9th consecutive quarter of free cash flow
generation, consolidated silver guidance affirmed
Hecla Mining Company (NYSE:HL) today announced second quarter
2022 financial and operating results.
SECOND QUARTER HIGHLIGHTS
- Silver and gold production of 3.6 million and 45,719 ounces
respectively, a 10% increase over the first quarter 2022 ("the
prior quarter")
- Sales of $191.2 million, a 3% increase over the prior quarter
despite lower gold and silver prices
- Cash provided by operating activities of $40.2 million and $5.9
million in free cash flow with continued positive free cash flow
generation from all three operations3
- Total cost of sales for silver of $90.9 million and cash cost
and all-in sustaining cash cost (AISC) per ounce (each after
by-product credits) of ($1.14) and $8.55 respectively1,2
- Net loss applicable to common shareholders of $13.7 million or
$0.03 per share (basic), and adjusted net income of $20.1 million
or $0.04 per share5
- Adjusted EBITDA of $70.5 million, net debt/adjusted EBITDA
(last 12 months) of 1.4x 4
- $198.2 million in cash and cash equivalents with approximately
$335 million in available liquidity
- Pending acquisition of Alexco Resource Corp ("Alexco") and its
high-grade silver property in Yukon; transaction expected to close
in early September
- Published 2021 Sustainability report 'Building Strong
Communities Through Responsible Mining'
“All three of our mines continue to deliver strong operational
and financial results with each generating positive free cash
flow," said Phillips S. Baker Jr., President & CEO. “Lucky
Friday achieved record quarterly tons milled reflecting the
significant strides we have made in managing seismicity and
improving productivity with the Underhand Closed Bench (UCB) mining
method. I strongly believe as we optimize this mining method, the
Lucky Friday along with Greens Creek will further increase our
position as the dominant U.S. silver producer."
Baker continued, "While we are exposed to inflationary pressures
like the rest of the industry, our silver mines have largely been
able to offset inflation with by-product credits. For the second
half of the year with our strong balance sheet, we plan to increase
our investment in operations with the goal of further accelerating
production, earnings and cash flow growth. We are looking forward
to closing the Alexco acquisition, which adds a high-grade silver
property in the Yukon to our best in class portfolio. This
acquisition could make Hecla the largest silver producer in Canada,
as well as the United States, an important and a unique
characteristic of Hecla among all silver producers for decades to
come."
FINANCIAL OVERVIEW
"Total cost of sales" as used in this release is comprised of
cost of sales and other direct production costs and depreciation,
depletion and amortization.
In Thousands unless stated otherwise
Q2-2022
Q1-2022
Q4-2021
Q3-2021
Q2-2021
YTD-2022
YTD-2021
FINANCIAL AND OPERATIONAL
HIGHLIGHTS
Sales
$
191,242
$
186,499
$
185,078
$
193,560
$
217,983
$
377,741
$
428,835
Total cost of sales
$
153,979
$
141,070
$
131,837
$
158,332
$
156,052
$
295,049
$
299,503
Gross profit
$
37,263
$
45,429
$
53,241
$
35,228
$
61,931
$
82,692
$
129,332
(Loss) income applicable to common
shareholders
$
(13,661
)
$
4,015
$
11,737
$
(1,117
)
$
2,610
$
(9,646
)
$
23,923
Basic (loss) income per common share (in
dollars)
$
(0.03
)
$
0.01
$
0.02
$
—
$
0.01
$
(0.02
)
$
0.04
Adjusted EBITDA 4
$
70,474
$
58,202
$
58,249
$
49,414
$
84,507
$
128,676
$
170,312
Net Debt to Adjusted EBITDA4,*
1.4
1.1
Cash provided by operating activities
$
40,183
$
37,909
$
53,355
$
42,742
$
86,304
$
78,092
$
124,240
Capital Expenditures
$
(34,329
)
$
(21,478
)
$
(28,838
)
$
(26,899
)
$
(31,898
)
$
(55,807
)
$
(53,311
)
Free Cash Flow 2
$
5,854
$
16,431
$
24,517
$
15,843
$
54,406
$
22,285
$
70,929
Production Highlights
Silver ounces produced
3,645,454
3,324,708
3,226,927
2,676,084
3,524,783
6,970,162
6,984,229
Silver payable ounces sold
3,387,909
2,687,261
2,606,622
2,581,690
3,415,464
6,075,170
6,445,490
Gold ounces produced
45,719
41,642
47,977
42,207
59,139
87,361
111,143
Gold payable ounces sold
44,225
41,053
44,156
53,000
47,168
85,278
104,454
Cash Costs and AISC, each after
by-product credits
Silver cash costs per ounce
$
(1.14
)
$
1.09
$
1.69
$
2.49
$
0.18
$
(0.07
)
$
0.79
Silver AISC per ounce
$
8.55
$
7.64
$
10.08
$
12.82
$
7.54
$
8.12
$
7.38
Gold cash costs per ounce
$
1,371
$
1,516
$
1,143
$
1,163
$
1,254
$
1,440
$
1,161
Gold AISC per ounce
$
1,641
$
1,810
$
1,494
$
1,450
$
1,419
$
1,721
$
1,357
*Reflects trailing twelve months ending
June 30,2022. Reconciliations are available at the end of the
release.
Loss applicable to common shareholders for the second quarter
was $13.7 million, or $(0.03) per share, compared to income of $4.0
million, or $0.01 per share, in the first quarter of 2022, and was
impacted by the following factors:
- Gross profit decreased by $8.2 million primarily due to lower
realized prices for all metals and higher mining costs at Greens
Creek caused by increased use of contractors
- A negative fair value adjustment, net of $16.4 million, versus
a gain of $6.0 million in the prior quarter, primarily due to
unrealized losses on the Company's investment portfolio of $15.7
million during the second quarter
These decreases were partially offset by:
- Higher sales volume at Greens Creek and Lucky Friday
- Lower income and mining tax provision of $0.3 million compared
to $5.6 million in the prior quarter reflecting lower income from
operations
- A net foreign exchange gain of $4.5 million versus a loss of
$2.0 million in the prior quarter reflecting the appreciation of
the U.S. dollar (“USD”) against the Canadian dollar (“CAD”) during
the current quarter
- Lower exploration and pre-development expense of $1.6 million
versus the prior quarter reflecting timing of expenditures across
the Company's exploration portfolio
Cash provided by operating activities of $40.2 million increased
$2.3 million compared to the prior quarter, primarily due to
positive working capital changes of $32.6 million reflecting the
semi-annual interest payment on the outstanding long-term debt in
the prior quarter.
Capital expenditures totaled $34.3 million, an increase of $12.9
million over the prior quarter with increased planned expenditures
at Greens Creek of $14.7 million, Lucky Friday of $11.5 million,
and Casa Berardi of $8.1 million. Free cash flow for the quarter
was $5.9 million, a decrease of $10.6 million over the prior
quarter primarily due to higher capital expenditures.
Cash costs and AISC (each after by-product credits) for silver
were $(1.14) and $8.55 per ounce respectively. Cash costs declined
by $2.23 per ounce over the prior quarter due to higher by-product
credits at Greens Creek and higher silver production at the Lucky
Friday as well as Greens Creek. AISC increased by $0.91 over the
prior quarter, as a result of increased sustaining capital spend at
both Greens Creek and Lucky Friday, partially offset by increased
production at the Lucky Friday.
Gold cash cost per ounce and AISC declined by $145 and $169,
respectively, attributable to higher gold production during the
second quarter.
The Company is seeing the impact of inflationary pressures and
labor constraints at all its operations. By-product credits
continue to help offset the inflationary pressures for the silver
segment due to strong by-product production and prices. At the Casa
Berardi mine, while AISC per gold ounce after by-product credits
declined over the prior quarter, the mine continues to see 15-20%
overall increases in costs, notably impacting fuel, steel,
reagents, and other consumables that have a greater impact on this
mine because it handles the largest volume of ore and waste among
the three operations. While Casa Berardi is focused on increasing
underground ore feed to the mill, the mill is kept full with ore
sourced from the surface, which exposes the mine to further
inflationary pressures due to relatively higher volume of material
moved.
Inflation is also impacting capital projects, particularly at
the Lucky Friday where multiple projects are underway to support
the production growth.
At the time of guidance issuance earlier this year, inflation
expectations were 5%, which have been surpassed in the first half
of the year. The Company expects these inflationary pressures to
continue in the second half of the year at similar levels seen in
the first half of the year and has revised gold cost guidance for
Casa Berardi. The Company has also revised the consolidated capital
expenditure guidance to reflect sustained inflationary pressures
and to account for supply chain uncertainties that might delay
equipment delivery schedules to 2023.
Forward Sales Contracts for Base Metals and Foreign
Currency
The Company uses financially settled forward sales contracts to
manage exposures to changes in prices of zinc and lead. At June 30,
2022, the Company had contracts covering approximately 65% of the
forecasted payable zinc production (through 2025) at an average
price of $1.32 per pound, and 49% of the forecasted payable lead
production (through 2024) at an average price of $0.99 per
pound.
The Company manages CAD exposure through forward contracts. At
June 30, 2022, the Company had hedged approximately 43% of
forecasted CAD direct production costs through 2025 at an average
CAD/USD rate of 1.30. The Company has also hedged approximately 32%
of capital costs for 2022 at 1.29.
OPERATIONS OVERVIEW
Greens Creek Mine - Alaska
Dollars are in thousands except cost per
ton
Q2-2022
Q1-2022
Q4-2021
Q3-2021
Q2-2021
YTD-2022
YTD-2021
GREENS CREEK
Tons of ore processed
209,558
211,687
221,814
211,142
214,931
421,245
409,011
Total production cost per ton
$
197.84
$
192.16
$
174.55
$
181.60
$
171.13
$
194.98
$
176.58
Ore grade milled - Silver (oz./ton)
14.0
13.8
12.6
11.1
14.5
13.9
15.2
Ore grade milled - Gold (oz./ton)
0.08
0.07
0.07
0.07
0.08
0.08
0.09
Ore grade milled - Lead (%)
3.0
2.8
2.6
2.7
3.1
2.9
3.1
Ore grade milled - Zinc (%)
7.2
6.6
6.3
7.1
7.6
6.9
7.6
Silver produced (oz.)
2,410,598
2,429,782
2,262,635
1,837,270
2,558,447
4,840,380
5,143,317
Gold produced (oz.)
