla Limited’s or our results of operations or
financial position.
The Johnny M Mine is in an area known as the San Mateo Creek Basin
(“SMCB”), which is an approximately 321 square mile area in New Mexico that
contains numerous legacy uranium mines and mills. In addition to
Johnny M, Hecla Limited’s predecessor was involved at other mining
sites within the SMCB. The EPA appears to have deferred
consideration of listing the SMCB site on CERCLA’s National
Priorities List (“Superfund”) by removing the site from its
emphasis list, and is working with various potentially responsible
parties (“PRPs”) at the site in order to study and potentially
address perceived groundwater issues within the SMCB. The EE/CA
discussed above relates primarily to contaminated rock and soil at
the Johnny M site, not groundwater
and not elsewhere within the SMCB
site. It is possible that Hecla Limited’s liability at the Johnny M
Site, and for any other mine site within the SMCB at which Hecla
Limited’s predecessor may have
operated, will be greater than our current accrual of $9.0 million due to the increased scope of
required remediation.
In July 2018, the EPA informed
Hecla Limited that it and several other PRPs may be liable for cleanup of the SMCB site or
for costs incurred by the EPA in cleaning up the site. The EPA
stated it has incurred approximately $9.6 million in response costs
to date. On May 2, 2022, Hecla
Limited received a letter from an attorney representing a PRP
notifying Hecla Limited that three
PRPs will seek cost recovery and contribution from Hecla Limited
under CERCLA for certain investigatory work performed by the PRPs
at the SMCB site. Hecla Limited cannot with reasonable certainty
estimate the amount or range of liability, if any, relating to this
matter because of, among other reasons, the lack of information
concerning the site, including the relative contributions of
contamination by the various PRPs.
Carpenter Snow Creek and Barker-Hughesville Sites in
Montana
In July 2010, the EPA made a formal
request to Hecla for information regarding the Carpenter Snow Creek
Superfund site located in Cascade County, Montana. The Carpenter
Snow Creek site is located in a historic mining district, and in
the early 1980s Hecla Limited
leased 6 mining claims and
performed limited exploration activities at the site. Hecla Limited
terminated the mining lease in 1988.
In June 2011, the EPA informed
Hecla Limited that it believes Hecla Limited, and several other
PRPs, may be liable for cleanup of
the site or for costs incurred by the EPA in cleaning up the site.
The EPA stated in the letter that it has incurred approximately
$4.5 million in response costs and estimated that total remediation
costs may exceed $100 million.
Hecla Limited cannot with reasonable certainty estimate the amount
or range of liability, if any, relating to this matter because of,
among other reasons, the lack of information concerning the site,
including the relative contributions of contamination by various
other PRPs.
In February 2017, the EPA made a
formal request to Hecla for information regarding the
Barker-Hughesville Mining District Superfund site located in Judith
Basin and Cascade Counties, Montana. Hecla Limited submitted a
response in April 2017. The
Barker-Hughesville site is located in a historic mining district,
and between approximately June and
December 1983, Hecla Limited was
party to an agreement with another mining company under which
limited exploration activities occurred at or near the site.
In August 2018, the EPA informed
Hecla Limited that it and several other PRPs may be liable for cleanup of the site or for
costs incurred by the EPA in cleaning up the site. The EPA did
not include an amount of its
alleged response costs to date. Hecla Limited cannot with
reasonable certainty estimate the amount or range of liability, if
any, relating to this matter because of, among other reasons, the
lack of information concerning past or anticipated future costs at
the site and the relative contributions of contamination by various
other PRPs.
Greens Creek and Lucky Friday Environmental Issues
On June 30, 2022, our Greens Creek
mine received a Notice of Violation ( “NOV”) from the EPA alleging that the mine
treated, stored, and disposed of certain hazardous waste without a
permit in violation of the Resource Conservation and Recovery Act
(“RCRA”), relating to the alleged presence of lead outside the
concentrate storage building and the alleged improper
reuse/recycling of certain materials produced from the on-site
laboratories. The NOV contained
two other less significant alleged
violations. We disagree with several of EPA’s allegations on a
factual and legal basis.
Currently, the EPA has not
initiated any formal enforcement proceeding against our Greens
Creek subsidiary. In civil judicial cases, EPA can seek statutory
penalties up to $81,540 per day per violation and, in
administrative settlements, EPA can seek administrative penalties
up to $47,423 per day per violation plus the economic benefit of
noncompliance. EPA typically pursues administrative penalties and
assesses lower penalties on a per day basis. At this time, we
cannot reasonably assess the amount of penalties EPA may seek, or predict the terms of any
potential settlement with the EPA.
