U.S. Markets open in 8 hrs 20 mins

Hecla Reports Third Quarter 2019 Results

COEUR D'ALENE, Idaho--(BUSINESS WIRE)--

Strong operating results and free cash flow generation; Lucky Friday reaches tentative agreement

For The Period Ended: September 30, 2019
For Release: November 7, 2019

Hecla Mining Company (NYSE:HL) today announced third quarter financial and operating results including sales of $161.5 million, net loss applicable to shareholders of $19.7 million, or $0.04 per share, cash provided by operating activities of $54.9 million and silver cost of sales and other direct production costs and depreciation, depletion and amortization ("cost of sales") of $57.3 million.

HIGHLIGHTS

  • Silver production of 3.3 million ounces and gold production of 77,311 ounces.
  • Adjusted net loss applicable to common shareholders of $11.8 million, or $0.02 per share.1
  • Adjusted EBITDA of $69.8 million.2
  • Approximately 40% lower cash cost per silver ounce and all in sustaining cost ("AISC") per silver ounce, in each case net of by-product credits compared to the third quarter of 2018. 3,4
  • Free cash flow of $28.8 million generated.6
  • Cash and cash equivalents of $33.0 million, with a draw on the revolving line of credit of $50 million, at September 30, 2019.
  • A tentative labor agreement at Lucky Friday between the Company and the union negotiating committees which is subject to member ratification.
  • Lucky Friday Mine received the Sentinels of Safety award from the National Mining Association (NMA) for its stellar safety record in 2018 as well as the Pollution Prevention Champion award from the State of Idaho.
  • Reaffirmed annual estimates for production, cost and expenditure estimates.

"The third quarter performance, including our increased adjusted EBITDA results, demonstrates significant progress toward our twin financial goals of having no net revolver indebtedness at year end and refinancing our senior notes," said Phillips S. Baker, Jr., President and CEO. "Our net revolver debt decreased by about $26 million, all from free cash flow, and our adjusted EBITDA of $70 million is about 50% more than the first and second quarter combined. We expect the fourth quarter adjusted EBITDA to be similar to the third quarter."

Mr. Baker continued, "At the Lucky Friday, a tentative labor agreement has been reached with the union's negotiating committee and is subject to member ratification. We expect the mine ramp-up to full production to take about a year's time, which would be good for the workforce, shareholders and the community. Also, congratulations to the Lucky Friday for winning the Sentinels of Safety, the highest safety award for mining in the US, as well as Idaho's Pollution Prevention Champion Award."

FINANCIAL OVERVIEW

 

Third Quarter Ended

 

Nine Months Ended

HIGHLIGHTS

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

FINANCIAL DATA

 

 

 

 

 

 

 

Sales (000)

$161,532

 

 

$143,649

 

 

$448,321

 

 

$430,617

 

Gross profit (000)

$14,880

 

 

$6,576

 

 

($1,919

)

 

$80,364

 

Loss applicable to common shareholders (000)

($19,654

)

 

($23,322

)

 

($91,995

)

 

($3,284

)

Basic and diluted loss per common share

($0.04

)

 

($0.05

)

 

($0.19

)

 

($0.01

)

Net loss (000)

($19,516

)

 

($23,184

)

 

($91,581

)

 

($2,870

)

Cash provided by operating activities (000)

$54,896

 

 

$28,192

 

 

$63,609

 

 

$75,210

 

Free cash flow (000)

$28,803

 

 

($11,789

)

 

($33,729

)

 

($8,075

)

Net loss applicable to common shareholders for the third quarter was $19.7 million, or $0.04 per share, compared to net loss of $23.3 million, or $0.05 per share, for the same period a year ago. The difference was mainly due to the following items:

  • Sales of $161.5 million were impacted by higher silver and gold production and higher realized silver and gold prices.
  • A decrease of $7.9 million in exploration and pre-development expenditures over the third quarter of 2018 under the Company's austerity program.
  • Acquisition costs of $6.1 million in the third quarter 2018.
  • Lower suspension-related costs at Lucky Friday by $2.8 million due to increased production.

Operating cash flow was $54.9 million compared to $28.2 million in the third quarter of 2018, with the increase due to higher income, adjusted for non-cash items, and lower cash outflows for working capital changes.

Adjusted EBITDA was $69.8 million compared to $64.4 million in the third quarter of 2018.

Capital expenditures totaled $29.0 million for the third quarter 2019 compared to $40.7 million in the third quarter of 2018, with the decrease mainly due to reduced spending at Nevada, Greens Creek and Lucky Friday, partially offset by increased spending at Casa Berardi. Expenditures at the operations were $2.5 million at Hecla Nevada, $9.0 million at Greens Creek, $13.2 million at Casa Berardi (includes $6.3 million for expansion of tailings dam capacity), $2.7 million at Lucky Friday, and $1.5 million at San Sebastian.

Metals Prices

The average realized silver price in the third quarter 2019 was $18.18 per ounce, 24% higher than the $14.68 price realized in the third quarter of 2018. The average realized gold price in the third quarter was $1,475 per ounce, 22% higher than the prior year period. Realized lead and zinc prices decreased by 2% and 14%, respectively, from the third quarter of 2018.

Metals Forward Sales Contracts

The following table summarizes the quantities of metals committed under financially settled forward sales contracts at September 30, 2019:

 

Ounces/Pounds Under Contract (in thousands)

 

Average Price per Ounce/Pound

 

Silver

Gold

Zinc

Lead

 

Silver

Gold

Zinc

Lead

Contracts on forecasted sales

 

 

 

 

 

 

 

 

 

Forward contracts

 

 

 

 

 

 

 

 

 

2019 settlements

 

 

 

4,409

 

 

 

 

 

$

0.95

 

2020 settlements

 

 

 

4,960

 

 

 

 

 

$

0.96

 

The forward contracts represent 14% of the forecasted payable lead production for the 36-month period ended September 30, 2022 at an average price of $0.95 per pound.