12,413
11,402
10,229
9,734
12,859
23,815
26,125
Lead produced (tons)
5,184
4,883
4,731
4,591
5,627
10,067
10,551
Zinc produced (tons)
13,396
12,494
12,457
13,227
14,610
25,890
27,964
Sales
$
92,723
$
86,090
$
87,865
$
84,806
$
113,763
$
178,813
$
212,172
Total cost of sales
$
(60,506
)
$
(49,637
)
$
(49,251
)
$
(55,193
)
$
(55,488
)
$
(110,143
)
$
(108,668
)
Gross profit
$
32,217
$
36,453
$
38,614
$
29,613
$
58,275
$
68,670
$
103,504
Cash flow from operations
$
41,808
$
56,295
$
50,632
$
40,626
$
68,521
$
98,103
$
112,866
Exploration
$
929
$
165
$
696
$
2,472
$
1,300
$
1,094
$
1,423
Capital additions
$
(14,668
)
$
(3,092
)
$
(9,544
)
$
(6,228
)
$
(6,339
)
$
(17,760
)
$
(8,111
)
Free cash flow 2
$
28,069
$
53,368
$
41,784
$
36,870
$
63,482
$
81,437
$
106,178
Cash cost per ounce, after by-product
credits
$
(3.29
)
$
(0.90
)
$
0.50
$
0.74
$
(2.64
)
$
(2.09
)
$
(1.65
)
AISC per ounce, after by-product
credits
$
3.48
$
1.90
$
5.66
$
5.94
$
0.68
$
2.69
$
1.14
Total cost of sales for the second quarter 2022 was $60.5
million compared to $49.6 million in the prior quarter. Cash cost
and AISC per silver ounce (each after by-product credits) were
$(3.29) and $3.48, respectively. Cash cost per silver ounce
decreased by $2.39 over the prior quarter due to higher by-product
credits and additional silver production which was due to
increasing mined grades which more than offset higher costs
primarily driven by the use of contractors. AISC per silver ounce
increased by $1.58 compared to the prior quarter due to planned
increased capital spending for the capital projects and additional
definition and development drilling.1,2 The decline in cash flow
from operations is primarily due to lower metals prices and
increased costs due to inflation
Lucky Friday Mine – Idaho
Dollars are in thousands except cost per
ton
Q2-2022
Q1-2022
Q4-2021
Q3-2021
Q2-2021
YTD-2022
YTD-2021
LUCKY FRIDAY
Tons of ore processed
97,497
77,725
80,097
78,227
82,442
175,222
163,513
Total production cost per ton
$
211.45
$
247.17
$
198.83
$
190.66
$
199.48
$
227.30
$
188.30
Ore grade milled - Silver (oz./ton)
13.2
12.0
12.5
11.2
11.6
12.7
11.4
Ore grade milled - Lead (%)
8.8
8.2
8.1
7.2
7.6
8.5
7.5
Ore grade milled - Zinc (%)
3.9
3.6
3.3
3.3
3.4
3.8
3.6
Silver produced (oz.)
1,226,477
887,858
955,401
831,532
913,294
2,114,335
1,777,195
Lead produced (tons)
8,147
5,980
6,131
5,313
5,913
14,127
11,693
Zinc produced (tons)
3,370
2,452
2,296
2,319
2,601
5,822
5,354
Sales
$
35,880
$
38,040
$
32,938
$
29,783
$
39,645
$
73,920
68,767
Total cost of sales
$
(30,348
)
$
(29,265
)
$
(23,252
)
$
(23,591
)
$
(27,901
)
$
(59,613
)
$
(50,696
)
Gross profit
$
5,532
$
8,776
$
9,686
$
6,192
$
11,744
$
14,307
$
18,071
Cash flow from operations
$
21,861
$
11,765
$
16,953
$
15,017
$
19,681
$
33,626
$
30,624
Capital additions
$
(11,501
)
$
(9,652
)
$
(9,109
)
$
(9,133
)
$
(5,731
)
$
(21,153
)
(11,643
)
Free cash flow 2
$
10,360
$
2,113
$
7,844
$
5,884
$
13,950
$
12,473
$
18,981
Cash cost per silver ounce, after
by-product credits
$
3.07
$
6.57
$
4.50
$
6.35
$
8.07
$
4.54
$
7.85
AISC per silver ounce, after by-product
credits
$
9.91
$
13.15
$
12.54
$
16.79
$
14.10
$
11.27
$
14.17
Lucky Friday produced 1.2 million ounces of silver during the
second quarter, a 38% increase over the prior quarter due to higher
production resulting from higher throughput due to the UCB mining
method and a 9% increase in grade. The throughput rate and the
mined tons in the quarter are the highest in the mine's 80-year
history. The UCB method mined 91% of tons in the second quarter
compared to 82% of tons in the second quarter of 2021.
Total cost of sales for the second quarter 2022 was $30.3
million, an increase of $1.1 million over the prior quarter due to
increased use of consumables to support higher mining volumes and
higher contractor costs resulting from manpower shortages. Cash
cost and AISC per silver ounce (each after by-product credits) were
$3.07 and $9.91, respectively, and decreased over the prior quarter
due to higher production, the reasons outlined above, and higher
by-product credits1,2
Casa Berardi Mine - Quebec
Dollars are in thousands except cost per
ton
Q2-2022
Q1-2022
Q4-2021
Q3-2021
Q2-2021
YTD-2022
YTD-2021
CASA BERARDI
Tons of ore processed – underground
176,576
161,609
161,355
167,435
178,908
338,185
365,827
Tons of ore processed – surface pit
225,042
224,541
225,662
230,708
195,775
449,586
377,259
Tons of ore processed – total
401,618
386,150
387,017
398,143
374,683
787,771
743,086
Surface tons mined – ore and waste
2,149,412
1,892,339
1,507,457
1,483,231
2,033,403
4,041,751
4,024,490
Total production cost per ton
$
113.07
$
117.96
$
108.82
$
86.95
$
99.36
115.46
$
99.52
Ore grade milled – Gold (oz./ton) -
underground
0.19
0.14
0.17
0.16
0.15
0.17
0.16
Ore grade milled – Gold (oz./ton) -
surface pit
0.05
0.05
0.07
0.04
0.06
0.05
0.06
Ore grade milled – Gold (oz./ton) -
combined
0.10
0.09
0.11
0.09
0.10
0.09
0.11
Gold produced (oz.) – underground
22,866
19,374
22,910
24,170
23,441
42,240
51,010
Gold produced (oz.) – surface pit
10,440
10,866
14,356
5,552
7,892
21,306
16,513
Gold produced (oz.) – total
33,306
30,240
37,266
29,722
31,333
63,546
67,523
Silver produced (oz.) – total
8,379
7,068
7,967
7,012
7,917
15,447
18,592
Sales
$
62,639
$
62,101
$
60,054
$
56,065
$
56,122
$
124,740
$
129,033
Total cost of sales
$
(61,870
)
$
(62,168
)
$
(57,069
)
$
(58,164
)
$
(54,669
)
$
(124,038
)
$
(114,596
)
Gross profit/(loss)
$
769
$
(67
)
$
2,985
$
(2,099
)
$
1,453
702
$
14,437
Cash flow from operations
$
7,417
$
8,089
$
10,029
$
17,058
$
15,756
$
15,506
$
30,948
Exploration
$
1,341
$
2,635
$
2,124
$
4,382
$
1,739
$
3,976
$
3,020
Capital additions
$
(8,093
)
$
(7,808
)
$
(9,537
)
$
(11,488
)
$
(12,153
)
$
(15,901
)
$
(26,000
)
Free cash flow 2
$
665
$
2,916
$
2,616
$
9,952
$
5,342
$
3,581
$
7,968
Cash Cost per gold ounce, after by-product
credits
$
1,371
$
1,516
$
1,137
$
1,175
$
1,199
$
1,440
$
1,106
AISC per gold ounce, after by-product
credits
$
1,641
$
1,810
$
1,470
$
1,476
$
1,434
$
1,721
$
1,347
Casa Berardi produced 33,306 ounces of gold compared to 30,240
ounces in the prior quarter, an increase of 10% due to higher
grades milled as more material was sourced from the underground
mine. The mill continued to perform well, operating at an average
of 4,413 tons per day ("tpd") in the second quarter of 2022
compared to 4,291 tpd over prior quarter.
Total cost of sales for the second quarter 2022 was $61.9
million compared to $62.2 million in the prior quarter. Cash cost
and AISC per gold ounce decreased by $145 per ounce and $169 per
ounce over the prior quarter to $1,371 and $1,641, respectively,
with the decrease primarily driven by higher production. 1,2
EXPLORATION AND PRE-DEVELOPMENT UPDATE
Exploration and Pre-development expenditures were $11.2 million
for the quarter with the focus on both surface and underground
drilling at Greens Creek, underground drilling at Casa Berardi and
the re-initiation of exploration at the large land packages at
Republic, Washington; Creede, Colorado and Aurora, Nevada. Programs
continued at San Sebastian and Midas with permitting for water
removal at Hollister advancing.
Greens Creek
At Greens Creek, three underground core drills focused on
resource conversion in the Southwest Bench, 200 South, East, and
West ore zones and exploration in the East and Gallagher Fault
Block zones while two helicopter supported core drills started
drilling extensions to the Upper Plate Zone from surface late in
the Quarter. Assay results received during the 2nd quarter for
drilling in the Southwest Bench, 200 South, East, West, and 9A
areas are confirming and expanding all mineral zones.
Southwest Bench drilling during the quarter targeted inferred
resource areas along a strike length of 400 feet with the goal of
upgrading and expanding resources. Highlights from this drilling
includes 42.7 oz/ton silver, 0.09 oz/ton gold, 18.8% zinc and 8.9%
lead over 7.4 feet.
200 South drilling targeted the southern portion of the zone
along a strike length of 600 feet and along with assay results
received during the quarter, the 200 South drilling confirms the
expansion of the deep bench up and down dip 50 feet, and down
plunge 100 feet, from previous ore grade intercepts. Intercepts
characteristic of this portion of the 200 South zone include 83.2
oz/ton Ag, 0.12 oz/ton Au, 3.1 % Zn, and 1.7% Pb over 7.2 feet.
Assays received also confirm the expansion of the middle bench 100
feet down plunge from previous ore grade intercepts and includes
15.8 oz/ton Ag, 0.03 oz/ton Au, 1.5% Zn, and 0.6% Pb over 21.3
feet.
Drilling in the central portion of the East Zone focused on
infilling areas between existing ore intercepts along the mine
contact over a strike length of 850 feet. While limited assay
results have been received so far, intercepts are typically narrow
and can contain high-grade mineralization such as hole GC5716 with
429.0 oz/ton silver, 1.38 oz/ton gold, 6.4% zinc, and 1.7% lead
over 1.0 foot.
Drilling at the West Zone targeted 400 feet of mine contact
strike to upgrade and expand known mineralization. Assay highlights
from this drilling include intercepts containing 50.4 oz/ton
silver, 0.30 oz/ton gold, 14.4% zinc, and 7.6% lead over 57.1 feet.
Assays results were received from 9A Zone drilling completed during
the first quarter. Highlights from this drilling include 55.3
oz/ton silver, 1.3 oz/ton gold, 16.9% zinc, and 9.1% lead over 14.3
feet.
More complete drill assay highlights can be found in Table A at
the end of the release.