On July 12, 2022, our Lucky Friday
mine received a NOV from the EPA
alleging violations of the Clean Water Act (“CWA”) between
2018 and 2021 relating primarily to concentration
levels of zinc and lead in the mine’s permitted water
discharges. Currently, the EPA has not initiated any formal enforcement
proceeding against our Lucky Friday subsidiary. In civil
judicial cases, EPA can seek statutory penalties up to $59,973 per
day per violation and, in administrative actions, EPA can seek
administrative penalties up to $23,989 per day per violation with a
maximum administrative penalty of $299,989 for all alleged
violations. EPA typically pursues administrative
penalties. At this time, we cannot reasonably assess the
amount of penalties EPA may seek,
or predict the terms of any potential settlement with the EPA.
Litigation Related to Klondex Acquisition
On May 24, 2019, a purported Hecla
stockholder filed a putative class action lawsuit in the U.S.
District Court for the Southern District of New York against Hecla
and certain of our executive officers, one of whom is also a director. The
complaint, purportedly brought on behalf of all purchasers of Hecla
common stock from March 19, 2018
through and including May 8, 2019,
asserts claims under Sections 10(b)
and 20(a) of the Securities
Exchange Act of 1934 and Rule
10b-5 promulgated thereunder and seeks, among
other things, damages and costs and expenses. Specifically, the
complaint alleges that Hecla, under the authority and control of
the individual defendants, made certain material false and
misleading statements and omitted certain material information
regarding Hecla’s Nevada Operations. The complaint alleges that
these misstatements and omissions artificially inflated the market
price of Hecla common stock during the class period, thus
purportedly harming investors. Filings with the court regarding our
motion to dismiss the lawsuit were completed in the first quarter of 2021. We cannot predict the outcome of this
lawsuit or estimate damages if plaintiffs were to prevail. We
believe that these claims are without merit and intend to defend
them vigorously.
Related to this class action lawsuit, Hecla has been named as a
nominal defendant in a shareholder derivative lawsuit which also
names as defendants certain current and past (i) members of Hecla’s
board of directors and (ii) officers of Hecla. The case was filed
on May 4, 2022 in the Delaware
Chancery Court. In general terms, the suit alleges breaches of
fiduciary duties by the individual defendants, waste of corporate
assets and unjust enrichment, and seeks damages, purportedly on
behalf of Hecla.
Debt
See Note 7 for information
on the commitments related to our debt arrangements as of
June 30, 2022.
Other Commitments
Our contractual obligations as of June
30, 2022 included open purchase orders and commitments of
approximately $8.1 million, $19.1 million, $1.3 million and $3.4
million for various capital and non-capital items at Greens Creek,
Lucky Friday, Casa Berardi and Nevada Operations, respectively. We
also have total commitments of approximately $15.9 million relating
to scheduled payments on finance leases, including interest,
primarily for equipment at our Greens Creek, Lucky Friday, Casa
Berardi and Nevada Operations units, and total commitments of
approximately $14.2 million relating to payments on operating
leases (see Note 7 for more
information). As part of our ongoing business and operations, we
are required to provide surety bonds, bank letters of credit, and
restricted deposits for various purposes, including financial
support for environmental reclamation obligations and workers
compensation programs. As of June 30,
2022, we had surety bonds totaling
$181.8 million and letters of credit totaling $14.9 million in
place as financial support for future reclamation and closure
costs, self-insurance, and employee benefit plans. The obligations
associated with these instruments are generally related to
performance requirements that we address through ongoing
operations. As the requirements are met, the beneficiary of the
associated instruments cancels or returns the instrument to the
issuing entity. Certain of these instruments are associated with
operating sites with long-lived assets and will remain outstanding
until closure of the sites. We believe we are in compliance with
all applicable bonding requirements and will be able to satisfy
future bonding requirements as they arise.
Other Contingencies
We also have certain other contingencies resulting from litigation,
claims, EPA investigations, and other commitments and are subject
to a variety of environmental and safety laws and regulations
incident to the ordinary course of business. We currently have
no basis to conclude that any or
all of such contingencies will materially affect our financial
position, results of operations or cash flows. However, in the
future, there may be changes to
these contingencies, or additional contingencies may occur, any of which might result in an
accrual or a change in current accruals recorded by us, and there
can be no assurance that their
ultimate disposition will not have
a material adverse effect on our financial position, results of
operations or cash flows.
Note 11. Developments
in Accounting Pronouncements
Accounting Standards Updates Adopted
In August 2020, the Financial
Accounting Standards Board (“FASB") issued ASU No. 2020-06 Debt
- Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity. The update is to address
issues identified as a result of the complexity associated with
applying generally accepted accounting principles to certain
financial instruments with characteristics of liabilities and
equity. The update is effective for fiscal years beginning after
December 15, 2021, including
interim periods within those fiscal years and with early adoption
permitted. We adopted the update as of January 1, 2022, which did not have a material impact on our
consolidated financial statements or disclosures.
