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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hecla Mining Company | NYSE:HL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.005 | 0.11% | 4.745 | 4.78 | 4.635 | 4.66 | 4,318,790 | 17:23:59 |
Hecla Mining Company (NYSE:HL) today announced third quarter net loss applicable to common shareholders of $10.0 million, or $0.03 per share, and a loss after adjustments applicable to common shareholders of $20.5 million, or $0.05 per share.1
THIRD QUARTER HIGHLIGHTS AND SIGNIFICANT ITEMS
"During the third quarter we delivered solid production performance, with Greens Creek continuing to lead the way. Cash costs, after by-product credits, were higher because of the weak price of our by-product metals," said Phillips S. Baker Jr., Hecla's President and CEO. "Hecla's cash flow and balance sheet have allowed continued investment in capital improvements, growth and exploration initiatives; the benefits of which are just beginning to be realized. We expect San Sebastian to start processing ore by year end, Casa Berardi is accessing a newly discovered, high-grade stope and the Lucky Friday has returned to full production after replacing the main ventilation booster fans."
(1) Loss after adjustments applicable to common shareholders represents a non-US Generally Accepted Accounting Principles (GAAP) measurement, a reconciliation of which to net income (loss) applicable to common shareholders (GAAP), the most comparable GAAP measure, can be found at the end of the release. (2) Adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to net income (loss), the most comparable GAAP measure, can be found at the end of the release. (3) Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measures, can be found at the end of the release.
FINANCIAL OVERVIEW
Net loss applicable to common shareholders for the third quarter was $10.0 million, or $0.03 per share, compared to net gain applicable to common shareholders of $3.5 million, or $0.01 per share, for the same period a year ago, and was impacted by the following items:
HIGHLIGHTS
2015 2014 2015 2014 FINANCIAL DATA Sales (000) $104,941 $135,507 $328,230 $378,796 Gross profit (000) ($2,561 ) $22,023 $26,776 $62,994 Income (loss) applicable to common shareholders (000) ($10,028 ) $3,538 ($24,419 ) $505 Basic and diluted loss per common share ($0.03 ) $0.01 ($0.07 ) $— Net income (loss) (000) ($9,890 ) $3,676 ($24,005 ) $919 Cash provided by operating activities (000) $26,795 $1,739 $78,968 $58,768Operating cash flow of $26.8 million was approximately $25 million higher for the third quarter of 2015 compared to the prior year period. While lower prices in the third quarter of 2015 resulted in lower net income, 2014's comparative results were driven lower by satisfying the remainder of the Coeur d'Alene Basin litigation settlement.
Capital expenditures (excluding capitalized interest) at the operations totaled $39.0 million for the third quarter. Expenditures were $16.5 million at Lucky Friday, $13.6 million at Greens Creek and $8.9 million at Casa Berardi.2
Metals Prices
The average realized silver price in the third quarter was $14.54 per ounce, 22% lower than the $18.53 price realized in the third quarter of 2014. Realized gold, lead and zinc prices also decreased by 12%, 24%, and 22% respectively, from the third quarter of 2014.
(1) Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measures, can be found at the end of the release. (2) Numbers may not add due to rounding.Third Quarter Ended Nine Months Ended September 30, September 30, September 30, September 30, 2015 2014 2015 2014 AVERAGE METAL PRICES Silver - London PM Fix ($/oz) $14.91 $19.74 $16.01 $19.95 Realized price per ounce $14.54 $18.53 $16.08 $19.35 Gold - London PM Fix ($/oz) $1,124 $1,282 $1,179 $1,288 Realized price per ounce $1,121 $1,275 $1,177 $1,288 Lead - LME Cash ($/pound) $0.78 $0.99 $0.83 $0.96 Realized price per pound $0.78 $1.02 $0.85 $1.00 Zinc - LME Cash ($/pound) $0.84 $1.05 $0.93 $0.97 Realized price per pound $0.83 $1.07 $0.91 $0.98
Base Metals Forward Sales Contracts
The following table summarizes the quantities of base metals committed under financially settled forward sales contracts at September 30, 2015:
Pounds Under Contract Average Price (in thousands) per Pound Zinc Lead Zinc Lead CONTRACTS ON PROVISIONAL SALES 2015 settlements 18,684 6,283 $ 0.85 $ 0.76With the advanced settlement of remaining financially settled base metal forward contracts, other than contracts on provisional sales, the Company recognized $4.4 million in additional proceeds during the quarter. Settlements have provided net proceeds of $16.5 million year to date.
OPERATIONS OVERVIEW
Summary
The following table provides the production and cash cost, after by-product credits, per silver and gold ounce summary for the third quarters ended September 30, 2015 and 2014:
Third Quarter and Nine Months Ended Third Quarter and Nine Months Ended September 30, 2015 September 30, 2014 Production (ounces)Increase/(decrease)over 2014
Cash costs, afterby-product credits,per silver or goldounce1,2
Production (ounces)Cash costs, afterby-product credits,per silver or goldounce1,2
Q3 9 Mos Q3 9 Mos Q3 9 Mos Q3 9 Mos Q3 9 Mos Silver 2,591,546 7,947,293 (10)% 1% $ 7.52 $ 5.98 2,869,722 7,877,410 $ 5.43 $ 4.90 Gold 43,635 128,977 3% (3)% $ 793 $ 861 42,501 132,323 $ 898 $ 911 Greens Creek: Silver 1,992,037 5,884,128 5% 10% $ 4.82 $ 3.79 1,890,929 5,367,249 $ 3.75 $ 2.95 Gold 14,376 43,368 6% 0% N/A N/A 13,524 43,464 N/A N/A Lucky Friday 592,243 2,042,436 (39)% (18)% $ 16.60 $ 12.30 972,994 2,493,385 $ 8.71 $ 9.08 Casa Berardi3 29,259 85,609 1% (4)% $ 793 $ 861 28,977 88,859 $ 898 $ 911 (1) Cash cost, after by-product credits, per silver or gold ounce represent a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparative GAAP measures, can be found at the end of the release. (2) Cash cost, after by-product credits, per gold ounce is only applicable to Casa Berardi production. Gold produced from Greens Creek is treated as a by-product credit against the silver cash cost. (3) Casa Berardi also produced 7,266 ounces of silver in the third quarter of 2015, which is treated as a by-product credit against the gold cash cost.The following table provides the production summary on a consolidated basis for the third quarter and nine months ended September 30, 2015 and 2014:
Third Quarter Ended Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 PRODUCTION SUMMARY Silver - Ounces produced 2,591,546 2,869,722 7,947,293 7,877,410 Payable ounces sold 2,392,798 2,562,171 7,305,740 6,968,138 Gold - Ounces produced 43,635 42,501 128,977 132,323 Payable ounces sold 44,937 43,637 124,969 128,115 Lead - Tons produced 9,123 10,604 28,526 30,468 Payable tons sold 8,315 8,976 24,068 25,210 Zinc - Tons produced 17,435 16,276 51,037 50,750 Payable tons sold 13,487 14,383 36,821 37,653Greens Creek Mine - Alaska
Greens Creek's third quarter production of 2.0 million ounces of silver exceeded the third quarter of 2014 by 5%, while gold production of 14,376 ounces was up 6% over the same period last year. The higher silver and gold production were a result of higher recoveries and increased tonnage, partially offset by lower grades. Silver recoveries increased to 76.5%, up from 71.0% in the prior year period as a result of a change implemented in late 2014 to the flotation circuit to more efficiently scalp additional lead concentrate directly to final concentrate, and by introducing CO2 for pH control in the lead flotation circuit. The increased recoveries positively impacted the operation's revenues by $1.8 million in the third quarter. Recoveries for the other three metals also increased period over period. The mill operated at an average of 2,233 tons per day (tpd) in the third quarter.
The cash cost, after by-product credits, per silver ounce of $4.82 increased from $3.75 in the third quarter 2014. The per ounce cost was impacted by lower by-product credits and slightly lower operating costs. Power costs were similar to the 2014 period due to higher precipitation levels in southeast Alaska in both cases resulting in availability of less expensive hydroelectric power, a condition that is expected to last through the next quarter. Treatment costs were lower as a result of lower prices.