Casa Berardi
At Casa Berardi, up to seven underground core drills and one
surface core drill were focused on definition and exploration
drilling in multiple zones and targets in the West Mine, Principal
Mine, and East Mine areas. In addition to drilling in the mining
lease, one surface Sonic drill completed the initial drill testing
of three small, select historical gold till anomalies in the West,
Central, and East Blocks of our large Casa Berardi property package
which covers 23 miles of strike length along the Casa Berardi
Break.
Drilling in the West Mine targeted the 118 zone where drilling
has been focused on defining continuity and expanding
mineralization in the 118-06,14, and 15 lenses up and down plunge
and to the east. Highlights from this drilling includes an
intercept grading 0.45 oz/ton gold over 14.1 feet which is located
down plunge from the 118-06 lens showing that mineralization
extends at least 360 feet below the current model and follow up
exploration drilling is being planned to further test this zone at
depth.
Drilling in the Principal Mine targeted the 119, Lower 123, and
extensions of the 124 and 134 zones. In the 119 Zone, drilling is
focused on defining the controls of mineralization in the 119-02
lens with recent intercepts including 0.14 oz/ton gold over 6.2
feet. Drilling at depth and to the west of the Lower 123 Zone
intersected 0.17 oz/ton gold over 21.0 feet expanding
mineralization 100 feet to the east of the modeled 123-02 lens.
Surface drilling targeting the area between the 124 and 134 zones
focused on expanding and connecting mineralization between these
two zones which could have a positive impact on future mining in
the proposed Principal and 134 open pits. Highlights from this
drilling include 0.10 oz/ton gold over 48.9 feet and 0.07 oz/ton
gold over 71.1 feet.
Exploration drilling in the East Mine targeted expanding
mineralization in the 148 zone. Assay results have been received
for one drillhole which extends high-grade mineralization an
additional 85 feet to the east of the 148-01 lens. This drillhole
grades 0.27 oz/ton gold over 24.6 feet and includes a narrower and
higher-grade section grading 2.81 oz/ton gold over 1.6 feet. This
drillhole intercept opens the area at depth and to the east for
expansion.
More complete drill assay highlights can be found in Table A at
the end of the release.
San Sebastian
Exploration at San Sebastian advanced drill testing multiple
targets within the district in addition to completing our Short
Vertical Reverse Circulation (SVRC) drilling in areas under cover
between the San Sebastian Mine and La Roca target areas.
Republic
Surface exploration is underway at our Republic District, which
has had very limited exploration since we ceased underground mining
operations in 1994. So far this year, we have completed a
geophysical survey, detailed surface mapping and sampling, and one
core drill is on site testing the Lone Pine-Blacktail and Tom Thumb
target areas.
Drilling to date has been focused on the Blacktail target and
four drillholes have been completed. The Blacktail target area is
currently being evaluated for both bulk-tonnage mineralization as
well as narrow underground mineable mineralization. Several known
vein zones including the Belligerent, Bellicose, and Apex veins
have been intersected in the current drilling in addition to
multiple zones of small veins and veinlets. Assay results have been
received for the high priority vein zones in the first three core
holes and highlights from this initial drilling include 0.57 oz/ton
gold and 5.7 oz/ton silver over 8.1 feet in the Belligerent Vein
and 0.40 oz/ton gold and 0.3 oz/ton silver over 5.1 feet in an
unnamed vein.
More complete drill assay highlights can be found in Table A at
the end of the release.
San Juan
Surface exploration is also underway at our Creede District in
Colorado. Detailed surface mapping is underway in the areas north
and west of the Bulldog vein system detailing the Alpha Corsair,
Pathfinder, and Rat Creek Basin target areas known to have large
alteration footprints at the surface and very limited exploration.
We also have one core drill testing the North Bulldog target area.
This drilling is focused on following up on a narrow high-grade
silver intercept that was intersected high in the volcanic
stratigraphy in a poorly welded tuff. Current drilling is targeting
the northern extension of the Bulldog structure deeper within the
Campbell Mountain welded tuff which is historically the best host
to mineralization in the district.
In addition to exploration drilling, Phase 1 of the Bulldog
underground rehabilitation work is in progress which is designed to
provide long-term access and water management and provide access
for underground exploration and resource confirmation drilling.
Nevada
Drilling with two drill rigs at Midas continued to focus on
drill testing the Racer structure within the East Graben Corridor
along 1.7 miles of strike length and drill testing several other
targets in the district including Little Opal, Southern Cross,
Silica Ridge, SVI, and Vapor Trail.
Drilling at Aurora began during the quarter with one core drill
targeting areas within the Martinez and Last Chance Hill target
areas. The initial drillholes are testing, confirming, and defining
the character of mineralization contained in some of the historical
high-grade reverse circulation drillhole intercepts.
ALEXCO ACQUISITION UPDATE
On July 5, 2022, the Company announced a definitive agreement to
acquire all outstanding common shares of Alexco that Hecla does not
already own. Each outstanding common share of Alexco will be
exchanged for 0.116 of a share of Hecla common stock implying
consideration of US$0.47 per Alexco common share based on the
companies’ 5-day volume weighted average price on the NYSE and NYSE
American on July 1, 2022. As part of the agreement, Hecla agreed to
(i) provide interim financing of $30 million to provide working
capital and ensure the development and exploration at Keno Hill
continues to be advanced and (ii) subscribe for additional common
shares bringing its ownership stake to 9.9%. At the time of this
release, of the $30 million interim financing, $20 million has been
drawn and the subscription of common shares has been completed. The
Company has also entered into an agreement with Wheaton Precious
Metals Corporation to terminate its silver streaming interest at
Alexco’s Keno Hill property in exchange for US$135 million of Hecla
common stock conditional upon the completion of Hecla’s acquisition
of Alexco. On July 27, 2022 the Supreme Court of British Columbia
issued an interim order authorizing the holding of Alexco's special
meeting of its security holders to consider and, if deemed
advisable, to pass a special resolution implementing Hecla's
acquisition of Alexco. The acquisition is expected to close in
early September 2022.
Upon closing of the acquisition, the Company expects to focus on
(i) development and drilling at the Bermingham and Flame & Moth
deposits over the next 12-18 months to open multiple sources of
feed, (ii) to complete certain underground infrastructure projects,
and (iii) to make improvements to the processing facility. At the
Bermingham deposit, development will focus on the Bear zone to open
working faces in addition to infill definition drilling. At the
Flame & Moth deposit, the Company anticipates advancing
development and conducting infill drilling focusing on the upper
Lightning zone.
CREDIT FACILITY
On July 21, 2022, the Company entered into a new senior secured
revolving credit facility of $150 million with a $75 million
accordion feature. The facility has a maturity date of July 21,
2026 and will incur an interest rate at SOFR plus margins ranging
from 0.10% to 0.25% plus an applicable margin between 2.00% and
3.50% depending on our total leverage ratio. The facility is
collateralized by a mortgage on the Greens Creek mine and the
equity interests of subsidiaries that own the Greens Creek mine or
are part of the Greens Creek Joint Venture. Proceeds of the
revolving loans under the facility may be used for general
corporate purposes. Bank of America acted as the Administrative
Agent and Sole Lead Arranger and Sole Bookrunner.
In connection with entry into the New Credit Agreement, the
Company’s prior Fifth Amended and Restated Credit Agreement dated
as of July 16, 2018, was terminated on July 21, 2022.
DIVIDENDS
Common Stock
The Board of Directors declared a quarterly cash dividend of
$0.00625 per share of common stock, consisting of $0.00375 per
share for the minimum dividend component and $0.0025 per share for
the silver-linked component. The common stock dividend is payable
on or about September 2, 2022, to stockholders of record on August
19, 2022. The realized silver price was $20.68 per ounce in the
second quarter satisfying the criterion for the silver-linked
component under the Company's common stock dividend policy.
Preferred Stock
The Board of Directors elected to declare a quarterly cash
dividend of $0.875 per share of preferred stock, payable on or
about October 1, 2022, to stockholders of record on September 15,
2022.
2022 GUIDANCE6
The Company has updated its guidance for annual cost and capital
guidance as below. There is no change to the production guidance.
The Company is also providing guidance for capital expenditures
planned by the three operations.
2022 Production Outlook
Silver Production
(Moz)
Gold Production
(Koz)
Silver Equivalent
(Moz)
Gold Equivalent
(Koz)
Greens Creek *
8.6-8.9
40-43
20.7-21.2
268-275
Lucky Friday *
4.3-4.6
N/A
8.9-9.3
116-120
Casa Berardi
N/A
125-132
9.7-10.2
125-132
Total6
12.9-13.5
165-175
39.3-40.7
509-527
* Equivalent ounces include Lead
and Zinc production
2022 Cost Outlook
Annual guidance for Greens Creek's cost of sales has increased
to reflect certain inflationary pressures. Increased production and
by-product prices in the first half of the year are expected to
more than offset inflation and as a result, Greens Creek's 2022
guidance for cash cost and AISC has been reduced. At the Lucky
Friday, increased costs of sales guidance is driven by additional
throughput as well as higher labor and other key input costs, which
have resulted in increased 2022 guidance for cash cost and AISC. At
the Casa Berardi mine, increased cost of sales guidance reflects
higher costs of energy, materials and labor and continued usage of
contractors to supplement manpower due to labor shortages in the
area. Costs in the second half are expected to remain similar to
levels seen in the first half of the year resulting in increased
guidance for 2022 cash costs and AISC.
Cost of Sales
(millions)
Cash cost, after by-product
credits, per silver/gold ounce3
AISC, after by-product
credits, per produced silver/gold ounce4
Previous
Current
Previous
Current
Previous
Current
Greens Creek
$230
$235
$0.75-$2.50
$0.00-$1.75
$6.50-$8.50
$5.50-$7.50
Lucky Friday
$115
$125
$0.75-$2.00
$1.75-$3.50
$7.25-$9.25
$9.75-$11.75
Total Silver
$345
$360
$0.75-$2.50
$0.75-$2.50
$9.75-$11.75
$9.75-$11.75
Casa Berardi
$210
$245
$1,175-$1,325
$1,275-$1,375
$1,450-$1,600
$1,550-$1,775
Total Gold
$210
$245
$1,175-$1,325
$1,275-$1,375
$1,450-$1,600
$1,550-$1,775
2022 Capital and Exploration Outlook
Consolidated capital guidance is increased for the year to
include further inflationary pressures, expansion in scope and
acceleration of certain capital projects from 2023 to 2022. At the
Greens Creek mine, planned capital spend is expected to increase
marginally as some planned expenditures from 2023 will be
accelerated to the second half of 2022. At the Lucky Friday,
capital expenditures for the second half are expected to increase
approximately two fold compared to the first half of 2022 primarily
due to expansion in scope, advancement of expenditures from 2023
into 2022, and inflationary adjustments. Capital expenditures at
the Casa Berardi over the next six months are forecast to increase
primarily due to design change in the planned raise of tailings
storage cell #7.
Guidance for exploration and pre-development expenditures is
unchanged.