In October 2021, the FASB issued
ASU 2021-08, Business Combinations (Topic
805): Accounting for Contract
Assets and Contract Liabilities from Contracts with
Customers, which requires entities to recognize and measure
contract assets and contract liabilities acquired in a business
combination in accordance with ASC 2014-09,
Revenue from Contracts with Customers (Topic 606). The update will generally result in
an entity recognizing contract assets and contract liabilities at
amounts consistent with those recorded by the acquiree immediately
before the acquisition date rather than at fair value. The update
is effective on a prospective basis for fiscal years beginning
after December 15, 2022, with early
adoption permitted. We adopted the new standard effective
January 1, 2022, which did
not have a material impact on our
consolidated financial statements or disclosures.
Accounting Standards Updates to Become Effective in Future
Periods
In 2017, the United Kingdom’s
Financial Conduct Authority ("FCA") announced that after 2021 it would no longer compel banks to submit the rates
required to calculate the London Interbank Offered Rate ("LIBOR"),
which have been widely used as reference rates for various
securities and financial contracts, including loans, debt and
derivatives. This announcement indicated that the continuation of
LIBOR on the current basis would not be guaranteed after 2021. Subsequently in March 2021, the FCA announced some USD LIBOR
tenors (overnight, 1 month,
3 month, 6 month and 12 month) will continue to be published until
June 30, 2023. Regulators in the
U.S. and other jurisdictions have been working to replace these
rates with alternative reference interest rates that are supported
by transactions in liquid and observable markets, such as the
Secured Overnight Financing Rate ("SOFR"). Currently, our credit
facility and certain of our derivative instruments reference
LIBOR-based rates. Our credit facility contains provisions
specifying alternative interest rate calculations to be employed
when LIBOR ceases to be available as a benchmark and we have
adhered to the ISDA 2020 IBOR
Fallbacks Protocol, which will govern our derivatives upon the
final cessation of USD LIBOR. ASU 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, as amended,
helps limit the accounting impact from contract modifications,
including hedging relationships, due to the transition from LIBOR
to alternative reference rates that are completed by December 31, 2022. We do not expect a significant impact to our
financial results, financial position or cash flows from the
transition from LIBOR to alternative reference interest rates, but
we will continue to monitor the impact of this transition until it
is completed.
Note 12. Subsequent
Events
On July 5, 2022, we and Alexco
Resource Corp. ("Alexco") a Canadian publicly traded company,
announced a definitive agreement for one of our subsidiaries to acquire all of the
outstanding common shares of Alexco that Hecla does not already own. Each outstanding common
share of Alexco will be exchanged for 0.116 of a share of our
common stock implying consideration of US$0.47 per Alexco common share.
In addition, we will (i) provide interim financing to provide
working capital and support the continued advancement of the
development and exploration at Alexco's, Keno Hill mine, of which
$20 million was advanced on July 19,
2022 and (ii) subscribe for additional common shares bringing
Hecla's ownership stake to 9.9%, which also closed on July 19, 2022.
The Company has also entered into an agreement with Wheaton
Precious Metals Corporation to terminate its silver streaming
interest at Alexco’s Keno Hill property in exchange for
US$135 million of
Company common stock, conditional upon the completion of the Alexco
acquisition.
On July 21, 2022, we entered into a
Credit Agreement (“New Credit Agreement”) with the various
financial institutions (the “Lenders”), Bank of Montreal and Bank
of America, N.A. as letters of credit issuers, and Bank of America,
N.A., as administrative agent for the Lenders and as swingline
lender, to replace our Prior Credit Agreement, see Note
7 for additional information on
this credit agreement. The New Credit Agreement is a $150 million
senior secured revolving facility, with an option to be increased
in an aggregate amount not to
exceed $75 million. The revolving loans under the New Credit
Agreement will have a maturity date of July 21, 2026. Proceeds of the revolving
loans under the New Credit Agreement may be used to refinance the Prior Credit
Agreement and for general corporate purposes. The interest rate on
outstanding loans under the New Credit Agreement is, at the option
of the Borrowers, one month,
three months or six months Term SOFR plus (x) 0.10% for an interest period of one-month’s duration, (y) 0.15% for an interest period of three-month’s
duration and (z) 0.25% for an
interest period of six-month’s
duration plus the Applicable Margin or Base Rate (which is the
highest of (i) the Bank of America prime rate, (ii) the Federal
Funds rate plus .50% and (iii) Term SOFR
plus 1.00%, subject to the interest
rate floors) plus the Applicable Margin. The “Applicable Margin”
means (a) for the first fiscal
quarter ending after the closing date, in the case of Term SOFR
loans, 2.25% per annum, and, in the
case of Base Rate loans, 1.25% per
annum, and (b) thereafter, between 2.00% and 3.50% for Term SOFR loans or between
1.00% and 2.50% for Base Rate loans depending on our
total leverage ratio. We are also required to pay quarterly in
arrears a commitment fee of between 0.45000% to 0.78750%, depending on our total leverage
ratio, of the actual daily amount by which the Aggregate Revolving
Commitments exceed the sum of the Outstanding Amount of Revolving
Loan and the Outstanding Amount of L/C Obligations. We are also
required to pay a participation fee for letters of credit issued
under the New Credit Agreement in an amount between 2.00% and 3.50% based on our total leverage ratio, as
well as a fronting fee to each issuing bank at an agreed upon rate
per annum on the average daily dollar amount of our letter of
credit exposure.
