Increasing annual silver production estimates
on higher Greens Creek grade
Hecla Mining Company (NYSE:HL) today announced second quarter
2019 financial and operating results.
HIGHLIGHTS
- Silver production of 3.0 million ounces and gold production of
60,768 ounces.
- Increasing annual silver production estimate Company-wide to
11.7 million ounces due to higher grades at Greens Creek.
- Total annual gold production estimate Company-wide unchanged at
274,000 ounces.
- Sales of $134.2 million.
- Adjusted net loss applicable to common shareholders of $36.4
million, or $0.07 per share.1
- Adjusted EBITDA of $22.9 million and net debt/adjusted EBITDA
(last 12 months) of 3.9x. 2,3
- Cash and cash equivalents of $9 million, with a draw on the
revolving line of credit of $52 million, at June 30, 2019.
- Amended revolving credit agreement to allow higher net
debt/EBITDA ratios through the second quarter of 2020.
- Locked in minimum average prices of $1,400 per gold ounce and
$15.13 per silver ounce by acquiring put options through the first
quarter of 2020, while allowing full participation in potentially
higher prices.
"Our financial performance in the second quarter was impacted by
several items, including lower by-product credits and the timing of
lead shipments at Greens Creek, and higher depreciation expense,
which more than offset the positive impact of higher grades at
Greens Creek," said Phillips S. Baker, Jr., President and CEO.
"Silver production at Greens Creek continued to be strong due to
higher grades, so we are increasing our estimates for silver
production for the year. Casa Berardi per-ounce costs were higher
due to lower production, which should improve in the second half of
the year with changes made to the mill and expected higher grades.
We were reminded of the strong exploration potential of Casa
Berardi and San Sebastian this quarter with high-grade
intersections underground in the East Mine at Casa and an expanding
oxide discovery at El Toro at San Sebastian. Changes were made in
June at the Nevada operations, so they did not have much impact on
the financial results for the second quarter but should help
improve the cash flow in the second half of the year."
Mr. Baker continued, "We have taken several steps in
anticipation of refinancing our senior notes, due in 21 months.
First, we bought put options that assure us of the minimum prices
for the next few quarters that we receive for gold and silver.
Next, we amended certain terms of our revolving credit agreement to
improve availability to borrow funds. Finally, we have reduced
expenditures, so we expect to be free cash flow positive in the
third quarter and even more in the fourth quarter, enough to have
no net revolver debt at year end. All of this should improve our
debt to EBITDA profile heading into 2020."
FINANCIAL OVERVIEW
Second Quarter Ended
Six Months Ended
HIGHLIGHTS
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
FINANCIAL DATA
Sales (000)
$
134,172
$
147,259
$
286,789
$
286,968
Gross (loss) profit (000)
$
(20,243
)
$
35,002
$
(16,799
)
$
73,788
(Loss) income (loss) applicable to common
shareholders (000)
$
(46,670
)
$
11,936
$
(72,341
)
$
20,038
Basic and diluted (loss) income per common
share
$
(0.10
)
$
0.03
$
(0.15
)
$
0.05
Net (loss) income (000)
$
(46,532
)
$
12,074
$
(72,065
)
$
20,314
Cash (used in) provided by operating
activities (000)
$
(11,317
)
$
30,635
$
8,713
$
47,018
Net loss applicable to common shareholders for the second
quarter 2019 was $46.7 million, or $0.10 per share, compared to net
income applicable to common shareholders of $11.9 million, or $0.03
per share, for the same period in 2018. The second quarter result
was mainly due to the following items:
- Gross loss in Nevada was $20.2 million, which includes $17.8
million in depreciation expense, due to higher costs and lower
grades and recoveries. At Greens Creek, gross profit was $17.1
million lower, primarily due to pricing. While at Casa Berardi,
gross profit was lower by $14.1 million as a result of 8,353 fewer
gold ounces sold, than in the second quarter of 2018, due primarily
to mill maintenance activities.
- Gain on metals derivative contracts of $3.8 million, compared
to a gain of $16.8 million in the second quarter of 2018.
- Loss of $4.6 million on the sale of Hecla’s interest in the
Fayolle property in Quebec.
- Net foreign exchange loss of $4.4 million compared to a gain of
$2.5 million in the second quarter of 2018.
Cash used by operating activities was $11.3 million compared to
cash provided by operating activities of $30.6 million in the
second quarter of 2018, with the decrease mainly due to lower gross
profit and timing of working capital changes.
Adjusted EBITDA was $22.9 million compared to $57.7 million in
the second quarter of 2018, with the decrease mainly due to lower
margins at Casa Berardi, negative results at our Nevada operations,
and lower silver and base metals prices at Greens Creek.
Capital expenditures (excluding capitalized interest) at the
operations totaled $38.9 million for the second quarter compared to
$26.8 million in the second quarter of 2018, with the increase
primarily due to the addition of the Nevada operations. Greens
Creek and Casa Berardi expenditures decreased by $5.5 million and
$0.4 million. Expenditures at Nevada operations, Casa Berardi,
Greens Creek, San Sebastian and Lucky Friday were $17.3 million,
$9.4 million, $8.7 million, $2.1 million, and $1.5 million
respectively.
Metals Prices
The average realized silver price in the second quarter was
$15.01 per ounce, 10% lower than the $16.61 in the second quarter
of 2018. Average realized lead and zinc prices decreased 26% and
9%, respectively, while the average gold price increased 2%.
Metals Forward Sales Contracts
The following table summarizes the quantities of metals
committed under financially settled forward sales contracts at June
30, 2019:
Ounces/Pounds Under Contract
(in thousands)
Average Price per
Ounce/Pound
Silver
Gold
Zinc
Lead
Silver
Gold
Zinc
Lead
Contracts on forecasted sales
Forward contracts
2019 settlements
—
—
25,629
1,653
N/A
N/A
$
1.25
$
0.96
2020 settlements
—
—
12,125
1,102
N/A
N/A
$
1.27
$
0.96
2021 settlements
—
—
N/A
N/A
2022 settlements
—
—
—
N/A
N/A
N/A
The forward contracts represent 14% of the forecasted payable
zinc production for the 36-month period ended June 30, 2022 at an
average price of $1.25 per pound and 3% of the forecasted payable
lead production for the same period at an average price of $0.96
per pound.
Setting A Short-term Floor for Silver and Gold Prices
The Company has bought put option contracts in an amount
approximating the expected silver and gold sales through a portion
of 2020, setting a minimum average price of $1,400 per gold ounce
and $15.13 per silver ounce. Buying a put option sets a floor on
the price the Company expects to receive on substantially all of
its projected near-term production while maintaining exposure to
the upside, other than the transaction costs. This gives the
Company confidence in the minimum prices it will receive.
OPERATIONS OVERVIEW
Overview
The following table provides the production summary on a
consolidated basis for the second quarter and six months ended June
30, 2019 and 2018:
Second Quarter Ended
Six Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
PRODUCTION SUMMARY
Silver -
Ounces produced
3,018,765
2,596,423
5,941,896
5,130,518
Payable ounces sold
2,418,586
2,313,753
5,316,669
4,405,217
Gold -
Ounces produced
60,768
60,313
120,789
118,121
Payable ounces sold
59,127
59,643
120,063
114,482
Lead -
Tons produced
5,515
5,522
11,299
11,149
Payable tons sold
3,963
4,745
8,811
8,613
Zinc -
Tons produced
13,315
14,299
27,259
29,510
Payable tons sold
9,823
10,686
19,356
20,790
The following tables provide a summary of the final production,
cost of sales, cash cost, after by‑product credits, per silver and
gold ounce, and AISC, after by-product credits, per silver and gold
ounce for the second quarter and six months ended June 30, 2019,
with comparisons to the prior year period:
Second Quarter Ended
Greens Creek
Lucky
Friday
San Sebastian
Casa Berardi
Nevada Operations
June 30, 2019
Silver
Gold
Silver
Gold
Silver
Silver
Gold
Gold
Silver
Gold
Silver
Production (ounces)
3,018,765
60,768
2,372,270
13,257
127,147
463,735
3,547
31,270
6,164
12,694
49,449
Increase/(decrease)
422,342
455
372,479
(462
)
102,460
(95,912
)
(325
)
(11,452
)
(6,134
)
12,694
49,449
Cost of sales and other direct
production costs and depreciation, depletion and amortization
(000)
$
61,744
$
92,671
$
45,650
$
—
$
4,951
$
11,143
$
—
$
55,152
$
—
$
37,519
$
—
Increase/(decrease)
$
1,182
$
40,976
$
(2,092
)
N/A
$
3,207
$
67
N/A
$
3,457
N/A
$
37,519
N/A
Cash costs, after by-product credits,
per silver or gold ounce 4, 6
$
3.50
$
1,151
$
2.38
$
—
$
—
$
9.22
$
—
$
1,101
$
—
$
1,274
$
—
Increase/(decrease)
$
4.07
$
376
$
5.85
N/A
$
—
$
—
N/A
$
326
N/A
$
1,274
N/A
AISC, after by-product credits per
silver or gold ounce5
$
11.16
$
1,700
$
6.37
$
—
$
—
$
15.50
$
—
$
1,437
$
—
$
2,347
$
—
Increase/(decrease)
$
(0.24
)
$
661
$
1.94
N/A
$
—
$
(1.65
)
N/A
$
398
N/A
$
2,347
N/A
Six Months Ended
Greens Creek
Lucky
Friday
San Sebastian
Casa Berardi
Nevada Operations
June 30, 2019
Silver
Gold
Silver
Gold
Silver
Silver
Gold
Gold
Silver
Gold
Silver
Production (ounces)
5,941,896
120,789
4,605,017
27,585
300,774
904,814
7,077
63,069
14,404
23,058
116,887
Increase/(decrease)
811,378
2,668
691,994
748
176,307
(167,025
)
(1,308
)
(19,830
)
(6,785
)
23,058
116,887
Cost of sales and other direct
production costs and depreciation, depletion and amortization
(000)
$
130,389
$
173,199
$
99,762
$
—
$
7,132
$
23,495
$
—
$
104,233
$
—
$
68,966
$
—
Increase/(decrease)
$
18,091
$
72,317
$
10,160
N/A
$
1,288
$
6,643
N/A
$
3,351
N/A
$
68,966
N/A
Cash costs, after by-product credits,
per silver or gold ounce 4, 6
$
2.90
$
1,213
$
1.46
$
—
$
—
$
10.20
$
—
$
1,107
$
—
$
1,502
$
—
Increase/(decrease)
$
4.82
$
413
$
5.68
N/A
$
—
$
4.20
N/A
$
307
N/A
$
1,502
N/A
AISC, after by-product credits per
silver or gold ounce5
$
10.29
$
1,729
$
4.85
$
—
$
—
$
16.02
$
—
$
1,387
$
—
$
2,666
$
—
Increase/(decrease)
$
1.68
$
667
$
2.29
N/A
$
—
$
3.02
N/A
$
325
N/A
$
2,666
N/A
Greens Creek Mine - Alaska
At the Greens Creek mine, 2.4 million ounces of silver and
13,257 ounces of gold were produced, compared to 2.0 million ounces
and 13,719 ounces, respectively, in the second quarter of 2018.