(millions)
Previous
Current
Capital expenditures
$135
$150 - $160
Greens Creek
$39 - $42
$42 - $45
Lucky Friday
$49 - $53
$60 - $64
Casa Berardi
$37 - $41
$45 - $48
Exploration and Pre-development
$45
$45
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Thursday, August 4,
2022 at 10:00 a.m. Eastern Daylight Time to discuss these results.
You may join the conference call by dialing toll-free
1-888-330-2391 or for international dialing 1-240-789-2702. The
Conference ID is 4812168. Please dial-in and provide the Conference
ID number at least 10 minutes prior to the start time to join the
call and mitigate any hold times. Hecla's live and archived webcast
can be accessed at www.hecla-mining.com under Investors/Events
& Webcasts.
ONE ON ONE CALLS
Hecla will make available members of management for one on one
calls with any interested parties on Thursday, August 4, from 12:00
p.m. to 2:00 p.m. Eastern Daylight Time.
Hecla invites shareholders, investors, and other interested
parties to schedule a personal, 30-minute virtual meeting (video or
telephone) with a member of management to discuss operations,
exploration, or general matters. Click on the link below to
schedule a call (or copy and paste the link into your web browser.)
You can select a topic once you have entered the meeting calendar.
If you are unable to book a time, either due to high demand or for
other reasons, please reach out to Anvita M. Patil, Vice President
- Investor Relations and Treasurer at amishra@hecla-mining.com or
208-769-4100.
One-on-One meeting URL: https://calendly.com/2022-august-vie
ABOUT HECLA
Founded in 1891, Hecla is the largest silver producer in the
United States. In addition to operating mines in Alaska and Idaho,
and Quebec, Canada, the Company owns a number of exploration and
pre-development properties in world-class silver and gold mining
districts throughout North America.
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
United States generally accepted accounting principles (GAAP).
These measures should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP. The non-GAAP financial measures cited in this release and
listed below are reconciled to their most comparable GAAP measure
at the end of this release.
(1) Cash cost, after by-product credits, per silver and gold
ounce is a non-GAAP measurement, a reconciliation of which to total
cost of sales, 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 and Lucky
Friday 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.
(2) 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 total cost
of sales, expenses for reclamation and exploration at the mines
sites, corporate exploration related to sustaining operations, and
all site sustaining capital costs. AISC, after by-product credits,
is calculated net of depreciation, depletion, and amortization and
by-product credits.
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 (i) in the understanding of the
economics of our operations and performance compared to other
producers and (ii) in the transparency 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.
(3) Free cash flow is a non-GAAP measure calculated as cash
provided by operating activities less additions to properties,
plants and equipment. Cash provided by operating activities for the
Greens Creek, Lucky Friday and Casa Berardi operating segments
excludes exploration and pre-development expense, as it is a
discretionary expenditure and not a component of the mines’
operating performance.
(4) Adjusted EBITDA is a non-GAAP measurement, a reconciliation
of which to net income(loss), the most comparable GAAP measure, can
be found at the end of the release. Adjusted EBITDA is a measure
used by management to evaluate the Company's operating performance
but should not be considered an alternative to net income, 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. Net debt to adjusted EBITDA is a non-GAAP measurement, a
reconciliation of which to debt and net income (loss), the most
comparable GAAP measurements, 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.
(5) 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) as defined by GAAP. They exclude
certain impacts which are of a nature which we believe are not
reflective of our underlying performance. Management believes that
adjusted net income (loss) per common share provides investors with
the ability to better evaluate our underlying operating
performance.
Other
(6) Expectations for 2022 include silver, gold, lead and zinc
production from Greens Creek, Lucky Friday and Casa Berardi
converted using Au $1,700/oz, Ag $22/oz, Zn $1.50/lb., and Pb
$1.00/lb. Numbers may be rounded.
Cautionary Statements to Investors on Forward-Looking
Statements
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbor
created by such sections and other applicable laws, including
Canadian securities laws. 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) Hecla could be the
largest silver producer in the U.S. and Canada; (ii) the Company
will be able to complete the Alexco acquisition; and (iii)
mine-specific and Company-wide 2022 estimates of future production,
sales and costs of sales, as well as cash cost and AISC per ounce
(in each case after by-product credits) and Company-wide estimated
spending on capital, exploration and pre-development for 2022. 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 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; and (xvi) there being no material increases in our
current requirements to post or maintain reclamation and
performance bonds or collateral related thereto.
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; (x) we take a material impairment charge on
our Nevada operations; (xi) we are unable to remain in compliance
with all terms of the credit agreement in order to maintain
continued access to the revolver, and (xii) we are unable to
refinance the maturing senior notes. For a more detailed discussion
of such risks and other factors, see the Company’s 2021 Form 10-K,
filed on February 23, 2022, with the Securities and Exchange
Commission (SEC), as well as the Company’s other SEC filings,
including its Quarterly Report on Form 10-Q filed with the SEC on
or about August 4, 2022. 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 news release or to
reflect the occurrence of unanticipated events, except as may be
required under applicable securities laws. Investors should not
assume that any lack of update to a previously issued
“forward-looking statement” constitutes a reaffirmation of that
statement. Continued reliance on “forward-looking statements” is at
investors’ own risk.
Qualified Person (QP)
Kurt D. Allen, MSc., CPG, VP - Exploration of Hecla Mining
Company and Keith Blair, MSc., CPG, Chief Geologist of Hecla
Limited, who serve as a Qualified Person under S-K 1300 and NI
43-101, supervised the preparation of the scientific and technical
information concerning Hecla’s mineral projects in this news
release. Technical Report Summaries (each a “TRS”) for each of the
Company’s material properties are filed as exhibits 96.1, 96.2 and
96.3 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2021, and are available at www.sec.gov. Information
regarding data verification, surveys and investigations, quality
assurance program and quality control measures and a summary of
analytical or testing procedures for (i) the Greens Creek Mine are
contained in its TRS and in a NI 43-101 technical report titled
“Technical Report for the Greens Creek Mine” effective date
December 31, 2018, (ii) the Lucky Friday Mine are contained in its
TRS and in its technical report titled “Technical Report for the
Lucky Friday Mine Shoshone County, Idaho, USA” effective date April
2, 2014, (iii) Casa Berardi are contained in its TRS and in its
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, and (iv) 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 each TRS and the 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 are contained in technical reports prepared for
Klondex Mines Ltd. for (i) the Fire Creek Mine (technical report
dated March 31, 2018), (ii) the Hollister Mine (technical report
dated May 31, 2017, amended August 9, 2017), and (iii) the Midas
Mine (technical report dated August 31, 2014, amended April 2,
2015). Copies of these technical reports are available under
Hecla’s profile 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 Operations
(dollars and shares in thousands,
except per share amounts - unaudited)
Three Months Ended
Six Months Ended
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Sales
$
191,242
$
217,983
$
377,741
$
428,835
Cost of sales and other direct production
costs
115,907
110,320
221,679
207,029
Depreciation, depletion and
amortization
38,072
45,732
73,370
92,474
Total cost of sales
153,979
156,052
295,049
299,503
Gross profit
37,263
61,931
82,692
129,332
Other operating expenses:
General and administrative
9,692
11,104
17,986
19,111
Exploration and pre-development
11,200
11,241
24,008
17,931
Care and maintenance costs
5,242
5,786
11,447
10,104
Provision for closed operations and
environmental matters
1,472
1,024
2,373
4,733
Other operating expense
1,945
3,634
4,408
7,282
29,551
32,789
60,222
59,161
Income from operations
7,712
29,142
22,470
70,171
Other income (expense):
Interest expense
(10,505
)
$
(10,271
)
(20,911
)
(21,015
)
Fair value adjustments, net
(16,428
)
(18,063
)
(10,463
)
(19,938
)
Net foreign exchange gain (loss)
4,482
(1,907
)
2,444
(3,971
)
Other income (expense)
1,470
(287
)
2,975
(439
)
(20,981
)
(30,528
)
(25,955
)
(45,363
)
(Loss) income before income and mining
taxes
(13,269
)
(1,386
)
(3,485
)
24,808
Income and mining tax (provision)
benefit
(254
)
4,134
(5,885
)
(609
)
Net (loss) income
(13,523
)
2,748
(9,370
)
24,199
Preferred stock dividends
(138
)
(138
)
(276
)
(276
)
(Loss) income applicable to common
shareholders
$
(13,661
)
$
2,610
$
(9,646
)
$
23,923
Basic and diluted (loss) income per common
share after preferred dividends
$
(0.03
)
$
0.01
$
(0.02
)
$
0.04
Weighted average number of common shares
outstanding - basic
539,401
535,531
538,943
534,819
Weighted average number of common shares
outstanding - diluted
539,401
542,262
538,943
541,468
HECLA MINING COMPANY
Condensed Consolidated Statements
of Cash Flows
(dollars in thousands -
unaudited)
Quarter Ended
Six Months Ended
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
OPERATING ACTIVITIES
Net (loss) income
$
(13,523
)
$
2,748
$
(9,370
)
$
24,199
Non-cash elements included in net (loss)
income
Depreciation, depletion and
amortization
38,200
45,904
73,656
92,861
Write-down of inventory
754
6,431
754
6,431
Fair value adjustments, net
(11,940
)
13,837
(14,185
)
5,214
Provision for reclamation and closure
costs
1,628
1,654
3,271
6,183
Stock compensation
1,254
2,802
2,525
3,302
Deferred income taxes
(3,524
)
(7,886
)
(1,290
)
(7,745
)
Foreign exchange loss (gain)
(5,722
)
2,700
(3,442
)
4,455
Other non-cash items, net
499
515
982
1,071
Change in assets and liabilities:
Accounts receivable
16,420
(6,768
)
19,199
(9,432
)
Inventories
(3,271
)
3,599
(8,352
)
5,719
Other current and non-current assets
(2,590
)
2,597
(894
)
4,125
Accounts payable and accrued
liabilities
31,026
18,056
17,119
(6,489
)
Accrued payroll and related benefits
(6,631
)
2,644
278
(5,351
)
Accrued taxes
(9,437
)
(3,030
)
(5,683
)
(999
)
Accrued reclamation and closure costs and
other non-current liabilities
7,040
501
3,524
696
Cash provided by operating
activities
40,183
86,304
78,092
124,240
INVESTING ACTIVITIES
Additions to properties, plants, equipment
and mineral interests
(34,329
)
(31,898
)
(55,807
)
(53,311
)
Proceeds from sale of investments
—
—
2,487
—
Proceeds from disposition of properties,
plants and equipment
113
112
730
131
Purchases of investments
(11,031
)
—
(21,899
)
—
Net cash used in investing
activities
(45,247
)
(31,786
)
(74,489
)
(53,180
)
FINANCING ACTIVITIES
Acquisition of treasury shares
(1,756
)
(4,525
)
(3,677
)
(4,525
)
Dividends paid to common and preferred
stockholders
(3,518
)
(6,165
)
(7,027
)
(10,991
)
Credit facility fees paid
(20
)
—
(74
)
(82
)
Repayments of finance leases
(1,638
)
(1,889
)
(3,333
)
(3,770
)
Net cash used in financing
activities
(6,932
)
(12,579
)
(14,111
)
(19,368
)
Effect of exchange rates on cash
(1,840
)
(195
)
(1,321
)
(28
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(13,836
)
41,744
(11,828
)
51,664
Cash, cash equivalents and restricted cash
at beginning of period
213,070
$
140,803
211,063
130,883
Cash, cash equivalents and restricted cash
at end of period
$
199,234
$
182,547
$
199,234
$
182,547
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
146
$
93
$
18,749
$
18,499
Cash paid for income and mining taxes
$
11,209
$
6,982
$
11,888
$
9,469
HECLA MINING COMPANY
Condensed Consolidated Balance
Sheets
(dollars and shares in thousands
- unaudited)
June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
198,193
$
210,010
Accounts receivable:
Trade
17,828
36,437
Other, net
7,696
8,149
Inventories
75,367
67,765
Derivative assets
9,923
2,709
Other current assets
13,389
16,557
Total current assets
322,396
341,627
Investments
23,931
10,844
Restricted cash
1,041
1,053
Properties, plants, equipment and mineral
interests, net
2,295,962
2,310,810
Operating lease right-of-use asset
11,649
12,435
Deferred income taxes
45,562
45,562
Derivative assets
12,897
2,503
Other non-current assets
3,665
3,974
Total assets
$
2,717,103
$
2,728,808
LIABILITIES
Current liabilities:
Accounts payable and accrued
liabilities
$
84,997
$
68,100
Accrued payroll and related benefits
26,945
28,714
Accrued taxes
8,341
12,306
Finance and operating leases
8,580
8,098
Derivative liabilities
4,228
19,353
Other current liabilities
14,544
14,553
Accrued reclamation and closure costs
10,594
9,259
Total current liabilities
158,229
160,383
Finance and operating leases
18,154
17,726
Accrued reclamation and closure costs
103,747
103,972
Long-term debt
507,841
508,095
Deferred tax liability
143,213
149,706
Derivative liabilities
522
18,528
Other non-current liabilities
2,515
9,611
Total liabilities
934,221
968,021
STOCKHOLDERS’ EQUITY
Preferred stock
39
39
Common stock
137,241
136,391
Capital surplus
2,043,621
2,034,485
Accumulated deficit
(370,048
)
(353,651
)
Accumulated other comprehensive income
(loss)
3,727
(28,456
)
Treasury stock
(31,698
)
(28,021
)
Total shareholders’ equity
1,782,882
1,760,787
Total liabilities and shareholders’
equity
$
2,717,103
$
2,728,808
Common shares outstanding
548,037
545,535
Non-GAAP Measures (Unaudited)
Reconciliation of Cost of Sales (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, Casa Berardi and Nevada Operations units for
the six-month periods ended June 30, 2022 and 2021 and the three
month periods ended June 30 and March 31, 2022.