Setting A Short-term Floor for Silver and Gold Prices

The Company purchased put option contracts in an amount approximating the expected silver and gold sales through the second quarter of 2020, setting an expected minimum average price of between $1,400 and $1,450 per gold ounce and between $15.00 and $16.00 per silver ounce. Put options set a floor on the price the Company expects to receive on substantially all of its projected near-term production while maintaining exposure to the upside, excluding the transaction costs. This gives the Company confidence in the minimum prices it expects to receive.

OPERATIONS OVERVIEW

The following table provides the production summary on a consolidated basis for the third quarter and nine months ended September 30, 2019 and 2018:

 

 

Third Quarter Ended

 

Nine Months Ended

 

 

September 30, 2019

September 30, 2018

 

September 30, 2019

September 30, 2018

PRODUCTION SUMMARY

 

 

 

 

Silver -

Ounces produced

3,251,350

 

2,523,691

 

 

9,193,246

 

7,654,118

 

 

Payable ounces sold

2,232,691

 

2,588,478

 

 

7,549,360

 

6,993,695

 

Gold -

Ounces produced

77,311

 

72,995

 

 

198,100

 

191,116

 

 

Payable ounces sold

69,760

 

68,568

 

 

189,823

 

183,050

 

Lead -

Tons produced

6,107

 

4,238

 

 

17,406

 

15,387

 

 

Payable tons sold

3,817

 

3,986

 

 

12,628

 

12,599

 

Zinc -

Tons produced

15,413

 

12,795

 

 

42,672

 

42,312

 

 

Payable tons sold

7,878

 

9,282

 

 

27,234

 

30,072

 

On a silver or gold equivalency basis, third quarter production equates to 12.5 million ounces of silver equivalent or 144,629 ounces of gold equivalent, and for nine months 34.6 million ounces of silver equivalent or 401,774 ounces of gold equivalent production.

The following tables provide a summary of the final production, cost of sales, cash cost, after by-product credits, per silver and gold ounce, and AISC, after by-product credits, per silver and gold ounce for the third quarter and nine months ended September 30, 2019:

Third Quarter Ended

 

 

 

 

Greens Creek

 

Lucky
Friday

 

San Sebastian

 

Casa Berardi

 

Nevada Ops

Sept 30, 2019

Silver

 

Gold

 

Silver

 

Gold

 

Silver

 

Silver

 

Gold

 

Gold

 

Silver

 

Gold

 

Silver

Production (ounces)

3,251,350

 

77,311

 

2,544,018

 

13,684

 

115,682

 

541,636

 

4,699

 

36,547

 

6,637

 

22,381

 

43,377

Increase/ (decrease) over 2018

727,659

 

4,316

 

667,601

 

2,125

 

84,043

 

19,705

 

1,033

 

(7,434)

 

(2,922)

 

8,592

 

(40,768)

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

$57,335

 

$89,317

 

$40,475

 

 

$4,018

 

$12,842

 

 

$53,006

 

 

$36,311

 

Increase/ (decrease) over 2018

$(9,152)

 

$18,731

 

$(11,688)

 

 

$4,019

 

$(1,483)

 

 

$1,739

 

 

$16,992

 

Cash costs, after by-prod credits, per silver or gold ounce 3,5

$2.34

 

$909

 

$2.05

 

 

 

$3.70

 

 

$966

 

 

$817

 

Increase/ (decrease) over 2018

$(1.78)

 

$106

 

$0.13

 

 

 

$(8.32)

 

 

$280

 

 

$(362)

 

AISC, after by-prod credits, per silver or gold ounce 4

$8.89

 

$1,213

 

$6.05

 

 

 

$7.21

 

 

$1,348

 

 

$992

 

Increase/ (decrease) over 2018

$(6.79)

 

$70

 

$(3.15)

 

 

 

$(9.74)

 

 

$452

 

 

$(940)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

Greens Creek

 

Lucky
Friday

 

San Sebastian

 

Casa Berardi

 

Nevada Ops

Sept 30, 2019

Silver

 

Gold

 

Silver

 

Gold

 

Silver

 

Silver

 

Gold

 

Gold

 

Silver

 

Gold

 

Silver

Production (ounces)

9,193,246

 

198,100

 

7,149,035

 

41,269

 

416,456

 

1,446,450

 

11,776

 

99,616

 

21,041

 

45,439

 

160,264

Increase/ (decrease) over 2018

1,539,128

 

6,984

 

1,359,595

 

2,873

 

260,441

 

(147,320)

 

(275)

 

(27,264)

 

(9,707)

 

31,650

 

76,119

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

$187,724

 

$262,516

 

$140,237

 

 

$11,149

 

$36,338

 

 

$157,239

 

 

$105,277

 

Increase/ (decrease) over 2018

$8,940

 

$91,047

 

$(1,526)

 

 

$5,305

 

$5,161

 

 

$5,089

 

 

$85,958

 

Cash costs, after by-prod credits, per silver or gold ounce 3,5

$2.70

 

$1,089

 

$1.67

 

 

 

$7.77

 

 

$1,055

 

 

$1,165

 

Increase/ (decrease) over 2018

$2.65

 

$287

 

$3.89

 

 

 

$(0.51)

 

 

$295

 

 

$(14)

 

AISC, after by-prod credits, per silver or gold ounce 4

$9.70

 

$1,520

 

$5.28

 

 

 

$12.14

 

 

$1,373

 

 

$1,841

 

Increase/ (decrease) over 2018

$(1.01)

 

$425

 

$0.57

 

 

 

$(1.20)

 

 

$369

 

 

$(91)

 

Greens Creek Mine – Alaska

At the Greens Creek mine, 2.5 million ounces of silver and 13,684 ounces of gold were produced, compared to 1.9 million ounces and 11,559 ounces, respectively, in the third quarter of 2018. Higher silver production was a result of higher grades due to mine sequencing. The mill operated at an average of 2,321 tons per day (tpd) in the third quarter, a similar throughput as the third quarter of 2018.