Lucky Friday Mine - Idaho
Lucky Friday’s third quarter silver production of 592,243 ounces was 39% lower than the third quarter of 2014 due to lower tonnage and grade. A failure of the underground booster fan reduced the ventilation capacity of the mine, leading to the temporary closure of a higher-grade production stope. Replacement fans are now in operation and Lucky Friday has returned to normal production. In addition, there were 16 days of downtime in the third quarter for planned hoist mechanical maintenance. The mill operated at an average of 792 tpd in the third quarter.
The cash cost, after by-product credits, per silver ounce of $16.60, increased from $8.71 per ounce in the third quarter of 2014. This increase was principally due to lower production and realized metals grades relating to downtime from the ventilation fan replacement, as well as lower by-product credits relating to lower base metals prices.
#4 Shaft, a key growth project, has been excavated to the 8,244 level. The project is more than 89% complete and is expected to be finished in the fourth quarter of 2016. The final depth of the shaft has been slightly reduced to 8600 from the earlier target of 8800 feet. A shaft station and operating level will be established at 8300 feet, the depth of the known resource. The total completion cost estimate remains at approximately $225 million, with $193.8 million already spent through the third quarter of 2015. As of September 30, 2015, the #4 Shaft team has worked 1,413 days without a lost-time accident.
Casa Berardi Mine - Quebec
Casa Berardi’s third quarter gold production of 29,259 ounces was 1% higher than the third quarter of 2014. The mill operated at an average of 2,262 tpd in the third quarter.
The cash cost, after by-product credits, per gold ounce of $793, decreased from $898 in the third quarter of 2014 mainly due to the weaker Canadian dollar relative to the USD.
Casa Berardi started the fourth quarter very strongly, with production of approximately 15,000 ounces of gold in October. The mine is expected to produce approximately 40,000 ounces of gold in the fourth quarter.
San Sebastian Mine - Mexico
Hecla is quickly advancing the San Sebastian mine in the State of Durango, Mexico with the goal of producing ore from small open pits by year end. Updates to the third-party owned processing plant are proceeding well, the hiring of supervisory staff is nearing completion, and stripping has begun on the East Francine and Middle veins.
A Preliminary Economic Assessment (PEA) of the San Sebastian project was recently completed and shows this is a robust project and a potential significant cash contributor for Hecla in 2016 and 2017. Notably, the PEA does not include results of the recent exploration and in-fill drilling programs described in the Exploration section below that have expanded the resource and improved the confidence of the resource in the open pit areas. Hecla has filed in Canada a National Instrument 43-101 technical report for the San Sebastian project entitled "Technical Report for the San Sebastian Ag-Au Property, Durango, Mexico" dated effective September 8, 2015. The report has been filed under the Company's profile on SEDAR at www.sedar.com, the website maintained by the Canadian Securities Administrators.
The following is a summary of the high-level life of mine economic assumptions of surface mining operations, as outlined in the PEA.1,2
Unit Value Total Projected Mill Feed tons 273,352 Mill Throughput tons per day 440 Gold Grade oz/ton 0.14 Silver Grade oz/ton 23.9 Gold Recovery % 90.8% Silver Recovery % 85.5% Gold Produced (recovered) ounces 35,959 Silver Produced (recovered) ounces 5,585,098 Silver Equivalent Production ounces 8,138,740 Capital (mining and milling) $ million 5.8 Cash cost, after by-product credits, per silver ounce3 $/ounce 5.49 Total After Tax Cash Flow (5% discount) $ million 43.0 IRR % 404 (1) The PEA is preliminary in nature, and is based on a mineral resource estimate that includes inferred mineral resources (approximately 10% of projected production) that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. (2) Results in this table assume $1,103/oz gold and $15.53/oz silver prices and a 12.5 Peso/Dollar exchange rate. (3) Cash cost, after by-product credits, per silver ounce represents a non-GAAP measurement, and the most comparable GAAP measures are cost of sales and other direct production costs and depreciation, depletion and amortization.EXPLORATION AND PRE-DEVELOPMENT
Expenditures
Exploration and pre-development expenses were $5.5 million and $1.7 million, respectively, in the third quarter of 2015. This is a decrease of $0.3 million in exploration and an increase $1.3 million in pre-development compared to the third quarter 2014 as a result of increased spending at the San Sebastian property. Full year exploration and pre-development expenses are expected to be about $24 million.
Casa Berardi - Quebec
At Casa Berardi, up to seven drills have been operating underground in an effort to refine current stope designs and expand reserves and resources in the 118, 123, 124 and Lower Inter zones. Other exploration drilling has extended mineralization on the 124 Zone and newly discovered 117 Zone. In-stope and definition drilling of the upper 118 Zone from the 530 level intersected a 15 to 55-foot wide shear zone that includes mineralized intervals of 0.74 oz/ton gold over 42.3 feet and 0.18 oz/ton gold over 55.4 feet. Mineralization is open and deeper drilling suggests the zone continues to plunge to the west. Drilling from the 910 level on the lower 118 Zone intersected 0.46 oz/ton gold over 18.7 feet and 0.36 oz/ton gold over 28.8 feet. This drilling has extended the resource to the east and also remains open to depth.
Drilling from the 550, 770, and 850 levels in the mine has identified multiple, stacked high-grade lenses of the 123 Zone that represent at least 1,800 feet of semi-continuous down-dip mineralization with an average strike length of 425 feet. Definition and step-out drilling at the bottom of the 123 Zone resource has defined a series of high-grade mineralized structures with intervals including 0.81 oz/ton gold over 23.6 feet and 0.73 oz/ton gold over 11.8 feet below the 850 level that are open at depth and to the west. Future drilling is expected to continue to expand the resource, and the close proximity of these new lenses to mine infrastructure is expected to allow near-term production from these areas.
Underground drilling on the 124 Zone east of the Principal Zone area defined a 15 to 60-foot thick, quartz-bearing zone with over 300 feet of strike length that is expected to define a resource close to the 250 level. Within this zone are high-grade lenses, including intervals of 1.50 oz/ton gold over 9.2 feet and 0.71 oz/ton gold over 11.8 feet at the 290 level. Drilling from the same level of the 124-81 lens includes intersections of 0.40 oz/ton gold over 8.2 feet. Deeper drilling of the 124 Principal Zone intersected broad mineralization at the 500 level including 0.26 oz/ton gold over 36.1 feet and 0.25 oz/ton gold over 16.1 feet. Exploration drilling from the 810 level of the newly defined 117 Zone has extended gold mineralization both north and south of the Casa Berardi Fault for over 325 feet down-plunge. Recent drill results include an interval of 0.13 oz/ton gold over 17.1 feet in iron formation north of the Casa Berardi Fault and 0.15 oz/ton gold over 21.8 feet in sheared veins to the south of the Casa Berardi Fault.
At the west end of the mine, drilling of the Lower Inter Zone intersected 1.04 oz/ton gold over 19.7 feet and 1.37 oz/ton gold over 9.8 feet and these intersections represent the upper extension of a multiple vein system that is open. Exploration drilling on the 157 Zone at the East Mine has better defined the geometry and continuity intersected narrow, high-grade zones including an intersection of 1.26 oz/ton gold over 3.3 feet.
The recent successes in both surface and underground drilling are expanding reserves and resources with considerable increases in overall grade and are also identifying new resource trends throughout the West Mine of Casa Berardi. When the acquisition of Casa Berardi was made, there was an expectation of finding significant mineralization that would prolong gold production for many years to come, and this expectation is being realized.
San Sebastian - Mexico
There has been significant drilling success over the past two and a half years on the near-surface East Francine, Middle and North veins at the San Sebastian project, and the project is quickly advancing to open pit mine production. The East Francine, Andrea, Middle and North veins now define nearly 5.0 miles of mineralized strike length and are open along strike and at depth.
