Hecla Reports Third Quarter 2020 Results

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Record adjusted EBITDA1, Lucky Friday ramp-up ahead of schedule

Hecla Mining Company (NYSE:HL) today announced third quarter 2020 financial and operating results.

THIRD QUARTER HIGHLIGHTS

  • Sales of $199.7 million, 24% more than the prior year quarter

  • Silver production of 3.5 million ounces and gold production of 41,174 ounces

  • Lucky Friday ramp-up ahead of schedule

  • Generated $73.4 million of cash provided by operating activities and $49.7 million of free cash flow4

  • Reported $98.7 million of cash and cash equivalents with $348.7 million of liquidity2

  • Record adjusted EBITDA and improved net debt/adjusted EBITDA (last 12 months) of 1.7x1,3

  • Increased dividend 50% and approved the payment of the first enhanced silver-linked dividend

  • Increased 2020 annual silver production guidance and reduced silver cost guidance

"Because of our strong operating performance and higher prices, Hecla had record adjusted EBITDA, generated the most free cash flow in a decade and repaid our revolver in full. These accomplishments were achieved because of our workforces’ resiliency and our commitment to health and safety," said Phillips S. Baker, Jr., President and CEO. "With the Lucky Friday ramp-up ahead of schedule, the expected improvements at Casa Berardi, and our modest planned capital expenditures, we are well positioned to further strengthen our balance sheet, increase exploration activities, and pay our enhanced dividend."

FINANCIAL OVERVIEW

Third Quarter Ended

Nine Months Ended

HIGHLIGHTS

2020

2019

2020

2019

FINANCIAL DATA (000)

Sales

$

199,703

$

161,532

$

502,983

$

448,321

Gross profit (loss)

$

53,488

$

14,880

$

98,939

($

1,919

)

Income (loss) applicable to common shareholders

$

13,490

($

19,654

)

($

17,999

)

($

91,995

)

Adjusted income (loss) applicable to common shareholders1

$

24,234

($

11,801

)

$

10,085

($

66,798

)

Adjusted EBITDA 1

$

75,701

$

69,786

$

168,531

$

112,503

Cash provided by operating activities

$

73,439

$

54,896

$

115,892

$

63,609

Capital expenditures

$

23,693

$

26,093

$

54,382

$

97,338

Free cash flow 4

$

49,746

$

28,803

$

61,510

($

33,729

)

Net income applicable to common shareholders for the third quarter was $13.5 million, or $0.03 per share, compared to net loss of $19.7 million, or $0.04 per share, for the same period a year ago. The difference was mainly due to the following items:

  • Improved gross profit at Greens Creek, Nevada Operations and San Sebastian, partially offset by slightly lower gross profit at Casa Berardi. Combined, our operations generated $38.6 million more gross profit.

  • Higher other operating expense by $3.1 million primarily due to costs for an ongoing project to identify and implement potential operational improvements at Casa Berardi.

  • Lower ramp-up and suspension-related costs by $2.2 million due to increased production and margins at Lucky Friday.

  • Unrealized gains on equity investments of $4.0 million compared to losses of $0.1 million in the prior year period.

Cash provided by operating activities was $73.4 million compared to $54.9 million in the third quarter of 2019, with the increase due to higher income, adjusted for non-cash items.

Adjusted EBITDA was $75.7 million compared to $69.8 million in the third quarter of 2019.

Capital expenditures totaled $23.7 million for the third quarter 2020 compared to $26.1 million in the third quarter of 2019, with the decrease due to planned lower expenditures at the operations in 2020 with the exception of Lucky Friday, where we have been returning the mine to full production. Expenditures at the operations were $11.6 million at Casa Berardi, $5.6 million at Greens Creek, $5.5 million at Lucky Friday, $0.4 million at Hecla Nevada, and $0.2 million at San Sebastian.

Metals Prices

The average realized silver price in the third quarter 2020 was 39% higher quarter over quarter and the average realized gold price was 31% higher. The realized zinc price increased by 7%, while the realized lead price decreased by 8%. Based on the realized silver price for the quarter of $25.32 per ounce, a silver price-linked dividend of $0.005 per common share was triggered.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Silver –

London PM Fix ($/ounce)

$

24.40

$

17.02

$

19.22

$

15.83

Realized price per ounce

$

25.32

$

18.18

$

19.72

$

16.21

Gold –

London PM Fix ($/ounce)

$

1,911

$

1,474

$

1,735

$

1,363

Realized price per ounce

$

1,929

$

1,475

$

1,745

$

1,374

Lead –

LME Final Cash Buyer ($/pound)

$

0.85

$

0.92

$

0.81

$

0.90

Realized price per pound

$

0.86

$

0.93

$

0.81

$

0.90

Zinc –

LME Final Cash Buyer ($/pound)

$

1.06

$

1.06

$

0.97

$

1.18

Realized price per pound

$

1.04

$

0.97

$

0.94

$

1.16

OPERATIONS OVERVIEW

Overview

The following table provides the production summary on a consolidated basis for the third quarter and nine months ended September 30, 2020 and 2019:

Third Quarter Ended

Nine Months Ended

2020

2019

2020

2019

PRODUCTION SUMMARY

Silver -

Ounces produced

3,541,371

3,251,350

10,190,621

9,193,246

Payable ounces sold

3,147,048

2,232,691

9,077,966

7,549,360

Gold -

Ounces produced

41,174

77,311

159,948

198,100

Payable ounces sold

51,049

69,760

159,550

189,823

Lead -

Tons produced

9,750

6,107

24,620

17,406

Payable tons sold

7,792

3,817

19,948

12,628

Zinc -

Tons produced

17,997

15,413

48,699

42,672

Payable tons sold

12,892

7,878

34,717

27,234

The following tables provide a summary of the (i) final production; (ii) cost of sales and other direct production costs and depreciation, depletion and amortization ("cost of sales"); (iii) cash cost, after by-product credits, per silver or gold ounce; and (iv) all in sustaining costs ("AISC"), after by-product credits, per silver or gold ounce for the third quarter and nine months ended September 30, 2020, with comparisons to the prior year periods:

Third Quarter Ended

Greens Creek

Lucky Friday

San Sebastian

Casa Berardi

Nevada Ops

Sept 30, 2020

Silver

Gold

Silver

Gold

Silver

Silver

Gold

Gold

Silver

Gold

Silver

Production (ounces)

3,541,371

41,174

2,634,436

12,838

636,389

266,691

1,931

26,405

3,855

0

0

Increase/(decrease) over 2019

290,021

(36,137

)

90,418

(846

)

520,707

(274,945

)

(2,768

)

(10,142

)

(2,782

)

(22,381

)

(43,377

)

Cost of sales & other direct production costs and dd&a (000)