Cash Cost, After By-product Credits, per Ounce and AISC, After
By-product Credits, per Ounce are measures developed by precious
metals companies (including the Silver Institute and the World Gold
Council) in an effort to provide a uniform standard for comparison
purposes. There can be no assurance, however, that these non-GAAP
measures as we report them are the same as those reported by other
mining companies.
Cash Cost, After By-product Credits, per Ounce is an important
operating statistic that we utilize to measure each mine's
operating performance. AISC, After By-product Credits, per Ounce is
an important operating statistic that we utilize as a measures of
our mines' net cash flow after costs for exploration,
pre-development, reclamation, and sustaining capital. Current GAAP
measures used in the mining industry, such as cost of goods sold,
do not capture all the expenditures incurred to discover, develop
and sustain silver and gold production. Cash Cost, After By-product
Credits, per Ounce and AISC, After By-product Credits, per Ounce
also allow us to benchmark the performance of each of our mines
versus those of our competitors. As a silver and gold mining
company, we also use these statistics on an aggregate basis -
aggregating the Greens Creek and Lucky Friday mines - to compare
our performance with that of other silver mining companies, and
aggregating Casa Berardi and Nevada Operations for comparison to
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. 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.
The Casa Berardi, Nevada Operations and combined gold properties
information below reports Cash Cost, After By-product Credits, per
Gold Ounce and AISC, After By-product Credits, per Gold Ounce for
the production of gold, its primary product, and by-product
revenues earned from silver, which is a by-product at Casa Berardi
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 is not included as a by-product
credit when calculating Cash Cost, After By-product Credits, per
Silver Ounce and AISC, After By-product Credits, per Silver Ounce
for the total of Greens Creek and Lucky Friday, our combined silver
properties. Similarly, the silver produced at our other two units
is not included as a by-product credit when calculating the gold
metrics for Casa Berardi and Nevada Operations.
Reconciliation of Cost of Sales to
Non-GAAP Measures, continued
In thousands (except per ounce
amounts)
Three Months Ended June 30,
2022
Three Months Ended March 31,
2022
Six Months Ended June 30,
2022
Six Months Ended June 30,
2021
Greens Creek
Lucky Friday
Other
Total Silver
Greens Creek
Lucky Friday
Other(2)
Total Silver
Greens Creek
Lucky Friday
Other
Total Silver
Greens Creek
Lucky Friday
Other(2)
Total Silver
Total cost of sales
$
60,506
$
30,348
—
$
90,854
$
49,638
$
29,264
—
$
78,902
$
110,143
$
59,613
—
$
169,756
$
108,668
$
50,696
$
95
$
159,459
Depreciation, depletion and
amortization
(13,629
)
(8,862
)
—
(22,491
)
(11,420
)
(8,032
)
—
(19,452
)
(25,049
)
(16,894
)
—
(41,943
)
(29,313
)
(13,738
)
—
(43,051
)
Treatment costs
8,778
4,803
—
13,581
9,096
3,677
—
12,773
17,892
8,480
—
26,372
19,465
9,664
—
29,129
Change in product inventory
(1,102
)
503
—
(599
)
6,538
(905
)
—
5,633
5,436
(402
)
—
5,034
(34
)
(1,689
)
—
(1,723
)
Reclamation and other costs
(1,005
)
(256
)
—
(1,261
)
(850
)
(361
)
—
(1,211
)
(1,872
)
(619
)
—
(2,491
)
(932
)
(559
)
(95
)
(1,586
)
Cash Cost, Before By-product Credits
(1)
53,548
26,536
—
80,084
53,002
23,643
—
76,645
106,550
50,178
—
156,728
97,854
44,374
—
142,228
Reclamation and other costs
705
282
—
987
705
282
—
987
1,410
564
—
1,974
1,695
528
—
2,223
Exploration
929
—
769
1,698
165
—
716
881
1,094
—
1,485
2,579
1,423
—
885
2,308
Sustaining capital
14,668
8,110
99
22,877
5,956
5,562
48
11,566
20,624
13,671
147
34,442
11,231
10,698
—
21,929
General and administrative
—
—
9,692
9,692
—
—
8,294
8,294
—
—
17,986
17,986
—
—
19,111
19,111
AISC, Before By-product Credits (1)
69,850
34,928
10,560
115,338
59,828
29,487
9,058
98,373
129,678
64,413
19,618
213,709
112,203
55,600
19,996
187,799
By-product credits:
Zinc
(32,828
)
(8,227
)
—
(41,055
)
(28,651
)
(5,977
)
—
(34,628
)
(61,479
)
(14,204
)
—
(75,683
)
(49,277
)
(9,846
)
—
(59,123
)
Gold
(20,364
)
—
—
(20,364
)
(18,583
)
—
—
(18,583
)
(38,947
)
—
—
(38,947
)
(41,434
)
—
—
(41,434
)
Lead
(8,271
)
(14,543
)
—
(22,814
)
(7,966
)
(11,836
)
—
(19,802
)
(16,237
)
(26,379
)
—
(42,616
)
(15,625
)
(20,574
)
—
(36,199
)
Total By-product credits
(61,463
)
(22,770
)
—
(84,233
)
(55,200
)
(17,813
)
—
(73,013
)
(116,663
)
(40,583
)
—
(157,246
)
(106,336
)
(30,420
)
—
(136,756
)
Cash Cost, After By-product Credits
$
(7,915
)
$
3,766
$
—
$
(4,149
)
$
(2,198
)
$
5,830
$
—
$
3,632
$
(10,113
)
$
9,595
$
—
$
(518
)
$
(8,482
)
$
13,954
$
—
$
5,472
AISC, After By-product Credits
$
8,387
$
12,158
$
10,560
$
31,105
$
4,628
$
11,674
$
9,058
$
25,360
$
13,015
$
23,830
$
19,618
$
56,463
$
5,867
$
25,180
$
19,996
$
51,043
Divided by ounces produced
2,410
1,226
3,636
2,430
888
3,318
4,840
2,114
6,954
5,143
1,777
6,920
Cash Cost, Before By-product Credits, per
Silver Ounce
$
22.21
$
21.65
$
22.03
$
21.82
$
26.63
$
23.10
$
22.01
$
23.74
$
22.54
$
19.03
$
24.97
$
20.55
By-product credits per ounce
(25.50
)
(18.58
)
(23.17
)
(22.72
)
(20.06
)
(22.01
)
(24.10
)
(19.20
)
(22.61
)
(20.68
)
(17.12
)
(19.76
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
(3.29
)
$
3.07
$
(1.14
)
$
(0.90
)
$
6.57
$
1.09
$
(2.09
)
$
4.54
$
(0.07
)
$
(1.65
)
$
7.85
$
0.79
AISC, Before By-product Credits, per
Silver Ounce
$
28.98
$
28.49
$
31.72
$
24.62
$
33.21
$
29.65
$
26.79
$
30.47
$
30.73
$
21.82
$
31.29
$
27.14
By-product credits per ounce
(25.50
)
(18.58
)
(23.17
)
(22.72
)
(20.06
)
(22.01
)
(24.10
)
(19.20
)
(22.61
)
(20.68
)
(17.12
)
(19.76
)
AISC, After By-product Credits, per Silver
Ounce
$
3.48
$
9.91
$
8.55
$
1.90
$
13.15
$
7.64
$
2.69
$
11.27
$
8.12
$
1.14
$
14.17
$
7.38
Reconciliation of Cost of Sales to
Non-GAAP Measures, continued
In thousands (except per ounce
amounts)
Three Months Ended June 30,
2022
Three Months Ended March 31,
2022
Six Months Ended June 30,
2022
Six Months Ended June 30,
2021
Casa Berardi
Total Gold
Casa Berardi
Total Gold
Casa Berardi
Total Gold
Casa Berardi
Nevada Operations(3)
Corporate(3)
Total Gold
Total cost of sales
$
61,870
$
61,870
$
62,168
$
62,168
$
124,038
$
124,038
$
114,596
$
25,448
—
$
140,044
Depreciation, depletion and
amortization
(15,459
)
(15,459
)
(15,846
)
(15,846
)
(31,305
)
(31,305
)
(41,191
)
(8,232
)
—
(49,423
)
Treatment costs
457
457
458
458
915
915
1,249
1,730
—
2,979
Change in product inventory
(793
)
(793
)
(563
)
(563
)
(1,356
)
(1,356
)
968
11,499
—
12,467
Reclamation and other costs
(209
)
(209
)
(210
)
(210
)
(419
)
(419
)
(423
)
(245
)
—
(668
)
Exclusion of Nevada Operations costs
—
—
—
—
—
—
—
(5,103
)
—
(5,103
)
Cash Cost, Before By-product Credits
(1)
45,866
45,866
46,007
46,007
91,873
91,873
75,199
25,097
—
100,296
Reclamation and other costs
209
209
210
210
419
419
423
245
—
668
Sustaining Exploration
1,178
1,178
1,394
1,394
2,572