Silver production was the most in the last three years, and the
increase compared to the second quarter of 2018 was due to higher
grades. The mill operated at an average of 2,301 tons per day
(tpd), which was slightly higher than the second quarter of
2018.
The cost of sales was $45.7 million, and the cash cost, after
by-product credits, per silver ounce, was $2.38, compared to $47.7
million and $(3.47), respectively, for the second quarter of 2018.4
The AISC, after by-product credits, was $6.37 per silver ounce
compared to $4.43 in the second quarter of 2018.5 The increased
silver production means there is less by-product credit to apply to
each ounce of silver so the cost per ounce after by-products is
higher. The per ounce silver costs were higher primarily due to
lower by-product metal prices and production, partially offset by
higher silver production.
Production in the second half is expected to be similar to the
first half, and to be spread fairly evenly between the third and
fourth quarters, but due to shipment schedules the cash flow should
mostly be in the fourth quarter.
Casa Berardi - Quebec
At the Casa Berardi mine, 31,270 ounces of gold were produced,
including 6,685 ounces from the East Mine Crown Pillar (EMCP) pit,
compared to 42,722 ounces in the second quarter of 2018. The
decrease is primarily due to lower ore grades, and lower mill
recovery as a result of planned adjustments to a number of mill
components to accommodate a higher throughput and the requirement
for a new carbon in leach (CIL) drive train, which was installed in
May. The shortfall in production in the first half of the year is
expected to be made up over the remainder of the year with the
introduction of a pre-crush system and projected higher grades. The
mill operated at an average of 3,820 tpd, which was slightly lower
than the second quarter of 2018.
The cost of sales was $55.2 million and the cash cost, after
by-product credits, per gold ounce was $1,101, compared to $51.7
million and $775, respectively, in the second quarter of 2018.4,6
The increase in cash cost, after by-product credits, per gold ounce
is mainly due lower gold production. Lower production, partially
offset by lower capital spending, resulted in higher AISC, after
by-product credits, of $1,437 per gold ounce, compared to $1,039 in
the second quarter of 2018.5
Production and cash flow from Casa Berardi are expected to be
higher in second half of the year, with the greater impact in the
fourth quarter.
San Sebastian - Mexico
At the San Sebastian mine, 463,735 ounces of silver and 3,547
ounces of gold were produced, compared to 559,647 ounces and 3,872
ounces, respectively, in the second quarter of 2018. The decreases
were due to lower grades, as expected, upon transitioning to
increased throughput coming from underground material, versus
higher-grade open pit material. The mill operated at an average of
504 tpd, which was 21% higher than the second quarter of 2018.
The cost of sales was $11.1 million and the cash cost, after
by-product credits, was $9.22 per silver ounce, compared to $11.1
million and $9.79, respectively, in the second quarter of 2018. The
cash cost, after by-product credits, decreased due to lower mining
costs and higher by-product credits on a per-ounce basis. The AISC,
after by-product credits, was $15.50 per silver ounce compared to
$17.15 in the second quarter of 2018 with the variance due to the
same factors along with lower capital and exploration
spending.5
Production is expected to remain consistent with the first half
of the year but with the cash flow weighted to the fourth quarter.
A review of sulfide ore continues, including a bulk sample to test
the capabilities of the third-party plant and the suitability of
long-hole stoping for the ore body, with results expected by the
fourth quarter of 2019.
Nevada Operations (acquired on July 20, 2018)
For the Nevada operations, 12,694 ounces of gold and 49,449
ounces of silver were produced. During the second quarter, a review
of the Nevada operations was conducted and changes made. The mining
contractor has been demobilized, and the decision made to mine only
currently developed material at Fire Creek and to suspend
production and development at Hollister. Mining at Midas is
expected to continue through the end of the third quarter. Some
surface exploration drilling and hydrology studies are still
planned to gather information on the deposits to aid future
development programs. Additional changes could also be taken with
the goal of turning it into a positive cash flowing unit.
Third-party ore processing arrangements are also being pursued
with the goal of reducing transportation and milling costs. This
could include mills that can process ore that is considered
refractory. With water discharge from Fire Creek higher than it was
a year ago, work is underway to increase discharge permits,
expected to be obtained in the near future and increase
non-consumptive water rights, expected within approximately one
year. These changes, combined with changing how the water is
treated, are important steps towards addressing the increase in
water inflow expected when the mine expands north and
southwards.
Production and cash flow at the Nevada operations are expected
to be higher in the second half of the year, particularly in the
fourth quarter as a result of the reduction in development
spending.
Lucky Friday Mine - Idaho
At the Lucky Friday Mine, 127,147 ounces of silver was produced
compared to 24,687 ounces in the second quarter of 2018 mainly due
to a shift in focus from development to production by the salaried
staff. The higher level of production is helping to defray costs
associated with the strike at Lucky Friday. Cost of sales was $5.0
million compared to $1.7 million in the second quarter of 2018,
mainly the result of increased production.
The Remote Vein Miner (RVM) is fully fabricated. It is expected
to begin operating at EPIROC's test mine in Sweden by the end of
the summer, with delivery to Lucky Friday expected in the second
quarter of 2020.
EXPLORATION
Exploration (including corporate development) expenses for the
second quarter were $4.3 million, a decrease of $3.5 million
compared to the prior year period.
A complete summary of exploration for the second quarter can be
found in the exploration news release entitled "Hecla Reports New
High-Grade at Casa Berardi and Expanding Near-Surface Oxide
Resource at San Sebastian" issued on August 6, 2019.
PRE-DEVELOPMENT
Pre-development spending was $0.8 million for the quarter,
compared to $1.4 million for the second quarter of 2018,
principally to advance the permitting of Rock Creek and
Montanore.
2019 ESTIMATES7
2019 Production Outlook
Silver Production
(Moz)
Gold Production
(Koz)
Silver Equivalent
(Moz)
Gold Equivalent
(Koz)
Previous
(if revised)
Current
Previous
(if revised)
Current
Previous
(if revised)
Current
Previous
(if revised)
Current
Greens Creek
7.7
9.0
50
52
24.0
27.0
305
278
Lucky Friday
0.2
0.5
N/A
N/A
0.2
1.3
N/A
N/A
San Sebastian
2.0
2.0
14
14
3.0
3.0
40
40
Casa Berardi
N/A
N/A
150
146
11.7
12.7
150
146
Nevada Operations
0.1
0.2
60
62
4.9
5.5
63
64
Total
10.0
11.7
274
274
43.8
49.5
558
528
2019 Cost Outlook
Costs of Sales
(million)
Cash cost, after
by-product
credits, per silver/gold
ounce2,5
AISC, after by-product
credits, per
produced silver/gold
ounce3
Previous
(if revised)
Current
Previous
(if revised)
Current
Previous
(if revised)
Current
Greens Creek
$202
$202
$0
$2.25
$5.50
$7.50
Lucky Friday
N/A
N/A
N/A
N/A
N/A
N/A
San Sebastian
$41
$46
$9.00
$9.00
$12.00
$13.00
Total Silver
$243
$248
$1.10
$3.25
$11.00
$12.50
Casa Berardi
$210
$210
$850
$950
$1,150
$1,250
Nevada Operations
$105
$147
$1,200
$1,300
$1,700
$1,600
Total Gold
$315
$357
$950
$1,100
$1,325
$1,425
2019 Capital and Exploration Outlook
Previous
(if revised)
Current
2019E Capital expenditures (excluding
capitalized interest)
$138 million
$138 million
2019E Exploration expenditures
(includes Corporate Development)
$16 million
$15 million
2019E Pre-development
expenditures
$2.5 million
$2.5 million
2019E Research and Development
expenditures
$1 million
$1 million
DIVIDENDS
Common
The Board of Directors elected to declare a quarterly cash
dividend of $0.0025 per share of common stock, payable on or about
September 3, 2019, to shareholders of record on August 23, 2019.