$78,517

$67,698

$51,057

$21,500

$5,960

$53,821

$13,877

Increase/(decrease) over 2019

$21,182

$(21,619

)

$10,582

$17,482

$(6,882

)

$815

$(22,434

)

Cash costs, after by-prod credits, per silver or gold ounce 5,6

$4.43

$1,398

$4.12

$7.53

$1,398

Increase/(decrease) over 2019

$2.09

$488

$2.07

$3.83

$432

AISC, after by-prod credits, per silver or gold ounce 7

$11.53

$1,855

$7.70

$8.87

$1,855

Increase/(decrease) over 2019

$2.64

$642

$1.65

$1.66

$506

Nine Months Ended

Greens Creek

Lucky Friday

San Sebastian

Casa Berardi

Nevada Ops

Sept 30, 2020

Silver

Gold

Silver

Gold

Silver

Silver

Gold

Gold

Silver

Gold

Silver

Production (ounces)

10,190,621

159,948

8,164,062

38,215

1,201,674

772,158

6,064

83,913

15,284

31,756

37,443

Increase/(decrease) over 2019

997,375

(38,152

)

1,015,027

(3,054

)

785,218

(674,292

)

(5,712

)

(15,703

)

(5,757

)

(13,683

)

(122,821

)

Cost of sales and other direct production costs and dd&a (000)

$211,968

$192,076

$157,910

$35,787

$18,271

$147,728

$44,348

Increase/(decrease) over 2019

$24,244

$(70,440

)

$17,673

$24,638

$(18,067

)

$(9,511

)

$(60,929

)

Cash costs, after by-prod credits, per silver or gold ounce 5,6

$5.08

$1,053

$4.99

$5.93

$1,181

$716

Increase/(decrease) over 2019

$2.38

$(36

)

$3.32

$(1.84

)

$126

$(449

)

AISC, after by-prod credits, per silver or gold ounce 7

$10.59

$1,299

$7.57

$6.76

$1,493

$787

Increase/(decrease) over 2019

$0.89

$(220

)

$2.29

$(5.38

)

$120

$(1,054

)

Greens Creek Mine – Alaska

At the Greens Creek Mine, 2.6 million ounces of silver and 12,838 ounces of gold were produced, compared to 2.5 million ounces and 13,684 ounces, respectively, in the third quarter of 2019. Higher silver production was a result of slightly higher ore production and grades. The mill operated at an average of 2,340 tons per day (tpd) in the third quarter, a similar throughput as the third quarter of 2019.

The cost of sales for the third quarter was $51.1 million, and the cash cost, after by-product credits, per silver ounce, was $4.12, compared to $40.5 million and $2.05, respectively, for the third quarter of 2019.5,6 The AISC, after by-product credits, was $7.70 per silver ounce for the third quarter compared to $6.05 in the third quarter of 2019.7 The per ounce silver cash costs were higher primarily due to higher treatment costs resulting from unfavorable changes in smelter terms and COVID-19 mitigation costs. AISC was also higher due to these factors, partially offset by lower capital spending.

Lucky Friday Mine - Idaho

At the Lucky Friday Mine, 636,389 ounces of silver were produced, compared to 115,682 ounces in the third quarter of 2019. The mine has continued normal operations during the pandemic, with the ramp-up ahead of schedule. Lucky Friday, starting in the fourth quarter, will achieve full production with estimated annual production in excess of 3 million ounces of silver in 2021.

Underground testing and modification of the Remote Vein Miner (RVM) continued in Sweden, but with limitations due to COVID-19. In parallel, the Company is testing alternative mining methods to increase productivity at the mine.

Casa Berardi Mine - Quebec

At the Casa Berardi Mine, 26,405 ounces of gold were produced, including 6,800 ounces from the East Mine Crown Pillar (EMCP) pit compared to 36,547 ounces in the third quarter of 2019. The decrease is primarily due to lower mill throughput resulting from longer than planned down time of major mill maintenance activities, along with lower ore grades due to a delay in the availability of higher-grade underground stopes as a result of ground condition challenges. We anticipate ore from these higher-grade stopes to be mined and processed in the fourth quarter. The mill operated at an average of 3,138 tpd in the third quarter, a decrease of 14% over the third quarter of 2019.

The cost of sales was $53.8 million and the cash cost, after by-product credits, per gold ounce was $1,398, compared to $53.0 million and $966, respectively, in the prior year period.5,6 The increase in cash cost, after by-product credits, per gold ounce is primarily due to the lower gold production from the longer than scheduled major mill repairs and two high-grade long hole stopes being delayed in the third quarter. These same factors, partially offset by lower capital and exploration spending, resulted in AISC, after by-product credits, of $1,855 per gold ounce compared to $1,348 in the third quarter of 2019.7

San Sebastian Mine - Mexico

At the San Sebastian Mine, 266,691 ounces of silver and 1,931 ounces of gold were produced, compared to 541,636 ounces and 4,699 ounces, respectively, in the third quarter of 2019. The lower silver and gold production was expected and the result of lower ore grades. The mill operated at an average of 512 tpd, an increase of 4% over the third quarter of 2019.

The cost of sales was $6.0 million and the cash cost, after by-product credits, was $7.53 per silver ounce, compared to $12.8 million and $3.70, respectively, in the third quarter of 2019.5,6 The AISC, after by-product credits, was $8.87 per silver ounce for the third quarter compared to $7.21 in the third quarter of 2019.7 The increase in per ounce costs was primarily due to lower silver production.

Mining was completed in the third quarter and milling is expected to be completed in the fourth quarter of 2020. The Company continues to explore this highly prospective land package and will evaluate further mining based on exploration success.

Nevada Operations

At the Nevada operations, ore mined during the quarter has been stockpiled for the third-party processing expected in the fourth quarter. Gold production will not be realized until 2021. Mining of non-refractory ore is substantially complete. Mining of refractory ore is expected to continue through the remainder of 2020. Production from the processing of the refractory ore is expected to be about 5 thousand ounces of gold.

EXPLORATION

Exploration (including corporate development) expenses were $3.4 million, a decrease of $1.4 million compared to the third quarter of 2019, primarily due to decreased activity at all sites mainly related to COVID-19 precautions. Turnaround time for assay results has also been longer than normal during the year due to assay laboratory delays related to COVID-19 and increased overall sample loads.

Greens Creek – Alaska

At Greens Creek, one drill rig program was focused on the 200S Zone, approximately 750 feet south of existing mining. A second drill rig was mobilized to site in October to bring drilling at Greens Creek back to pre-pandemic levels. Strong definition drilling assay results confirmed and upgraded 200S Zone resources, including 20.2 oz/ton silver, 0.02 oz/ton gold, 6.3% zinc and 2.9% lead over 28.5 feet and 30.3 oz/ton silver, 0.03 oz/ton gold, 18.2% zinc and 9.7% lead over 8.0 feet on the upper bench structure. Drilling targeting the lower contact returned 31.6 oz/ton silver, 0.22 oz/ton gold, 1.2% zinc and 0.6% lead over 32.9 feet.