Hecla Mining Company and certain of its subsidiaries are the
borrowers under the New Credit Agreement, while certain of its
other subsidiaries are guarantors of the borrowers’ obligations
under the New Credit Agreement. As further security, the credit
facility is collateralized by a mortgage on the Greens Creek mine,
the equity interests of subsidiaries that own the Greens Creek mine
or are part of the Greens Creek Joint Venture and our subsidiary
Hecla Admiralty Company (the “Greens Creek Group”), and by all of
the Green Creek Group’s rights and interests in the Greens Creek
Joint Venture Agreement, and in all assets of the joint venture and
of any member of the Greens Creek Group.
In connection with entry into the New Credit Agreement, the
Company’s Prior credit agreement was terminated on July 21, 2022.
Forward-Looking Statements
Certain statements contained in this Form 10-Q, including in
Management’s Discussion and Analysis of Financial Condition and
Results of Operations and Quantitative and Qualitative Disclosures
About Market Risk, are intended to be covered by the safe harbor
provided for under Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Our forward-looking statements include our
current expectations and projections about future results,
performance, results of litigation, prospects and opportunities,
including reserves and other mineralization. We have tried to
identify these forward-looking statements by using words such as
“may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,”
“plan,” “estimate,” “project,” “forecast” and similar
expressions. These forward-looking statements are based
on information currently available to us and are expressed in good
faith and believed to have a reasonable basis. However,
our forward-looking statements are subject to a number of risks,
uncertainties and other factors that could cause our actual
results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, these
forward-looking statements.
These risks, uncertainties and other factors include, but are not
limited to, those set forth under Part I, Item 1A. – Risk
Factors in our 2021 Form 10-K and in Part II, Item 1.A. - Risk
Factors in this Form 10-Q. Given these risks and uncertainties,
readers are cautioned not to place undue reliance on our
forward-looking statements. All subsequent written and
oral forward-looking statements attributable to Hecla Mining
Company or to persons acting on our behalf are expressly qualified
in their entirety by these cautionary statements. Except
as required by federal securities laws, we do not intend to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
Item
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
In this Management’s Discussion and Analysis of Financial Condition
and Results of Operations (“MD&A”), “Hecla,” “the Company,”
“we,” “us” and “our” refer to Hecla Mining Company and its
consolidated subsidiaries, except where the context requires
otherwise. You should read this discussion in conjunction with our
consolidated financial statements, the related MD&A and the
discussion of our Business and Properties in our 2021 Form 10-K
filed with the United States Securities and Exchange Commission
(the “SEC”). The results of operations reported and summarized
below are not necessarily indicative of future operating results
(refer to “Forward-Looking Statements” above for further
discussion). References to “Notes” are Notes included in our Notes
to Condensed Consolidated Financial Statements (Unaudited).
Throughout MD&A, all references to losses or income per share
are on a diluted basis.
Overview
Established in 1891, we believe we are the oldest operating
precious metals mining company in the United States. We are the
largest silver producer in the United States, producing over 40% of
the United States silver production at our Greens Creek and Lucky
Friday operations. We produce gold at our Casa Berardi operation in
Quebec, Canada, and Greens Creek, and produced gold at our Nevada
Operations segment prior to suspension of operations during 2021.
Based upon our operational footprint, we believe we have low
political and economic risk compared to other mines located in
other parts of the world. Our exploration interests are located in
the United States, Canada and Mexico. Our operating and strategic
framework is based on expanding our production and locating and
developing new resource potential in a safe and responsible
manner.
Second Quarter 2022 Highlights
Operational:
|
•
|
Produced 3.6 million ounces of silver and 45,719 ounces of gold.
See Consolidated Results of Operations below for
information on total cost of sales and cash costs and AISC, after
by-product credits, per silver and gold ounce for the three-month
periods ended June 30, 2022 and 2021.
|
|
•
|
Continued mitigation of the impacts of COVID-19 through refinement
of our operational plans and procedures to protect our workforce,
operations and communities while maintaining liquidity.
|
Financial:
|
•
|
Reported sales of $191.2 million.
|
|
•
|
Generated $40.2 million in net cash provided by operating
activities. See the Financial Liquidity and Capital
Resources section below for further discussion.
|
|
•
|
Made capital expenditures (excluding lease additions and other
non-cash items) of approximately $34.7 million, including $14.7
million at Greens Creek, $11.5 million at Lucky Friday, $8.1
million at Casa Berardi and $0.3 million at the Nevada
Operations.
|
|
•
|
Generated $5.9 million in free cash flow. A reconciliation of the
non-GAAP measure free cash flow to net cash provided by operating
activities, the nearest GAAP measure, is included in the
Reconciliation of Cash Flows From Operating Activities (GAAP) to
Free Cash Flow (Non-GAAP) section below.
|
|
•
|
Returned $3.5 million, or 60% of free cash flows, to our
shareholders through payment of dividends.
|
|
•
|
Spent $11.2 million on exploration and pre-development
activities.
|
|
•
|
During April made an $11.0 million strategic investment in Alexco.