The cost of sales for the third quarter was $40.5 million, and the cash cost, after by-product credits, per silver ounce, was $2.05, compared to $52.2 million and $1.92, respectively, for the third quarter of 2018.3 The AISC, after by-product credits, was $6.05 per silver ounce for the third quarter compared to $9.20 in the third quarter of 2018.4 The per ounce silver cash costs were higher primarily due to lower base metals prices, while AISC was lower due to lower capital spending.

In September 2019, the Company sold and received payment for two parcels of concentrate, but weather delayed the vessel departing until early October. A current deferred revenue liability of $20.1 million in proceeds was recognized.

Casa Berardi Mine - Quebec

At the Casa Berardi mine, 36,547 ounces of gold were produced, including 6,080 ounces from the East Mine Crown Pillar (EMCP) pit; compared to 43,981 ounces in the third quarter of 2018. The decrease is primarily due to lower ore grades and mill recovery. Gold production increased compared to the first two quarters of the year with a pre-crush system being used to process the stockpile left over from the lower throughput in the first half. Higher grades and a further increase in production are projected in the fourth quarter. The mill operated at an average of 3,667 tpd in the third quarter, a decrease of 5% over the third quarter of 2018.

The cost of sales was $53.0 million and the cash cost, after by-product credits, per gold ounce was $966, compared to $51.3 million and $686, respectively, in the prior year period.3,5 The increase in cash cost, after by-product credits, per gold ounce is due to lower gold production. The AISC, after by-product credits, was $1,348 per gold ounce compared to $896 in the third quarter of 2018, primarily due to the lower gold production and planned higher capital spending which included expansion of the tailings storage capacity.4

San Sebastian Mine - Mexico

At the San Sebastian mine, 541,636 ounces of silver and 4,699 ounces of gold were produced, compared to 521,931 ounces and 3,666 ounces, respectively, in the third quarter of 2018. The higher silver and gold production was expected as a result of increased throughput. The Velardeña mill operated at an average of 492 tpd, an increase of 14% over the third quarter of 2018.

The cost of sales was $12.8 million and the cash cost, after by-product credits, was $3.70 per silver ounce, compared to $14.3 million and $12.02, respectively, in the third quarter of 2018.3 The AISC, after by-product credits, was $7.21 per silver ounce for the third quarter compared to $16.95 in the third quarter of 2018, principally due to the higher silver and gold production and higher gold prices.4

A review of sulfide ore continues through 2019, including a bulk sample to test the capabilities of the third-party plant and the suitability of long-hole stoping for the ore body, with results expected early in 2020. To date, about 20,000 tons of the planned 26,000-ton sample have been mined and results from the long-hole stoping indicate better than modeled mining recovery and lower dilution. About 13,000 tons have been processed at a third-party mill and results suggest that mill recoveries are generally in line with expectations.

Nevada Operations

For the Nevada Operations, 22,381 ounces of gold and 43,377 ounces of silver were produced, as compared to 13,789 ounces of gold and 84,145 ounces of silver in the third quarter 2018. Hecla's ownership of the operations commenced July 20, 2018.

The cost of sales was $36.3 million and the cash cost, after by-product credits, was $817 per gold ounce, compared to $19.3 million and $1,179, respectively, in the third quarter of 2018.3,5 The AISC, after by-product credits, was $992 per gold ounce compared to $1,932 in the third quarter of 2018, with the decrease due to higher gold production and lower capital and exploration spending.4 Mining was conducted on resources that have been exposed by previous development, and increased spending is not anticipated in the fourth quarter. Mining at Midas is expected to end in the fourth quarter. Some surface exploration drilling and hydrology studies have continued to provide information on the deposits to aid future development programs.

Third-party ore processing arrangements are also being pursued with the goal of reducing transportation and milling costs. This could include facilities that can process ore that is considered refractory.

Lucky Friday Mine - Idaho

At the Lucky Friday Mine, 115,682 ounces of silver were produced by salaried workers, compared to 31,639 ounces in the third quarter of 2018. The higher level of production helps defray costs associated with the strike at Lucky Friday. Cost of sales was $4.0 million, with no amount reported for the third quarter of 2018 as there were no concentrate shipments during that period.

The Remote Vein Miner (RVM) is fully fabricated, with testing at EPIROC's test mine in Sweden underway and modifications ongoing. Delivery to Lucky Friday is expected in 2020.

A tentative agreement has been reached between the Company and the union negotiating committee which requires ratification by a majority of union members. A ramp-up to full production is expected to take about a year.

The mine earned the 2018 Sentinels of Safety award by the National Mining Association, the highest safety honor for a mine in the US, for the first time in its more than 60-year history of operations by Hecla.

In addition, Lucky Friday was recently showcased by the Idaho Department of Environmental Quality as an example of environmental leadership for its efforts creating waste treatment facilities that reduce the concentration of lead and zinc in the water released by over 95% and a water recycling program that reduces the average freshwater use by 95% in the concentrator plant.

EXPLORATION AND PRE-DEVELOPMENT

Exploration (including corporate development) expenses were $4.8 million, a decrease of $7.6 million compared to the third quarter of 2018.