In the fourth quarter of 2020 definition drilling is planned in the Upper Plate, 9a, East Ore, West, and Northwest West ore zones with lesser amounts of pre-production drilling in the 9a and 5250 ore zones. The two drilling rigs are currently active on the East Zone and the Upper Plate Zone.

More complete drill assay highlights from Greens Creek can be found in Table A at the end of the release.

Casa Berardi – Quebec

At Casa Berardi, drilling in the East Mine focused on defining continuity and expanding mineralization in the 160 Zone Pit area and in the 148 Zone. Definition drilling in the 160 Zone targeted mineralization below the current 160 Pit shell to further define the continuity of the 160 lenses at depth. Intersections from this drilling included 0.07 oz/ton gold over 108.2 feet, 0.10 oz/ton gold over 59.7 feet, and 0.06 oz/ton gold over 138.4 feet including 0.11 oz/ton gold over 8.9 feet and expands mineralization in the 160-03 and 160-04 lenses at depth plunging to the east. Exploration drilling in the East Mine occurred in the 148 Zone from underground targeting the down-plunge trend of the known high-grade mineralization. Intersections include 0.67 oz/ton gold over 9.8 feet located 98 feet below the currently defined 148-01 lens limit at the contact of the Casa Berardi Fault. Exploration drilling in the 159 Zone located just south of the 160 Zone Pit area intersected a narrow high-grade vein containing 0.41 oz/ton gold over 5.6 feet including 0.84 oz/ton gold over 2.6 feet. This vein is open for expansion to the east and at depth.

In the West Mine area, definition and exploration drilling focused on defining and expanding mineralization in the Upper 123 Zone from the 350 level, the Lower 123 Zone from the 1070 level, and the 128 Zone from the 490 level. Recent high-grade intersections from the Upper 123 Zone indicate the 123-01 lens is open for expansion up dip and include 0.91 oz/ton gold over 9.2 feet, 0.63 oz/t gold over 9.6 feet, and 0.51 oz/ton gold over 9.8 feet. Drilling in the 128 Zone identifies that two additional lenses, one to the north and one to the south of the 128-01 lens. Intersections include 0.91 oz/ton gold over 1.0 feet and 0.12 oz/ton gold over 17.7 feet including 0.23 oz/ton gold over 3.3 feet and 0.31 oz/ton gold over 3.9 feet. These initial results indicate mineralization is open at depth for expansion.

In the fourth quarter of 2020, underground drilling will focus on refining and expanding resources in the 123, 124, and 128 zones in the West Mine and the 148, 159, and 160 zones in the East Mine.

More complete drill assay highlights from Casa Berardi can be found in Table A at the end of the release.

San Sebastian - Mexico

At San Sebastian two core rigs operated throughout the quarter, one at the newly discovered El Bronco Vein and one at the newly discovered El Tigre Vein. The El Bronco Vein was discovered late in the second quarter and the El Tigre Vein was discovered early in the third quarter of this year as a result of short vertical reverse circulation (SVRC) drilling in areas with thick soil cover. These two new blind vein discoveries represent strong new structures to explore for zones of high-grade mineralization and continue to demonstrate the excellent prospectivity of the San Sebastian District and the effectiveness of SVRC drilling to discover new veins under cover.

Early drilling at the El Bronco Vein produced positive results with a recent drillhole returning: 0.29 oz/ton gold, 20.7 oz/ton silver over 4.2 feet (true width). Follow-up offset drilling of this intercept is currently in progress. The El Tigre Vein is a strong vein structure with an average true width in the first seven holes of 12.8 feet. Step-out drilling at both the El Bronco and El Tigre veins on approximately 300-foot centers is in progress and scheduled to continue into the fourth quarter of 2020 and into 2021.

More complete drill assay highlights from San Sebastian can be found in Table A at the end of the release.

Midas - Nevada

At Midas, four core rigs operated in September and will continue drilling into late November testing high-priority targets. Detailed mapping and sampling, geology modeling, alteration mineral speciation, and CSAMT geophysics during the first two quarters of 2020 defined numerous high-priority drilling targets at Midas including the Green Racer Sinter, Elko Prince, North Block, Southern Cross, SV1, Jackknife Ridge, and G3 target areas. Targets were prioritized based on anomalous gold, silver, and pathfinder elements, strong alteration associated with a boiling hydrothermal system at depth, and structural preparation. Because they were outside the Plan of Operations, many of these targets have never been drill tested or limited previous drilling did not adequately test the target. Initial drill testing of these targets began late in the third quarter beginning with the Green Racer Sinter, North Block, Southern Cross, and SV1 targets. Assay results are pending for drilling completed to date.

2020 ESTIMATES 8

2020 Production Outlook

Silver Production
(Moz)

Gold Production
(Koz)

Silver Equivalent
(Moz)

Gold Equivalent
(Koz)

Current

Prior

Current

Prior

Current

Prior

Current

Prior

Greens Creek*

10.2-10.5

10-10.3

47-48

47-48

23.5-24.0

21.5-22.1

263.5-268

240-246

Lucky Friday*

1.8-2.0

1.6-1.8

N/A

N/A

4.0

3.2-3.6

43-45.5

35-40

San Sebastian

0.8-0.9

0.8-0.9

6-7

6

1.5

14-1.7

15-17

16-19

Casa Berardi

N/A

N/A

115-120

114-124

10.5-11.0

12.1-12.6

115-121

135-140

Nevada Operations

N/A

N/A

32

32

2.9

2.9

32

32

Total

12.8-13.4

12.4-13.0

200-207

199-210

42.8-43.4

40.4-42.6

468.5-482.5

458-477

* Equivalent ounces include lead and zinc production.

2020 Cost Outlook

Costs of Sales (million)

Cash cost, after by-product credits, per silver/gold ounce5,6,9

AISC, after by-product credits, per silver/gold ounce7,9

Current

Prior

Current

Prior

Current

Prior

Greens Creek

$215

$205

$5.25-$5.50

$6.00-$6.75

$8.75-$9.00

$9.50-$10.00

Lucky Friday**

$56

$14

$8.25-$9.00

$9.50-$10.25

$12.75-$13.75

$14.00-$15.00

San Sebastian

$25

$25

$6.00-$6.75

$6.25-$8.50

$8.75-$9.50

$8.00-$10.75

Total Silver

$296

$244

$5.50-$6.25

$6.50-$7.00

$11.75-$12.25

$12.25-$13.25

Casa Berardi

$200

$185

$1,075-$1,125

$900-$975

$1,425-$1,500

$1,225-$1,275

Nevada Operations

$46

$39

$725-$750

$825-$1,000

$800-$825

$850-$1,050

Total Gold

$246

$224

$1,025-$1,100

$900-$975

$1,300-$1,350

$1,150-$1,250

** Prior cost of sales guidance was only during the period of full production, while current cost of sales guidance is during the entire year. Lucky Friday cash costs and AISC, after by-product credits, per silver ounce are calculated using only Fourth Quarter 2020 production and cost estimates.

