Hecla Reports Third Quarter 2024 Results

Press Release

Nov. 06, 2024

COEUR D’ALENE, Idaho– Hecla Mining Company (NYSE:HL) (“Hecla” or the “Company”) today announced third quarter 2024 financial and operating results.

THIRD QUARTER HIGHLIGHTS

Operational

• Produced 3.6 million silver ounces and 32,280 ounces of gold.
• Keno Hill produced 0.6 million ounces of silver, with 2.1 million ounces produced in the first nine months of the year, at an average mill throughput of 314 tons per day (”tpd”).
• Sold 98,792 pounds of payable copper at Greens Creek.
• 2024 guidance for silver production decreased and cost guidance increased, gold production and cost guidance affirmed.

Financial

• Revenues of $245.1 million, second highest in Company history, 45% from silver and 32% from gold.
• Net income applicable to common stockholders of $1.6 million or $0.00 per share; adjusted net income applicable to common stockholders of $19.7 million or $0.03 per share.¹
• Reduced total debt by $50.6 million; achieved the second highest quarterly Adjusted EBITDA, improving the net leverage ratio* to 1.8.⁵
• Cash provided by operating activities of $55.0 million; strong free cash flow generation at Greens Creek and Lucky Friday.²
  • Greens Creek generated $54.1 million in cash flow from operations and $46.9 million in free cash flow.²
  • Lucky Friday generated $34.4 million in cash flow from operations and $23.2 million in free cash flow (including $14.8 million in insurance receipts).²
• Collected the remaining $14.8 million of Lucky Friday’s underground insurance claim of $50 million.
• Consolidated silver total cost of sales of $132.7 million; cash cost and all-in sustaining cost (“AISC”) per silver ounce (each after by-product credits) of $4.46 and $15.29, respectively.^3,4
• Declared silver-linked quarterly dividend of $0.01 per share, reflecting a quarterly realized silver price between $25 and $30 per ounce, for a total cash dividend of $0.01375 per common share.

* Net Leverage ratio is calculated as current debt, long-term debt and finance leases less cash to 12 month trailing adjusted EBITDA.

Exploration

• At Keno Hill, over 9,800 feet of definition drilling was completed. Drilling continues to intersect high-grade silver mineralization over significant widths and highlights the potential for high-grade silver mineralization in the district. Highlights include:
  • Bermingham Footwall Vein: 63.8 oz/ton silver, 6.7% lead, and 6.4% zinc over 10.2 feet
    • Includes: 99.6 oz/ton silver, 10.7% lead, and 9.8% zinc over 6.4 feet
• Flame & Moth Vein 1: 71.6 oz/ton silver, 11.6% lead, and 11.2% zinc over 14.8 feet
• At Greens Creek, over 27,000 feet of drilling was completed, focused on resource conversion and extension of mineralization. Highlights include:
  • 200 South Zone: 74.0 oz/ton silver, 0.03 oz/ton gold, 4.7% zinc, and 2.2% lead over 33.8 feet
  • Southwest Bench: 51.4 oz/ton silver, 0.52 oz/ton gold, 9.3% zinc, and 4.9% lead over 19.0 feet

“Hecla produced 3.6 million ounces of silver in the third quarter, bringing year-to-date production to 12.3 million ounces. Lucky Friday had a strong quarter as the mill achieved the second-highest throughput in its 80-year history after a record last quarter,” said Cassie Boggs, Interim President and CEO. “While Greens Creek’s silver production was lower than anticipated due to five days of unplanned mill maintenance in the third quarter, our team was able to complete the maintenance quickly and complete a portion of our fourth quarter scheduled maintenance simultaneously. Strong performance from our silver operations has generated free cash flow of $170 million year-to-date, which along with opportunistic use of our ATM program, has allowed us to substantially repay outstanding borrowings on our revolving credit facility, reducing total debt by $50.6 million.”

Boggs continued, “At Keno Hill, we have already mined more than 2.5 million ounces and produced 2.1 million ounces of silver this year, putting us on track to meet our production guidance for this year. We are prioritizing building the foundation for this operation’s future to operate in Yukon successfully, which includes improving safety and environmental practices and, importantly, valuing the perspectives of the Yukon Government and the First Nation of Na-Cho Nyäk Dun, both of whom have important roles in permitting our improvements to infrastructure as well as our future operations.”

New President and CEO

Ms. Boggs continued, “What we are most excited about is welcoming our new President and CEO, Rob Krcmarov, a proven leader in the mining industry. His vision and expertise will be invaluable as we continue our journey toward growth, innovation and continuous improvement.”