The East Francine Vein has currently been traced for over 1,600 feet along strike and to 500 feet of depth. The near-surface, high-grade zones are characterized as being silver and gold dominant, supergene enriched and oxidized (cyanide soluble). An in-fill drill program of the main mineralized shoot has demonstrated the continuity of the vein structure and increased resource confidence to measured and indicated categories in the proposed open pit areas. The drilling also appears to extend the high-grade area further along strike, potentially expanding the open pit resource. Assay results from drilling at the east extent of the East Francine Vein resource include 0.17 oz/ton gold and 8.2 oz/ton silver over 23.9 feet. About 550 feet east of the resource a 1 foot-wide vein grading 0.07 oz/ton gold and 10.5 oz/ton silver was intersected in recent exploration drilling suggesting mineralized veins are present well away from the current resource.
The Middle Vein has been traced for nearly 7,000 feet along strike and to a depth of over 1,000 feet. Shallow in-fill drilling of the Middle Vein confirmed the continuity of the vein mineralization and includes intercepts of 0.20 oz/ton gold and 54.2 oz/ton silver over 5.9 feet and 0.11 oz/ton gold and 38.4 oz/ton silver over 6.5 feet. This in-fill program improved the continuity and grade over previous drilling and has defined strong mineralization beyond the original pit outline. Exploration drilling continues to define a new zone of near-surface mineralization to the southeast, past the San Ricardo Fault. The zone is slightly deeper and shallower dipping than the Middle Vein to the west of the fault, and assay intervals include 0.10 oz/ton gold and 13.2 oz/ton silver over 7.0 feet, and 0.01 oz/ton gold and 11.1 oz/ton silver over 8.9 feet.
The North Vein has a mineralized trend that extends over 3,500 feet along strike and 700 feet to depth and remains open along strike in both directions and at depth. The North Vein in-fill drilling intercepts have returned grade results that are consistent with the initial drilling completed prior to this year. These assay intervals include 1.74 oz/ton gold and 15.9 oz/ton silver over 4.3 feet, and 0.29 oz/ton gold and 7.6 oz/ton silver over 4.8 feet. On the North Vein, some of exploration intercepts to the southeast include 0.12 oz/ton gold and 3.7 oz/ton silver over 10.4 feet and 0.04 oz/ton gold and 11.7 oz/ton silver over 5.0 feet.
Exploration and in-fill drilling at San Sebastian over the last two quarters has expanded the resources and improved the confidence in near-surface resources to measured and indicated category. All of the resource models are in the process of being updated. Updated mining models of each vein are expected to be finalized by the end of the year and are expected to provide upside to production defined in the PEA study.
Greens Creek - Alaska
At Greens Creek, definition drilling made progress in refining the resources of the lower NWW, Deep 200 South, Upper Southwest, and West Wall zones. Exploration drilling of the 9A Zone expanded the resource along the projected trend and mineralization has been intersected on the margins of Southwest Bench and East Ore zones. Recent drilling of the lower NWW Zone has generally confirmed and upgraded the resource model of the shared and upper limbs and assay results include 71.6 oz/ton silver, 0.16 oz/ton gold, 8.2% zinc, and 4.6% lead over 5.4 feet and 36.2 oz/ton silver, 1.0 oz/ton gold, 5.6% zinc, and 2.6% lead over 12.2 feet. Drilling has defined additional West Wall mineralization up to 240 feet down-dip from the current resource model. More base metal-rich intersections of the West Wall include 5.8 oz/ton silver, 0.07 oz/ton gold, 27.9% zinc, and 7.7% lead over 9.4 feet.
Drilling to follow up historic high-grade intersections of the 9A Zone has defined continuous mineralization within the Maki Fault and above the southern end of the current resource. This drilling has defined an 8 to 10-foot wide mineralized zone over an area stretching about 260 feet along strike and 130 feet along dip. Drilling of the Upper Southwest Zone has defined good continuity of multiple, flat-lying mineralized zones toward the northern end of Upper Southwest mineralization. Recent assay results include 25.4 oz/ton silver, 0.11 oz/ton gold, 8.8% zinc, and 4.5% lead over 18.2 feet and 24.0 oz/ton silver, 0.12 oz/ton gold, 13.2% zinc, and 7.4% lead over 13.5 feet.
Drilling of the Deep 200 South Zone in the past few years has defined three stacked folds of high-grade mineralization that represent up to 600 feet of down-dip continuity. Recent drilling of the folded upper bench mineralization has stepped systematically to the south and has defined mineralization of similar extent, thickness, and geometry compared to the resource model. Intersections of Deep 200 South include 35.5 oz/ton silver, 0.09 oz/ton gold, 1.2% zinc, and 0.7% lead over 16.1 feet and 34.5 oz/ton silver, 0.05 oz/ton gold, 1.0% zinc and 0.4% lead over 9.8 feet along the upper limb. The mineralization remains open to the south and exploration drilling recently identified mineralization above and to the east of the bench mineralization.
More complete drill assay highlights from Casa Berardi, San Sebastian and Greens Creek can be found in Table A at the end of the release.
Other Properties
Summer fieldwork on the Opinaca-Wildcat project near the Eleonore Mine in northern Quebec identified gold mineralization in trenches at the Manuel occurrence including 0.35 oz/ton gold over 15.4 feet. Prospecting and sampling of the areas covered by an Induced Polarization geophysical survey in April identified gold mineralization in the Brad, Mousson and Emma grids.
At the recently acquired Rock Creek project in Montana, work included integration and upgrading of the resource model and exploration data into the Hecla database and modeling software.
MANAGEMENT CHANGE
James A. Sabala, Senior Vice President and CFO, has announced that he intends to retire immediately after the Company's Annual Shareholder Meeting in 2016. The Company has begun a search for his replacement and will be considering both internal and external candidates.
"Jim started his career at Hecla in 1972 working as a miner at the Lucky Friday, and it is only fitting that he has spent the last eight years of his management career at Hecla," said Phillips S. Baker, Jr. "He has been a leader, a mentor and my partner in transforming Hecla. Jim will be missed but his legacy is a stronger Hecla positioned to grow and prosper in the future."
2015 GUIDANCE
For the full year 2015, the Company expects:
Mine2015E¹ SilverProduction(Moz)
2015E GoldProduction (oz)
Cash cost, after by-product credits, persilver/gold ounce2,3
Greens Creek 7.7-8.0 59,000 $3.75 per silver ounce Lucky Friday 2.8-3.0 n/a $10.75 per silver ounce Casa Berardi n/a 126,000 $825 per gold ounce High end Company-wide 10.5-11.0 185,000 $6.00 per silver ounce Silver Equivalent Production: Including all metals 352015E capital expenditures (excluding capitalized interest)
$150 million
2015E pre-development and exploration expenditures
$24 million
(1)
2015E refers to the Company's estimates for 2015.(2)
Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement. A reconciliation of historical cash cost, after by-product credits, per ounce of silver and gold to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measures, can be found at the end of the release.(3)
All metal equivalent production of 35 million silver oz includes silver, gold, lead and zinc production from Lucky Friday, Greens Creek and Casa Berardi converted using the following conversion ratios: 60:1 gold to silver, 80:1 zinc to silver and 90:1 lead to silver.DIVIDENDS
Common
The Board of Directors declared a quarterly cash dividend of $0.0025 per share of common stock, payable on or about December 1, 2015, to shareholders of record on November 19, 2015.
