Hedging and amended revolver provide financial
flexibility
Hecla Mining Company (NYSE:HL) today announced certain
preliminary second quarter production results,1 changes to its
revolving credit agreement and its hedge position for gold and
silver.
HIGHLIGHTS
- Silver production of 3.0 million ounces, and gold production of
58,390 ounces.
- Silver equivalent production of 11.0 million ounces or gold
equivalent production of 125,359 ounces.2
- Lead production of 5,514 tons and zinc production of 13,315
tons.
- At June 30, 2019, cash, cash equivalents and short-term
investments of approximately $10 million, with a draw on the
revolving line of credit of $52 million.
- Amended revolving credit agreement to allow higher debt to
EBITDA ratios for the next year.
- Established hedges that utilize put options on expected gold
and silver sales through the first quarter of 2020, locking in a
minimum average price of $1,400 per gold ounce and $15.13 per
silver ounce.
“Our strong silver production reflects the continued
outperformance of Greens Creek, which had higher grades and
recoveries during the quarter as expected,” said Phillips S. Baker,
Jr., Hecla’s President and CEO. “San Sebastian is continuing to
perform as expected as we continue the bulk sample test of the
sulfide material. We expect gold production to be higher at both
Casa Berardi and in Nevada in the second half of the year,
particularly the fourth quarter.”
“With the increase in the gold and silver prices we have
purchased puts that assure a minimum price for our projected gold
and silver sales through the end of the first quarter of next year.
This, combined with the amended revolving credit facility, should
provide Hecla with adequate liquidity if prices are lower over the
next several quarters. That said, at these hedged prices, we don’t
expect the revolver to be drawn at the end of the year,” continued
Mr. Baker.
(1)
See cautionary statement regarding
preliminary statements at the end of this release.
(2)
Silver and gold equivalent calculation
based on average actual prices for each metal in the second quarter
as follows: $14.89 for Ag, $1,310 for Au, $0.86 for Pb, and $1.25
for Zn
Greens Creek
At the Greens Creek mine, 2.4 million ounces of silver and
13,256 ounces of gold were produced in the quarter which is the
most silver production in three years. The higher silver
production, when compared to the second quarter of 2018, was due to
higher ore grades as a result of mine sequencing. The mill operated
at an average of 2,301 tons per day (tpd).
Casa Berardi
At the Casa Berardi mine, 28,892 ounces of gold were produced in
the quarter, including 2,658 ounces from the East Mine Crown Pillar
pit. The decrease in gold ounces compared to the second quarter of
2018 was expected due to lower grades and lower mill throughput and
recovery as a result of adjustments to mill components that
continued into the second quarter. The mill operated at an average
of 3,820 tpd. Production of gold is expected to be higher in the
second half of 2019 as installation of the new carbon in leach
(CIL) drivetrain was completed in May and the in-pit crushing of
stockpiled material comes on-line.
San Sebastian
At the San Sebastian mine, 0.5 million ounces of silver and
3,547 ounces of gold were produced in the second quarter. Silver
and gold production were lower compared to the second quarter of
2018 due to lower ore grades, as expected. The mill operated at an
average of 504 tpd.
Nevada Operations
At the Nevada operations, 12,695 ounces of gold and 49,450
ounces of silver were produced. Ore was processed at an average of
642 tpd (combined Midas and Aurora mills).
Lucky Friday
At the Lucky Friday mine, 127,147 ounces of silver were produced
in the quarter. There was limited production and capital
improvements, performed by salaried staff, and limited shipments of
concentrate in the second quarter due to the ongoing strike.