Casa Berardi - Quebec

Up to nine drills (7 underground and 2 surface) operated in the East and West Mine areas with the goal of upgrading and expanding resources in several promising areas and potentially extending the underground mine production. Definition drilling was concentrated on the 148, 152 and EMCP zones in the East Mine Area and the 119, 123 and 124 zones in the Principal Area. Exploration drilling was focused on the western extension of the 118 Zone and the down-plunge extensions of the 128 Zone in the Principal Mine area as well as the down-plunge extensions of the 148 and the 152 zones in the East Mine. Two drills on surface completed definition and exploration drilling at the 128 Zone east of and at depth of the Principal Pit area, below the 160 Pit to define the 157 Zone resources, and along strike of the 160 Zone open pit.

The East Mine has a history of high-grade mine production and given that access has been re-established in the area, underground drilling confirmed and expanded a series of high-grade lenses from the 148 to 160 zones. Definition and exploration drilling results from the East Mine were previously reported in the press release "Hecla Expands High-Grade at Casa Berardi's East Mine" dated November 5, 2019. Results from this drilling continue to show high grades over substantial widths. The most successful drilling included 0.45 oz/ton gold over 16.1 feet, 0.65 oz/ton gold over 22.3 feet including 1.05 oz/ton gold over 12.8 feet, 0.63 oz/ton gold over 26.6 feet including 1.12 oz/ton gold over 13.4 feet, 0.78 oz/ton gold over 15.2 feet and 1.03 oz/ton gold over 14.7 feet. Drilling also shows that the high-grade mineralization on the 148-08 lens extends both to the surface and west of the known EMCP pit lenses and includes intersections of 0.03 oz/ton gold over 64 feet and 0.06 oz/ton gold over 48.5 feet. Drilling continues at the East Mine and results show high-grades and the presence of visible gold in many of the drill holes with pending assays, and these high-grade lenses are open at depth down-plunge. Results received to date could have a significant positive impact on 2020 as we work to accelerate the modeling and mine planning of these high-grade zones.

West Mine definition drilling occurred in the 119, 123, 124 zones, and the West Mine Crown Pillar (WMCP) pit. In the lower part of the 123 Zone, in-fill and step-out drilling from the 1010 and 1030-levels to the west shows the continuity of high-grade mineralization down-plunge for over 400 feet and indicates the mineralization remains open to the west and to depth. Recent intersections include 0.33 oz/ton gold over 11.9 feet and 0.35 oz/ton gold over 32.0 feet. Higher in the mine, drilling of the 119 Zone from the 550-Level continues to define the eastern extension of the 119-01 lens south the Casa Berardi Fault. Recent assays include 0.14 oz/ton gold over 13.8 feet which extends the 119-01 lens over 160 feet to the east. Drilling in the 124 Zone shows the upward continuity of the 124-22 lens within the Principal Mine, with recent results including 0.37 oz/ton gold over 11.5 feet. Drilling results in the WMCP pit show that the high-grade mineralization extends to the surface and include intersections of 0.04 oz/ton gold over 42.6 feet and 0.03 oz/ton gold over 25.9 feet.

West Mine exploration drilling occurred in the 113, 118, and 128 zones during the quarter. Drilling in the 113 Zone from the 1010-level ramp in the West Mine has been completed and results indicate that there is potential for resource gains within the 113 Zone; further drilling will be required to better define these zones, especially on the North side of the Casa Berardi Fault. Exploration drilling in the 118 Zone, testing the connection between the 113 Zone and the 118 Zone, shows that the 118 Zone is open to the West with recent drill intersections including 0.13 oz/ton gold over 7.9 feet and 0.16 oz/ton gold over 13.1 feet. Drilling in the 128 Zone began in September and is focused on the South Domain south of the Casa Berardi Fault to test the eastern extension of the Upper Principal area mineralization.

A selection of third quarter assay results from Casa Berardi are listed in Table 1.

San Sebastian - Mexico

There were up to three core drills operating at San Sebastian focused on exploration definition drilling of the El Toro and El Toro Hanging Wall veins and definition drilling on the Middle Vein. This drilling added new mineralization and increased confidence to the El Toro veins, potentially adding oxide mine life to San Sebastian.

Discovered in late-2018, the El Toro Vein area is located approximately 1.2 miles southwest of the San Sebastian mine operation. Follow-up exploration drilling was conducted throughout most of 2019, and to date mineralization has been identified over 5,000 feet of strike length on the El Toro Vein and over 1,600 feet of strike length on the El Toro Hanging Wall Vein and up to 900 feet down-dip within both veins. Drilling results at El Toro and El Toro Hanging Wall Veins during the third quarter continued to return good grades over significant widths including 0.32 oz/ton gold and 33.0 oz/ton silver over 6.8 feet, 0.38 oz/ton gold and 21.2 oz/ton silver over 6.6 feet and 0.13 oz/ton gold and 8.5 oz/ton silver over 17.2 feet.

Two definition drill holes were completed in the 100 Zone of the Middle Vein and provided information for mine stope design in advance of mining. Results include 22.5 oz/ton silver and 0.08 oz/ton gold over 5.0 feet and 7.5 oz/ton silver and 0.13 oz/ton gold over 3.8 feet.

A selection of third quarter assay results from the El Toro, El Toro Hanging Wall, and Middle Veins are listed in Table 1.

Greens Creek - Alaska

At Greens Creek, drilling continues to upgrade the East, NWW, and 9A Ore zones resources. In the East Ore Zone, drill intersections targeted the central portion of the resource and confirmed mineralization. Strong assay results included 31.7 oz/ton silver, 0.35 oz/ton gold, 9.9% zinc and 4.0% lead over 10.6 feet and 114.4 oz/ton silver, 0.23 oz/ton gold, 4.9% zinc and 1.7% lead over 2.4 feet.