Preferred
The Board of Directors also declared the regular quarterly cash dividend of $0.875 per share on the outstanding Series B Cumulative Convertible Preferred Stock, on a total of 157,816 shares outstanding. This represents a total amount to be paid of approximately $138,000. The cash dividend is payable on January 4, 2016, to shareholders of record on December 15, 2015.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Wednesday, November 4, 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 by 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
Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska and Idaho, and is a growing gold producer with an operating mine in Quebec, Canada. The Company also has exploration and pre-development properties in six 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 to Investors on Forward-Looking Statements, including 2015 Outlook
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian securities laws. Such forward-looking statements may include, without limitation: (i) estimates of future production and sales; (ii) estimates of the costs and completion date of the #4 Shaft project; (iii) guidance for 2015 for silver and gold production, cash cost, after by-product credits, capital expenditures and pre-development and exploration expenditures (which assumes metal prices of gold at $1,225/oz., silver at $17.25/oz., zinc at $0.90/lb. and lead at $0.95/lb. and USD/CAD at $0.91); (iv) expectations regarding the development, growth and exploration potential of the Company’s projects (including the San Sebastian property); (v) expectations of growth; (vi) expected availability of hydroelectric power at Greens Creek, and extensions of mineralization of various zones; (vii) the possibility of increasing production at Casa Berardi due to accessing higher grade material, and strike and dip extensions of various zones; (viii) possible strike extensions of veins at the San Sebastian project and estimates of mining, grade, recovery, free cash flow generation, mine life, IRR, ability to reactivate existing mill permits, production of silver, gold and silver equivalent ounces, ability to begin mining by year end, and the ability to mine the high-grade ore; and (ix) expected completion of #4 Shaft by Q4 2016 with a budget of $225 million and to a depth of 8600 feet. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. 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 Canadian dollar to the U.S. dollar, 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; and (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. Where the Company 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.” Such risks include, but are not limited to gold, silver and other metals price volatility, operating risks, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, community relations, conflict resolution and outcome of projects or oppositions, litigation, political, regulatory, labor and environmental risks, and 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. For a more detailed discussion of such risks and other factors, see the Company’s 2014 Form 10-K, filed on February 18, 2015 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 news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.
Qualified Person (QP) 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 and Aurizon Mines Ltd. titled “Technical Report for the Greens Creek Mine, Juneau, Alaska, USA” effective date March 28, 2013, 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, and 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 four technical reports is a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors. Copies of these technical reports are available under Hecla's profile on SEDAR at www.sedar.com.
Cautionary Statements to Investors on Reserves and Resources
Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in the SEC's Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (“Guide 7”). However, the Company is also a "reporting issuer" under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (“NI 43-101”). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is being included here to satisfy the Company's “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.
Reporting requirements in the United States for disclosure of mineral properties under Guide 7 and the requirements in Canada under NI 43-101 standards are substantially different. This document contains a summary of certain estimates of the Company, not only of proven and probable reserves within the meaning of Guide 7, which requires the preparation of a “final” or “bankable” feasibility study demonstrating the economic feasibility of mining and processing the mineralization using the three-year historical average price for any reserve or cash flow analysis to designate reserves and that the primary environmental analysis or report be filed with the appropriate governmental authority, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. The terms “measured resources,” "indicated resources," and "inferred resources" are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are not normally permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. Investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into proven or probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a "resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a "resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.
HECLA MINING COMPANYCondensed Consolidated Statements of Income (Loss)
(dollars and shares in thousands, except per share amounts - unaudited)
Third Quarter Ended Nine Months Ended September 30, September 30, September 30, September 30, 2015 2014 2015 2014 Sales of products $ 104,941 $ 135,507 $ 328,230 $ 378,796 Cost of sales and other direct production costs 79,273 86,680 220,805 235,460 Depreciation, depletion and amortization 28,229 26,804 80,649 80,342 107,502 113,484 301,454 315,802 Gross profit (2,561 ) 22,023 26,776 62,994 Other operating expenses: General and administrative 9,461 7,884 26,477 23,984 Exploration 5,540 5,797 14,748 13,086 Pre-development 1,696 391 3,834 1,247 Other operating expense 743 442 2,137 1,853 Provision or closed operations and reclamation 1,181 1,238 10,983 3,609 Aurizon acquisition costs 15 — 2,162 — 18,636 15,752 60,341 43,779 Income (loss) from operations (21,197 ) 6,271 (33,565 ) 19,215 Other income (expense): Gain (loss) on derivative contracts 3,347 (411 ) 8,252 (2,560 ) Gain on sale of investments — — — — Unrealized loss on investments (100 ) (2,830 ) (3,226 ) (2,750 ) Foreign exchange gain (loss) 9,077 7,299 19,518 6,051 Interest and other income 100 32 173 208 Interest expense, net of amount capitalized (6,617 ) (6,505 ) (19,350 ) (20,307 ) 5,807 (2,415 ) 5,367 (19,358 ) Income (loss) before income taxes (15,390 ) 3,856 (28,198 ) (143 ) Income tax benefit (provision) 5,500 (180 ) 4,193 1,062 Net income (loss) (9,890 ) 3,676 (24,005 ) 919 Preferred stock dividends (138 ) (138 ) (414 ) (414 ) Income (loss) applicable to common shareholders $ (10,028 ) $ 3,538 $ (24,419 ) $ 505 Basic income (loss) per common share after preferred dividends $ (0.03 ) $ 0.01 $ (0.07 ) $ — Diluted income (loss) per common share after preferred dividends $ (0.03 ) $ 0.01 $ (0.07 ) $ — Weighted average number of common shares outstanding - basic 377,508 359,472 372,555 348,801 Weighted average number of common shares outstanding - diluted 377,508 362,262 372,555 354,673HECLA MINING COMPANY