The realized silver price was $15.01 in the second quarter and
therefore did not satisfy the criteria for a larger dividend under
the Company's dividend policy.
Preferred
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, 2019, to shareholders of record on September 13,
2019.
SENIOR MANAGEMENT CHANGES
Hecla today announced changes to its senior leadership
structure.
Mr. Lauren Roberts joins the Company as its Senior Vice
President and Chief Operating Officer. A mining engineer with over
30 years’ experience in the industry, Mr. Roberts has held
progressively more senior roles at Kinross since joining them in
2004, ending as Senior Vice President and Chief Operating Officer.
He previously worked for Hecla from 1989 to 1997 and then spent
seven years at Barrick before joining Kinross.
Mr. Larry Radford, formerly Hecla’s Senior Vice President and
Chief Operating Officer, transitions to the temporary role of Chief
Technical Officer. He will assist with the transition of
responsibilities to Lauren and lead the Technical Services and
Project Development teams.
Mr. Dean McDonald, Senior Vice President, Exploration, is
retiring. Since joining Hecla in 2006, Dean has been instrumental
in the Company achieving record silver reserves in 10 of the past
11 years and strong growth in gold reserves. Dean’s role will be
divided between Keith Blair, who becomes Chief Geologist, and Kurt
Allen, who becomes Director of Exploration.
“Lauren Roberts has held key leadership roles at Kinross, and I
am excited that he has elected to return to Hecla,” said Mr. Baker.
“I want to thank Dean for his significant contributions to Hecla
over the past 13 years and wish him well in his retirement. I want
to thank Larry for enabling a smooth transition, and I also want to
congratulate Keith on becoming Chief Geologist and Kurt on becoming
Director of Exploration.”
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Wednesday, August 7,
at 10:00 a.m. Eastern Time to discuss these results. You may join
the conference call by dialing toll-free 1-855-760-8158 or for
international dialing 1-720-634-2922. The participant passcode is
HECLA. Hecla's live and archived webcast can be accessed at
www.hecla-mining.com under Investors
or via Thomson StreetEvents Network.
ABOUT HECLA
Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading
low-cost U.S. silver producer with operating mines in Alaska,
Idaho, and Mexico and is a gold producer with operating mines in
Quebec, Canada and Nevada. The Company also has exploration and
pre-development properties in seven world-class silver and gold
mining districts in the U.S., Canada and Mexico, and an exploration
office and investments in early-stage silver exploration projects
in Canada.
NOTES
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by
generally accepted accounting principles in the United States
(GAAP). These measures should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with GAAP.
(1) Adjusted net (loss) income applicable to common stockholders
is a non-GAAP measurement, a reconciliation of which to net (loss)
income applicable to common stockholders, the most comparable GAAP
measure, can be found at the end of the release. Adjusted net
(loss) income is a measure used by management to evaluate the
Company's operating performance but should not be considered an
alternative to net (loss) income, or cash (used in) provided by
operating activities as those terms are defined by GAAP, and does
not necessarily indicate whether cash flows will be sufficient to
fund cash needs. In addition, the Company may use it when
formulating performance goals and targets under its incentive
program.
(2) Adjusted EBITDA is a non-GAAP measurement, a reconciliation
of which to net (loss) income, the most comparable GAAP measure,
can be found at the end of the release. Adjusted EBITDA is a
measure used by management to evaluate the Company's operating
performance but should not be considered an alternative to net
(loss) income, or cash (used in) provided by operating activities
as those terms are defined by GAAP, and does not necessarily
indicate whether cash flows will be sufficient to fund cash needs.
In addition, the Company may use it when formulating performance
goals and targets under its incentive program.
(3) Net debt to adjusted EBITDA is a non-GAAP measurement, a
reconciliation of which to debt and net (loss) income, 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.
(4) Cash cost, after by-product credits, per silver or gold
ounce is a non-GAAP measurement, a reconciliation of which to cost
of sales and other direct production costs and depreciation,
depletion and amortization (sometimes referred to as "cost of
sales" in this release), can be found at the end of the release. It
is an important operating statistic that management utilizes to
measure each mine's operating performance. It also allows the
benchmarking of performance of each mine versus those of our
competitors. As a silver and gold mining company, management also
uses the statistic on an aggregate basis - aggregating the Greens
Creek, Lucky Friday and San Sebastian mines - to compare
performance with that of other silver mining companies, and
aggregating Casa Berardi and the Nevada operations, to compare its
performance with other gold mining companies. Similarly, the
statistic is useful in identifying acquisition and investment
opportunities as it provides a common tool for measuring the
financial performance of other mines with varying geologic,
metallurgical and operating characteristics. In addition, the
Company may use it when formulating performance goals and targets
under its incentive program. Cash cost, after by-product credits,
per silver ounce is not presented for Lucky Friday for the second
quarters and first halves of 2019 and 2018, as production was
limited due to the strike and results are not comparable to those
from prior periods and are not indicative of future operating
results under full production.
(5) All in sustaining cost (AISC), after by-product credits, is
a non-GAAP measurement, a reconciliation of which to cost of sales
and other direct production costs and depreciation, depletion and
amortization, the closest GAAP measurement, can be found in the end
of the release. AISC, after by-product credits, includes cost of
sales and other direct production costs, expenses for reclamation
and exploration at the mine sites, corporate exploration related to
sustaining operations, and all site sustaining capital costs. AISC,
after by-product credits, is calculated net of depreciation,
depletion, and amortization and by-product credits. AISC, after
by-product credits, per silver ounce is not presented for Lucky
Friday for the second quarters and first halves of 2019 and 2018,
as production was limited due to the strike and results are not
comparable to those from prior periods and are not indicative of
future operating results under full production.
Current GAAP measures used in the mining industry, such as cost
of goods sold, do not capture all the expenditures incurred to
discover, develop and sustain silver and gold production.
Management believes that all in sustaining costs is a non-GAAP
measure that provides additional information to management,
investors and analysts to help in the understanding of the
economics of our operations and performance compared to other
producers and in the investor's visibility by better defining the
total costs associated with production. Similarly, the statistic is
useful in identifying acquisition and investment opportunities as
it provides a common tool for measuring the financial performance
of other mines with varying geologic, metallurgical and operating
characteristics. In addition, the Company may use it when
formulating performance goals and targets under its incentive
program.
(6) Cash cost, after by-product credits, per gold ounce is only
applicable to Casa Berardi and Nevada Operations production. Gold
produced from Greens Creek and San Sebastian is treated as a
by-product credit against the silver cash cost.
Other
(7) Expectations for 2019 includes silver, gold, lead and zinc
production from Greens Creek, San Sebastian, Casa Berardi, Nevada
Operations and Lucky Friday converted using Au $1,400/oz, Ag
$16.00/oz, Zn $1.10/lb, and Pb $0.90/lb. Prices formerly used were
Au $1,250/oz, Ag $16.00/oz, Zn $1.25/lb, and Pb $1.00/lb.
Numbers may be rounded.
Cautionary Statements to Investors on Forward-Looking
Statements
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbor created by such
sections and other applicable laws, including Canadian securities
laws. When a forward-looking statement expresses or implies an
expectation or belief as to future events or results, such
expectation or belief is expressed in good faith and believed to
have a reasonable basis. However, such statements are subject to
risks, uncertainties and other factors, which could cause actual
results to differ materially from future results expressed,
projected or implied by the forward-looking statements.
Forward-looking statements often address our expected future
business and financial performance and financial condition and
often contain words such as “anticipate,” “intend,” “plan,” “will,”
“could,” “would,” “estimate,” “should,” “expect,” “believe,”
“project,” “target,” “indicative,” “preliminary,” “potential” and
similar expressions. Forward-looking statements in this news
release may include, without limitation: (i) estimates of future
production, sales and cash flows; (ii) successful operation of the
Nevada operations and its impact on Hecla's operations and results;
(iii) expectations regarding the development, growth potential,
financial performance of the Company’s projects; (iv) the Company’s
mineral reserves and resources; (v) continued access to borrowings
under the revolving credit agreement; (vi) minimum expected prices
on the Company’s projected silver and gold production through the
first quarter of 2020; (vii) expected gold and silver 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; (ix) the level of borrowings under the revolving credit
agreement at the end of 2019; and (x) impact of metals prices on
costs and cash flows. The material factors or assumptions used to
develop such forward-looking statements or forward-looking
information include that the Company’s plans for development and
production will proceed as expected and will not require revision
as a result of risks or uncertainties, whether known, unknown or
unanticipated, to which the Company’s operations are subject.