Subsequent to June 30, 2022, we increased our investment in Alexco.
See Note 12, of Notes to Condensed Consolidated Financial
Statements (unaudited) regarding our proposed acquisition of
Alexco.
|
Year to date 2022 Highlights
Operational:
|
•
|
Produced 7.0 million ounces of silver and 87,361 ounces of gold.
See Consolidated Results of Operations below for
information on total cost of sales and cash costs and AISC, after
by-product credits, per silver and gold ounce for the six-month
periods ended June 30, 2022 and 2021.
|
|
•
|
Continued our trend of strong safety performance, as our All Injury
Frequency Rate (“AIFR”) for the year to date was 1.59, 24% below
the U.S. national average for MSHA's “metal and
nonmetal” category and within 10% of our AIFR of 1.45 for the
full year of 2021.
|
|
•
|
Continued mitigation of the impacts of COVID-19 through refinement
of our operational plans and procedures to protect our workforce,
operations and communities while maintaining liquidity.
|
Financial:
|
•
|
Reported sales of $377.7 million.
|
|
•
|
Generated $78.1 million in net cash provided by operating
activities. See the Financial Liquidity and Capital
Resources section below for further discussion.
|
|
•
|
Made capital expenditures (excluding lease additions and other
non-cash items) of approximately $55.8 million, including $17.8
million at Greens Creek, $21.2 million at Lucky Friday, $15.9
million at Casa Berardi and $1.2 million at the Nevada
Operations.
|
|
•
|
Generated $22.3 million in free cash flow. A reconciliation of the
non-GAAP measure free cash flow to net cash provided by operating
activities, the nearest GAAP measure, is included in the
Reconciliation of Cash Flows From Operating Activities (GAAP) to
Free Cash Flow (Non-GAAP) section below.
|
|
•
|
Returned $7.0 million, or 31% of free cash flows, to our
shareholders through payment of dividends.
|
|
•
|
Spent $24.0 million on exploration and pre-development
activities.
|
|
•
|
Invested $21.9 million in junior mining companies, including an
$11.0 investment in Alexco. See Note 12, of Notes to Condensed
Consolidated Financial Statements (unaudited) regarding our
proposed acquisition of Alexco.
|
Our current business strategy is to focus our financial and human
resources in the following areas:
|
•
|
executing value enhancing transactions, such as with the proposed
Alexco acquisition;
|
|
•
|
rapidly responding to the threats from the COVID-19 pandemic to
protect our workforce, operations and communities while maintaining
liquidity;
|
|
•
|
operating our properties safely, in an environmentally responsible
and cost-effective manner;
|
|
•
|
maintaining and investing in exploration and pre-development
projects in the vicinities of eleven mining districts and projects
we believe to be under-explored and under-invested: Greens Creek on
Alaska's Admiralty Island located near Juneau; North Idaho's Silver
Valley in the historic Coeur d'Alene Mining District; the
silver-producing district near Durango, Mexico; in the vicinity of
our Casa Berardi mine and the Heva-Hosco project in the Abitibi
region of northwestern Quebec, Canada; our projects located in two
districts in Nevada; our projects in northwestern Montana; the
Creede district of southwestern Colorado; the Kinskuch project in
British Columbia, Canada; and the Republic mining district in
Washington state;
|
|
•
|
improving operations at each of our mines, which includes incurring
costs for new technologies and equipment;
|
|
•
|
expanding our proven and probable reserves, mineral resources and
production capacity at our properties;
|
|
•
|
conducting our business with financial stewardship to preserve our
financial position in varying metals price and operational
environments;
|
|
•
|
advancing permitting of one or both of our Montana projects;
and
|
|
•
|
continuing to seek opportunities to acquire and invest in mining
and exploration properties and companies.
|
We strive to achieve excellent mine safety and health performance.
We seek to implement this goal by: training employees in safe work
practices; establishing, following and improving safety standards;
investigating accidents, incidents and losses to avoid recurrence;
involving employees in the establishment of safety standards; and
participating in the National Mining Association’s CORESafety
program. We seek to implement reasonable best practices with
respect to mine safety and emergency preparedness. We respond to
issues outlined in investigations and inspections by MSHA, the
Commission of Labor Standards, Pay Equity and Occupational Health
and Safety in Quebec, and the Mexico Ministry of Economy and Mining
and continue to evaluate our safety practices. There can be no
assurance that our practices will mitigate or eliminate all safety
risks. Achieving and maintaining compliance with regulations will
be challenging and may increase our operating costs. See Item
1A. Risk Factors - We face substantial governmental regulation,
including the Mine Safety and Health Act, various environmental
laws and regulations and the 1872 Mining Law in our 2021 Form
10-K.
