Reduced borrowing under revolving credit
facility by $150 million
Hecla Mining Company (NYSE:HL) today announced preliminary
production results and its cash position at the end of the second
quarter as well as a new investment by Investissement Quebec.¹
HIGHLIGHTS
- All five mines in operation (Casa Berardi and San Sebastian
were subjected to government-mandated shutdowns of 3 and 4 weeks,
respectively in the quarter).
- Silver production of 3.4 million ounces, and gold production of
59,982 ounces.
- Silver equivalent production of 12.5 million ounces or gold
equivalent production of 119,037 ounces.2
- Reduced borrowing under revolving credit facility from $200
million to $50 million.
- Cash position of approximately $76 million.
- In the third quarter, to enable open market purchasing of some
existing 7.25% coupon bonds and fund Casa Berardi’s capital
expenditures, Hecla is issuing C$50 million (US$36.8 million) of
senior unsecured notes to Investissement Quebec with a five-year
maturity yielding 5.74%.
“Our quick actions at the beginning of the pandemic minimized
impact on our operations and finances, so production and cash flow
generation were strong this quarter,” said Phillips S. Baker, Jr.,
Hecla’s President and CEO. “Because U.S. mines are essential
businesses and the other two mines returned to production in the
quarter, we increased production and internally generated cash
flow. This performance has allowed us to substantially reduce our
revolving line of credit which we expect to be fully repaid by year
end. Hecla produces one third of all the silver in the U.S., giving
investors unique exposure to what we believe will be higher silver
prices in the future.”
“Today’s announcement of the investment by Investissement Quebec
is another example of why Quebec is one of the leading mining
jurisdictions in the world. We are happy to have the province
investing in five-year notes to fund Casa Berardi capital
expenditures and replace existing bonds,” Mr. Baker continued.
- See cautionary statement regarding preliminary statements at
the end of this release.
- Silver and gold equivalent calculation based on average actual
prices for each metal in the second quarter as follows: $16.33 for
Ag, $1,711 for Au, $0.76 for Pb, and $0.89 for Zn.
Performance Against 2020 Production
Outlook
Silver (Moz)
Gold (Koz)
Greens Creek
Lucky Friday
San Sebastian
Total
Greens Creek
Casa Berardi
Nevada
San Sebastian
Total
2020 Outlook
8.9-9.3
1.4-1.8
0.6-0.8
10.9-11.8
46-48
119-124
24-29
6-7
195-208
First Half 2020
5.5
0.6
0.5
6.6
25
58
32
4
119
Greens Creek exceeded expectations in the first half of the year
due to higher grades. Lucky Friday is expected to increase
production in the second half under the planned ramp-up to full
throughput. San Sebastian production is as expected and should
cease in the third quarter. Nevada has exceeded expectations due to
higher grades but has limited non-refractory ore in the third
quarter. Currently there is no estimate for the bulk sample
production of refractory ore. Casa Berardi is expected to have
higher production later in 2020 due to more high-grade underground
production from the East Mine. Production outlook is unchanged at
this time.
Greens Creek
At the Greens Creek mine, 2.7 million ounces of silver and
13,104 ounces of gold were produced. Higher silver production
compared to the second quarter of 2019, was due to higher ore
grades as a result of mine sequencing. The mill operated at an
average of 2,366 tons per day (tpd).
Operations at Greens Creek continue strongly, with the mine
quickly implementing a 14‑day quarantine for all visitors to
Admiralty Island, where the mine is located. This has helped
protect the workforce from the potential spread of the COVID-19
virus, and with the addition of strict testing protocols the mine
has now reduced the quarantine period to 7 days. This is expected
to reduce the cost associated with protecting the workforce as well
as reducing workforce stress.
Casa Berardi
At the Casa Berardi mine, 30,756 ounces of gold were produced,
including 5,681 ounces from the East Mine Crown Pillar pit. The
mine restarted operations on April 15 after the Government-mandated
shutdown of operations due to COVID-19. The decrease in gold ounces
compared to the second quarter of 2019 was expected due to the
shutdown. The project to optimize the mill operations is making
progress on many fronts and results are expected over the coming
several quarters. The mill operated at an average of 3,595 tpd.
San Sebastian
At the San Sebastian mine, 0.2 million ounces of silver and
1,331 ounces of gold were produced. The mill restarted on May 29
and the mine on June 6 after a Government-mandated shutdown of
operations due to COVID-19. Silver and gold production were lower
compared to the second quarter of 2019 due to lower ore grades, as
well as the shutdown. Mining of oxide material is expected to be
completed in the third quarter and milling in the fourth quarter of
2020. The Company continues to assess the viability of mining the
sulfide Hugh Zone. The mill operated at an average of 528 tpd.