Estimates or expectations of future events or results are based
upon certain assumptions, which may prove to be incorrect, which
could cause actual results to differ from forward-looking
statements. Such assumptions, include, but are not limited to: (i)
there being no significant change to current geotechnical,
metallurgical, hydrological and other physical conditions; (ii)
permitting, development, operations and expansion of the Company’s
projects being consistent with current expectations and mine plans;
(iii) political/regulatory developments in any jurisdiction in
which the Company operates being consistent with its current
expectations; (iv) the exchange rate for the USD/CAD and USD/MXN,
being approximately consistent with current levels; (v) certain
price assumptions for gold, silver, lead and zinc; (vi) prices for
key supplies being approximately consistent with current levels;
(vii) the accuracy of our current mineral reserve and mineral
resource estimates; (viii) the Company’s plans for development and
production will proceed as expected and will not require revision
as a result of risks or uncertainties, whether known, unknown or
unanticipated; (ix) counterparties performing their obligations
under hedging instruments and put option contracts; (x) sufficient
workforce is available and trained to perform assigned tasks; (xi)
weather patterns and rain/snowfall within normal seasonal ranges so
as not to impact operations; (xii) relations with interested
parties, including Native Americans, remain productive; (xiii)
economic terms can be reached with third-party mill operators who
have capacity to process our ore; (xiv) maintaining availability of
water rights; (xv) factors do not arise that reduce available cash
balances, (xvi) there being no material increases in our current
requirements to post or maintain reclamation and performance bonds
or collateral related thereto, and (xvii) the Company's plans for
refinancing its high yield notes proceeding as expected.
In addition, material risks that could cause actual results to
differ from forward-looking statements include, but are not limited
to: (i) gold, silver and other metals price volatility; (ii)
operating risks; (iii) currency fluctuations; (iv) increased
production costs and variances in ore grade or recovery rates from
those assumed in mining plans; (v) community relations; (vi)
conflict resolution and outcome of projects or oppositions; (vii)
litigation, political, regulatory, labor and environmental risks;
(viii) exploration risks and results, including that mineral
resources are not mineral reserves, they do not have demonstrated
economic viability and there is no certainty that they can be
upgraded to mineral reserves through continued exploration; (ix)
the failure of counterparties to perform their obligations under
hedging instruments, including put option contracts; (x) our plans
for improvements at our Nevada operations, including at Fire Creek,
are not successful; (xi) our estimates for the third and fourth
quarter results are inaccurate; (xii) we take a material impairment
charge on our Nevada operations; (xiii) we are unable to remain in
compliance with all terms of the credit agreement in order to
maintain continued access to the revolver, and (xiv) we are unable
to refinance the maturing high yield notes. For a more detailed
discussion of such risks and other factors, see the Company’s 2018
Form 10-K, filed on February 22, 2019, and Form 10-Q filed on each
of May 9, and August 7, 2019 with the Securities and Exchange
Commission (SEC), as well as the Company’s other SEC filings. The
Company does not undertake any obligation to release publicly
revisions to any “forward-looking statement,” including, without
limitation, outlook, to reflect events or circumstances after the
date of this presentation, or to reflect the occurrence of
unanticipated events, except as may be required under applicable
securities laws. Investors should not assume that any lack of
update to a previously issued “forward-looking statement”
constitutes a reaffirmation of that statement. Continued reliance
on “forward-looking statements” is at investors’ own risk.
Qualified Person (QP) Pursuant to
Canadian National Instrument 43-101
Dean McDonald, PhD. P.Geo., Senior Vice President - Exploration
of Hecla Mining Company, who serves as a Qualified Person under
National Instrument 43-101, supervised the preparation of the
scientific and technical information concerning Hecla’s mineral
projects in this news release. Information regarding data
verification, surveys and investigations, quality assurance program
and quality control measures and a summary of sample, analytical or
testing procedures for the Greens Creek Mine are contained in a
technical report prepared for Hecla titled “Technical Report for
the Greens Creek Mine, Juneau, Alaska, USA” effective date March
28, 2013, and for the Lucky Friday Mine are contained in a
technical report prepared for Hecla titled “Technical Report on the
Lucky Friday Mine Shoshone County, Idaho, USA” effective date April
2, 2014, for the Casa Berardi Mine are contained in a technical
report prepared for Hecla titled "Technical Report on the Mineral
Resource and Mineral Reserve Estimate for the Casa Berardi Mine,
Northwestern Quebec, Canada" effective date March 31, 2014 (the
"Casa Berardi Technical Report"), and for the San Sebastian Mine
are contained in a technical report prepared for Hecla titled
"Technical Report for the San Sebastian Ag-Au Property, Durango,
Mexico" effective date September 8, 2015. Also included in these
three 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. Copies of these technical reports are available
under Hecla's profile on SEDAR at www.sedar.com.
The current Casa Berardi drill program was performed on core
sawed in half and included the insertion of blanks and standards of
variable grade in every 24 core samples. Standards were generally
provided by Analytical Solutions Ltd and prepared in 30-gram bags.
Samples were sent to the Swastika Laboratories in Swastika,
Ontario, a registered accredited laboratory, where they were dried,
crushed, and split for gold analysis. Analysis for gold was
completed by fire assay with AA finish. Gold over-limits were
analyzed by fire assay with gravimetric finish. Data received from
the lab were subject to validation using in-built program triggers
to identify outside limit blank or standard assays that require
re-analysis. Over 5% of the original pulps and rejects are sent for
re-assay to ALS Chemex in Val d’Or for quality control.
Dr. McDonald reviewed and verified information regarding drill
sampling, data verification of all digitally collected data, drill
surveys and specific gravity determinations relating to the Casa
Berardi mine. The review encompassed quality assurance programs and
quality control measures including analytical or testing practice,
chain-of-custody procedures, sample storage procedures and included
independent sample collection and analysis. This review found the
information and procedures meet industry standards and are adequate
for Mineral Resource and Mineral Reserve estimation and mine
planning purposes.
HECLA MINING COMPANY
Condensed Consolidated Statements
of (Loss) Income
(dollars and shares in thousands,
except per share amounts - unaudited)
Second Quarter Ended
Six Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Sales of products
$
134,172
$
147,259
$
286,789
$
286,968
Cost of sales and other direct production
costs
104,938
80,440
215,324
153,309
Depreciation, depletion and
amortization
49,477
31,817
88,264
59,871
154,415
112,257
303,588
213,180
Gross (loss) profit
(20,243
)
35,002
(16,799
)
73,788
Other operating expenses:
General and administrative
8,918
9,787
18,877
17,522
Exploration
4,346
7,838
8,748
15,198
Pre-development
798
1,415
1,654
2,420
Research and development
158
2,337
561
3,773
Other operating expense
657
674
1,244
1,319
Loss (gain) on disposition or impairment
of properties, plants, equipment and mineral interests
4,642
(36
)
4,642
(166
)
Provision for closed operations and
environmental matters
1,052
1,420
1,622
2,682
Suspension-related costs
2,266
6,801
5,044
11,818
Acquisition costs
397
1,010
410
3,517
23,234
31,246
42,802
58,083
(Loss) income from operations
(43,477
)
3,756
(59,601
)
15,705
Other income (expense):
Unrealized loss on investments
(1,129
)
(564
)
(1,033
)
(254
)
Gain on derivative contracts
3,798
16,804
1,999
20,811
Other (expense) income
(1,187
)
108
(2,311
)
52
Net foreign exchange gain (loss)
(4,381
)
2,476
(7,514
)
5,068
Interest expense
(11,335
)
(10,079
)
(22,000
)
(19,873
)
(14,234
)
8,745
(30,859
)
5,804
(Loss) Income before income taxes
(57,711
)
12,501
(90,460
)
21,509
Income tax benefit (provision)
11,179
(427
)
18,395
(1,195
)
Net (loss) income
(46,532
)
12,074
(72,065
)
20,314
Preferred stock dividends
(138
)
(138
)
(276
)
(276
)
(Loss) Income applicable to common
shareholders
$
(46,670
)
$
11,936
$
(72,341
)
$
20,038