2,572
2,010
—
—
2,010
Sustaining capital
7,597
7,597
7,281
7,281
14,878
14,878
13,822
133
—
13,955
AISC, Before By-product Credits (1)
54,850
54,850
54,892
54,892
109,742
109,742
91,454
25,475
—
116,929
By-product credits:
—
Silver
$
(188
)
(188
)
(166
)
(166
)
(354
)
(354
)
(487
)
(1,103
)
—
(1,590
)
Total By-product credits
(188
)
(188
)
(166
)
(166
)
(354
)
(354
)
(487
)
(1,103
)
—
(1,590
)
Cash Cost, After By-product Credits
$
45,678
$
45,678
$
45,841
$
45,841
$
91,519
$
91,519
$
74,712
$
23,994
$
98,706
AISC, After By-product Credits
$
54,662
$
54,662
$
54,726
$
54,726
$
109,388
$
109,388
$
90,967
$
24,372
$
115,339
Divided by gold ounces produced
33
33
30
30
64
64
68
17
85
Cash Cost, Before By-product Credits, per
Gold Ounce
$
1,377
$
1,377
$
1,521
$
1,521
$
1,446
$
1,446
$
1,113
$
1,434
$
1,180
By-product credits per ounce
(6
)
(6
)
(5
)
(5
)
(6
)
(6
)
(7
)
(63
)
(19
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
1,371
$
1,371
$
1,516
$
1,516
$
1,440
$
1,440
$
1,106
$
1,371
$
1,161
AISC, Before By-product Credits, per Gold
Ounce
$
1,647
$
1,647
$
1,815
$
1,815
$
1,727
$
1,727
$
1,354
$
1,456
$
1,376
By-product credits per ounce
(6
)
(6
)
(5
)
(5
)
(6
)
(6
)
(7
)
(63
)
(19
)
AISC, After By-product Credits, per Gold
Ounce
$
1,641
$
1,641
$
1,810
$
1,810
$
1,721
$
1,721
$
1,347
$
1,393
$
1,357
Reconciliation of Cost of Sales to
Non-GAAP Measures, continued
In thousands (except per ounce
amounts)
Three Months Ended June 30,
2022
Three Months Ended March 31,
2022
Six Months Ended June 30,
2022
Six Months Ended June 30,
2021
Total Silver
Total Gold
Total
Total Silver
Total Gold
Total
Total Silver
Total Gold
Total
Total Silver
Total Gold
Total
Total cost of sales
$
90,854
$
61,870
$
152,724
$
78,902
$
62,168
$
141,070
$
169,756
$
124,038
$
293,794
$
159,459
$
140,044
$
299,503
Depreciation, depletion and
amortization
(22,491
)
(15,459
)
(37,950
)
(19,452
)
(15,846
)
(35,298
)
(41,943
)
(31,305
)
(73,248
)
(43,051
)
(49,423
)
(92,474
)
Treatment costs
13,581
457
14,038
12,773
458
13,231
26,372
915
27,287
29,129
2,979
32,108
Change in product inventory
(599
)
(793
)
(1,392
)
5,633
(563
)
5,070
5,034
(1,356
)
3,678
(1,723
)
12,467
10,744
Reclamation and other costs
(1,261
)
(209
)
(1,470
)
(1,211
)
(210
)
(1,421
)
(2,491
)
(419
)
(2,910
)
(1,586
)
(668
)
(2,254
)
Cash costs excluded
—
—
—
—
—
—
—
—
—
—
(5,103
)
(5,103
)
Cash Cost, Before By-product Credits
(1)
80,084
45,866
125,950
76,645
46,007
122,652
156,728
91,873
248,601
142,228
100,296
$
242,524
Reclamation and other costs
987
209
1,196
987
210
1,197
1,974
419
2,393
2,223
668
2,891
Exploration
1,698
1,178
2,876
881
1,394
2,275
2,579
2,572
5,151
2,308
2,010
4,318
Sustaining capital
22,877
7,597
30,474
11,566
7,281
18,847
34,442
14,878
49,320
21,929
13,955
35,884
General and administrative
9,692
—
9,692
8,294
—
8,294
17,986
—
17,986
19,111
—
19,111
AISC, Before By-product Credits (1)
115,338
54,850
170,188
98,373
54,892
153,265
213,709
109,742
323,451
187,799
116,929
$
304,728
By-product credits:
Zinc
(41,055
)
—
(41,055
)
(34,628
)
—
(34,628
)
(75,683
)
—
(75,683
)
(59,123
)
—
(59,123
)
Gold
(20,364
)
—
(20,364
)
(18,583
)
—
(18,583
)
(38,947
)
—
(38,947
)
(41,434
)
—
(41,434
)
Lead
(22,814
)
—
(22,814
)
(19,802
)
—
(19,802
)
(42,616
)
—
(42,616
)
(36,199
)
—
(36,199
)
Silver
—
(188
)
(188
)
—
(166
)
(166
)
—
(354
)
(354
)
—
(1,590
)
(1,590
)
Total By-product credits
(84,233
)
(188
)
(84,421
)
(73,013
)
(166
)
(73,179
)
(157,246
)
(354
)
(157,600
)
(136,756
)
(1,590
)
(138,346
)
Cash Cost, After By-product Credits
$
(4,149
)
$
45,678
$
41,529
$
3,632
$
45,841
$
49,473
$
(518
)
$
91,519
$
91,001
$
5,472
$
98,706
$
104,178
AISC, After By-product Credits
$
31,105
$
54,662
$
85,767
$
25,360
$
54,726
$
80,086
$
56,463
$
109,388
$
165,851
$
51,043
$
115,339
$
166,382
Divided by ounces produced
3,636
33
3,318
30
6,954
64
6,920
85
Cash Cost, Before By-product Credits, per
Ounce
$
22.03
$
1,377
$
23.10
$
1,521
$
22.54
$
1,446
$
20.55
$
1,180
By-product credits per ounce
(23.17
)
(6
)
(22.01
)
(5
)
(22.61
)
(6
)
(19.76
)
(19
)
Cash Cost, After By-product Credits, per
Ounce
$
(1.14
)
$
1,371
$
1.09
$
1,516
$
(0.07
)
$
1,440
$
0.79
$
1,161
AISC, Before By-product Credits, per
Ounce
$
31.72
$
1,647
$
29.65
$
1,815
$
30.73
$
1,727
$
27.14
$
1,376
By-product credits per ounce
(23.17
)
(6
)
(22.01
)
(5
)
(22.61
)
(6
)
(19.76
)
(19
)
AISC, After By-product Credits, per
Ounce
$
8.55
$
1,641
$
7.64
$
1,810
$
8.12
$
1,721
$
7.38
$
1,357
Reconciliation of Cost of Sales to
Non-GAAP Measures, continued
In thousands (except per ounce
amounts)
Three Months Ended December 31,
2021
Three Months Ended September 30,
2021
Three Months Ended June 30,
2021
Greens Creek
Lucky Friday(2)
Other(3)
Total Silver
Greens Creek
Lucky Friday
Other(3)
Total Silver
Greens Creek
Lucky Friday(2)
Other(3)
Total Silver
Total cost of sales
$
49,252
$
23,251
$
152
$
72,655
$
55,193
$
23,591
$
—
$
78,784
$
55,488
$
27,901
$
1
$
83,390
Depreciation, depletion and
amortization
(6,300
)
(6,518
)
(152
)
(12,970
)
(13,097
)
(6,590
)
—
(19,687
)
(14,492
)
(7,402
)
—
(21,894
)
Treatment costs
8,655
3,636
—
12,291
7,979
3,427
—
11,406
8,924
4,686
—
13,610
Change in product inventory
236
1,351
—
1,587
(122
)
(68
)
—
(190
)
(435
)
(1,596
)
—
(2,031
)
Reclamation and other costs (5)
(1,689
)
(199
)
—
(1,888
)
(786
)
(281
)
—
(1,067
)
(672
)
(325
)
(1
)
(998
)
Cash Cost, Before By-product Credits
(1)
50,154
21,521
—
71,675
49,167
20,079
—
69,246
48,813
23,264
—
72,077
Reclamation and other costs
847
264
—
1,111
848
264
—
1,112
847
264
1,111
Exploration
696
—
867
1,563
2,472
—
474
2,946
1,300
—
450
1,750
Sustaining capital
10,123
7,413
172
17,708
6,228
8,406
—
14,634
6,339
5,244
—
11,583
General and administrative (5)
—
—
6,585
6,585
—
—
8,874
8,874
11,104
11,104
AISC, Before By-product Credits (1)
61,820
29,198
7,624
98,642
58,715
28,749
9,348
96,812
57,299
28,772
11,554
97,625
By-product credits:
Zinc
(25,643
)
(5,022
)
(30,665
)
(25,295
)
(4,611
)
(29,906
)
(26,510
)
(5,093
)
—
(31,603
)
Gold
(15,712
)
0
(15,712
)
(14,864
)
—
(14,864
)
(20,438
)
—
—
(20,438
)
Lead
(7,657
)
(12,204
)
(19,861
)
(7,640
)
(10,188
)
(17,828
)
(8,605
)
(10,799
)
—
(19,404
)
Total By-product credits
(49,012
)
(17,226
)
—
(66,238
)
(47,799
)
(14,799
)
—
(62,598
)
(55,553
)
(15,892
)
—
(71,445
)
Cash Cost, After By-product Credits
$
1,142
$
4,295
$
—
$
5,437
$
1,368
$
5,280
$
—
$
6,648
$
(6,740
)
$
7,372
$
—
$
632
AISC, After By-product Credits
$
12,808
$
11,972
$
7,624
$
32,404
$
10,916
$
13,950
$
9,348
$
34,214
$
1,746
$
12,880
$
11,554
$
26,180
Divided by ounces produced
2,262
955
3,217
1,837
832
2,669
2,558
913
3,471
Cash Cost, Before By-product Credits, per
Silver Ounce
$
22.18
$
22.54
$
22.28
$
26.76
$
24.14
$
25.93
$
19.08
$
25.49
$
20.76
By-product credits per ounce
(21.68
)
(18.04
)
(20.59
)
(26.02
)
(17.79
)
(23.44
)
(21.72
)
(17.42
)
(20.58
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
0.50
$
4.50
$
1.69
$
0.74
$
6.35
$
2.49
$
(2.64
)
$
8.07
$
0.18
AISC, Before By-product Credits, per
Silver Ounce
$
27.34
$
30.58
$
30.67
$
31.96
$
34.58