Condensed Consolidated Balance Sheets
(dollars and share in thousands - unaudited)
September 30, 2015 December 31, 2014 ASSETS Current assets: Cash and cash equivalents $ 174,454 $ 209,665 Accounts receivable: Trade 10,384 17,696 Other, net 27,189 17,184 Inventories 43,606 47,473 Current deferred income taxes 19,573 12,029 Other current assets 15,957 12,312 Total current assets 291,163 316,359 Non-current investments 2,003 4,920 Non-current restricted cash and investments 999 883 Properties, plants, equipment and mineral interests, net 1,878,177 1,831,564 Non-current deferred income taxes 93,037 98,923 Reclamation insurance asset 16,800 — Other non-current assets and deferred charges 3,034 9,415 Total assets $ 2,285,213 $ 2,262,064 LIABILITIES Current liabilities: Accounts payable and accrued liabilities $ 47,724 $ 41,869 Accrued payroll and related benefits 23,497 27,956 Accrued taxes 7,078 4,241 Current portion of capital leases 9,492 9,491 Current portion of debt 1,981 — Current portion of accrued reclamation and closure costs 20,788 1,631 Other current liabilities 15,056 5,797 Total current liabilities 125,616 90,985 Capital leases 9,485 13,650 Accrued reclamation and closure costs 70,822 55,619 Long-term debt 501,281 498,479 Non-current deferred tax liability 125,753 153,300 Other non-current liabilities 50,485 53,057 Total liabilities 883,442 865,090 SHAREHOLDERS’ EQUITY Preferred stock 39 39 Common stock 95,114 92,382 Capital surplus 1,517,514 1,486,750 Accumulated deficit (168,522 ) (141,306 ) Accumulated other comprehensive loss (31,640 ) (32,031 ) Treasury stock (10,734 ) (8,860 ) Total shareholders’ equity 1,401,771 1,396,974 Total liabilities and shareholders’ equity $ 2,285,213 $ 2,262,064 Common shares outstanding 377,697 367,377HECLA MINING COMPANY
Condensed Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Nine Months Ended September 30, September 30, 2015 2014 OPERATING ACTIVITIES Net income (loss) $ (24,005 ) $ 919 Non-cash elements included in net income (loss): Depreciation, depletion and amortization 81,475 81,116 Gain on sale of investments — — Gain on disposition of properties, plants, equipment and mineral interests 175 (49 ) Unrealized loss (gain) on investments 3,060 2,750 Provision for reclamation and closure costs 11,028 3,646 Stock compensation 4,036 3,826 Deferred income taxes (1,781 ) (5,859 ) Amortization of loan origination fees 1,365 1,703 (Gain) loss on derivative contracts 9,561 6,458 Foreign exchange gain (17,566 ) (5,932 ) Other non-cash items, net 45 (914 ) Change in assets and liabilities: Accounts receivable (2,951 ) 10,952 Inventories 4,382 7,125 Other current and non-current assets (6,779 ) (1,097 ) Accounts payable and accrued liabilities 3,986 (4,446 ) Accrued payroll and related benefits 2,221 10,205 Accrued taxes 2,782 (1,541 ) Accrued reclamation and closure costs and other non-current liabilities 7,934 (50,094 ) Cash provided by operating activities 78,968 58,768 INVESTING ACTIVITIES Additions to properties, plants, equipment and mineral interests (95,399 ) (90,697 ) Acquisition of Revett, net of cash acquired (809 ) — Proceeds from sale of investments — Proceeds from disposition of properties, plants and equipment 277 447 Purchases of investments (947 ) (580 ) Changes in restricted cash and investment balances — 4,334 Net cash used in investing activities (96,878 ) (86,496 ) FINANCING ACTIVITIES Proceeds from exercise of warrants — 54,418 Acquisition of treasury shares (1,875 ) (3,740 ) Dividends paid to common shareholders (2,796 ) (2,629 ) Dividends paid to preferred shareholders (414 ) (414 ) Credit facility and debt issuance fees paid (123 ) (705 ) Payments on debt (216 ) — Borrowings on debt — — Payments on capital leases (7,833 ) (6,893 ) Net cash provided by financing activities (13,257 ) 40,037 Effect of exchange rates on cash (4,044 ) (2,124 ) Net increase in cash and cash equivalents (35,211 ) 10,185 Cash and cash equivalents at beginning of period 209,665 212,175 Cash and cash equivalents at end of period $ 174,454 $ 222,360HECLA MINING COMPANY
Production Data
Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2015 2014 2015 2014 GREENS CREEK UNIT Tons of ore milled 205,437 204,295 600,600 608,156 Mining cost per ton $ 71.95 $ 69.29 $ 73.06 $ 69.75 Milling cost per ton $ 30.55 $ 32.88 $ 29.88 $ 30.49 Ore grade milled - Silver (oz./ton) 12.68 13.04 12.92 12.51 Ore grade milled - Gold (oz./ton) 0.10 0.11 0.11 0.12 Ore grade milled - Lead (%) 3.25 3.22 3.29 3.21 Ore grade milled - Zinc (%) 8.91 7.91 8.73 8.35 Silver produced (oz.) 1,992,037 1,890,929 5,884,128 5,367,249 Gold produced (oz.) 14,376 13,524 43,368 43,464 Lead produced (tons) 5,394 5,033 15,717 14,902 Zinc produced (tons) 16,024 14,149 45,406 44,478 Cash cost, after by-product credits, per silver ounce (1) $ 4.82 $ 3.75 $ 3.79 $ 2.95 Capital additions (in thousands) $ 13,584 $ 6,696 $ 31,984 $ 19,545 LUCKY FRIDAY UNIT Tons of ore milled 65,817 78,979 212,121 238,447 Mining cost per ton $ 95.98 $ 90.21 $ 93.1 $ 86.35 Milling cost per ton $ 28.05 $ 22.96 $ 22.77 $ 21.79 Ore grade milled - Silver (oz./ton) 9.48 12.90 10.10 11.00 Ore grade milled - Lead (%) 6.06 7.41 6.40 6.91 Ore grade milled - Zinc (%) 2.33 2.93 2.89 2.94 Silver produced (oz.) 592,243 972,994 2,042,436 2,493,385 Lead produced (tons) 3,729 5,571 12,809 15,566 Zinc produced (tons) 1,411 2,127 5,631 6,272 Cash cost, after by-product credits, per silver ounce (1) $ 16.60 $ 8.71 $ 12.30 $ 9.08 Capital additions (in thousands) $ 16,459 $ 13,729 $ 41,519 $ 36,516 CASA BERARDI UNIT Tons of ore milled 208,074 206,237 615,171 604,869 Mining cost per ton $ 89.76 $ 102.33 $ 96.75 $ 108.68 Milling cost per ton $ 19.09 $ 20.81 $ 19.91 $ 20.86 Ore grade milled - Gold (oz./ton) 0.16 0.16 0.16 0.16 Ore grade milled - Silver (oz./ton) 0.040 0.031 0.040 0.031 Silver produced (oz.) 7,266 5,799 20,729 16,776 Gold produced (oz.) 29,259 28,977 85,609 88,859 Cash cost, after by-product credits, per gold ounce (1) $ 793 $ 898 $ 861 $ 911 Capital additions (in thousands) $ 8,941 $ 13,980 $ 25,139 $ 37,814 (1) Cash cost, after by-product credits, per ounce represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement. A reconciliation of cash cost, after by-product credits to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) 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 Cash Cost, Before By-product Credits, per Ounce and Cash Cost, After By-product Credits, per Ounce to Generally Accepted Accounting Principles (GAAP)