PRODUCTION SUMMARY
Second Quarter Ended
Six Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
PRODUCTION
Increase/
(Decrease)
Increase/
(Decrease)
Silver
3,018,376
2,596,424
16%
5,941,506
5,130,518
16%
Gold
58,390
60,313
(3%)
118,412
118,120
- -
Lead1
5,514
5,522
- -
11,299
11,149
1%
Zinc
13,315
14,299
(7%)
27,259
29,510
(8%)
Greens Creek - Silver
2,372,270
1,999,792
19%
4,605,017
3,913,023
18%
Greens Creek - Gold
13,256
13,720
(3%)
27,584
26,837
3%
Lucky Friday - Silver1
127,147
24,687
415%
300,773
124,467
142%
San Sebastian - Silver
463,735
559,647
(17%)
904,814
1,071,839
(16%)
San Sebastian - Gold
3,547
3,872
(8%)
7,077
8,385
(16%)
Casa Berardi - Gold2
28,892
42,721
(32%)
60,691
82,898
(27%)
Nevada Operations - Silver
(oz)3
49,450
N/A
N/A
116,888
N/A
N/A
Nevada Operations - Gold (oz)3
12,695
N/A
N/A
23,059
N/A
N/A
(1)
Union workers at Lucky Friday have been on
strike since March 13 2017. Limited production being carried out by
salaried staff.
(2)
Casa Berardi also produced 5,774 ounces of
silver in the second quarter 2019 compared to 12,299 ounces of
silver for second quarter 2018.
(3)
The Nevada operations were acquired on
July 20 2018.
ABOUT HECLA
Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading
low-cost U.S. silver producer with operating mines in Alaska, Idaho
and Mexico, and is a growing gold producer with an operating mine
in Quebec, Canada. The Company also has exploration and
pre-development properties in seven world-class silver and gold
mining districts in the U.S., Canada, and Mexico, and an
exploration office and investments in early-stage silver
exploration projects in Canada.
Cautionary Statements Regarding Preliminary Results
All measures of the Company's second quarter 2019 operating and
financial results contained in this news release, including cash,
cash equivalents and short-term investments, are preliminary and
reflect the Company’s expected results as of the date of this news
release. Actual reported second quarter 2019 results are subject to
management's final review as well as review by the Company's
independent registered public accounting firm and may vary
significantly from those expectations because of a number of
factors, including, without limitation, additional or revised
information and changes in accounting standards or policies or in
how those standards are applied.
Cautionary Statements Regarding 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 silver
production for the second quarter of 2019 on a consolidated basis
and at each of the Greens Creek, Lucky Friday and San Sebastian
mines; (ii) estimates of second quarter of 2019 gold production at
Casa Berardi and Nevada operations; (iii) estimates of quarter-end
cash position; (iv) estimates of amounts borrowed under the
Company’s revolving credit agreement (“revolver”) at quarter-end;
(v) continued access to borrowings under the revolver; (vi) minimum
expected prices on the Company’s projected silver and gold
production through the first quarter of 2020; (vii) expected gold
production in the second half of the year, including the fourth
quarter, (viii) the effectiveness of steps taken by the Company to
lessen its risks; and (ix) the level of borrowings under the
revolver at the end of 2019. 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, including 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, 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 second 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 2018
Form 10-K, filed on February 22, 2019, and Form 10-Q filed on May
9, 2019 with the Securities and Exchange Commission (SEC), as well
as the Company’s other SEC filings. The Company does not undertake
any obligation to release publicly revisions to any
“forward-looking statement,” including, without limitation,
outlook, to reflect events or circumstances after the date of this
presentation, or to reflect the occurrence of unanticipated events,
except as may be required under applicable securities laws.
Investors should not assume that any lack of update to a previously
issued “forward-looking statement” constitutes a reaffirmation of
that statement. Continued reliance on “forward-looking statements”
is at investors’ own risk.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190718005179/en/
Mike Westerlund Vice President – Investor Relations 800-HECLA91
(800-432-5291) Investor Relations Email: hmc-info@hecla-mining.com
Website: www.hecla-mining.com
Hecla Mining (NYSE:HL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hecla Mining (NYSE:HL)
Historical Stock Chart
From Apr 2023 to Apr 2024