2020 Capital and Exploration Outlook

(in millions)

Current

Prior

2020E Capital expenditures

$100

$90

2020E Exploration expenditures (includes Corporate Development)

$16

$11

2020E Pre-development expenditures

$2.5

$2.2

DIVIDENDS

Common

The Board of Directors declared a quarterly cash dividend of $0.00875 per share of common stock, consisting of $0.005 per share for the silver price-linked component and $0.00375 for the base annual dividend component. The common dividend is payable on or about December 1, 2020, to stockholders of record on November 18, 2020. The realized silver price was $25.32 in the third quarter and, therefore, satisfied the recently amended criteria for a larger silver linked dividend under the Company's dividend policy.

Preferred

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 4, 2021 to shareholders of record on December 15, 2020.

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held Monday, November 9, at 10:00 a.m. Eastern Time to discuss these results. We recommend that you dial in at least 10 minutes before the call is due to commence. You may join the conference call by dialing toll-free 1-833-350-1380 or for international dialing 1-647-689-6934. The Participant Code is 6996406 and must be provided when dialing in. Hecla's live and archived webcast can be accessed at www.hecla-mining.com under Investors.

ABOUT HECLA

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

NOTES

Non-GAAP Financial Measures

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

(1) Adjusted EBITDA and adjusted net income are non-GAAP measurements, reconciliations of which to net income (loss), the most comparable GAAP measure, can be found at the end of the release. Adjusted EBITDA and adjusted net income are measures 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 (used in) 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) Liquidity of $348.7 million calculated as $250.0 million in available credit facility plus $98.7 million in cash equivalents at September 30, 2020.

(3) Net debt to adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to debt and net income (loss), the most comparable GAAP meas...urements, can be found at the end of the release. It is an important measure for management to measure relative indebtedness and the ability to service the debt relative to its peers. It is calculated as total debt outstanding less total cash on hand divided by adjusted EBITDA.

(4) Free cash flow is a non-GAAP measure, a calculation of which can be found at the end of the release. Free cash flow is calculated as cash provided by (used in) operating activities, less additions to properties, plants, equipment and mineral interests ("Capital Expenditures"). It is a measure used by management to evaluate the Company's operating performance but should not be considered an alternative to cash provided by (used in) operating activities as those terms are defined by GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Management believes that, when presented in conjunction with comparable GAAP measures, free cash flow is useful to investors in evaluating our operating performance.

(5) 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 silver and gold 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 silver mining companies, and aggregating Casa Berardi and the Nevada operations, to compare its performance with other gold mining companies. 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 first nine-month periods of 2020 and 2019, as production was limited due to the strike and subsequent ramp-up and results are not comparable to those from prior periods and are not indicative of future operating results under full production.

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

(7) 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-month periods of 2020 and 2019, as production was limited due to the strike and subsequent ramp-up 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.

Other

(8) Expectations for 2020 include silver, gold, lead and zinc production from Greens Creek, Lucky Friday, San Sebastian, Casa Berardi and Nevada Operations converted using $1,525 gold, $17 silver, $0.85 lead, and $1.00 zinc; these haven’t changed from the first quarter.

Prices for by-product credits were calculated using actual realized prices through the third quarter, and $1,650 gold, $18.00 silver, $0.85 lead, and $0.95 zinc, resulting in full year prices of $1,721 gold, $19.26 silver, $0.82 lead, and $0.95 zinc.

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 future production, sales, costs, and capital expenditures; (ii) expectations regarding the development, growth potential, financial performance of the Company’s projects, including that Lucky Friday will be at full production in the fourth quarter and that estimated annual production for 2021 will be in excess of 3 million ounces in 2021; (iii) the effectiveness of the Company's protocols to mitigate the risks presented by COVID-19; and (iv) expected improvement at Casa Berardi, including related mining and processing ore from higher-grade stopes in the fourth quarter. 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 fourth quarter results are inaccurate; (xii) we take a material impairment charge on our Nevada operations; and (xiii) we are unable to remain in compliance with all terms of the credit agreement in order to maintain continued access to the revolver. For a more detailed discussion of such risks and other factors, see the Company’s 2019 Form 10-K, filed on February 13, 2020, and Form 10-Q filed on May 7, 2020 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.

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 Persons 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. 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 Income (Loss)

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

Third Quarter Ended

Nine Months Ended

September 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

Sales of products

$

199,703

$

161,532

$

502,983

$

448,321

Cost of sales and other direct production costs

105,977

95,878

284,717

311,202

Depreciation, depletion and amortization

40,238

50,774

119,327

139,038

146,215

146,652

404,044

450,240

Gross profit (loss)

53,488

14,880

98,939

(1,919

)

Other operating expenses:

General and administrative

11,713

7,978

27,631

26,855

Exploration

3,407

4,808

7,899

13,556

Pre-development

759

881

1,857

2,535

Research and development

53

614

Other operating expense

3,497

437

5,851

1,681

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

(14

)

24

559

4,666

Provision or closed operations and reclamation

1,254

1,907

2,807

3,529

Ramp-up and suspension costs

1,541

3,722

24,109

8,766

Foundation grant

1,970

Acquisition costs

2

183

13

593

22,159

19,993

72,696

62,795

Income (loss) from operations

31,329

(5,113

)

26,243

(64,714

)

Other income (expense):

Loss on derivative contracts

(6,666

)

(4,718

)

(12,775

)

(2,719

)

Gain on disposition of investments

927

927

Unrealized gain (loss) on investments

3,979

(126

)

9,410

(1,159

)

Foreign exchange (loss) gain

(2,196

)

773

1,235

(6,741

)

Other expense

(406

)

(1,096

)

(1,582

)

(3,407

)

Interest expense

(10,779

)

(11,777

)

(38,919

)

(33,777

)

(16,068

)

(16,017

)

(42,631

)

(46,876

)

Income (loss) before income taxes

15,261

(21,130

)

(16,388

)

(111,590

)

Income tax (provision) benefit

(1,633

)

1,614

(1,197

)

20,009

Net income (loss)

13,628

(19,516

)

(17,585

)

(91,581

)

Preferred stock dividends

(138

)

(138

)

(414

)

(414

)

Income (loss) applicable to common shareholders

$

13,490

$

(19,654

)

$

(17,999

)

$

(91,995

)

Basic income (loss) per common share after preferred dividends

$

0.03

$

(0.04

)

$

(0.03

)