Since its outbreak in 2020, the COVID-19 pandemic continues to
impact our operational practices and we continue to incur
incremental costs and modify our operational plans to keep our
workforce safe. In 2020, the pandemic adversely impacted our
expected production of gold at Casa Berardi and exploration
drilling at Greens Creek. We incurred $0.1 million and $0.4 million
in COVID-19 mitigation costs during the three and six months ended
June 30, 2022 compared to $1.4 million and $3.0 million during the
three and six months ended June 30, 2021, respectively. To mitigate
the impact of COVID-19, we have taken precautionary measures,
including implementing operational plans and practices and
increasing our cash reserves. As long as they are required, the
operational practices implemented could continue to have an adverse
impact on our operating results due to additional costs or deferred
production and revenues. There is uncertainty related to the
potential additional impacts COVID-19 and any subsequent variants
could have on our operations and financial results for the rest of
2022. In our 2021 Form 10-K, see Item IA. Risk Factors - Natural
disasters, public health crises (including COVID-19), political
crises, and other catastrophic events or other events outside of
our control may materially and adversely affect our business or
financial results and COVID-19 virus pandemic may heighten
other risks for information on how restrictions related to
COVID-19 have recently affected some of our operations.
A number of key factors may impact the execution of our strategy,
including regulatory issues and metals prices. Metals prices can be
very volatile and are influenced by a number of factors beyond our
control (except on a limited basis through the use of derivative
contracts). See Item 7. Critical Accounting Estimates
in our 2021 Form 10-K and above in Note 8 of Notes to
Condensed Consolidated Financial Statements (Unaudited). The
average realized prices of gold and zinc were higher, with the
average realized price for silver and lead lower, in the second
three months of 2022 than in the comparable period last year, as
illustrated by the table in Results of Operations below.
While we believe longer-term global economic and industrial trends
could result in continued demand for the metals we produce, prices
have been volatile and there can be no assurance that current
prices will continue.
Volatility in global financial markets and other factors can pose a
significant challenge to our ability to access credit and equity
markets, should we need to do so, and to predict sales prices for
our products. To help mitigate this challenge, we utilize forward
contracts to manage exposure to declines in the prices of (i)
silver, gold, zinc and lead contained in our concentrates that have
been shipped but have not yet settled, and (ii) zinc and lead that
we forecast for future concentrate shipments. In addition, we have
in place a $250 million revolving credit agreement, of which $14.9
million was used as of June 30, 2022 for letters of credit, leaving
approximately $235.1 million available for borrowing.
Another challenge for us is the risk associated with environmental
litigation and ongoing reclamation activities. As described in
Item 1A. Risk Factors in our 2021 Form 10-K and above in
Note 10 of Notes to Condensed Consolidated Financial
Statements (Unaudited), it is possible that our estimate of
these liabilities (and our ability to estimate liabilities in
general) may change in the future, affecting our strategic plans.
We are involved in various environmental legal matters and the
estimate of our environmental liabilities and liquidity needs, as
well as our strategic plans, may be significantly impacted as a
result of these matters or new matters that may arise. We strive to
ensure that our activities are conducted in compliance with
applicable laws and regulations and attempt to resolve
environmental litigation on terms as favorable to us as
possible.
Consolidated Results of Operations
Sales by metal for the three- and six-month periods ended
June 30, 2022 and 2021 were as follows:
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
(in thousands)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Silver
|
|
$ |
70,050 |
|
|
$ |
92,765 |
|
|
$ |
136,382 |
|
|
$ |
170,525 |
|
Gold