Basic and diluted (loss) income per common
share after preferred dividends
$
(0.10
)
$
0.03
$
(0.15
)
$
0.05
Weighted average number of common shares
outstanding - basic
486,065
400,619
484,438
399,972
Weighted average number of common shares
outstanding - diluted
486,065
403,610
484,438
402,873
HECLA MINING COMPANY
Condensed Consolidated Balance
Sheets
(dollars and shares in thousands
- unaudited)
June 30, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
9,434
$
27,389
Accounts receivable:
Trade
6,877
4,184
Taxes
25,326
14,191
Other, net
7,367
7,443
Inventories
80,602
87,533
Prepaid taxes
288
12,231
Other current assets
15,524
11,179
Total current assets
145,418
164,150
Non-current investments
5,815
6,583
Non-current restricted cash and
investments
1,025
1,025
Properties, plants, equipment and mineral
interests, net
2,485,869
2,520,004
Operating lease right-of-use asset
19,019
—
Non-current deferred income taxes
3,395
1,987
Other non-current assets and deferred
charges
10,172
10,195
Total assets
$
2,670,713
$
2,703,944
LIABILITIES
Current liabilities:
Accounts payable and accrued
liabilities
$
69,336
$
77,861
Accrued payroll and related benefits
21,357
30,034
Accrued taxes
1,434
7,727
Current portion of finance leases
5,392
5,264
Current portion of operating leases
6,628
—
Other current liabilities
6,882
11,898
Current portion of accrued reclamation and
closure costs
6,824
3,410
Total current liabilities
117,853
136,194
Non-current finance leases
8,013
7,871
Non-current operating leases
12,410
—
Accrued reclamation and closure costs
103,782
104,979
Long-term debt
586,667
532,799
Non-current deferred tax liability
148,338
173,537
Non-current pension liability
48,448
47,711
Other non-current liabilities
5,974
9,890
Total liabilities
1,031,485
1,012,981
SHAREHOLDERS’ EQUITY
Preferred stock
39
39
Common stock
123,701
121,956
Capital surplus
1,895,617
1,880,481
Accumulated deficit
(323,079
)
(248,308
)
Accumulated other comprehensive loss
(34,670
)
(42,469
)
Treasury stock
(22,380
)
(20,736
)
Total shareholders’ equity
1,639,228
1,690,963
Total liabilities and shareholders’
equity
$
2,670,713
$
2,703,944
Common shares outstanding
488,870
399,176
HECLA MINING COMPANY
Condensed Consolidated Statements
of Cash Flows
(dollars in thousands -
unaudited)
Six Months Ended
June 30, 2019
June 30, 2018
OPERATING ACTIVITIES
Net (loss) income
$
(72,065
)
$
20,314
Non-cash elements included in net (loss)
income:
Depreciation, depletion and
amortization
90,821
62,852
Unrealized loss on investments
1,033
254
Adjustment of inventory to market
value
1,399
—
Gain on disposition of properties, plants,
equipment and mineral interests
4,642
(166
)
Provision for reclamation and closure
costs
3,209
2,640
Stock compensation
3,552
2,441
Deferred income taxes
(22,585
)
(2,977
)
Amortization of loan origination fees
1,252
898
Gain on derivative contracts
(6,101
)
(30,236
)
Foreign exchange loss (gain)
12,217
(5,348
)
Other non-cash items, net
3
(35
)
Change in assets and liabilities:
Accounts receivable
(12,772
)
2,471
Inventories
(147
)
(6,865
)
Other current and non-current assets
16,784
(2,507
)
Accounts payable and accrued
liabilities
(12,085
)
8,701
Accrued payroll and related benefits
1,660
(337
)
Accrued taxes
(6,452
)
(672
)
Accrued reclamation and closure costs and
other non-current liabilities
4,348
(4,410
)
Cash provided by operating
activities
8,713
47,018
INVESTING ACTIVITIES
Additions to properties, plants, equipment
and mineral interests
(71,245
)
(43,304
)
Proceeds from disposition of properties,
plants and equipment
25
463
Purchases of investments
(107
)
(31,682
)
Maturities of investments
—
59,336
Net cash used in investing
activities
(71,327
)
(15,187
)
FINANCING ACTIVITIES
Acquisition of treasury shares
(1,644
)
(2,694
)
Dividends paid to common shareholders
(2,430
)
(2,000
)
Dividends paid to preferred
shareholders
(276
)
(276
)
Credit availability and debt issuance fees
paid
(46
)
(3
)
Payments on debt
(118,000
)
—
Borrowings on debt
170,000
31,024
Repayments of finance leases
(3,377
)
(3,762
)
Net cash provided by financing
activities
44,227
22,289
Effect of exchange rates on cash
432
(532
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(17,955
)
53,588
Cash, cash equivalents and restricted cash
at beginning of period
28,414
187,139
Cash, cash equivalents and restricted cash
at end of period
$
10,459
$
240,727
HECLA MINING COMPANY
Production Data
Three Months Ended
Six Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
GREENS CREEK UNIT
Tons of ore milled
209,370
208,409
416,195
419,839
Mining cost per ton of ore
$
80.41
$
69.83
$
79.62
$
69.41
Milling cost per ton of ore
$
35.10
$
33.59
$
35.48
$
33.11
Ore grade milled - Silver (oz./ton)
14.36
12.46
13.91
12.08
Ore grade milled - Gold (oz./ton)
0.092
0.100
0.095
0.097
Ore grade milled - Lead (%)
2.75
3.17
2.79
3.06
Ore grade milled - Zinc (%)
6.82
7.84
7.07
7.95
Silver produced (oz.)
2,372,270
1,999,791
4,605,017
3,913,023
Gold produced (oz.)
13,257
13,719
27,585
26,837
Lead produced (tons)
4,628
5,305
9,410
10,326
Zinc produced (tons)
12,739
14,179
26,257
28,978
Cash cost, after by-product credits, per
silver ounce 1
$
2.38
$
(3.47
)
$
1.46
$
(4.22
)
AISC, after by-product credits, per silver
ounce 1
$
6.37
$
4.43
$
4.85
$
2.56
Capital additions (in thousands)
$
8,665
$
14,183
$
13,977
$
23,665
LUCKY FRIDAY UNIT
Tons of ore milled
13,697
3,447
27,500
13,006
Ore grade milled - Silver (oz./ton)
10.12
10.63
11.73
10.98
Ore grade milled - Lead (%)
7.19
7.28
7.58
7.01
Ore grade milled - Zinc (%)
5.03
3.43
4.28
4.43
Silver produced (oz.)
127,147
24,687
300,774
124,467
Lead produced (tons)
887
217
1,889
823
Zinc produced (tons)
576
120
1,002
532
Cash cost, after by-product credits, per
silver ounce 1
$
—
$
—
$
—
—
AISC, after by-product credits, per silver
ounce 1
$
—
$
—
$
—
$
—
Capital additions (in thousands)
$
1,481
$
1,061
$
3,207
$
2,049
Three Months Ended
Six Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
CASA BERARDI UNIT
Tons of ore milled - underground
200,148
184,373
389,504
375,706
Tons of ore milled - surface pit
147,448
165,564
287,850
322,780
Tons of ore milled - total
347,596
349,937
677,347
698,486
Surface tons mined - ore and waste
1,862,402
1,961,171
4,022,525
3,637,605
Mining cost per ton of ore -
underground
$
94.16
$
106.75
$
101.89
$
106.28
Mining cost per ton - combined
$
76.35
$
73.61
$
81.11
$
75.28
Mining cost per ton of ore and waste -
surface tons mined
$
4.13
$
3.10
$
3.96
$
3.48
Milling cost per ton of ore
$
18.28
$
16.71
$
17.06
$
16.34
Ore grade milled - Gold (oz./ton) -
underground
0.16
0.209
0.16
0.195
Ore grade milled - Gold (oz./ton) -
surface pit
0.05
0.062
0.05
0.07
Ore grade milled - Gold (oz./ton) -
combined
0.11
0.14
0.12
0.137
Ore grade milled - Silver (oz./ton)
0.02
0.04
0.03
0.03
Gold produced (oz.) - underground
24,585
33,743
49,848
63,265
Gold produced (oz.) - surface pit
6,685
8,979
13,221
19,634
Gold produced (oz.) - total
31,270
42,722
63,069
82,899
Silver produced (oz.)
6,164
12,298
14,404
21,189
Cash cost, after by-product credits, per
gold ounce 1
$
1,101
$
775
$
1,107
$
800
AISC, after by-product credits, per gold
ounce 1
$
1,437
$
1,039
$
1,387
$
1,062
Capital additions (in thousands)
$
9,442
$
9,809
$
15,121
$
18,876
SAN SEBASTIAN
Tons of ore milled
45,869
37,780
90,344
72,177
Mining cost per ton of ore
$
108.25
$
180.12
$
116.79
$
149.14
Milling cost per ton of ore
$
61.43
$
65.46
$
61.81
$
66.25
Ore grade milled - Silver (oz./ton)
11.03
15.93
10.99
16.01
Ore grade milled - Gold (oz./ton)
0.092
0.115
0.093
0.127
Silver produced (oz.)
463,735
559,647
904,814
1,071,839
Gold produced (oz.)
3,547
3,872
7,077
8,385
Cash cost, after by-product credits, per
silver ounce 1
$
9.22
$
9.79
$
10.20
$
6.46
AISC, after by-product credits, per silver
ounce 1
$
15.50
$
17.15
$
16.02
$
12.95
Capital additions (in thousands)
$
2,084
$
1,680
$
3,980
$
2,110
NEVADA OPERATIONS
Tons of ore milled
58,417
99,782
Mining cost per ton of ore
$
129.75
$
164.08
Milling cost per ton of ore
$
75.44
$
90.74
Ore grade milled - Gold (oz./ton)
0.259
0.276
Ore grade milled - Silver (oz./ton)
1.63
1.99
Gold produced (oz.)
12,694
—
23,058
—
Silver produced (oz.)
49,449
—
116,887
—
Cash cost, after by-product credits, per
gold ounce 1
$
1,274
$
—
$
1,502
$
—
AISC, after by-product credits, per gold
ounce 1
$
2,347
$
—
$
2,666
$
—
Capital additions (in thousands)
$
17,269
$
—
$
39,074
$
—
(1)
Cash cost, after by-product credits, per
ounce and AISC, after by-product credits, per ounce represent
non-U.S. Generally Accepted Accounting Principles (GAAP)
measurements. A reconciliation of cost of sales and other direct
production costs and depreciation, depletion and amortization
(GAAP) to cash cost, after by-product credits can be found in the
cash cost per ounce reconciliation section of this news release.
Gold, lead and zinc produced have been treated as by-product
credits in calculating silver costs per ounce. The primary metal
produced at Casa Berardi is gold, with a by-product credit for the
value of silver production.