Nevada Operations
At the Nevada operations, 14,791 ounces of gold and 15,988
ounces of silver were produced. Mining of non-refractory ore is
expected to be completed in the third quarter. Mining of refractory
ore for the bulk sample test is expected to continue through the
remainder of 2020. Ore was processed at an average of 117 tpd.
Lucky Friday
At the Lucky Friday mine, 469,537 ounces of silver were produced
in the quarter. The mine has continued normal operations during the
pandemic, with the ramp-up proceeding as planned. The #2 shaft
hoist upgrade project is proceeding on schedule. The mine is
expected to reach its full tonnage throughput rate by the end of
the year.
Financing
On July 9, issued C$50 million (US$36.8 million) senior
unsecured notes with a five-year maturity bearing a coupon of 6.5%
to Investissement Quebec. The notes were issued at a premium of
103.65%, implying an effective annual yield of 5.74% and an
aggregate principal amount to be repaid of C$48.2 million. The
notes will be issued in four installments of C$12.5 million
(US$9.205 million based on current exchange rate) on July 9, August
9, September 9, and October 9, 2020. Proceeds to be used for
general corporate purposes, including open market purchases of the
Company’s 7.25% notes due 2028 and capital expenditures at Casa
Berardi.
PRODUCTION SUMMARY
Second Quarter Ended
Six Months Ended
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
PRODUCTION
Increase/
(Decrease)
Increase/
(Decrease)
Silver
3,403,781
3,018,765
13%
6,649,249
5,941,896
12%
Gold
59,982
60,768
(1)%
118,774
120,789
(2)%
Lead1
8,978
5,515
63%
14,870
11,299
32%
Zinc
17,856
13,315
34%
30,703
27,259
13%
Greens Creek - Silver
2,753,919
2,372,270
16%
5,529,626
4,605,017
20%
Greens Creek - Gold
13,104
13,257
(1)%
25,377
27,585
(8)%
Lucky Friday - Silver1
469,537
127,147
269%
565,284
300,774
88%
San Sebastian - Silver
158,842
463,735
(66)%
505,467
904,814
(44)%
San Sebastian - Gold
1,331
3,547
(63)%
4,133
7,077
(42)%
Casa Berardi - Gold2
30,756
31,270
(2)%
57,508
63,069
(9)%
Nevada Operations - Silver (oz)
15,988
49,449
(68)%
37,443
116,887
(68)%
Nevada Operations - Gold (oz)
14,791
12,694
17%
31,756
23,058
38%
(1) Union workers at Lucky Friday were on
strike in 2019. (2) Casa Berardi also produced 5,495 ounces of
silver in the second quarter 2020 compared to 6,164 ounces of
silver for second quarter 2019.
ABOUT HECLA
Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading
low-cost U.S. silver producer with operating mines in Alaska, Idaho
and Mexico, and is a growing gold producer with operating mines in
Quebec and Nevada. The Company also has exploration and
pre-development properties in eight world-class silver and gold
mining districts in the U.S., Canada, and Mexico.
Cautionary Statements Regarding Forward Looking
Statements
Statements made or information provided in this news release
that are not historical facts are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995 and "forward-looking information" within the meaning of
Canadian securities laws. Words such as “may”, “will”, “should”,
“expects”, “intends”, “projects”, “believes”, “estimates”,
“targets”, “anticipates” and similar expressions are used to
identify these forward-looking statements. Forward-looking
statements in this news release may include, without limitations,
(i) estimates of silver production for the second quarter of 2020
on a consolidated basis and at each of the Greens Creek, Lucky
Friday, San Sebastian, and Nevada Operations mines; second quarter
of 2020 gold production at Casa Berardi and Nevada operations;
(iii) quarter-end cash position and revolver draw-down; (iv)
expectations to fully repay revolving line of credit by year end
and (v) expectations for higher silver prices in the future and
higher grades at Casa Berardi in the second half of the year. 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.
Forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated, expected, or implied. These
risks and uncertainties include, but are not limited to, metals
price volatility, volatility of metals production and costs,
litigation, regulatory and environmental risks, operating risks,
project development risks, political risks, labor issues, ability
to raise financing and exploration risks and results. Refer to the
Company's Form 10K and 10-Q reports for a more detailed discussion
of factors that may impact expected future results. The Company
undertakes no obligation and has no intention of updating
forward-looking statements other than as may be required by
law.
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version on businesswire.com: https://www.businesswire.com/news/home/20200710005075/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
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