Drilling in the NWW Zone focused on testing the 600 feet of strike length. Recent assay results returned high-grade precious and base metal mineralization including 29.5 oz/ton silver, 0.21 oz/ton gold, 10.0% zinc and 5.7% lead over 32.2 feet and 42.8 oz/ton silver, 0.20 oz/ton gold, 30.3% zinc and 21.1% lead over 8.7 feet. Results received for the Northwest West Zone should upgrade the lower portion of model and extended a limb of mineralization at depth in the central portion of the zone.

Drilling in the 9A Zone targeted the northern and southern extents of the zone. Results included 17.5 oz/ton silver, 0.16 oz/ton gold, 18.2% zinc and 4.0% lead over 7.6 feet and 13.6 oz/ton silver, 0.03 oz/ton gold, 18.5% zinc and 10.1% lead over 3.6 feet. The 9A Zone is structurally complex and multiple drill holes intersected mineralization across several bands.

A selection of third quarter assay results from Greens Creek are listed in Table 1.

Nevada

Up to two drill rigs were used at Fire Creek to further evaluate the potential of areas of Spiral 2, Spiral 3 and Spiral 9 for near-term production and one surface drill rig was used to complete two exploration drill holes in the Hatter Graben at Hollister.

At Fire Creek, drilling focused on: 1) the lower extension of Spiral 2 mineralization, 2) expanding Spiral 2 resources up-dip in the Karen and Joyce zones, 3) testing the southern portion of Spiral 9 mineralization, and 4) extensions of Vein 20 in Spiral 2. High-grade intersections in the Spiral 2 area include 4.65 oz/ton gold over 2.8 feet in the Joyce Splay, 1.06 oz/ton gold over 11.8 feet on the Vonnie vein, and 2.87 oz/ton gold over 1.2 feet on the Vonnie vein. Drilling in the upper part of Spiral 2 focused on expanding the resources up-dip in the Karen and Joyce zones. Assay results include 0.57 oz/ton gold over 6.3 feet and 0.43 oz/ton gold over 7.5 feet on Vein 31 and 1.07 oz/ton gold over 1.5 feet on Vein 20. Assay results from Spiral 4 drilling targeting mineralization down-dip of the northern part of Spiral 4 encountered the best results to date in that area with 2.37 oz/ton gold over 5.4 feet.

Two surface exploration drill holes were completed at the Hatter Graben to test the eastern strike potential of the veins, where they might have been offset to the north and along strike of an historic vein intersected in drill hole H7-246 grading 1.13 oz/ton gold and 0.42 oz/ton silver over 3.4 feet. Geology of these two drill holes show that the vein intersected in historic drill hole H7-246 is not the offset extension of the Hatter Graben vein system but rather a new and possibly parallel vein system within the footwall of the Northern Boundary Fault.

Drill hole HSC-00007 intersected two narrow vein zones. The first interval cut a weakly banded quartz vein yielding 0.45 oz/ton gold and 1.0 oz/ton silver over 0.7 feet. The second interval cut two parallel banded veins containing apparent cataclastic textures yielded 0.16 oz/ton gold and 0.8 oz/ton silver over 1.3 feet. These intervals are interpreted as being deeper in the epithermal system and that the higher-grade zones are likely located up-dip and/or along strike. Assays for HSC-00008 are pending.

A selection of third quarter assay results from the Nevada Operations are listed in Table 1.

PRE-DEVELOPMENT

Pre-development spending for permitting of Rock Creek and Montanore was $0.9 million for the quarter.

2019 ESTIMATES7

The Company is not changing any of its annual estimates provided in August.

2019 Production Outlook

 

Silver Production
(Moz)

Gold Production
(Koz)

Silver Equivalent
(Moz)

Gold Equivalent
(Koz)

Greens Creek

9.0

52

27.0

278

Lucky Friday

0.5

N/A

1.3

N/A

San Sebastian

2.0

14

3.0

40

Casa Berardi

N/A

146

12.7

146

Nevada Operations

0.2

62

5.5

64

Total

11.7

274

49.5

528

2019 Cost Outlook

 

Costs of Sales
(million)

Cash cost, after
by-product credits,
per silver/gold ounce1,4

AISC, after by-product
credits, per produced
silver/gold ounce2

Greens Creek

$202

$2.25

$7.50

Lucky Friday

N/A

N/A

N/A

San Sebastian

$46

$9.00

$13.00

Total Silver

$248

$3.25

$12.50

Casa Berardi

$210

$950

$1,250

Nevada Operations

$147

$1,300

$1,600

Total Gold

$357

$1,100

$1,425

2019 Capital and Exploration Outlook

2019E Capital expenditures (excluding capitalized interest)

$138 million

2019E Exploration expenditures (includes Corporate Development)

$15 million

2019E Pre-development expenditures

$2.5 million

2019E Research and Development expenditures

$1 million

DIVIDENDS

The Board of Directors declared a quarterly cash dividend of $0.0025 per share of common stock, payable on or about December 3, 2019, to stockholders of record on November 22, 2019. The realized silver price was $17.98 in the third quarter, and therefore did not satisfy the criteria for a larger dividend under the Company's dividend policy.

The Board of Directors also declared the regular quarterly dividend of $0.875 per share on the 157,816 outstanding shares of Series B Cumulative Convertible Preferred Stock. This represents a total amount to be paid of approximately $138,000. The cash dividend is payable on or about January 2, 2020 to shareholders of record on December 13, 2019.

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held Thursday, November 7, at 10:00 a.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-855-760-8158 or for international dialing 1-720-634-2922. The participant passcode is HECLA. Hecla's live and archived webcast can be accessed at www.hecla-mining.com under Investors or via Thomson StreetEvents Network.