Non-GAAP Measures
(Unaudited)
Reconciliation of Cost of Sales and Other Direct Production
Costs and Depreciation, Depletion and Amortization (GAAP) to Cash
Cost, Before By-product Credits and Cash Cost, After By-product
Credits (non-GAAP) and All-In Sustaining Cost, Before By-product
Credits and All-In Sustaining Cost, After By-product Credits
(non-GAAP)
The tables below present reconciliations between the most
comparable GAAP measure of cost of sales and other direct
production costs and depreciation, depletion and amortization to
the non-GAAP measures of (i) Cash Cost, Before By-product Credits,
(ii) Cash Cost, After By-product Credits, (iii) AISC, Before
By-product Credits and (iv) AISC, After By-product Credits for our
operations at the Greens Creek, Lucky Friday, San Sebastian, Casa
Berardi and Nevada Operations units for the three- and six-month
periods ended June 30, 2019 and 2018 and for estimated result for
the full-year of 2018.
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, Lucky Friday and San Sebastian 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 and mining production taxes. AISC, Before By-product
Credits for each mine also includes on-site exploration,
reclamation, and sustaining capital costs. AISC, Before By-product
Credits for our consolidated silver properties also includes
corporate costs for general and administrative expense,
reclamation, exploration, and pre-development. By-product credits
include revenues earned from all metals other than the primary
metal produced at each unit. As depicted in the tables below,
by-product credits comprise an essential element of our silver unit
cost structure, distinguishing our silver operations due to the
polymetallic nature of their orebodies. Cash Cost, After By-product
Credits, per Ounce and AISC, After By-product Credits, per Ounce
provide management and investors an indication of operating cash
flow, after consideration of the average price, received from
production. We also use these measurements for the comparative
monitoring of performance of our mining operations period-to-period
from a cash flow perspective. Cash Cost, After By-product Credits,
per Ounce is a measure developed by precious metals companies
(including the Silver Institute) in an effort to provide a uniform
standard for comparison purposes. There can be no assurance,
however, that our reporting of these non-GAAP measures are the same
as those reported by other mining companies.
The Casa Berardi, 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, Lucky Friday and San Sebastian, our
combined silver properties. Similarly, the silver produced at our
other three units is not included as a by-product credit when
calculating the gold metrics for Casa Berardi and Nevada
Operations.
In thousands (except per ounce
amounts)
Three Months Ended June 30,
2019
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
45,650
4,951
$
11,143
$
61,744
Depreciation, depletion and
amortization
(10,850
)
(422
)
(1,848
)
(13,120
)
Treatment costs
10,964
524
238
11,726
Change in product inventory
4,577
(641
)
(190
)
3,746
Reclamation and other costs
(933
)
—
(422
)
(1,355
)
Exclusion of Lucky Friday costs
—
(4,412
)
—
(4,412
)
Cash Cost, Before By-product Credits
(1)
49,408
—
8,921
58,329
Reclamation and other costs
738
123
861
Exploration
79
1,483
497
2,059
Sustaining capital
8,665
1,308
12
9,985
General and administrative
8,918
8,918
AISC, Before By-product Credits (1)
58,890
—
11,835
80,152
By-product credits:
Zinc
(22,221
)
—
(22,221
)
Gold
(15,350
)
—
(4,645
)
(19,995
)
Lead
(6,198
)
—
(6,198
)
Silver
Total By-product credits
(43,769
)
—
(4,645
)
(48,414
)
Cash Cost, After By-product Credits
$
5,639
$
—
$
4,276
$
9,915
AISC, After By-product Credits
$
15,121
$
—
$
7,190
$
31,738
Divided by ounces produced
2,372
—
464
2,836
Cash Cost, Before By-product Credits, per
Ounce
$
20.83
$
—
$
19.23
$
20.57
By-product credits per ounce
(18.45
)
—
(10.01
)
(17.07
)
Cash Cost, After By-product Credits, per
Ounce
$
2.38
$
—
$
9.22
$
3.50
AISC, Before By-product Credits, per
Ounce
$
24.82
$
—
$
25.51
$
28.23
By-product credits per ounce
(18.45
)
—
(10.01
)
(17.07
)
AISC, After By-product Credits, per
Ounce
$
6.37
$
—
$
15.50
$
11.16
In thousands (except per ounce amounts)
Three months ended June 30,
2019
Casa
Berardi
Nevada
Operations(4)
Total Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
55,152
$
37,519
$
92,671
Depreciation, depletion and
amortization
(18,561
)
(17,796
)
(36,357
)
Treatment costs
427
36
463
Change in product inventory
(2,367
)
(1,969
)
(4,336
)
Reclamation and other costs
(128
)
(885
)
(1,013
)
Cash Cost, Before By-product Credits
(1)
34,523
16,905
51,428
Reclamation and other costs
127
378
505
Exploration
941
698
1,639
Sustaining capital
9,431
12,553
21,984
General and administrative
—
AISC, Before By-product Credits (1)
45,022
30,534
75,556
By-product credits:
Silver
(91
)
(739
)
(830
)
Total By-product credits
(91
)
(739
)
(830
)
Cash Cost, After By-product Credits
$
34,432
$
16,166
$
50,598
AISC, After By-product Credits
$
44,931
$
29,795
$
74,726
Divided by ounces produced
31
13
44
Cash Cost, Before By-product Credits, per
Ounce
$
1,104.02
$
1,331.73
$
1,169.78
By-product credits per ounce
(2.91
)
(58.22
)
(18.88
)
Cash Cost, After By-product Credits, per
Ounce
$
1,101.11
$
1,273.51
$
1,150.90
AISC, Before By-product Credits, per
Ounce
$
1,439.84
$
2,405.38
$
1,718.62
By-product credits per ounce
(2.91
)
(58.22
)
(18.88
)
AISC, After By-product Credits, per
Ounce
$
1,436.93
$
2,347.16
$
1,699.74
In thousands (except per ounce amounts)
Three months ended June 30,
2019
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
61,744
$
92,671
$
154,415
Depreciation, depletion and
amortization
(13,120
)
(36,357
)
(49,477
)
Treatment costs
11,726
463
12,189
Change in product inventory
3,746
(4,336
)
(590
)
Reclamation and other costs
(1,355
)
(1,013
)
(2,368
)
Exclusion of Lucky Friday costs
(4,412
)
—
(4,412
)
Cash Cost, Before By-product Credits
(1)
58,329
51,428
109,757
Reclamation and other costs
861
505
1,366
Exploration
2,059
1,639
3,698
Sustaining capital
9,985
21,984
31,969
General and administrative
8,918
—
8,918
AISC, Before By-product Credits (1)
80,152
75,556
155,708
By-product credits:
Zinc
(22,221
)
—
(22,221
)
Gold
(19,995
)
—
(19,995
)
Lead
(6,198
)
—
(6,198
)
Silver
(830
)
(830
)
Total By-product credits
(48,414
)
(830
)
(49,244
)
Cash Cost, After By-product Credits
$
9,915
$
50,598
$
60,513
AISC, After By-product Credits
$
31,738
$
74,726
$
106,464
Divided by ounces produced
2,836
44
Cash Cost, Before By-product Credits, per
Ounce
$
20.57
$
1,169.78
By-product credits per ounce
(17.07
)
(18.88
)
Cash Cost, After By-product Credits, per
Ounce
$
3.50
$
1,150.90
AISC, Before By-product Credits, per
Ounce
$
28.23
$
1,718.62
By-product credits per ounce
(17.07
)
(18.88
)
AISC, After By-product Credits, per
Ounce
$
11.16
$
1,699.74
In thousands (except per ounce amounts)
Three Months Ended June 30,
2018
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Casa
Berardi
(Gold)
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
47,742
$
1,744
$
11,076
$
60,562
$
51,695
$
112,257
Depreciation, depletion and
amortization
(11,813
)
(182
)
(1,107
)
(13,102
)
(18,715
)
(31,817
)
Treatment costs
9,481
55
116
9,652
559
10,211
Change in product inventory
321
(1,160
)
769
(70
)
(78
)
(148
)
Reclamation and other costs
(449
)
(58
)
(319
)
(826
)
(139
)
(965
)
Exclusion of Lucky Friday cash costs
—
(399
)
—
(399
)
—
(399
)
Cash Cost, Before By-product Credits
(1)
45,282
—
10,535
55,817
33,322
89,139
Reclamation and other costs
850
—
103
953
140
1,093
Exploration
778
—
2,334
434
3,546
1,330
4,876
Sustaining capital
14,183
—
1,680
517
16,380
9,809
26,189
General and administrative
9,787
9,787
9,787
AISC, Before By-product Credits (1)