$

(0.19

)

Diluted income (loss) per common share after preferred dividends

$

0.03

$

(0.04

)

$

(0.03

)

$

(0.19

)

Weighted average number of common shares outstanding - basic

529,838

489,971

526,098

486,298

Weighted average number of common shares outstanding - diluted

535,788

489,971

526,098

486,298

HECLA MINING COMPANY

Condensed Consolidated Balance Sheets

(dollars and share in thousands - unaudited)

September 30, 2020

December 31, 2019

ASSETS

Current assets:

Cash and cash equivalents

$

98,669

$

62,452

Accounts receivable:

Trade

28,464

11,952

Taxes

6,343

20,048

Other, net

6,642

6,421

Inventories

87,630

66,213

Prepaid taxes

107

107

Other current assets

7,301

11,931

Total current assets

235,156

179,124

Non-current investments

17,362

6,207

Non-current restricted cash and investments

1,053

1,025

Properties, plants, equipment and mineral interests, net

2,342,038

2,423,698

Operating lease right-of-use assets

11,928

16,381

Non-current deferred income taxes

3,408

3,537

Other non-current assets and deferred charges

4,205

7,336

Total assets

$

2,615,150

$

2,637,308

LIABILITIES

Current liabilities:

Accounts payable and accrued liabilities

$

55,315

$

57,716

Accrued payroll and related benefits

29,201

26,916

Accrued taxes

7,890

4,776

Current portion of finance leases

6,187

5,429

Current portion of operating leases

3,590

5,580

Current portion of accrued reclamation and closure costs

5,892

4,581

Accrued interest

4,935

5,804

Current derivatives liabilities

12,232

6,170

Other current liabilities

149

2

Total current liabilities

125,391

116,974

Finance leases

7,883

7,214

Operating leases

8,355

10,818

Accrued reclamation and closure costs

100,072

103,793

Long-term debt - notes

495,839

504,729

Non-current deferred tax liability

129,506

138,282

Non-current pension liability

48,303

56,219

Other non-current liabilities

6,153

6,856

Total liabilities

921,502

944,885

SHAREHOLDERS’ EQUITY

Preferred stock

39

39

Common stock

134,421

132,292

Capital surplus

1,998,322

1,973,700

Accumulated deficit

(375,527

)

(353,331

)

Accumulated other comprehensive loss

(40,111

)

(37,310

)

Treasury stock

(23,496

)

(22,967

)

Total shareholders’ equity

1,693,648

1,692,423

Total liabilities and shareholders’ equity

$

2,615,150

$

2,637,308

Common shares outstanding

530,834

522,896

HECLA MINING COMPANY

Condensed Consolidated Statements of Cash Flows

(dollars in thousands - unaudited)

Third Quarter Ended

Nine Months Ended

September 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

OPERATING ACTIVITIES

Net income (loss)

$

13,628

$

(19,516

)

$

(17,585

)

$

(91,581

)

Non-cash elements included in net loss:

Depreciation, depletion and amortization

42,726

52,219

126,911

143,040

Gain on disposition of investments

(927

)

(927

)

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

(14

)

24

559

4,666

Unrealized (gain) loss on investments

(3,979

)

126

(9,410

)

1,159

Adjustment of inventory to market value

1,399

Provision for reclamation and closure costs

1,545

2,089

4,638

5,298

Stock compensation

2,801

1,206

5,229

4,758

Deferred income taxes

(1,225

)

(4,031

)

(6,390

)

(26,616

)

Amortization of loan origination fees

442

667

3,066

1,919

Loss on derivative contracts

595

11,925

4,483

5,824

Foreign exchange loss (gain)

2,857

(5,957

)

(2,810

)

6,263

Foundation grant

1,970

Change in assets and liabilities:

Accounts receivable

366

2,557

(3,741

)

(10,215

)

Inventories

(8,510

)

(6,354

)

(13,090

)

(6,501

)

Other current and non-current assets

7,672

(1,871

)

6,748

14,913

Accounts payable and accrued liabilities

6,354

17,701

(1,762

)

5,616

Accrued payroll and related benefits

5,899

2,846

11,317

4,506

Accrued taxes

(636

)

719

3,276

(5,733

)

Accrued reclamation and closure costs and other non-current liabilities

2,918

1,473

2,483

5,821

Cash provided by operating activities

73,439

54,896

115,892

63,609

INVESTING ACTIVITIES

Additions to properties, plants, equipment and mineral interests

(23,693

)

(26,093

)

(54,382

)

(97,338

)

Proceeds from sale of investments

1,760

1,760

Proceeds from disposition of properties, plants and equipment

105

61

305

86

Purchases of investments

(1,024

)

(282

)

(1,661

)

(389

)

Net cash used in investing activities

(24,612

)

(24,554

)

(55,738

)

(95,881

)

FINANCING ACTIVITIES

Acquisition of treasury shares

(595

)

(2,745

)

(2,239

)

Dividends paid to common shareholders

(1,329

)

(1,225

)

(3,951

)

(3,655

)

Dividends paid to preferred shareholders

(138

)

(138

)

(414

)

(414

)

Credit facility and debt issuance fees

(736

)

(541

)

(1,287

)

(587

)

Repayments of debt

(50,000

)

(77,000

)

(716,500

)

(195,000

)

Borrowings on debt

27,607

75,000

707,107

245,000

Payments on finance leases

(1,406

)

(2,107

)

(4,246

)

(5,484

)

Net cash (used in) provided by financing activities

(26,002

)

(6,606

)

(22,036

)

37,621

Effect of exchange rates on cash

(79

)

(175

)

(1,873

)

257

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

22,746

23,561

36,245

5,606

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

76,976

10,459

63,477

28,414

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

$

99,722

$

34,020

$

99,722

$

34,020

HECLA MINING COMPANY

Production Data

Three Months Ended

Nine Months Ended

September 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

GREENS CREEK UNIT

Tons of ore milled

215,237

213,557

629,316

629,752

Mining cost per ton

$

72.37

$

81.16

$

78.97

$

80.15

Milling cost per ton

$

33.22

$

36.67

$

36.77

$

35.89

Ore grade milled - Silver (oz./ton)

15.04

15.01

15.79

14.28

Ore grade milled - Gold (oz./ton)

0.084

0.095

0.084

0.095

Ore grade milled - Lead (%)

3.26

%

3.00

%

3.22

%

2.86

%

Ore grade milled - Zinc (%)

8.17

%

7.70

%

7.76

%

7.28

%

Silver produced (oz.)

2,634,436

2,544,018

8,164,062

7,149,035

Gold produced (oz.)