ABOUT HECLA

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

NOTES

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles in the United States (GAAP). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

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

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

(3) Cash cost, after by-product credits, per silver or gold ounce is a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (sometimes referred to as "cost of sales" in this release), can be found at the end of the release. It is an important operating statistic that management utilizes to measure each mine's operating performance. It also allows the benchmarking of performance of each mine versus those of our competitors. As a primary silver mining company, management also uses the statistic on an aggregate basis - aggregating the Greens Creek, Lucky Friday and San Sebastian mines - to compare performance with that of other primary silver mining companies. With regard to Casa Berardi and the Nevada operations, management uses cash cost, after by-product credits, per gold ounce to compare its performance with other gold mines. Similarly, the statistic is useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics. In addition, the Company may use it when formulating performance goals and targets under its incentive program. Cash cost, after by-product credits, per silver ounce is not presented for Lucky Friday for the third quarters and year to date of 2019 and 2018, as production was limited due to the strike and results are not comparable to those from prior periods and are not indicative of future operating results under full production. The estimated fair value of the stockpile acquired at Hollister has been removed from the cash cost, after by-product credits calculation.

(4) All in sustaining cost (AISC), after by-product credits, is a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the closest GAAP measurement, can be found in the end of the release. AISC, after by-product credits, includes cost of sales and other direct production costs, expenses for reclamation and exploration at the mine sites, corporate exploration related to sustaining operations, and all site sustaining capital costs. AISC, after by-product credits, is calculated net of depreciation, depletion, and amortization and by-product credits. AISC, after by-product credits, per silver ounce is not presented for Lucky Friday for the third quarters and first nine months of 2019 and 2018, as production was limited due to the strike and results are not comparable to those from prior periods and are not indicative of future operating results under full production.

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

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

(6) Free cash flow is a non-GAAP measure used to evaluate our operating performance and is calculated as cash provided by operating activities (GAAP), less additions to properties, plants, equipment and mineral interests (GAAP). The calculation of free cash flow using these GAAP measures can be found at the end of the release.

Other

(7) Expectations for 2019 includes silver, gold, lead and zinc production from Greens Creek, San Sebastian, Casa Berardi, Nevada Operations and Lucky Friday converted using Au $1,400/oz, Ag $16.00/oz, Zn $1.10/lb, and Pb $0.90/lb.

Numbers may be rounded.

Cautionary Statements to Investors on Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian securities laws. When a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the forward-looking statements. Forward-looking statements often address our expected future business and financial performance and financial condition and often contain words such as “anticipate,” “intend,” “plan,” “will,” “could,” “would,” “estimate,” “should,” “expect,” “believe,” “project,” “target,” “indicative,” “preliminary,” “potential” and similar expressions. Forward-looking statements in this news release may include, without limitation: (i) estimates of full-year 2019 silver and gold production, cost of sales, cash costs, after by-product credits, AISC, after by-product credits and cash flows as well as estimated spending on capital, exploration, pre-development and research and development; (ii) setting minimum expected prices on the Company’s projected silver and gold production through the second quarter of 2020(iii) the ability to have no net revolver indebtedness by year end(iv) impact of metals prices on costs and cash flows; (v) estimated adjusted EBITDA in the fourth quarter of 2019 being similar to the third quarter; (vi) ability to refinance senior notes before the end of the second quarter of 2020; (vii) exploration results from the East Mine at Casa Berardi mine could have significant impact on 2020 results; (viiii) ability to reduce trucking and processing costs in Nevada by securing third party milling agreements for refractory and non-refractory ore, (ix) ability to complete testing the RVM and deliver it to Lucky Friday in 2020, (x) ability to have the tentative labor agreement at Lucky Friday ratified by the union; (xi) ability to ramp up Lucky Friday to full production in about a year, and (xii) ability of the El Toro vein to extend the oxide mine life and the successful completion of the bulk sample test at San Sebastian. The material factors or assumptions used to develop such forward-looking statements or forward-looking information include that the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated, to which the Company’s operations are subject.

Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect, which could cause actual results to differ from forward-looking statements. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political/regulatory developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) the exchange rate for the USD/CAD and USD/MXN, being approximately consistent with current levels; (v) certain price assumptions for gold, silver, lead and zinc; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy of our current mineral reserve and mineral resource estimates; (viii) the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated; (ix) counterparties performing their obligations under hedging instruments and put option contracts; (x) sufficient workforce is available and trained to perform assigned tasks; (xi) weather patterns and rain/snowfall within normal seasonal ranges so as not to impact operations; (xii) relations with interested parties, including Native Americans, remain productive; (xiii) economic terms can be reached with third-party mill operators who have capacity to process our ore; (xiv) maintaining availability of water rights; (xv) factors do not arise that reduce available cash balances; (xvi) there being no material increases in our current requirements to post or maintain reclamation and performance bonds or collateral related thereto, and (xvii) the Company's plans for refinancing its high yield notes proceeding as expected.

In addition, material risks that could cause actual results to differ from forward-looking statements include, but are not limited to: (i) gold, silver and other metals price volatility; (ii) operating risks; (iii) currency fluctuations; (iv) increased production costs and variances in ore grade or recovery rates from those assumed in mining plans; (v) community relations; (vi) conflict resolution and outcome of projects or oppositions; (vii) litigation, political, regulatory, labor and environmental risks; (viii) exploration risks and results, including that mineral resources are not mineral reserves, they do not have demonstrated economic viability and there is no certainty that they can be upgraded to mineral reserves through continued exploration; (ix) the failure of counterparties to perform their obligations under hedging instruments, including put option contracts; (x) our plans for improvements at our Nevada operations, including at Fire Creek, are not successful; (xi) our estimates for the third and fourth quarter results are inaccurate; (xii) we take a material impairment charge on our Nevada operations; (xiii) we are unable to remain in compliance with all terms of the credit agreement in order to maintain continued access to the revolver, and (xiv) we are unable to refinance the maturing senior notes. For a more detailed discussion of such risks and other factors, see the Company’s 2018 Form 10-K, filed on February 22, 2019, and Form 10-Q filed on each of May 9, and August 7, 2019 with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.