|
|
|
82,018 |
|
|
|
86,078 |
|
|
|
159,186 |
|
|
|
187,487 |
|
Lead
|
|
|
21,314 |
|
|
|
22,223 |
|
|
|
40,878 |
|
|
|
38,116 |
|
Zinc
|
|
|
31,176 |
|
|
|
30,037 |
|
|
|
66,814 |
|
|
|
59,228 |
|
Less: smelter charges
|
|
|
(13,316 |
) |
|
|
(13,120 |
) |
|
|
(25,519 |
) |
|
|
(26,521 |
) |
Sales of products
|
|
$ |
191,242 |
|
|
$ |
217,983 |
|
|
$ |
377,741 |
|
|
$ |
428,835 |
|
Sales by metal for the three- and six-month periods ended June 30,
2022 and 2021, and the approximate variances attributed to
differences in metals prices, sales volumes and smelter terms, were
as follows:
(in thousands)
|
|
Silver
|
|
|
Gold
|
|
|
Base metals
|
|
|
Less: smelter
and refining
charges
|
|
|
Total sales
of products
|
|
Three months ended June 30, 2021
|
|
$ |
92,765 |
|
|
$ |
86,078 |
|
|
$ |
52,260 |
|
|
$ |
(13,120 |
) |
|
$ |
217,983 |
|
Variances - 2022 versus 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price
|
|
|
(21,990 |
) |
|
|
1,107 |
|
|
|
(1,052 |
) |
|
|
1,360 |
|
|
|
(20,575 |
) |
Volume
|
|
|
(688 |
) |
|
|
(5,167 |
) |
|
|
1,282 |
|
|
|
100 |
|
|
|
(4,473 |
) |
Smelter terms
|
|
|
(37 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,656 |
) |
|
|
(1,693 |
) |
Three months ended June 30, 2022
|
|
$ |
70,050 |
|
|
$ |
82,018 |
|
|
$ |
52,490 |
|
|
$ |
(13,316 |
) |
|
$ |
191,242 |
|
(in thousands)
|
|
Silver
|
|
|
Gold
|
|
|
Base metals
|
|
|
Less: smelter
and refining
charges
|
|
|
Total sales
of products
|
|
Six months ended June 30, 2021
|
|
$ |
170,525 |
|
|
$ |
187,487 |
|
|
$ |
97,344 |
|
|
$ |
(26,521 |
) |
|
$ |
428,835 |
|
Variances - 2022 versus 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price
|
|
|
(24,348 |
) |
|
|
5,708 |
|
|
|
11,404 |
|
|
|
(16 |
) |
|
|
(7,252 |
) |
Volume
|
|
|
(9,703 |
) |
|
|
(33,924 |
) |
|
|
(1,056 |
) |
|
|
1,428 |
|
|
|
(43,255 |
) |
Smelter terms
|
|
|
(92 |
) |
|
|
(85 |
) |
|
|
— |
|
|
|
(410 |
) |
|
|
(587 |
) |
Six months ended June 30, 2022
|
|
$ |
136,382 |
|
|
$ |
159,186 |
|
|
$ |
107,692 |
|
|
$ |
(25,519 |
) |
|
$ |
377,741 |
|
The fluctuations in sales for the second quarter and first six
months of 2022 compared to the same periods of 2021 were primarily
due to the following two reasons:
|
•
|
Lower average realized prices for silver in the second quarter and
first half of 2022, lower realized lead prices in the three months
ended June 30, 2022, partially offset by higher realized gold and
zinc prices in the second quarter and first half of 2022 and higher
realized lead prices for the first half of 2022, all compared to
the same periods of 2021. These price variances are illustrated in
the following table:
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Silver –
|
London PM Fix ($/ounce)
|
|
$ |
22.64 |
|
|
$ |
26.69 |
|
|
$ |
23.30 |
|
|
$ |
26.49 |
|
|
Realized price per ounce
|
|
$ |
20.68 |
|
|
$ |
27.14 |
|
|
$ |
22.45 |
|
|
$ |
26.45 |
|
Gold –
|
London PM Fix ($/ounce)
|
|
$ |
1,872 |
|
|
$ |
1,816 |
|
|
$ |
1,873 |
|
|
$ |
1,807 |
|
|
Realized price per ounce
|
|
$ |
1,855 |
|
|
$ |
1,825 |
|
|
$ |
1,867 |
|
|
$ |
1,795 |
|
Lead –
|
LME Final Cash Buyer ($/pound)
|
|
$ |
1.00 |
|
|
$ |
0.96 |
|
|
$ |
1.03 |
|
|
$ |
0.94 |
|
|
Realized price per pound
|
|
$ |
0.97 |
|
|
$ |
1.04 |
|
|
$ |
1.02 |
|
|
$ |
0.99 |
|
Zinc –
|
LME Final Cash Buyer ($/pound)
|
|
$ |
1.78 |
|
|
$ |
1.32 |
|
|
$ |
1.74 |
|
|
$ |
1.29 |
|
|
Realized price per pound
|
|
$ |
1.44 |
|
|
$ |
1.35 |
|
|
$ |
1.61 |
|
|
$ |
1.34 |
|
Average realized prices typically differ from average market prices
primarily because concentrate sales are generally recorded as
revenues at the time of shipment at forward prices for the
estimated month of settlement, which differ from average market
prices. Due to the time elapsed between shipment of
concentrates and final settlement with the customers, we must
estimate the prices at which sales of our metals will be
settled. Previously recorded sales are adjusted to
estimated settlement metals prices each period through final
settlement. For the second quarter and first six months
of 2022, we recorded net negative price adjustments to provisional
settlements of $15.7 million and $14.8 million,
respectively, compared to net positive price adjustments to
provisional settlements of $3.1 million and 3.6 million,
respectively, in the second quarter and first six months of 2021.