61,093
—
14,652
86,483
44,601
131,084
By-product credits:
Zinc
(27,492
)
—
(27,492
)
(27,492
)
Gold
(15,716
)
(5,057
)
(20,773
)
(20,773
)
Lead
(9,022
)
—
(9,022
)
(9,022
)
Silver
(201
)
(201
)
Total By-product credits
(52,230
)
—
(5,057
)
(57,287
)
(201
)
(57,488
)
Cash Cost, After By-product Credits
$
(6,948
)
$
—
$
5,478
$
(1,470
)
$
33,121
$
31,651
AISC, After By-product Credits
$
8,863
$
—
$
9,595
$
29,196
$
44,400
$
73,596
Divided by ounces produced
2,000
—
560
2,560
43
Cash Cost, Before By-product Credits, per
Ounce
$
22.65
$
—
$
18.82
$
21.81
$
780
By-product credits per ounce
(26.12
)
—
(9.03
)
(22.38
)
(5
)
Cash Cost, After By-product Credits, per
Ounce
$
(3.47
)
$
—
$
9.79
$
(0.57
)
$
775
AISC, Before By-product Credits, per
Ounce
$
30.55
$
—
$
26.16
$
33.78
$
1,044
By-product credits per ounce
(26.12
)
—
(9.03
)
(22.38
)
(5
)
AISC, After By-product Credits, per
Ounce
$
4.43
$
—
$
17.13
$
11.40
$
1,039
In thousands (except per ounce amounts)
Six Months Ended June 30,
2019
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
99,762
$
7,132
$
23,495
$
130,389
Depreciation, depletion and
amortization
(23,220
)
(591
)
(3,608
)
(27,419
)
Treatment costs
21,316
1,334
369
23,019
Change in product inventory
712
842
(1,043
)
511
Reclamation and other costs
(1,347
)
—
(735
)
(2,082
)
Exclusion of Lucky Friday costs
—
(8,717
)
—
(8,717
)
Cash Cost, Before By-product Credits
(1)
97,223
—
18,478
115,701
Reclamation and other costs
1,475
—
246
1,721
Exploration
160
—
3,200
938
4,298
Sustaining capital
13,977
—
1,814
73
15,864
General and administrative
18,877
18,877
AISC, Before By-product Credits (1)
112,835
—
23,738
156,461
By-product credits:
Zinc
(45,506
)
—
(45,506
)
Gold
(31,868
)
(9,247
)
(41,115
)
Lead
(13,115
)
—
(13,115
)
Silver
Total By-product credits
(90,489
)
—
(9,247
)
(99,736
)
Cash Cost, After By-product Credits
$
6,734
$
—
$
9,231
$
15,965
AISC, After By-product Credits
$
22,346
$
—
$
14,491
$
56,725
Divided by ounces produced
4,605
—
905
5,510
Cash Cost, Before By-product Credits, per
Ounce
$
21.11
$
—
$
20.42
$
21.00
By-product credits per ounce
(19.65
)
—
(10.22
)
(18.10
)
Cash Cost, After By-product Credits, per
Ounce
$
1.46
$
—
$
10.20
$
2.90
AISC, Before By-product Credits, per
Ounce
$
24.50
$
—
$
26.24
$
28.39
By-product credits per ounce
(19.65
)
—
(10.22
)
(18.10
)
AISC, After By-product Credits, per
Ounce
$
4.85
$
—
$
16.02
$
10.29
In thousands (except per ounce amounts)
Six Months Ended June 30,
2019
Casa
Berardi
Nevada
Operations(4)
Total Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
104,233
$
68,966
$
173,199
Depreciation, depletion and
amortization
(34,716
)
(26,129
)
(60,845
)
Treatment costs
869
74
943
Change in product inventory
(99
)
(5,215
)
(5,314
)
Reclamation and other costs
(257
)
(1,264
)
(1,521
)
Exclusion of Lucky Friday costs
—
—
—
Cash Cost, Before By-product Credits
(1)
70,030
36,432
106,462
Reclamation and other costs
256
756
1,012
Exploration
2,287
816
3,103
Sustaining capital
15,123
25,260
40,383
General and administrative
—
AISC, Before By-product Credits (1)
87,696
63,264
150,960
By-product credits:
Zinc
—
Gold
—
Lead
—
Silver
(217
)
(1,796
)
(2,013
)
Total By-product credits
(217
)
(1,796
)
(2,013
)
Cash Cost, After By-product Credits
$
69,813
$
34,636
$
104,449
AISC, After By-product Credits
$
87,479
$
61,468
$
148,947
Divided by ounces produced
63
23
86
Cash Cost, Before By-product Credits, per
Ounce
$
1,110.33
$
1,580.02
$
1,236.10
By-product credits per ounce
(3.40
)
(77.89
)
(23.37
)
Cash Cost, After By-product Credits, per
Ounce
$
1,106.93
$
1,502.13
$
1,212.73
AISC, Before By-product Credits, per
Ounce
$
1,390.45
$
2,743.69
$
1,752.76
By-product credits per ounce
(3.40
)
(77.89
)
(23.37
)
AISC, After By-product Credits, per
Ounce
$
1,387.05
$
2,665.80
$
1,729.39
In thousands (except per ounce amounts)
Six Months Ended June 30,
2019
Total Silver
Total Gold
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
130,389
$
173,199
$
303,588
Depreciation, depletion and
amortization
(27,419
)
(60,845
)
(88,264
)
Treatment costs
23,019
943
23,962
Change in product inventory
511
(5,314
)
(4,803
)
Reclamation and other costs
(2,082
)
(1,521
)
(3,603
)
Exclusion of Lucky Friday costs
(8,717
)
—
(8,717
)
Cash Cost, Before By-product Credits
(1)
115,701
106,462
222,163
Reclamation and other costs
1,721
1,012
2,733
Exploration
4,298
3,103
7,401
Sustaining capital
15,864
40,383
56,247
General and administrative
18,877
—
18,877
AISC, Before By-product Credits (1)
156,461
150,960
307,421
By-product credits:
Zinc
(45,506
)
—
(45,506
)
Gold
(41,115
)
—
(41,115
)
Lead
(13,115
)
—
(13,115
)
Silver
(2,013
)
(2,013
)
Total By-product credits
(99,736
)
(2,013
)
(101,749
)
Cash Cost, After By-product Credits
$
15,965
$
104,449
$
120,414
AISC, After By-product Credits
$
56,725
$
148,947
$
205,672
Divided by ounces produced
5,510
86
Cash Cost, Before By-product Credits, per
Ounce
$
21.00
$
1,236.10
By-product credits per ounce
(18.10
)
(23.37
)
Cash Cost, After By-product Credits, per
Ounce
$
2.90
$
1,212.73
AISC, Before By-product Credits, per
Ounce
$
28.39
$
1,752.76
By-product credits per ounce
(18.10
)
(23.37
)
AISC, After By-product Credits, per
Ounce
$
10.29
$
1,729.39
In thousands (except per ounce amounts)
Six Months Ended June 30,
2018
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Casa
Berardi
(Gold)
Total
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
89,602
$
5,844
$
16,852
$
112,298
$
100,882
$
213,180
Depreciation, depletion and
amortization
(22,452
)
(803
)
(1,791
)
(25,046
)
(34,825
)
(59,871
)
Treatment costs
20,869
627
320
21,816
1,094
22,910
Change in product inventory
5,475
(2,182
)
3,407
6,700
(179
)
6,521
Reclamation and other costs
(1,360
)
(103
)
(814
)
(2,277
)
(281
)
(2,558
)
Exclusion of Lucky Friday cash costs
—
(3,383
)
—
(3,383
)
—
(3,383
)
Cash Cost, Before By-product Credits
(1)
92,134
—
17,974
110,108
66,691
176,799
Reclamation and other costs
1,699
—
209
1,908
283
2,191
Exploration
1,138
—
4,646
878
6,662
2,520
9,182
Sustaining capital
23,665
—
2,110
634
26,409
18,876
45,285
General and administrative
17,522
17,522
17,522
AISC, Before By-product Credits (1)
118,636
—
24,939
162,609
88,370
250,979
By-product credits:
Zinc
(59,634
)
—
(59,634
)
(59,634
)
Gold
(31,008
)
(11,055
)
(42,063
)
(42,063
)
Lead
(17,996
)
—
(17,996
)
(17,996
)
Silver
(349
)
(349
)
Total By-product credits
(108,638
)
—
(11,055
)
(119,693
)
(349
)
(120,042
)
Cash Cost, After By-product Credits
$
(16,504
)
$
—
$
6,919
$
(9,585
)
$
66,342
$
56,757
AISC, After By-product Credits
$
9,998
$
—
$
13,884
$
42,916
$
88,021
$
130,937
Divided by ounces produced
3,913
—
1,072
4,985
83
Cash Cost, Before By-product Credits, per
Ounce
$
23.54
$
—
$
16.77
$
22.09
$
804
By-product credits per ounce
(27.76
)
—
(10.31
)
(24.01
)
(4
)
Cash Cost, After By-product Credits, per
Ounce
$
(4.22
)
$
—
$
6.46
$
(1.92
)
$
800
AISC, Before By-product Credits, per
Ounce
$
30.32
$
—
$
23.26
$
32.62
$
1,066
By-product credits per ounce
(27.76
)
—
(10.31
)
(24.01
)
(4
)
AISC, After By-product Credits, per
Ounce
$
2.56
$
—
$
12.95
$
8.61
$
1,062
In thousands (except per ounce amounts)
Current Estimate for Twelve
Months Ended December 31, 2019
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Casa
Berardi
Nevada
Total
Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
202,000
$
46,000
$
248,000
$
210,000
$
147,000
$
357,000
Depreciation, depletion and
amortization
(47,000
)
(10,000
)
(57,000
)
(77,000
)
(68,000
)
(145,000
)
Treatment costs
48,000
1,000
49,000
—
—
—
Change in product inventory
(1,000
)
—
(1,000
)
3,000
—
3,000
Reclamation and other costs
3,000
(1,000
)
2,000
4,500
5,000
9,500
Cash Cost, Before By-product Credits
(1)
205,000
36,000
241,000
140,500
84,000
224,500
Reclamation and other costs
5,000
500
5,500