Cautionary Statements to Investors on Reserves and Resources

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

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

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

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

 

HECLA MINING COMPANY

Condensed Consolidated Statements of Loss

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

 

 

 

Third Quarter Ended

 

Nine Months Ended

 

 

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

Sales of products

 

$

161,532

 

 

$

143,649

 

 

$

448,321

 

 

$

430,617

 

Cost of sales and other direct production costs

 

95,878

 

 

93,609

 

 

311,202

 

 

246,918

 

Depreciation, depletion and amortization

 

50,774

 

 

43,464

 

 

139,038

 

 

103,335

 

 

 

146,652

 

 

137,073

 

 

450,240

 

 

350,253

 

Gross profit

 

14,880

 

 

6,576

 

 

(1,919

)

 

80,364

 

 

 

 

 

 

 

 

 

 

Other operating expenses:

 

 

 

 

 

 

 

 

General and administrative

 

7,978

 

 

10,327

 

 

26,855

 

 

27,849

 

Exploration

 

4,808

 

 

12,411

 

 

13,556

 

 

27,609

 

Pre-development

 

881

 

 

1,195

 

 

2,535

 

 

3,615

 

Research and development

 

53

 

 

1,269

 

 

614

 

 

5,042

 

Other operating expense

 

437

 

 

448

 

 

1,681

 

 

1,767

 

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

 

24

 

 

(3,208

)

 

4,666

 

 

(3,374

)

Provision or closed operations and reclamation

 

1,907

 

 

1,852

 

 

3,529

 

 

4,534

 

Suspension-related costs

 

3,722

 

 

6,519

 

 

8,766

 

 

18,337

 

Acquisition costs

 

183

 

 

6,139

 

 

593

 

 

9,656

 

 

 

19,993

 

 

36,952

 

 

62,795

 

 

95,035

 

Income from operations

 

(5,113

)

 

(30,376

)

 

(64,714

)

 

(14,671

)

Other income (expense):

 

 

 

 

 

 

 

 

(Loss) gain on derivative contracts

 

(4,718

)

 

19,460

 

 

(2,719

)

 

40,271

 

Gain (loss) on disposition of investments

 

927

 

 

(36

)

 

927

 

 

(36

)

Unrealized (loss) gain on investments

 

(126

)

 

(2,207

)

 

(1,159

)

 

(2,461

)

Foreign exchange gain (loss)

 

773

 

 

(2,212

)

 

(6,741

)

 

2,856

 

Other expense

 

(1,096

)

 

(346

)

 

(3,407

)

 

(294

)

Interest expense

 

(11,777

)

 

(10,146

)

 

(33,777

)

 

(30,019

)

 

 

(16,017

)

 

4,513

 

 

(46,876

)

 

10,317

 

Loss before income taxes

 

(21,130

)

 

(25,863

)

 

(111,590

)

 

(4,354

)

Income tax benefit

 

1,614

 

 

2,679

 

 

20,009

 

 

1,484

 

Net loss

 

(19,516

)

 

(23,184

)

 

(91,581

)

 

(2,870

)

Preferred stock dividends

 

(138

)

 

(138

)

 

(414

)

 

(414

)

Loss applicable to common shareholders

 

$

(19,654

)

 

$

(23,322

)

 

$

(91,995

)

 

$

(3,284

)

Basic loss per common share after preferred dividends

 

$

(0.04

)

 

$

(0.05

)

 

$

(0.19

)

 

$

(0.01

)

Diluted loss per common share after preferred dividends

 

$

(0.04

)

 

$

(0.05

)

 

$

(0.19

)

 

$

(0.01

)

Weighted average number of common shares outstanding - basic

 

489,971

 

 

452,636

 

 

486,298

 

 

417,532

 

Weighted average number of common shares outstanding - diluted

 

489,971

 

 

452,636

 

 

486,298

 

 

417,532

 

 
 

HECLA MINING COMPANY

Condensed Consolidated Balance Sheet

(dollars and share in thousands - unaudited)

 

 

September 30, 2019

 

December 31, 2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

32,995

 

 

$

27,389

 

Accounts receivable:

 

 

 

Trade

6,222

 

 

4,184

 

Taxes

22,902

 

 

14,191

 

Other, net

8,056

 

 

7,443

 

Inventories

98,251

 

 

87,533

 

Prepaid taxes

100

 

 

12,231

 

Other current assets

10,400

 

 

11,179

 

Total current assets

178,926

 

 

164,150

 

Non-current investments

7,349

 

 

6,583

 

Non-current restricted cash and investments

1,025

 

 

1,025

 

Properties, plants, equipment and mineral interests, net

2,455,511

 

 

2,520,004

 

Operating lease right-of-use assets

17,313

 

 

 

Non-current deferred income taxes

3,701

 

 

1,987

 

Other non-current assets and deferred charges

9,353

 

 

10,195

 

Total assets

$

2,673,178

 

 

$

2,703,944

 

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

57,860

 

 

$

77,861

 

Accrued payroll and related benefits

23,147

 

 

30,034

 

Accrued taxes

2,160

 

 

7,727

 

Current portion of finance leases

5,704

 

 

5,264

 