$
36.26
$
22.40
$
31.52
$
28.12
By-product credits per ounce
(21.68
)
(18.04
)
(20.59
)
(26.02
)
(17.79
)
(23.44
)
(21.72
)
(17.42
)
(20.58
)
AISC, After By-product Credits, per Silver
Ounce
$
5.66
$
12.54
$
10.08
$
5.94
$
16.79
$
12.82
$
0.68
$
14.10
$
7.54
Reconciliation of Cost of Sales to
Non-GAAP Measures, continued
In thousands (except per ounce
amounts)
Three Months Ended December 31,
2021
Three Months Ended September 30,
2021
Three Months Ended June 30,
2021
Casa Berardi
Nevada Operations(4)
Total Gold
Casa Berardi
Nevada Operations(4)
Total Gold
Casa Berardi
Nevada Operations(4)
Total Gold
Total cost of sales
$
57,069
$
2,113
$
59,182
$
58,164
$
21,384
$
79,548
$
54,669
$
17,993
$
72,662
Depreciation, depletion and
amortization
(19,585
)
(320
)
(19,905
)
(19,968
)
(6,135
)
(26,103
)
(18,239
)
(5,599
)
(23,838
)
Treatment costs
423
—
423
475
1
476
535
1,719
2,254
Change in product inventory
4,839
(956
)
3,883
(3,369
)
(12,389
)
(15,758
)
1,015
12,583
13,598
Reclamation and other costs (5)
(208
)
1
(207
)
(210
)
—
(210
)
(215
)
(218
)
(433
)
Exclusion of Nevada Operations costs
—
—
—
—
—
—
—
(4,914
)
(4,914
)
Cash Cost, Before By-product Credits
(1)
42,538
838
43,376
35,092
2,861
37,953
37,765
21,564
59,329
Reclamation and other costs
209
327
536
209
327
536
215
218
433
Exploration
1,775
—
1,775
1,541
—
1,541
1,103
—
1,103
Sustaining capital
10,459
316
10,775
7,208
29
7,237
6,064
44
6,108
AISC, Before By-product Credits (1)
54,981
1,481
56,462
44,050
3,217
47,267
45,147
21,826
66,973
By-product credits:
Silver
(183
)
(21
)
(204
)
(169
)
(6
)
(175
)
(209
)
(1,103
)
(1,312
)
Total By-product credits
(183
)
(21
)
(204
)
(169
)
(6
)
(175
)
(209
)
(1,103
)
(1,312
)
Cash Cost, After By-product Credits
$
42,355
$
817
$
43,172
$
34,923
$
2,855
$
37,778
$
37,556
$
20,461
$
58,017
AISC, After By-product Credits
$
54,798
$
1,460
$
56,258
$
43,881
$
3,211
$
47,092
$
44,938
$
20,723
$
65,661
Divided by gold ounces produced
37
—
37
30
3
33
31
15
46
Cash Cost, Before By-product Credits, per
Gold Ounce
$
1,142
$
1,737
$
1,148
$
1,181
$
1,040
$
1,168
$
1,206
$
1,443
$
1,282
By-product credits per ounce
(5
)
(44
)
(5
)
(6
)
(2
)
(5
)
(7
)
(74
)
(28
)
Cash Cost, After By-product Credits, per
Gold Ounce
$
1,137
$
1,693
$
1,143
$
1,175
$
1,038
$
1,163
$
1,199
$
1,369
$
1,254
AISC, Before By-product Credits, per Gold
Ounce
$
1,475
$
3,073
$
1,499
$
1,482
$
1,169
$
1,455
$
1,441
$
1,460
$
1,447
By-product credits per ounce
(5
)
(44
)
(5
)
(6
)
(2
)
(5
)
(7
)
(74
)
(28
)
AISC, After By-product Credits, per Gold
Ounce
$
1,470
$
3,029
$
1,494
$
1,476
$
1,167
$
1,450
$
1,434
$
1,386
$
1,419
Reconciliation of Cost of Sales to
Non-GAAP Measures, continued
In thousands (except per ounce
amounts)
Three Months Ended December 31,
2021
Three Months Ended September 30,
2021
Three Months Ended June 30,
2021
Total Silver
Total Gold
Total
Total Silver
Total Gold
Total
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
72,655
$
59,182
$
131,837
$
78,784
$
79,548
$
158,332
$
83,390
$
72,662
$
156,052
Depreciation, depletion and
amortization
(12,970
)
(19,905
)
(32,875
)
(19,687
)
(26,103
)
(45,790
)
(21,894
)
(23,838
)
(45,732
)
Treatment costs
12,291
423
12,714
11,406
476
11,882
13,610
2,254
15,864
Change in product inventory
1,587
3,883
5,470
(190
)
(15,758
)
(15,948
)
(2,031
)
13,598
11,567
Reclamation and other costs
(1,888
)
(207
)
(2,095
)
(1,067
)
(210
)
(1,277
)
(998
)
(433
)
(1,431
)
Cash costs excluded
—
—
—
—
—
—
—
(4,914
)
(4,914
)
Cash Cost, Before By-product Credits
(1)
71,675
43,376
115,051
69,246
37,953
107,199
72,077
59,329
131,406
Reclamation and other costs
1,111
536
1,647
1,112
536
1,648
1,111
433
1,544
Exploration
1,563
1,775
3,338
2,946
1,541
4,487
1,750
1,103
2,853
Sustaining capital
17,708
10,775
28,483
14,634
7,237
21,871
11,583
6,108
17,691
General and administrative
6,585
—
6,585
8,874
—
8,874
11,104
—
11,104
AISC, Before By-product Credits (1)
98,642
56,462
155,104
96,812
47,267
144,079
97,625
66,973
164,598
By-product credits:
Zinc
(30,665
)
—
(30,665
)
(29,906
)
—
(29,906
)
(31,603
)
—
(31,603
)
Gold
(15,712
)
—
(15,712
)
(14,864
)
—
(14,864
)
(20,438
)
—
(20,438
)
Lead
(19,861
)
—
(19,861
)
(17,828
)
—
(17,828
)
(19,404
)
—
(19,404
)
Silver
—
(204
)
(204
)
—
(175
)
(175
)
—
(1,312
)
(1,312
)
Total By-product credits
(66,238
)
(204
)
(66,442
)
(62,598
)
(175
)
(62,773
)
(71,445
)
(1,312
)
(72,757
)
Cash Cost, After By-product Credits
$
5,437
$
43,172
$
48,609
$
6,648
$
37,778
$
44,426
$
632
$
58,017
$
58,649
AISC, After By-product Credits
$
32,404
$
56,258
$
88,662
$
34,214
$
47,092
$
81,306
$
26,180
$
65,661
$
91,841
Divided by ounces produced
3,217
37
2,669
33
3,471
46
Cash Cost, Before By-product Credits, per
Ounce
$
22.28
$
1,148
$
25.93
1,168
$
20.76
$
1,282
By-product credits per ounce
(20.59
)
(5
)
(23.44
)
(5
)
(20.58
)
(28
)
Cash Cost, After By-product Credits, per
Ounce
$
1.69
$
1,143
$
2.49
$
1,163
$
0.18
$
1,254
AISC, Before By-product Credits, per
Ounce
$
30.67
$
1,499
$
36.26
$
1,455
$
28.12
$
1,447
By-product credits per ounce
(20.59
)
(5
)
(23.44
)
(5
)
(20.58
)
(28
)
AISC, After By-product Credits, per
Ounce
$
10.08
$
1,494
$
12.82
$
1,450
$
7.54
$
1,419
(1)
Includes all direct and indirect operating
costs related to the physical activities of producing metals,
including mining, processing and other plant costs, third-party
refining and marketing expense, on-site general and administrative
costs, royalties, before by-product revenues earned from all metals
other than the primary metal produced at each unit. AISC, Before
By-product Credits also includes on-site exploration, reclamation,
and sustaining capital costs.
(2)
Mining at San Sebastian was completed in
the third quarter of 2020, and milling was completed in the fourth
quarter of 2020. Care and maintenance costs at San Sebastian
totaling $1.4 million for the first half of 2021 are reported in a
separate line item on our consolidated statements of operations and
excluded from the calculations of cost of sales and other direct
production costs and depreciation, depletion and amortization, Cash
Cost, Before By-product Credits, Cash Cost, After By-product
Credits, AISC, Before By-product Credits, and AISC, After
By-product Credits.
(3)
AISC, Before By-product Credits for our
consolidated silver properties includes corporate costs for general
and administrative expense, exploration and sustaining capital.
(4)
Production was suspended at the Hollister
and Midas mines and Aurora mill in the latter part of 2019. Care
and maintenance at Nevada Operations totaling $5.2 million and $2.7
million for the second quarter of 2022 and 2021, respectively,
($8.8 million and $6.7 million for the first halves of 2022 and
2021) are reported in a separate line item on our consolidated
statements of operations and excluded from the calculations of cost
of sales and other direct production costs and depreciation,
depletion and amortization, Cash Cost, Before By-product Credits,
Cash Cost, After By-product Credits, AISC, Before By-product
Credits, and AISC, After By-product Credits.