2,000
1,000
3,000
Exploration
1,000
4,000
2,500
7,500
4,000
1,500
5,500
Sustaining capital
45,000
4,500
2,500
52,000
40,000
18,000
58,000
General and administrative
35,000
35,000
AISC, Before By-product Credits (1)
256,000
45,000
341,000
186,500
104,500
291,000
By-product credits
(186,000
)
(19,000
)
(205,000
)
(500
)
(3,000
)
(3,500
)
Cash Cost, After By-product Credits
$
19,000
$
17,000
$
36,000
$
140,000
$
81,000
$
221,000
AISC, After By-product Credits
$
70,000
$
26,000
$
136,000
$
186,000
$
101,500
$
287,500
Divided by ounces produced
9,000
2,000
11,000
146
62
208
Cash Cost, Before By-product Credits, per
Ounce
$
22.78
$
18.00
$
21.91
$
962
$
1,355
$
1,079
By-product credits per ounce
(20.67
)
(9.50
)
(18.64
)
(3
)
(48
)
(17
)
Cash Cost, After By-product Credits, per
Ounce
$
2.11
$
8.50
$
3.27
$
959
$
1,307
$
1,062
AISC, Before By-product Credits, per
Ounce
$
28.44
$
22.50
$
31.00
$
1,277
$
1,685
$
1,399
By-product credits per ounce
(20.67
)
(9.50
)
(18.64
)
(3
)
(48
)
(17
)
AISC, After By-product Credits, per
Ounce
$
7.77
$
13.00
$
12.36
$
1,274
$
1,637
$
1,382
In thousands (except per ounce
amounts)
Original Estimate for Twelve
Months Ended December 31, 2019
Greens
Creek
Lucky
Friday(2)
San
Sebastian
Corporate(3)
Total
Silver
Casa
Berardi
Nevada
Total
Gold
Cost of sales and other direct production
costs and depreciation, depletion and amortization
$
202,000
$
41,000
$
243,000
$
210,000
$
105,000
$
315,000
Depreciation, depletion and
amortization
(45,000
)
(4,000
)
(49,000
)
(80,000
)
(25,000
)
(105,000
)
Treatment costs
38,000
1,000
39,000
—
—
—
Change in product inventory
(1,000
)
—
(1,000
)
(2,000
)
(1,000
)
(3,000
)
Reclamation and other costs
(1,000
)
(1,000
)
(2,000
)
1,000
(2,800
)
(1,800
)
Cash Cost, Before By-product Credits
(1)
193,000
37,000
230,000
129,000
76,200
205,200
Reclamation and other costs
1,000
1,000
2,000
1,000
850
1,850
Exploration
2,000
3,500
2,500
8,000
4,000
5,000
9,000
Sustaining capital
42,000
1,500
2,500
46,000
43,000
24,000
67,000
General and administrative
35,000
35,000
—
—
—
AISC, Before By-product Credits (1)
238,000
43,000
321,000
177,000
106,050
283,050
By-product credits
(198,000
)
(19,000
)
(217,000
)
(2,000
)
(4,000
)
(6,000
)
Cash Cost, After By-product Credits
$
(5,000
)
$
18,000
$
13,000
$
127,000
$
72,200
$
199,200
AISC, After By-product Credits
$
40,000
$
24,000
$
104,000
$
175,000
$
102,050
$
277,050
Divided by ounces produced
7,700
2,000
9,700
150
60
210
Cash Cost, Before By-product Credits, per
Ounce
$
25.06
$
18.50
$
23.71
$
860
$
1,270
$
977
By-product credits per ounce
(25.71
)
(9.50
)
(22.37
)
(13
)
(67
)
(29
)
Cash Cost, After By-product Credits, per
Ounce
$
(0.65
)
$
9.00
$
1.34
$
847
$
1,203
$
948
AISC, Before By-product Credits, per
Ounce
$
30.91
$
21.50
$
33.09
$
1,180
$
1,768
$
1,348
By-product credits per ounce
(25.71
)
(9.50
)
(22.37
)
(13
)
(67
)
(29
)
AISC, After By-product Credits, per
Ounce
$
5.20
$
12.00
$
10.72
$
1,167
$
1,701
$
1,319
(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 and mining production taxes, 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)
The unionized employees at Lucky Friday
have been on strike since March 13, 2017, and production at Lucky
Friday has been limited since that time. As a result, Cash Cost,
Before By-product Credits, Cash Cost, After By-product Credits,
AISC, Before By-product Credits, and AISC, After By-product Credits
are not presented for Lucky Friday, and costs related to the
limited production at Lucky Friday are excluded from the
calculation 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 combined silver
operations.
(3)
AISC, Before By-product Credits for our
consolidated silver properties includes 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 (except per share
amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Net (loss) income applicable to common
shareholders (GAAP)
$
(46,670
)
$
11,936
$
(72,341
)
$
20,038
Adjusting items:
Gains on derivatives contracts
(3,798
)
(16,804
)
(1,999
)
(20,811
)
Provisional price (gains) losses
1,225
2,517
700
2,582
Foreign exchange (gain) loss
4,381
(2,476
)
7,514
(5,068
)
Suspension-related costs
2,266
6,801
5,044
11,818
Acquisition costs
397
1,010
410
3,517
Unrealized loss on investments
1,129
564
1,033
254
Loss (gain) on disposition or impairment
of properties, plants, equipment and mineral interests
4,642
(36
)
4,642
(166
)
Adjusted net (loss) income applicable to
common shareholders
$
(36,428
)
$
3,512
$
(54,997
)
$
12,164
Weighted average shares - basic
486,065
400,619
484,438
399,972
Weighted average shares - diluted
486,065
403,610
484,438
402,873
Basic adjusted net (loss) income per
common share
$
(0.07
)
$
0.01
$
(0.11
)
$
0.03
Diluted adjusted net (loss) income per
common share
$
(0.07
)
$
0.01
$
(0.11
)
$
0.03
Reconciliation of Net (Loss) Income (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 (loss)
income before the following items: interest expense, income tax
provision, depreciation, depletion, and amortization expense,
exploration expense, pre-development expense, acquisition costs,
foreign exchange gains and losses, gains and losses on derivative
contracts, suspension-related 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, RQ Notes,
finance leases, and other notes payable, less the total of our cash
and cash equivalents and short-term investments. 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) income and debt to Adjusted EBITDA and net
debt:
Dollars are in thousands
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
2019
2018
2019
2018
2019
2018
Net (loss) income
$
(46,532
)
$
12,074
$
(72,065
)
$
20,314
$
(118,942
)
$
(8,340
)
Plus: Interest expense, net of amount
capitalized
11,335
10,079
22,000
19,873
43,071
38,820
Plus/(Less): Income taxes
(11,179
)
427
(18,395
)
1,195
(26,291
)
34,592
Plus: Depreciation, depletion and
amortization
49,477
31,817
88,264
59,871
162,437
123,002
Plus: Exploration expense
4,346
7,838
8,748
15,198
29,245
28,341
Plus: Pre-development expense
798
1,415
1,654
2,420
4,121
5,564
Plus/(Less): Foreign exchange (gain)
loss
4,381
(2,476
)
7,514
(5,068
)
2,272
(728
)
Plus: Suspension-related costs
2,266
6,801
5,044
11,818
13,919
23,514
Plus/(Less): Losses (gains) on disposition
of properties, plants, equipment and mineral interests
4,642
(36
)
4,642
(166
)
2,015
(6,208
)
Plus: Acquisition costs
397
1,010
410
3,517
6,938
3,517
Plus: Stock-based compensation
1,973
1,314
3,552
2,404
7,390
5,904
Plus/(Less): (Gains) losses on derivative
contracts
(4,201
)
(16,804
)
(2,402
)
(20,811
)
10,473
(2,888
)
Plus: Provisional price loss
1,225
2,517
700
2,582
1,921
1,160
Plus: Provision for closed operations and
environmental matters
1,615
1,317
3,209
2,640
6,659
4,901
Plus/(Less): Unrealized loss (gain) on
investments
1,129
564
1,033
254
3,595
552
Other
1,187
(108
)
2,311
(52
)
3,304
(934
)
Adjusted EBITDA
$
22,859
$
57,749
$
56,219
$
115,989
$
152,127
$
250,769
Total debt
$
600,072
$
548,002
Less: Cash, cash equivalents and
short-term investments
$
(9,434
)
$
(245,278
)
Net debt
$
590,638
$
302,724
Net debt/LTM adjusted EBITDA
(non-GAAP)
3.9
1.2
Reconciliation of Cash (Used in) 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 (used in) 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 (used in) provided by operating activities to free
cash flow:
Dollars are in thousands
Three Months Ended June 30,
2019
2018
Cash provided by operating activities
$
(11,317
)
$
30,635
Less: Additions to properties, plants
equipment and mineral interests
(38,174
)
(25,669
)
Free cash flow
$
(49,491
)
$
4,966
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190807005230/en/
For further information, please contact: Mike Westerlund Vice
President - Investor Relations 800-HECLA91 (800-432-5291) 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