This release contains references to a non-GAAP measure of cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce. Cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements that the Company believes provide management and investors an indication of net cash flow. Management also uses this measurement for the comparative monitoring of performance of mining operations period-to-period from a cash flow perspective. Cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce are measures developed by gold companies and used by silver companies in an effort to provide a comparable standard; however, there can be no assurance that our reporting of these non-GAAP measures is similar to those reported by other mining companies. Cost of sales and other direct production costs and depreciation, depletion and amortization are the most comparable financial measures calculated in accordance with GAAP to cash cost, before by-product credits cash cost, after by-product credits.
As depicted in the Greens Creek Unit and the Lucky Friday Unit tables below, by-product credits comprise an essential element of our silver unit cost structure. By-product credits constitute an important competitive distinction for our silver operations due to the polymetallic nature of their orebodies. By-product credits included in our presentation of cash cost, after by-product credits, per silver ounce include:
Total, Greens Creek and Lucky Friday Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 By-product value, all silver properties: Zinc $ 20,850 $ 24,029 $ 67,764 $ 70,638 Gold 13,299 14,315 42,294 46,573 Lead 12,251 18,179 40,616 50,933 Total by-product credits $ 46,400 $ 56,523 $ 150,674 $ 168,144 By-product credits per silver ounce, all silver properties Zinc $ 8.07 $ 8.39 $ 8.55 $ 8.99 Gold 5.15 5.00 5.34 5.93 Lead 4.74 6.35 5.11 6.47 Total by-product credits $ 17.96 $ 19.74 $ 19 $ 21.39By-product credits included in our presentation of Cash Cost, After By-product Credits, per Gold Ounce for our Casa Berardi Unit include:
Casa Berardi (1) Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Silver by-product value $ 107 $ 112 $ 327 $ 330 Silver by-product credits per gold ounce $ 4 $ 4 $ 4 $ 4
The following table calculates cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce (in thousands, except per-ounce amounts):
Total, Greens Creek and Lucky Friday Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Cash cost, before by-product credits (1) $ 65,823 $ 72,083 $ 198,103 $ 206,653 By-product credits (46,401 ) (56,523 ) (150,674 ) (168,144 ) Cash cost, after by-product credits 19,422 15,560 47,429 38,509 Divided by silver ounces produced 2,584 2,864 7,926 7,860 Cash cost, before by-product credits, per silver ounce $ 25.47 $ 25.17 $ 24.99 $ 26.29 By-product credits per silver ounce $ (17.96 ) $ (19.74 ) $ (19.01 ) $ (21.39 ) Cash cost, after by-product credits, per silver ounce $ 7.52 $ 5.43 $ 5.98 $ 4.90 Reconciliation to GAAP: Cash cost, after by-product credits $ 19,422 $ 15,560 $ 47,429 $ 38,509 Depreciation, depletion and amortization 16,669 17,204 49,732 53,706 Treatment costs (18,518 ) (21,430 ) (57,744 ) (61,346 ) By-product credits 46,401 56,523 150,674 168,144 Change in product inventory 5,445 6,384 5,044 3,968 Reclamation and other costs 624 959 921 1,870 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 70,043 $ 75,200 $ 196,056 $ 204,851 Greens Creek Unit Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Cash cost, before by-product credits (1) $ 49,030 $ 50,415 $ 145,683 $ 147,419 By-product credits (39,436 ) (43,326 ) (123,376 ) (131,562 ) Cash cost, after by-product credits 9,594 7,089 22,307 15,857 Divided by silver ounces produced 1,992 1,891 5,884 5,367 Cash cost, before by-product credits, per silver ounce $ 24.62 $ 26.66 $ 24.76 $ 27.46 By-product credits per silver ounce $ (19.80 ) $ (22.91 ) $ (20.97 ) $ (24.51 ) Cash cost, after by-product credits, per silver ounce $ 4.82 $ 3.75 $ 3.79 $ 2.95 Reconciliation to GAAP: Cash cost, after by-product credits $ 9,594 $ 7,089 $ 22,307 $ 15,857 Depreciation, depletion and amortization 13,868 14,716 41,389 46,702 Treatment costs (15,231 ) (15,676 ) (46,103 ) (46,058 ) By-product credits 39,436 43,326 123,376 131,562 Change in product inventory 4,003 5,966 4,922 3,589 Reclamation and other costs 568 909 870 1,779 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 52,238 $ 56,330 $ 146,761 $ 153,431Lucky Friday Unit Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Cash cost, before by-product credits (1) $ 16,793 $ 21,668 $ 52,420 $ 59,234 By-product credits (6,965 ) (13,197 ) (27,298 ) (36,582 ) Cash cost, after by-product credits 9,828 8,471 25,122 22,652 Divided by silver ounces produced 592 973 2,042 2,493 Cash cost, before by-product credits, per silver ounce $ 28.36 $ 22.27 $ 25.67 $ 23.75 By-product credits per silver ounce $ (11.76 ) $ (13.56 ) $ (13.37 ) $ (14.67 ) Cash cost, after by-product credits, per silver ounce $ 16.60 $ 8.71 $ 12.30 $ 9.08 Reconciliation to GAAP: Cash cost, after by-product credits $ 9,828 $ 8,471 $ 25,122 $ 22,652 Depreciation, depletion and amortization 2,801 2,488 8,343 7,004 Treatment costs (3,287 ) (5,754 ) (11,641 ) (15,288 ) By-product credits 6,965 13,197 27,298 36,582 Change in product inventory 1,442 418 122 379 Reclamation and other costs 57 51 51 91 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 17,806 $ 18,871 $ 49,295 $ 51,420 Casa Berardi Unit Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Cash cost, before by-product credits (1) $ 23,311 $ 26,134 $ 74,022 $ 81,293 By-product credits (107 ) (112 ) (327 ) (330 ) Cash cost, after by-product credits 23,204 26,022 73,695 80,963 Divided by gold ounces produced 29,259 28,977 85,609 88,859 Cash cost, before by-product credits, per gold ounce $ 797 $ 902 $ 865 $ 915 By-product credits per gold ounce $ (4 ) $ (4 ) $ (4 ) $ (4 ) Cash cost, after by-product credits, per gold ounce $ 793 $ 898 $ 861 $ 911 Reconciliation to GAAP: Cash cost, after by-product credits $ 23,204 $ 26,022 $ 73,695 $ 80,963 Depreciation, depletion and amortization 11,561 9,600 30,917 26,636 Treatment costs (152 ) (108 ) (449 ) (337 ) By-product credits 107 112 327 330 Change in product inventory 2,628 2,450 562 2,738 Reclamation and other costs 111 208 346 621 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 37,459 $ 38,284 $ 105,398 $ 110,951