Current portion of operating leases

5,864

 

 

 

Current portion of accrued reclamation and closure costs

7,457

 

 

3,410

 

Accrued interest

15,039

 

 

5,961

 

Deferred revenue

20,084

 

 

 

Other current liabilities

8,528

 

 

5,937

 

Total current liabilities

145,843

 

 

136,194

 

Finance leases

8,569

 

 

7,871

 

Operating leases

11,466

 

 

 

Accrued reclamation and closure costs

103,821

 

 

104,979

 

Long-term debt

584,618

 

 

532,799

 

Non-current deferred tax liability

143,442

 

 

173,537

 

Non-current pension liability

50,662

 

 

47,711

 

Other non-current liabilities

8,113

 

 

9,890

 

Total liabilities

1,056,534

 

 

1,012,981

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

Preferred stock

39

 

 

39

 

Common stock

124,133

 

 

121,956

 

Capital surplus

1,897,363

 

 

1,880,481

 

Accumulated deficit

(343,958

)

 

(248,308

)

Accumulated other comprehensive loss

(37,958

)

 

(42,469

)

Treasury stock

(22,975

)

 

(20,736

)

Total shareholders’ equity

1,616,644

 

 

1,690,963

 

Total liabilities and shareholders’ equity

$

2,673,178

 

 

$

2,703,944

 

Common shares outstanding

490,251

 

 

482,604

 

 
 

HECLA MINING COMPANY

Condensed Consolidated Statements of Cash Flows

(dollars in thousands - unaudited)

 

 

Nine Months Ended

 

September 30,
2019

September 30,
2018

OPERATING ACTIVITIES

 

 

Net loss

$

(91,581

)

$

(2,870

)

Non-cash elements included in net loss:

 

 

Depreciation, depletion and amortization

143,040

 

108,814

 

Loss on disposition of investments

(927

)

 

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

4,666

 

(3,374

)

Unrealized loss on investments

1,159

 

2,461

 

Adjustment of inventory to market value

1,399

 

7,232

 

Provision for reclamation and closure costs

5,298

 

3,957

 

Stock compensation

4,758

 

4,672

 

Deferred income taxes

(26,616

)

(4,637

)

Amortization of loan origination fees

1,919

 

1,471

 

Loss (gain) loss on derivative contracts

5,824

 

(15,208

)

Foreign exchange loss (gain)

6,263

 

(2,032

)

Other non-cash items, net

 

(37

)

Change in assets and liabilities:

 

 

Accounts receivable

(10,215

)

(4,424

)

Inventories

(6,501

)

(18,954

)

Other current and non-current assets

14,913

 

(5,569

)

Accounts payable and accrued liabilities

5,616

 

12,308

 

Accrued payroll and related benefits

4,506

 

(4,207

)

Accrued taxes

(5,733

)

845

 

Accrued reclamation and closure costs and other non-current liabilities

5,821

 

(5,238

)

Cash provided by operating activities

63,609

 

75,210

 

 

 

 

INVESTING ACTIVITIES

 

 

Additions to properties, plants, equipment and mineral interests

(97,338

)

(83,285

)

Acquisition of Klondex, net of cash and restricted cash acquired

 

(139,326

)

Proceeds from sale of investments

1,760

 

 

Proceeds from disposition of properties, plants and equipment

86

 

722

 

Insurance proceeds received for damaged property

 

4,377

 

Purchases of investments

(389

)

(31,971

)

Maturities of short-term investments

 

64,895

 

Net cash used in investing activities

(95,881

)

(184,588

)

 

 

 

FINANCING ACTIVITIES

 

 

Proceeds from issue of stock, net of related costs

 

3,085

 

Acquisition of treasury shares

(2,239

)

(2,694

)

Dividends paid to common shareholders

(3,655

)

(3,193

)

Dividends paid to preferred shareholders

(414

)

(414

)

Debt origination fees

(587

)

(2,460

)

Repayments of debt

(195,000

)

(82,036

)

Borrowings on debt

245,000

 

78,024

 

Payments on capital leases

(5,484

)

(5,992

)

Net cash provided by (used in) financing activities

37,621

 

(15,680

)

Effect of exchange rates on cash

257

 

(215

)

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

5,606

 

(125,273

)

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

28,414

 

187,139

 

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

$

34,020

 

$

61,866

 

 
...
 

HECLA MINING COMPANY

Production Data

 

 

Three Months Ended

Nine Months Ended

 

September 30,
2019

September 30,
2018

September 30,
2019

September 30,
2018

GREENS CREEK UNIT

 

 

 

 

Tons of ore milled

213,557

 

213,037

 

629,752

 

632,876

 

Mining cost per ton

$

81.16

 

$

68.76

 

$

80.15

 

$

69.19

 

Milling cost per ton

$

36.67

 

$

31.97

 

$

35.89

 

$

32.73

 

Ore grade milled - Silver (oz./ton)

15.01

 

11.65

 

14.28

 

11.94

 

Ore grade milled - Gold (oz./ton)

0.095

 

0.087

 

0.095

 

0.094

 

Ore grade milled - Lead (%)

3.00

%

2.40

%

2.86

%

2.84

%

Ore grade milled - Zinc (%)

7.70

%

6.87

%

7.28

%

7.58

%

Silver produced (oz.)

2,544,018

 

1,876,417

 

7,149,035

 

5,789,440

 

Gold produced (oz.)

13,684

 

11,559

 

41,269

 

38,396

 

Lead produced (tons)

5,258

 

4,026

 

14,668

 

14,352

 

Zinc produced (tons)

15,073

 

12,695

 

41,330

 

41,673

 

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

$

2.05

 

$

1.92

 

$

1.67

 

$

(2.22