12,838

13,684

38,215

41,269

Lead produced (tons)

5,909

5,258

16,996

14,668

Zinc produced (tons)

16,187

15,073

44,858

41,330

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

$

4.12

$

2.05

$

4.99

$

1.67

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

$

7.70

$

6.05

$

7.57

$

5.28

Capital additions (in thousands)

$

8,265

$

8,966

$

18,276

$

22,943

LUCKY FRIDAY UNIT

Tons of ore milled

55,050

13,254

109,951

40,754

Ore grade milled - Silver (oz./ton)

12.10

9.33

11.43

10.95

Ore grade milled - Lead (%)

7.35

%

7.01

%

7.33

%

7.40

%

Ore grade milled - Zinc (%)

3.76

%

3.13

%

3.89

%

3.91

%

Silver produced (oz.)

636,389

115,682

1,201,674

416,456

Lead produced (tons)

3,841

849

7,624

2,738

Zinc produced (tons)

1,810

340

3,841

1,342

Capital additions (in thousands)

$

5,547

$

2,739

$

14,603

$

5,946

SAN SEBASTIAN

Tons of ore milled

47,093

45,232

104,216

135,576

Mining cost per ton

$

31.41

$

102.94

$

51.3

$

112.17

Milling cost per ton

$

58.55

$

62.85

$

58.77

$

62.16

Ore grade milled - Silver (oz./ton)

6.27

13.36

8.11

11.78

Ore grade milled - Gold (oz./ton)

0.052

0.122

0.070

0.103

Silver produced (oz.)

266,691

541,636

772,158

1,446,450

Gold produced (oz.)

1,931

4,699

6,064

11,776

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

$

7.53

$

3.70

$

5.93

$

7.77

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

$

8.87

$

7.21

$

6.76

$

12.14

Capital additions (in thousands)

$

233

$

1,513

$

537

$

5,493

CASA BERARDI UNIT

Tons of ore milled - underground

157,734

193,130

472,936

582,631

Tons of ore milled - surface pit

130,948

144,221

427,784

432,067

Tons of ore milled - total

288,682

337,351

900,720

1,014,698

Surface tons mined - ore and waste

1,410,505

2,196,292

4,065,596

6,218,817

Mining cost per ton of ore - underground

$

136.53

$

98.29

$

119.55

$

99.53

Mining cost per ton of ore - combined

$

92.74

$

80.67

$

80.15

$

80.97

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

$

3.66

$

2.35

$

3.78

$

3.21

Milling cost per ton

$

28.35

$

18.39

$

23.74

$

17.50

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

0.124

0.186

0.132

0.170

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

0.052

0.050

0.051

0.052

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

0.114

0.128

0.114

0.120

Ore grade milled - Silver (oz./ton)

0.02

0.02

0.02

0.03

Gold produced (oz.) - underground

19,605

30,467

62,260

80,315

Gold produced (oz.) - surface pit

6,800

6,080

21,652

19,301

Gold produced (oz.) - total

26,405

36,547

83,913

99,616

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

$

1,398

$

966

$

1,181

$

1,055

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

$

1,855

$

1,348

$

1,493

$

1,373

Capital additions (in thousands)

$

11,629

$

13,239

$

24,413

$

28,360

Nevada Operations

Tons of ore milled

63,954

27,984

163,736

Mining cost per ton

$

$

149.16

$

402.94

$

158.25

Milling cost per ton

$

$

67.66

$

176.63

$

81.73

Ore grade milled - Gold (oz./ton)

0.389

1.232

0.320

Silver produced (oz.)

43,377

37,443

160,264

Gold produced (oz.)

22,381

31,756

45,439

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

$

$

817

$

716

$

1,165

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

$

$

992

$

787

$

1,841

Capital additions (in thousands)

$

380

$

2,502

$

1,849

$

41,576

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

Non-GAAP Measures
(Unaudited)

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

The tables below present reconciliations between the most comparable GAAP measure of cost of sales and other direct production costs and depreciation, depletion and amortization to the non-GAAP measures of Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits and AISC, After By-product Credits for our operations at the Greens Creek, Lucky Friday, San Sebastian, Casa Berardi and Nevada Operations units for the three- and nine-month periods ended September 30, 2020 and 2019.

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

Cash Cost, Before By-product Credits and AISC, Before By-product Credits include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. AISC, Before By-product Credits for each mine also includes on-site exploration, reclamation, and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense, reclamation, exploration, and pre-development. By-product credits include revenues earned from all metals other than the primary metal produced at each unit. As depicted in the tables below, by-product credits comprise an essential element of our silver unit cost structure, distinguishing our silver operations due to the polymetallic nature of their orebodies. Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce provide management and investors an indication of operating cash flow, after consideration of the average price, received from production. We also use these measurements for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. Cash Cost, After By-product Credits, per Ounce is a measure developed by precious metals companies (including the Silver Institute) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that our reporting of these non-GAAP measures are the same as those reported by other mining companies.

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

In thousands (except per ounce amounts)

Three Months Ended September 30, 2020

Greens
Creek

Lucky
Friday(3)

San
Sebastian(4)

Corporate(5)

Total Silver

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

$

51,057

$

21,500

$

5,960

$

78,517

Depreciation, depletion and amortization

(11,735

)

(2,956

)

(781

)

(15,472

)

Treatment costs

22,675

4,038

81

26,794

Change in product inventory

2,899

11

826

3,736

Reclamation and other costs (1)

(891

)

(392

)

(1,283

)

Exclusion of Lucky Friday costs

(22,593

)

(22,593

)

Cash Cost, Before By-product Credits (2)

64,005

5,694

69,699

Reclamation and other costs

788

114

902

Exploration

370

429

799

Sustaining capital

8,265

244

38

8,547

General and administrative (1)

10,345

10,345

AISC, Before By-product Credits (2)

73,428

6,052

90,292

By-product credits:

Zinc

(23,772

)

(23,772

)

Gold

(21,226

)

(3,686

)

(24,912

)

Lead

(8,149

)

(8,149

)

Total By-product credits

(53,147

)

(3,686

)

(56,833

)

Cash Cost, After By-product Credits

$

10,858

$

$

2,008

$

12,866

AISC, After By-product Credits

$

20,281

$

$

2,366

$

33,459

Divided by silver ounces produced

2,634

267

2,901

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

$

24.30

$

$

21.34

$

24.02

By-product credits per ounce

(20.18

)

(13.81

)

(19.59

)

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

$

4.12

$

$

7.53

$

4.43

AISC, Before By-product Credits, per Silver Ounce

$

27.88

$

$

22.68

$

31.12

By-product credits per ounce

(20.18

)

(13.81

)

(19.59

)

AISC, After By-product Credits, per Silver Ounce

$

7.70

$

$

8.87

$

11.53

In thousands (except per ounce amounts)

Three Months Ended September 30, 2020

Casa Berardi(6)

Nevada Operations(7)

Total Gold

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

$

53,821

$

13,877

$

67,698

Depreciation, depletion and amortization

(17,471

)