The price adjustments related to silver, gold, zinc and lead
contained in our concentrate shipments were partially offset by
gains and losses on forward contracts for those metals. See Note
8 of Notes to Condensed Consolidated Financial Statements
(Unaudited) for more information. The gains and
losses on these contracts are included in revenues and impact the
realized prices for silver, gold, lead and
zinc. Realized prices are calculated by dividing gross
revenues for each metal (which include the price adjustments and
gains and losses on the forward contracts discussed above) by the
payable quantities of each metal included in concentrate, doré and
carbon material shipped during the period.
|
•
|
Higher quantities of lead sold as a result of higher production at
Lucky Friday was offset by lower silver, gold and zinc sales
volumes, in the second quarter and first half of 2022 compared to
2021. See The Greens Creek Segment, The Lucky Friday
Segment, The Casa Berardi Segment and The Nevada Operations
Segment sections below for more information on metal production
and sales volumes at each of our operating segments. Total metals
production and sales volumes for each period are shown in the
following table:
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Silver -
|
Ounces produced
|
|
|
3,645,454 |
|
|
|
3,524,783 |
|
|
|
6,970,162 |
|
|
|
6,984,229 |
|
|
Payable ounces sold
|
|
|
3,387,909 |
|
|
|
3,415,464 |
|
|
|
6,075,170 |
|
|
|
6,445,490 |
|
Gold -
|
Ounces produced
|
|
|
45,719 |
|
|
|
59,139 |
|
|
|
87,361 |
|
|
|
111,143 |
|
|
Payable ounces sold
|
|
|
44,225 |
|
|
|
47,168 |
|
|
|
85,278 |
|
|
|
104,454 |
|
Lead -
|
Tons produced
|
|
|
13,331 |
|
|
|
11,540 |
|
|
|
24,194 |
|
|
|
22,244 |
|
|
Payable tons sold
|
|
|
11,685 |
|
|
|
10,663 |
|
|
|
20,739 |
|
|
|
19,331 |
|
Zinc -
|
Tons produced
|
|
|
16,766 |
|
|
|
17,211 |
|
|
|
31,712 |
|
|
|
33,318 |
|
|
Payable tons sold
|
|
|
10,858 |
|
|
|
11,143 |
|
|
|
20,805 |
|
|
|
22,170 |
|
The difference between what we report as “ounces/tons produced” and
“payable ounces/tons sold” is attributable to the difference
between the quantities of metals contained in the concentrates we
produce versus the portion of those metals actually paid for by our
customers according to the terms of our sales contracts.
Differences can also arise from inventory changes incidental to
shipping schedules, or variances in ore grades which impact the
amount of metals contained in concentrates produced and sold.
Sales, total cost of sales, gross profit, Cash Cost, After
By-product Credits, per Ounce (“Cash Cost”) (non-GAAP) and All-In
Sustaining Cost, After By-product Credits, per Ounce (“AISC”)
(non-GAAP) at our operating units for the three- and six-months
ended June 30, 2022 and 2021 were as follows (in thousands,
except for Cash Cost and AISC):
|
|
Silver
|
|
|
Gold
|
|
|
|
Greens
Creek
|
|
|
Lucky
Friday
|
|
|
Other
|
|
|
Total
Silver (2)
|
|
|
Casa
Berardi
|
|
|
Nevada Operations
|
|
|
Total
Gold
|
|
Three Months Ended June 30, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
92,723 |
|
|
$ |
35,880 |
|
|
$ |
— |
|
|
$ |
128,603 |
|
|
$ |
62,639 |
|
|
$ |
— |
|
|
$ |
62,639 |
|
Total cost of sales
|
|
|
(60,506 |
) |
|
|
(30,348 |
) |
|
|
— |
|
|
|
(90,854 |
) |
|
|
(61,870 |
) |
|
|
(1,255 |
) |
|
|
(63,125 |
) |
Gross profit (loss)
|
|
$ |
32,217 |
|
|
$ |
5,532 |
|
|
|
|
|
|
$ |
37,749 |
|
|
$ |
769 |
|
|
$ |
(1,255 |
) |
|
$ |
(486 |
) |
Cash Cost per silver or gold ounce (1)
|
|
$ |
(3.29 |
) |
|
$ |
3.07 |
|
|
$ |
— |
|
|
$ |
(1.14 |
) |
|
$ |
1,371 |
|
|
|
— |
|
|
$ |
1,371 |
|
AISC per silver or gold ounce (1)
|
|
$ |
3.48 |
|
|
$ |
9.91 |
|
|
$ |
— |
|
|
$ |
8.55 |
|
|
$ |
1,641 |
|
|
$ |
— |
|
|
$ |
1,641 |
|
Three Months Ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
113,763 |
|
|
$ |
39,645 |
|
|
$ |
3 |
|
|
$ |
153,411 |
|
|
$ |
56,122 |
|
|
$ |
8,450 |
|
|
$ |
64,572 |
|
Total cost of sales
|
|
|
(55,488 |
) |
|
|
(27,901 |
) |
|
|
(1 |
) |
|
|
(83,390 |
) |
|
|
(54,669 |
) |
|
|
(17,993 |
) |
|
|
(72,662 |
) |
Gross profit (loss)
|
|
$ |
|