2022 Guidance, Previous Estimates:
Reconciliation of Cost of Sales to Non-GAAP Measures,
continued
In thousands (except per ounce
amounts)
Previous Estimate for Twelve
Months Ended December 31, 2022
Greens Creek
Lucky Friday
Other(2)
Total Silver
Casa Berardi
Total Gold
Total cost of sales
$
230,000
$
115,000
$
345,000
$
210,000
$
210,000
Depreciation, depletion and
amortization
(47,900
)
(39,150
)
(87,050
)
(58,250
)
(58,250
)
Treatment costs
34,750
15,650
50,400
500
500
Change in product inventory
(1,500
)
(1,500
)
(3,000
)
1,300
1,300
Reclamation and other costs
500
1,300
1,800
1,200
1,200
Cash Cost, Before By-product Credits
(1)
215,850
91,300
307,150
154,750
154,750
Reclamation and other costs
3,400
1,000
4,400
900
900
Exploration
4,900
—
3,000
7,900
5,300
5,300
Sustaining capital
40,200
28,900
69,100
30,700
30,700
General and administrative
—
—
38,000
38,000
—
—
AISC, Before By-product Credits (1)
264,350
121,200
41,000
426,550
191,650
191,650
By-product credits:
Zinc
(111,640
)
(29,360
)
(141,000
)
—
—
Gold
(66,100
)
—
(66,100
)
—
—
Lead
(29,601
)
(58,375
)
(87,976
)
—
—
Silver
—
—
—
(730
)
(730
)
Total By-product credits
(207,341
)
(87,735
)
—
(295,076
)
(730
)
(730
)
Cash Cost, After By-product Credits
$
8,509
$
3,565
$
—
$
12,074
$
154,020
$
154,020
AISC, After By-product Credits
$
57,009
$
33,465
$
41,000
$
131,474
$
190,920
$
190,920
Divided by silver ounces produced
8,750
4,450
13,200
128.5
128.5
Cash Cost, Before By-product Credits, per
Silver Ounce
$
24.67
$
20.52
$
23.27
$
1,204
$
1,204
By-product credits per silver ounce
(23.70
)
(19.72
)
(22.35
)
(6
)
(6
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
0.97
$
0.80
$
0.92
$
1,198
$
1,198
AISC, Before By-product Credits, per
Silver Ounce
$
30.21
$
27.24
$
32.31
$
1,491
$
1,491
By-product credits per silver ounce
(23.70
)
(19.72
)
(22.35
)
(6
)
(6
)
AISC, After By-product Credits, per Silver
Ounce
$
6.51
$
7.52
$
9.96
$
1,485
$
1,485
2022 Guidance, Current Estimates:
Reconciliation of Cost of Sales to Non-GAAP Measures,
continued
In thousands (except per ounce
amounts)
Current Estimate for Twelve
Months Ended December 31, 2022
Greens Creek
Lucky Friday
Other(2)
Total Silver
Casa Berardi
Total Gold
Total cost of sales
$
235,000
$
125,000
$
360,000
$
245,000
$
245,000
Depreciation, depletion and
amortization
(52,000
)
(38,750
)
(90,750
)
(69,400
)
(69,400
)
Treatment costs
37,500
16,800
54,300
900
900
Change in product inventory
(3,500
)
(4,725
)
(8,225
)
3,300
3,300
Reclamation and other costs
500
1,100
1,600
1,500
1,500
Cash Cost, Before By-product Credits
(1)
217,500
99,425
316,925
181,300
181,300
Reclamation and other costs
2,800
1,100
3,900
800
800
Exploration
5,600
—
3,000
8,600
6,500
6,500
Sustaining capital
45,225
34,500
79,725
43,750
43,750
General and administrative
—
—
38,000
38,000
—
—
AISC, Before By-product Credits (1)
271,125
135,025
41,000
447,150
232,350
232,350
By-product credits:
Zinc
(116,000
)
(28,200
)
(144,200
)
—
—
Gold
(69,200
)
—
(69,200
)
—
—
Lead
(30,900
)
(56,900
)
(87,800
)
—
—
Silver
—
—
—
(730
)
(730
)
Total By-product credits
(216,100
)
(85,100
)
—
(301,200
)
(730
)
(730
)
Cash Cost, After By-product Credits
$
1,400
$
14,325
$
—
$
15,725
$
180,570
$
180,570
AISC, After By-product Credits
$
55,025
$
49,925
$
41,000
$
145,950
$
231,620
$
231,620
Divided by silver ounces produced
8,750
4,450
13,200
131.5
131.5
Cash Cost, Before By-product Credits, per
Silver Ounce
$
24.86
$
22.34
$
24.01
$
1,379
$
1,379
By-product credits per silver ounce
(24.70
)
(19.12
)
(22.82
)
(6
)
(6
)
Cash Cost, After By-product Credits, per
Silver Ounce
$
0.16
$
3.22
$
1.19
$
1,373
$
1,373
AISC, Before By-product Credits, per
Silver Ounce
$
30.99
$
30.34
$
33.88
$
1,767
$
1,767
By-product credits per silver ounce
(24.70
)
(19.12
)
(22.82
)
(6
)
(6
)
AISC, After By-product Credits, per Silver
Ounce
$
6.29
$
11.22
$
11.06
$
1,761
$
1,761
(1)
Includes all direct and indirect operating
costs related to the physical activities of producing metals,
including mining, processing and other plant costs, third-party
refining and marketing expense, non-discretionary on-site general
and administrative costs, royalties and mining production taxes,
before by-product revenues earned from all metals other than the
primary metal produced at each operation. AISC, Before By-product
Credits also includes on-site exploration, reclamation, and
sustaining capital costs.
(2)
AISC, Before By-product Credits for our
consolidated silver properties includes non-discretionary corporate
costs for general and administrative expense, exploration and
sustaining capital.
Reconciliation of Net (Loss) Income Applicable to Common
Shareholders (GAAP) to Adjusted Net (Loss) Income Applicable to
Common Stockholders (non-GAAP)
This release refers to a non-GAAP measure of adjusted net income
(loss) applicable to common stockholders and adjusted net income
(loss) per share, which are indicators of our performance. They
exclude certain impacts which are of a nature which we believe are
not reflective of our underlying performance. Management believes
that adjusted net income (loss) per common share provides investors
with the ability to better evaluate our underlying operating
performance.
Dollars are in thousands
Q2 -2022
Q1-2022
Q4 -2021
Q3 -2021
Q2 -2021
YTD - 2022
YTD-2021
Net (loss) income applicable to common
stockholders (GAAP)
(13,661
)
$
4,015
11,737
(1,117
)
2,610
$
(9,646
)
23,923
Adjusted for items below:
—
Derivative contracts losses (gains)
689
204
25,840
(16,053
)
17,313
893
16,840
Provisional pricing losses (gains)
15,807
(968
)
(5,648
)
(72
)
(3,077
)
14,839
(3,629
)
Unrealized losses (gains) on equity
investments
15,739
(6,100
)
(2,822
)
2,861
750
9,639
4,256
Environmental accruals
—
14
—
—
—
14
2,882
Foreign exchange (gain) loss
(4,482
)
2,038
(393
)
(3,995
)
1,907
(2,444
)
3,971
Care and maintenance costs
5,242
6,205
5,998
6,910
5,786
11,447
10,104
Loss (gain)on disposition of properties,
plants, equipment and mineral interests
5
(8
)
326
(390
)
143
(3
)
152
Adjustments of inventory to net realizable
value
754
—
—
93
6,242
754
6,431
Adjusted income (loss) applicable to
common stockholders
$
20,093
$
5,400
$
35,038
$
(11,763
)
$
31,674
$
25,493
$
64,930
Weighted average shares - basic
539,401
538,490
538,124
536,966
535,531
538,943
534,819
Weighted average shares - diluted
539,401
544,061
543,134
536,966
542,262
539,401
541,468
Basic adjusted net income (loss) per
common stock (in cents)
0.04
0.01
0.07
(0.02
)
0.06
0.05
0.12
Diluted adjusted net income (loss) per
common stock (in cents)
0.04
0.01
0.06
(0.02
)
0.06
0.05
0.12
Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to
Adjusted EBITDA (non-GAAP) and Net Debt (non-GAAP)
This release refers to the non-GAAP measures of adjusted
earnings before interest, taxes, depreciation and amortization
("Adjusted EBITDA"), which is a measure of our operating
performance, and net debt to adjusted EBITDA for the last 12 months
(or "LTM adjusted EBITDA"), which is a measure of our ability to
service our debt. Adjusted EBITDA is calculated as net income
(loss) before the following items: interest expense, income tax
provision, depreciation, depletion, and amortization expense,
acquisition costs, foreign exchange gains and losses, gains and
losses on derivative contracts, ramp-up and suspension costs,
provisional price gains and losses, stock-based compensation,
unrealized losses and gains on investments, provisions for closed
operations, and interest and other income (expense). Net debt is
calculated as total debt, which consists of the liability balances
for our Senior Notes, revolving credit facility and finance leases,
less the total of our cash and cash equivalents. Management
believes that, when presented in conjunction with comparable GAAP
measures, Adjusted EBITDA and net debt to LTM adjusted EBITDA are
useful to investors in evaluating our operating performance and
ability to meet our debt obligations. The following table
reconciles net loss and debt to Adjusted EBITDA and net debt:
Dollars are in thousands
Q2 -2022
Q1-2022
Q4 -2021
Q3 -2021
Q2 -2021
LTM 6/30/2022
FY 2021
Net income (loss)
(13,523
)
$
4,153
11,875
(979
)
2,748
1,526
35,095
Interest expense
10,505
10,406
10,461
10,469
10,271
41,841
41,945
Income and mining tax provision
(benefit)
254
5,631
(25,645
)
(4,533
)
(4,134
)
(24,293
)
(29,569
)
Depreciation, depletion and
amortization
38,072
35,298
32,875
45,790
46,059
152,035
171,793
Foreign exchange (gain) loss
(4,482
)
2,038
(393
)
(3,995
)
1,907
(6,832
)
(417
)
Loss/(gain) on undesignated derivative
contracts
689
204
25,840
(16,053
)
13,078
10,680
11,903
Care and maintenance costs
5,242
6,205
5,998
6,910
5,786
24,355
23,012
Provisional price losses ( gains)
15,807
(968
)
(5,648
)
(72
)
(3,077
)
9,119
(9,349
)
Loss (gain) on disposition of properties,
plants, equipment and mineral interests
5
(8
)
326
(390
)
143
(67
)
87
Stock-based compensation
1,254
1,271
1,307
1,472
2,802
5,304
6,081
Provision for closed operations and
environmental matters
1,628
1,643
3,693
8,088
1,654
15,052
17,964
Unrealized loss (gain) on investments
15,739
(6,100
)
(2,822
)
2,861
750
9,678
4,295
Adjustments of inventory to net realizable
value
754
—
—
93
6,242
847
6,524
Other
(1,470
)
(1,571
)
382
(247
)
278
(2,906
)
(584
)
Adjusted EBITDA
$
70,474
$
58,202
58,249
49,414
84,507
$
236,339
$
278,780
Total debt
534,575
$
521,483
Less: Cash and cash equivalents
$
198,193
$
210,010
Net debt
$
336,382
$
311,473
Net debt/LTM adjusted EBITDA
(non-GAAP)
1.4
1.1
Reconciliation of Cash Provided by Operating Activities
(GAAP) to Free Cash Flow (non-GAAP)
This release refers to a non-GAAP measure of free cash flow,
calculated as cash provided by operating activities, less additions
to properties, plants, equipment and mineral interests. Management
believes that, when presented in conjunction with comparable GAAP
measures, free cash flow is useful to investors in evaluating our
operating performance. The following table reconciles cash provided
by operating activities to free cash flow:
Dollars are in thousands
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
Cash provided by operating activities
$
40,183
$
86,304
$
78,092
$
124,240
Less: Additions to properties, plants
equipment and mineral interests
(34,329
)
(31,898
)
(55,807
)
(53,311
)
Free cash flow
$
5,854
$
54,406
$
22,285
$
70,929
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220804005424/en/
Anvita M. Patil Vice President, Investor Relations and
Treasurer
Cheryl Turner Communications Coordinator
800-HECLA91 (800-432-5291) Investor Relations Email:
hmc-info@hecla-mining.com Website: www.hecla-mining.com
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