Total, All Locations Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Reconciliation to GAAP: Cash cost, after by-product credits $ 42,626 $ 41,582 $ 121,124 $ 119,472 Depreciation, depletion and amortization 28,230 26,804 80,649 80,342 Treatment costs (18,670 ) (21,538 ) (58,193 ) (61,683 ) By-product credits 46,508 56,635 151,001 168,474 Change in product inventory 8,073 8,834 5,606 6,706 Reclamation and other costs 735 1,167 1,267 2,491 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 107,502 $ 113,484 $ 301,454 $ 315,802 (1) Includes 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 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.
Reconciliation of Net Income (Loss) Applicable to Common Shareholders (GAAP) to Adjusted Net Income (Loss) Applicable to Common Stockholders
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.
Three Months Ended Nine Months EndedDollars are in thousands (except per share amounts)
September 30, September 30, 2015 2014 2015 2014 Net income (loss) applicable to common shareholders (GAAP)$
(10,028
) $ 3,538 $ (24,419 ) $ 505 Adjusting items: (Gains) losses on derivatives contracts (3,347 ) 411 (8,252 ) 2,560 Provisional price losses (gains) 963 1,116 (561 ) 2,064 Environmental accruals — 128 8,700 983 Foreign exchange (gain) loss (9,077 ) (7,299 ) (19,518 ) (6,051 ) Acquisition costs 15 — 2,162 — Income tax effect of above adjustments 948 (662 )(820 ) (2,243 ) Adjusted net income (loss) applicable to common shareholders $ (20,526 ) $ (2,768 ) $ (42,708 ) $ (2,182 ) Weighted average shares - basic 377,508 359,472 372,555 348,801 Weighted average shares - diluted 377,508 362,262 372,555 354,673 Basic adjusted net income (loss) per common share $ (0.05 ) $ (0.01 ) $ (0.11 ) $ (0.01 ) Diluted adjusted net income (loss) per common share $ (0.05 ) $ (0.01 ) $ (0.11 ) $ (0.01 )
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA
This release refers to a non-GAAP measure of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), which is a measure of our operating performance. Adjusted EBITDA is calculated as net income before the following items: interest expense, income tax provision, depreciation, depletion, and amortization expense, exploration expense, pre-development expense, Aurizon acquisition costs, Lucky Friday suspension-related costs, interest and other income (expense), foreign exchange gains and losses, gains and losses on derivative contracts, unrealized gains on investments, provisions for environmental matters, stock-based compensation, and provisional price gains and losses . Management believes that, when presented in conjunction with comparable GAAP measures, Adjusted EBITDA is useful to investors in evaluating our operating performance. The following table reconciles net income (loss) to Adjusted EBITDA:
Dollars are in thousands
Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2015 2014 2015 2014 Net income (loss) $ (9,890 ) $ 3,676 $ (24,005 ) $ 919 Plus: Interest expense, net of amount capitalized 6,617 6,505 19,350 20,307 Plus/(Less): Income taxes (5,500 ) 180 (4,193 ) (1,062 ) Plus: Depreciation, depletion and amortization 28,229 26,804 80,649 80,342 Plus: Exploration expense 5,540 5,797 14,748 13,086 Plus: Pre-development expense 1,696 391 3,834 1,247 Plus: Acquisition costs 15 — 2,162 — Plus/(Less): Foreign exchange (gain) loss (9,077 ) (7,299 ) (19,518 ) (6,051 ) Less: (Gains) losses on derivative contracts (3,347 ) 411 (8,252 ) 2,560 Plus/(Less): Provisional price (gains)/losses 963 1,116 (561 ) 2,064 Plus: Other 2,547 4,997 18,117 14,544 Adjusted EBITDA $ 17,793 $ 42,578 $ 82,331 $ 127,956
Table A – Assay Results – Q3 2015
Casa Berardi (Quebec) ZoneDrill HoleNumber
Drill HoleSection
Drill HoleAzm/Dip
SampleFrom
SampleTo
TrueWidth(feet)
Gold(oz/ton)
DepthFrom MineSurface(feet)
Lower-Inter Upper CBW-1071 10782 325/-48 549.2 562.0 12.8 0.26 -1374.7 CBW-1072 10794 335/-50 609.3 623.4 14.1 0.55 -1431.8 CBW-1077 10759 360/-40 570.9 590.6 19.7 1.04 -1353.0 CBW-1078 10764 360/-42 577.4 587.3 9.8 1.37 -1357.6 South-West (107) CBW-0365-036 10738 360/-8 132.5 142.4 9.8 0.20 -1205.4 (107) CBW-0365-038 10724 001/3 170.6 180.4 8.2 0.24 -1165.0 Upper 118 (118-61) CBP-0530-214 12307 360/3 246.4 288.7 42.3 0.74 -1760.2 (118-61) CBP-0530-220 12304 360/-3 186.4 199.1 12.8 0.30 -1789.7 (118-06) CBP-0530-228 12240 331/-60 290.4 345.8 55.4 0.18 -2039.7 (118-06) CBP-0530-229 12235 331/-52 298.9 326.4 20.7 0.23 -2018.4 Lower 118 (118-27) CBP-0910-053 12045 180/19 82.0 98.4 15.7 0.32 -2950.1 (118-27) CBP-0910-055 12037 180/2 144.7 163.7 18.7 0.46 -2976.0 (118-22) CBP-0910-057 12022 180/-12 59.1 72.8 13.1 0.29 -3000.3 (118-27) CBP-0910-058 12021 180/2 124.7 136.2 11.5 0.51 -2978.3 (118-27) CBP-0910-059 12021 180/18 150.9 172.9 21.0 0.38 -2930.4 (118-27) CBP-0910-060 11991 180/19 85.0 118.4 31.8 0.24 -2951.1 (118-27) CBP-0910-061 11991 180/7 91.5 109.6 14.4 0.33 -2985.6 (118-27) CBP-0910-062 12007 180/8 58.7 83.7 24.9 0.33 -2975.4 (118-27) CBP-0910-063 12006 180/19 64.6 93.5 28.8 0.36 -2959.0 Upper 123 (123-05) CBP-0550-099 12559 126/33 265.1 282.2 13.5 0.27 -1658.8 (123-08) CBP-0550-109 12362 180/-21 297.2 329.4 22.6 0.92 -1868.4 Lower 123 (123-11) CBP-0810-039 12431 153/-29 318.2 341.5 17.1 0.18 -2746.4 (123-04) CBP-0850-061 12377 146/14 236.9 249.3 8.2 0.57 -2667.7 (123-02) CBP-0850-071 12339 178/-37 412.7 436.4 23.6 0.81 -2991.5 (123-03) CBP-0850-074 12315 195/-30 265.7 287.4 9.5 0.62 -2990.8 (123-02) CBP-0850-075 12308 195/-39 412.1 430.8 11.8 0.73 -2844.8 (123-02) CBP-0850-079 12392 166/-41 500.3 529.5 10.2 0.35 -3062.7 U Principal (124-81) CBP-0250-071 12564 156/64 145.0 157.5 8.2 0.40 -661.7 (124-22) CBP-0290-252 12494 029/16 246.7 257.9 9.2 1.50 -871.7 (124-22) CBP-0290-254 12491 029/-3 229.3 246.7 15.4 0.28 -949.8 (124-22) CBP-0290-259 12505 041/-27 246.1 260.5 11.8 0.71 -1056.1 L Principal (124-32) CBP-0530-215 12303 360/16 117.5 138.5 21.0 0.15 -1736.2 (124-32) CBP-0530-220 12303 360/-3 140.1 176.8 36.7 0.20 -1786.1 (124-31) CBP-0530-221 12258 357/-3 42.7 65.6 16.1 0.25 -1767.7 (124-31) CBP-0530-222 12258 357/8 33.5 69.6 36.1 0.26 -1757.2 (124-31) CBP-0530-226 12261 007/4 25.6 50.5 7.5 0.22 -1762.1 (124-31) CBP-0530-227 12270 007/-30 223.1 294.6 71.5 0.23 -1917.0 (124-22) CBP-0550-099 12555 126/33 242.8 254.9 12.1 0.20 -1673.2 UG 117 CBW-1069 11,700 010/-77 4068.2 4104.3 21.8 0.15 -4501.6 UG 117 CBW-1070 11700 010/-74 1636.5 1653.5 17.1 0.13 -3901.9 Surf 100 CBW-1071 11850 0.10/-70 1235.5 1264.7 29.2 21.80 -3791.0 Surf 100 CBS-15-627 10400 360/-70 3666.3 3710.6 44.3 0.05 -2920.3 Surf 100 CBS-15-627A 10400 360/-72 3553.1 3720.5 167.3 0.05 -2769.4 Surf 157 CBS-15-632 15500 360/-85 1304.1 1353.3 49.2 0.07 -1274.6 Surf 157 CBS-15-633 15650 360/-70 1366.8 1370.1 3.3 1.26 -1245.4
San Sebastian (Mexico)
ZoneDrill HoleNumber
Sample From(ft)
Sample To(ft)
Width(feet)
True Width(feet)
Gold(oz/ton)
Silver(oz/ton)