(7,295

)

(24,766

)

Treatment costs

562

562

Change in product inventory

543

6,920

7,463

Reclamation and other costs (1)

(449

)

(324

)

(773

)

Exclusion of Nevada Operations costs

(13,178

)

(13,178

)

Cash Cost, Before By-product Credits (2)

37,006

37,006

Reclamation and other costs

97

97

Exploration

335

335

Sustaining capital

11,629

11,629

General and administrative (1)

AISC, Before By-product Credits (2)

49,067

49,067

By-product credits:

Silver

(93

)

(93

)

Total By-product credits

(93

)

(93

)

Cash Cost, After By-product Credits

$

36,913

$

$

36,913

AISC, After By-product Credits

$

48,974

$

$

48,974

Divided by gold ounces produced

26

26

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

$

1,402

$

$

1,402

By-product credits per ounce

(4

)

(4

)

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

$

1,398

$

$

1,398

AISC, Before By-product Credits, per Gold Ounce

$

1,859

$

$

1,859

By-product credits per ounce

(4

)

(4

)

AISC, After By-product Credits, per Gold Ounce

$

1,855

$

$

1,855

In thousands (except per ounce amounts)

Three Months Ended September 30, 2020

Total Silver

Total Gold

Total

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

$

78,517

$

67,698

$

146,215

Depreciation, depletion and amortization

(15,472

)

(24,766

)

(40,238

)

Treatment costs

26,794

562

27,356

Change in product inventory

3,736

7,463

11,199

Reclamation and other costs (1)

(1,283

)

(773

)

(2,056

)

Exclusion of costs

(22,593

)

(13,178

)

(35,771

)

Cash Cost, Before By-product Credits (2)

69,699

37,006

106,705

Reclamation and other costs

902

97

999

Exploration

799

335

1,134

Sustaining capital

8,547

11,629

20,176

General and administrative (1)

10,345

10,345

AISC, Before By-product Credits (2)

90,292

49,067

139,359

By-product credits:

Zinc

(23,772

)

(23,772

)

Gold

(24,912

)

(24,912

)

Lead

(8,149

)

(8,149

)

Silver

(93

)

(93

)

Total By-product credits

(56,833

)

(93

)

(56,926

)

Cash Cost, After By-product Credits

$

12,866

$

36,913

$

49,779

AISC, After By-product Credits

$

33,459

$

48,974

$

82,433

Divided by ounces produced

2,901

26

Cash Cost, Before By-product Credits, per Ounce

$

24.02

$

1,402

By-product credits per ounce

(19.59

)

(4

)

Cash Cost, After By-product Credits, per Ounce

$

4.43

$

1,398

AISC, Before By-product Credits, per Ounce

$

31.12

$

1,859

By-product credits per ounce

(19.59

)

(4

)

AISC, After By-product Credits, per Ounce

$

11.53

$

1,855

In thousands (except per ounce amounts)

Three Months Ended September 30, 2019

Greens Creek

Lucky
Friday(3)

San
Sebastian

Corporate(5)

Total Silver

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

$

40,475

$

4,018

$

12,842

$

57,335

Depreciation, depletion and amortization

(9,008

)

(300

)

(3,326

)

(12,634

)

Treatment costs

13,003

500

63

13,566

Change in product inventory

8,456

(134

)

(335

)

7,987

Reclamation and other costs

(92

)

(294

)

(386

)

Exclusion of Lucky Friday costs

(4,084

)

(4,084

)

Cash Cost, Before By-product Credits (2)

52,834

8,950

61,784

Reclamation and other costs

737

123

860

Exploration

465

1,252

167

1,884

Sustaining capital

8,966

528

9,494

General and administrative

7,978

7,978

AISC, Before By-product Credits (2)

63,002

10,853

82,000

By-product credits:

Zinc

(22,452

)

(22,452

)

Gold

(17,517

)

(6,946

)

(24,463

)

Lead

(7,649

)

(7,649

)

Total By-product credits

(47,618

)

(6,946

)

(54,564

)

Cash Cost, After By-product Credits

$

5,216

$

$

2,004

$

7,220

AISC, After By-product Credits

$

15,384

$

$

3,907

$

27,436

Divided by ounces produced

2,544

541

3,085

Cash Cost, Before By-product Credits, per Ounce

$

20.77

$

16.54

$

20.03

By-product credits per ounce

(18.72

)

(12.84

)

(17.69

)

Cash Cost, After By-product Credits, per Ounce

$

2.05

$

$

3.70

$

2.34

AISC, Before By-product Credits, per Ounce

$

24.77

$

20.05

$

26.58

By-product credits per ounce

(18.72

)

(12.84

)

(17.69

)

AISC, After By-product Credits, per Ounce

$

6.05

$

$

7.21

$

8.89

In thousands (except per ounce amounts)

Three Months Ended September 30, 2019

Casa Berardi

Nevada Operations

Total Gold

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

$

53,006

$

36,311

$

89,317

Depreciation, depletion and amortization

(19,090

)

(19,050

)

(38,140

)

Treatment costs

561

45

606

Change in product inventory

1,070

2,118

3,188

Reclamation and other costs

(129

)

(377

)

(506

)

Cash Cost, Before By-product Credits (2)

35,418

19,047

54,465

Reclamation and other costs

130

378

508

Exploration

603

1,232

1,835

Sustaining capital

13,237

2,305

15,542

AISC, Before By-product Credits (2)

49,388

22,962

72,350

By-product credits:

Silver

(111

)

(755

)

(866

)

Total By-product credits

(111

)

(755

)

(866

)

Cash Cost, After By-product Credits

$

35,307

$

18,292

$

53,599

AISC, After By-product Credits

$

49,277

$

22,207

$

71,484

Divided by ounces produced

37

22

59

Cash Cost, Before By-product Credits, per Ounce

$

969

$

851

$

924

By-product credits per ounce

(3

)

(34

)

(15

)

Cash Cost, After By-product Credits, per Ounce

$

966

$

817

$

909

AISC, Before By-product Credits, per Ounce

$

1,351

$

1,026

$

1,228

By-product credits per ounce

(3

)

(34

)

(15

)

AISC, After By-product Credits, per Ounce

$

1,348

$

992

$

1,213

In thousands (except per ounce amounts)

Three Months Ended September 30, 2019

Total Silver

Total Gold

Total

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

$

57,335

$

89,317

$

146,652

Depreciation, depletion and amortization

(12,634)

(38,140)

(50,774)

Treatment costs

13,566

606

14,172

Change in product inventory

7,987

3,188

11,175

Reclamation and other costs

(386)

(506)

(892)

Exclusion of Lucky Friday costs

(4,084)

(4,084)

Cash Cost, Before By-product Credits (2)

61,784

54,465

116,249

Reclamation and other costs

860

508

1,368

Exploration

1,884

1,835

3,719

Sustaining capital

9,494

15,542

25,036

General and administrative

7,978

7,978

AISC, Before By-product Credits (2)

82,000

72,350

154,350

By-product credits:

Zinc

(22,452)

(22,452)

Gold

(24,463)

(24,463)

Lead

(7,649)

(7,649)

Silver

(866)

(866)

Total By-product credits

(54,564)

(866)

(55,430)

Cash Cost, After By-product Credits

$

7,220

$

53,599

$

60,819

AISC, After By-product Credits

$

27,436

$

71,484

$

98,920

Divided by ounces produced

3,085

59

Cash Cost, Before By-product Credits, per Ounce

$

20.03

$

924

By-product credits per ounce

(17.69)

(15)

Cash Cost, After By-product Credits, per Ounce

$

2.34

$

909

AISC, Before By-product Credits, per Ounce

$

26.58

$

1,228

By-product credits per ounce

(17.69)

(15)

AISC, After By-product Credits, per Ounce

$

8.89

$

1,213

In thousands (except per ounce amounts)

Nine Months Ended September 30, 2020

Greens
Creek

Lucky
Friday(3)

San
Sebastian(4)

Corporate(5)

Total Silver

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

$

157,910

$

35,787

$

18,271

$

211,968

Depreciation, depletion and amortization

(37,152

)

(5,152

)

(3,149

)

(45,453

)

Treatment costs

58,517

7,502

232

66,251

Change in product inventory

1,749

807

681

3,237

Reclamation and other costs (1)

(478

)

(1,050

)

(1,528

)

Exclusion of Lucky Friday costs

(38,944

)

(38,944

)

Cash Cost, Before By-product Credits (2)

180,546

14,985

195,531

Reclamation and other costs

2,365

342

2,707

Exploration

374

1,362

1,736

Sustaining capital

18,276

299

38

18,613

General and administrative (1)

26,263

26,263

AISC, Before By-product Credits (2)

201,561

15,626

244,850

By-product credits:

Zinc

(59,711

)

(59,711

)

Gold

(57,850

)

(10,402

)

(68,252

)

Lead

(22,208

)

(22,208

)

Total By-product credits

(139,769

)

(10,402

)

(150,171

)

Cash Cost, After By-product Credits

$

40,777

$

$

4,583

$

45,360

AISC, After By-product Credits

$

61,792

$

$

5,224

$

94,679

Divided by silver ounces produced

8,164

772

8,936

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

$

22.11

$

$

19.40

$

21.89

By-product credits per ounce

(17.12

)

(13.47

)

(16.81

)

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

$

4.99

$

$

5.93

$

5.08

AISC, Before By-product Credits, per Silver Ounce

$

24.69

$

$

20.23

$

27.40

By-product credits per ounce

(17.12

)

(13.47

)

(16.81

)

AISC, After By-product Credits, per Silver Ounce

$

7.57

$

$

6.76

$

10.59

In thousands (except per ounce amounts)

Nine Months Ended September 30, 2020

Casa Berardi(6)

Nevada Operations (7)

Total Gold

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

$

147,728

$

44,348

$

192,076

Depreciation, depletion and amortization

(51,149

)

(22,725

)

(73,874

)

Treatment costs

1,693

45

1,738

Change in product inventory

1,751

15,869

17,620

Reclamation and other costs (1)

(637

)

(978

)

(1,615

)

Exclusion of Nevada Operations costs

(13,178

)

(13,178

)

Cash Cost, Before By-product Credits (2)

99,386

23,381

122,767

Reclamation and other costs

287

654

941

Exploration

1,493

1,493

Sustaining capital

24,413

1,600

26,013

AISC, Before By-product Credits (2)

125,579

25,635

151,214

By-product credits:

Silver

(285

)

(635

)

(920

)

Total By-product credits

(285

)

(635

)

(920

)

Cash Cost, After By-product Credits

$

99,101

$

22,746

$

121,847

AISC, After By-product Credits

$

125,294

$

25,000

$

150,294

Divided by gold ounces produced

84

32

116

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

$

1,184

$

736

$

1,061

By-product credits per ounce

(3

)

(20

)

(8

)

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

$

1,181

$

716

$

1,053

AISC, Before By-product Credits, per Gold Ounce

$

1,496

$

807

$

1,307

By-product credits per ounce

(3

)

(20

)

(8

)

AISC, After By-product Credits, per Gold Ounce

$

1,493

$

787

$

1,299

In thousands (except per ounce amounts)

Nine Months Ended September 30, 2020

Total Silver

Total Gold

Total

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

$

211,968

$

192,076

$

404,044

Depreciation, depletion and amortization

(45,453)

(73,874)

(119,327)

Treatment costs

66,251

1,738

67,989

Change in product inventory

3,237

17,620

20,857

Reclamation and other costs (1)

(1,528)

(1,615)

(3,143)

Exclusion of costs

(38,944)

(13,178)

(52,122)

Cash Cost, Before By-product Credits (2)

195,531

122,767

318,298

Reclamation and other costs

2,707

941

3,648

Exploration

1,736

1,493

3,229

Sustaining capital

18,613

26,013

44,626

General and administrative (1)

26,263

26,263

AISC, Before By-product Credits (2)

244,850

151,214

396,064

By-product credits:

Zinc

(59,711)

(59,711)

Gold

(68,252)

(68,252)

Lead

(22,208)

(22,208)

Silver

(920)

(920)

Total By-product credits

(150,171)

(920)

(151,091)

Cash Cost, After By-product Credits

$

45,360

$

121,847

$

167,207

AISC, After By-product Credits

$

94,679

$

150,294

$

244,973

Divided by ounces produced

8,936

116

Cash Cost, Before By-product Credits, per Ounce

$

21.89

$

1,061

By-product credits per ounce

(16.81)

(8)

Cash Cost, After By-product Credits, per Ounce

$

5.08

$

1,053

AISC, Before By-product Credits, per Ounce

$

27.40

$

1,307

By-product credits per ounce

(16.81)

(8)

AISC, After By-product Credits, per Ounce

$

10.59

$

1,299

In thousands (except per ounce amounts)

Nine Months Ended September 30, 2019

Greens
Creek

Lucky
Friday(3)

San
Sebastian

Corporate(5)

Total
Silver

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

$

140,237

$

11,149

$

36,338

$

187,724

Depreciation, depletion and amortization

(32,228

)

(891

)

(6,934

)

(40,053

)

Treatment costs

34,319

1,834

432

36,585

Change in product inventory

9,168

708

(1,378

)

8,498

Reclamation and other costs

(1,439

)

(1,030

)

(2,469

)

Exclusion of Lucky Friday costs

(12,800

)

(12,800

)

Cash Cost, Before By-product Credits (2)

150,057