East Francine Vein SS-935 106.3 130.3 24.1 23.9 0.17 8.16 East Francine Vein SS-936 163.0 164.2 1.2 1.2 0.30 13.34 East Francine Vein SS-937 228.5 229.6 1.1 1.0 0.07 10.50 Middle Vein SS-790 764.7 773.7 9.0 8.9 0.02 11.06 Middle Vein SS-799 322.7 330.2 7.5 7.0 0.10 13.19 Middle Vein SS-902 713.7 721.7 7.9 5.9 0.20 54.24 Middle Vein SS-904 835.7 841.7 6.1 5.0 0.02 4.67 Middle Vein SS-907 249.3 251.2 1.9 1.8 0.10 15.34 Middle Vein SS-908 586.4 593.6 7.2 6.5 0.11 38.37 Middle Vein SS-913 531.2 533.8 2.6 2.5 0.02 6.56 Middle Vein SS-914 638.2 640.7 2.5 2.1 0.07 14.37 Middle Vein SS-917 496.3 503.7 7.4 6.8 0.02 6.92 Middle Vein SS-918 726.2 734.7 8.4 7.3 0.05 15.12 Middle Vein SS-919 396.5 400.0 3.5 3.4 0.09 16.67 Middle Vein SS-922 290.6 294.8 4.1 4.0 0.03 8.91 Middle Vein SS-924 510.3 516.5 6.2 5.6 0.07 27.90 Middle Vein SS-924 A 510.3 514.0 3.6 3.3 0.02 10.56 Middle Vein SS-926 378.2 382.9 4.7 4.6 0.06 9.01 Middle Vein SS-927 614.1 618.3 4.2 3.9 0.15 33.15 Middle Vein SS-932 590.6 600.9 10.3 9.9 0.01 8.16 Middle Vein SS-933 409.1 411.0 1.9 1.9 0.05 15.72 North Vein SS-899 773.0 778.0 5.0 5.0 0.04 11.72 North Vein SS-943 143.0 151.2 8.2 8.1 0.10 3.04 North Vein SS-948 138.4 140.4 2.0 2.0 0.50 8.25 North Vein SS-950 170.3 172.7 2.4 2.4 0.14 1.70 North Vein SS-952 111.2 122.7 11.5 11.0 0.20 2.02 North Vein SS-954 107.1 115.6 8.5 8.1 0.11 1.61 North Vein SS-955 94.1 99.4 5.3 5.3 0.51 7.23 North Vein SS-956 82.6 86.9 4.3 4.3 1.74 15.87 North Vein SS-958 A 62.1 66.2 4.1 3.7 0.11 4.30 North Vein SS-959 95.6 115.8 20.2 20.1 0.14 2.98 North Vein SS-965 31.1 36.1 5.0 4.9 0.06 8.94 North Vein SS-966 A 45.9 56.9 10.9 10.4 0.12 3.68 North Vein SS-967 23.1 36.7 13.6 13.0 0.06 1.83 North Vein SS-970 100.5 103.9 3.4 3.4 0.06 6.58 North Vein SS-973 138.5 143.3 4.8 4.8 0.29 7.59 North Vein SS-979 70.3 74.5 4.3 4.2 0.10 6.99 North Vein SS-980 80.2 83.9 3.6 2.2 0.08 6.45 North Vein SS-990 78.3 80.2 2.0 1.9 0.22 4.61
Greens Creek (Alaska)
ZoneDrill HoleNumber
Drill HoleAzm/Dip
SampleFrom
SampleTo
HorizontalWidth1(feet)
Silver(oz/ton)
Gold(oz/ton)
Zinc(%)
Lead(%)
DepthFromMinePortal(feet)
Northwest West GC4023 063/-28 92.00 101.60 7.9 13.64 0.07 2.25 1.11 -439 GC4050 063/-63 124.90 134.50 9.5 19.03 0.14 6.73 2.98 -516 140.80 145.20 4.4 12.15 0.14 12.96 3.32 -530 GC4068 063/-34 144.00 148.00 3.4 23.46 0.08 3.87 1.72 -482 277.20 282.20 2.6 23.13 0.06 1.22 0.38 -557 307.90 312.90 2.6 15.43 0.03 0.09 0.11 -574 GC4071 063/-61 115.60 119.20 3.4 80.71 0.08 10.82 5.47 -524 127.50 129.40 1.9 49.34 0.23 6.04 2.81 -515 GC4073 063/-78 177.50 180.20 2.2 25.75 0.23 17.28 4.84 -579 GC4076 063/19 178.10 182.90 4.3 16.95 0.03 8.62 4.35 -616 320.10 323.00 1.7 34.11 0.04 13.34 7.76 -298 GC4079 063/37 195.40 197.40 1.9 14.37 0.07 0.68 0.33 -278 204.00 207.90 3.4 8.33 0.14 0.67 0.26 -272 240.40 251.40 10.6 14.43 0.05 13.31 6.38 -249 261.40 269.70 5.6 47.10 0.13 8.96 4.79 -239 GC4088 243/-69 242.70 252.70 6.2 32.98 0.39 12.78 5.62 -630 GC4089 243/-80 199.20 205.80 5.4 40.93 0.15 2.56 1.59 -601 GC4091 063/-23 438.30 441.00 2.7 5.38 0.09 24.86 3.52 -571 GC4093 063/-32 145.30 148.40 2.4 32.69 0.14 6.59 3.09 -481 GC4097 063/-64 122.00 131.10 8.0 35.14 0.20 7.29 3.03 -514 GC4098 063/-82 168.30 170.70 1.5 52.95 0.36 14.84 5.64 -572 GC4102 063/24 192.80 199.60 5.6 58.04 0.19 8.97 4.96 -312 247.80 252.00 2.0 36.52 0.40 5.37 2.41 -288 264.30 279.20 10.2 19.91 0.04 6.99 3.62 -281 GC4105 063/17 132.70 134.70 1.9 36.58 0.00 0.24 0.10 -356 227.60 230.60 1.9 151.21 0.32 6.66 3.93 -327 GC4108 243/-64 212.90 225.20 10.9 34.86 0.28 11.87 5.37 -598 GC4110 243/-28 515.10 517.30 2.2 11.02 0.02 16.89 9.22 -627 121.30 122.30 0.8 29.69 0.70 8.22 3.47 -485 GC4122 063/-83 102.10 104.10 1.7 25.69 0.15 2.26 1.17 -508 157.30 159.90 2.1 21.98 0.10 5.88 2.71 -564 GC4123 063/28 278.20 280.20 1.5 14.09 0.17 1.20 0.47 -277 293.00 296.70 2.8 12.26 0.06 0.14 0.11 -271 303.20 309.90 5.4 71.55 0.16 8.25 4.61 -268 GC4132 57/-34.5 151.90 157.70 5.6 19.71 0.07 8.40 4.03 -498 GC4136 261/-77.5 180.00 184.30 4.1 39.17 0.33 5.58 2.13 -584 GC4159 063/-27 154.30 158.10 3.8 20.79 0.13 8.18 3.50 -364 183.80 187.50 3.7 14.01 0.11 0.96 0.37 -377 189.50 205.20 12.2 36.20 1.04 5.59 2.65 -375 GC4161 063/-35 144.30 147.00 2.6 18.68 0.09 11.08 5.21 -376 179.20 185.40 6.2 21.82 0.37 8.73 3.89 -395 GC4163 063/-44 135.90 138.90 2.5 11.42 0.03 2.21 1.07 -388 170.50 172.20 1.7 18.28 0.05 14.32 5.88 -412 GC4165 063/-18 163.50 168.00 4.3 31.39 0.30 13.45 6.92 -344 225.80 230.80 3.3 19.14 0.16 2.94 1.57 -365 West Wall GC4023 063/-28 515.10 517.30 2.2 11.02 0.02 16.89 9.22 -628 GC4093 063/-32 532.60 543.40 9.4 5.86 0.07 27.94 7.68 -674 Deep 200 South GC3968 243/-79 269.80 278.00 8.1 19.77 0.12 0.89 0.56 -1531 459.50 463.50 4.0 12.19 0.06 12.59 6.53 -1718 GC3977 063/-76 294.00 300.50 6.2 18.48 0.11 1.70 1.05 -1554 GC4059 243/-54 305.50 310.80 3.5 20.08 0.14 1.27 0.53 -1516 GC4062 243/-84 265.00 266.10 1.1 42.72 0.04 3.71 2.36 -1532 GC4124 243/-87 263.70 269.00 5.2 18.98 0.15 0.87 0.54 -1527 243/-87 928.00 931.00 2.0 24.51 0.00 0.21 0.12 -2190 462.00 466.10 4.1 31.00 0.09 11.55 6.37 -1725 GC4131 063/-73 306.50 310.80 3.0 36.75 0.16 0.84 0.49 -1557 370.70 391.40 16.1 35.52 0.09 1.29 0.67 -1618 GC4135 063/-35 340.00 341.60 1.1 15.69 0.05 1.54 0.79 -1462 GC4141 063/-65 386.20 400.00 10.1 13.56 0.08 0.92 0.55 -1619 417.40 424.50 3.8 13.47 0.03 1.21 0.70 -1646 GC4143 063/-84 267.50 269.30 1.5 12.49 0.04 1.35 0.79 -1512 630.00 642.20 2.7 34.78 0.42 9.04 4.18 -1873 646.20 651.60 2.0 19.37 0.22 3.80 1.92 -1920 704.50 711.80 3.4 42.91 0.46 9.90 4.82 -1946 732.00 737.00 2.0 21.81 0.29 3.80 1.97 -1975 GC4146 063/-71 326.20 327.30 0.8 18.80 0.24 1.49 0.87 -1578 GC4150 243/-77 254.70 256.70 1.9 16.00 0.07 0.78 0.80 -1520 GC4152 243/-47 357.00 360.20 1.0 13.84 0.11 0.89 0.45 -1536 371.40 389.80 9.8 34.46 0.05 0.94 0.41 -1546 618.00 619.00 0.8 32.46 0.07 0.07 0.03 -1735 GC4155 243/-42 485.80 495.80 3.3 15.83 0.02 0.42 0.17 -1599 GC4162 243/-52 306.10 309.10 1.6 14.76 0.03 0.98 0.45 -1513 243/-52 306.10 309.10 1.6 14.76 0.03 0.98 0.45 -1513 Upper Southwest/5250 GC4103 063/-46 30.50 31.90 1.4 18.32 0.01 3.09 2.36 -628 GC4111 063/-49 164.30 170.90 5.4 12.28 0.08 3.70 1.84 -147 GC4113 063/-85 197.80 205.00 5.1 10.19 0.00 9.21 5.23 -327 GC4118 063/43 0.00 10.80 10.5 19.39 0.07 17.02 9.38 -116 GC4119 063/87 0.00 22.00 13.5 23.95 0.12 13.20 7.44 -111 GC4126 063/-80 167.50 169.00 1.4 17.91 0.05 27.84 17.89 -297 GC4127 063/71 2.30 5.50 3.2 39.41 0.07 16.15 9.36 -112 GC4129 063/79 0.00 19.30 18.2 25.37 0.11 8.84 4.50 -5 9a GC4139 063/-20 500.30 502.50 2.1 23.01 0.03 17.65 10.50 -468 1 Due to the irregular shape of the ore body, the determination of true width is not possible. Horizontal width is seen as a reasonable alternative.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104005499/en/
Hecla Mining CompanyMike Westerlund, 800-HECLA91 (800-432-5291)Vice President - Investor Relationshmc-info@hecla-mining.comhttp://www.hecla-mining.com
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