Mr. Krcmarov added, “Hecla has a remarkable legacy of operational excellence, innovation, and a strong commitment to responsible mining and sustainable practices. I am thrilled to be a part of this team and I look forward to contributing to the Company’s continued growth and success.”

FINANCIAL OVERVIEW

In the following table and throughout this release, “total cost of sales” is comprised of cost of sales and other direct production costs and depreciation, depletion and amortization, and comparisons are made to the “prior quarter” which refers to the second quarter of 2024.

In Thousands unless stated otherwise		3Q-2024				2Q-2024				1Q-2024				4Q-2023				3Q-2023				2Q-2023				YTD-2024				YTD-2023
FINANCIAL AND PRODUCTION SUMMARY
Sales		$	245,085			$	245,657			$	189,528			$	160,690			$	181,906			$	178,131			$	680,270			$	559,537
Total cost of sales		$	185,799			$	194,227			$	170,368			$	153,825			$	148,429			$	140,472			$	550,394			$	453,453
Gross profit		$	59,286			$	51,430			$	19,160			$	6,865			$	33,477			$	37,659			$	129,876			$	106,084
Net income (loss) applicable to common stockholders		$	1,623			$	27,732			$	(5,891	)		$	(43,073	)		$	(22,553	)		$	(15,832	)		$	23,464			$	(41,696	)
Basic income (loss) per common share (in dollars)		$	0.00			$	0.04			$	(0.01	)		$	(0.07	)		$	(0.04	)		$	(0.03	)		$	0.04			$	(0.07	)
Adjusted EBITDA1		$	88,859			$	90,895			$	71,597			$	32,907			$	46,251			$	67,740			$	251,351			$	175,894
Total Debt		$	539,804																											$	616,246
Net Debt to Adjusted EBITDA1			1.8																								1.8				2.2
Cash provided by operating activities		$	55,009			$	78,718			$	17,080			$	884			$	10,235			$	23,777			$	150,807			$	74,615
Capital Expenditures		$	(55,699	)		$	(50,420	)		$	(47,589	)		$	(62,622	)		$	(55,354	)		$	(51,468	)		$	(153,708	)		$	(161,265	)
Free Cash Flow2		$	(690	)		$	28,298			$	(30,509	)		$	(61,738	)		$	(45,119	)		$	(27,691	)		$	(2,901	)		$	(86,650	)
Silver ounces produced			3,645,004				4,458,484				4,192,098				2,935,631				3,533,704				3,832,559				12,295,586				11,407,232
Silver payable ounces sold			3,729,782				3,785,285				3,481,884				2,847,591				3,142,227				3,360,694				10,996,951				10,107,415
Gold ounces produced			32,280				37,324				36,592				37,168				39,269				35,251				106,196				114,091
Gold payable ounces sold			31,414				35,276				32,189				33,230				36,792				31,961				98,879				108,372
Cash Costs and AISC, each after by-product credits
Silver cash costs per ounce 3		$	4.46			$	2.08			$	4.78			$	4.94			$	3.31			$	3.32			$	3.71			$	2.86
Silver AISC per ounce 4		$	15.29			$	12.54			$	13.10			$	17.48			$	11.39			$	11.63			$	13.57			$	10.52
Gold cash costs per ounce 3		$	1,754			$	1,701			$	1,669			$	1,702			$	1,475			$	1,658			$	1,707			$	1,635
Gold AISC per ounce 4		$	2,059			$	1,825			$	1,899			$	1,969			$	1,695			$	2,147			$	1,923			$	2,075
Realized Prices
Silver, $/ounce		$	29.43			$	29.77			$	24.77			$	23.47			$	23.71			$	23.67			$	28.07			$	23.28
Gold, $/ounce		$	2,522			$	2,338			$	2,094			$	1,998			$	1,908			$	1,969			$	2,317			$	1,921
Lead, $/pound		$	0.93			$	1.06			$	0.97			$	1.09			$	1.07			$	0.99			$	0.99			$	1.02
Zinc, $/pound		$	1.36			$	1.51			$	1.10			$	1.39			$	1.52			$	1.13			$	1.32			$	1.34

Sales in the third quarter of $245.1 million were consistent with the prior quarter as lower sales volumes of silver, gold and lead, and lower realized prices for silver, zinc, lead were offset by higher sales volumes for zinc and higher realized prices for gold. The lower sales volumes stemmed from a combination of lower production and volumes sold at Lucky Friday and Casa Berardi (due to lower grades and lower mill throughput) and lower sales volumes at Keno Hill due to lower mill throughput attributable to delays in design and construction of the dry stack tailings facility (“DSTF”), including permitting delays following the heap leach failure at Victoria Gold’s Eagle Gold mine. Sales of silver and zinc concentrate inventory built up at Greens Creek in the prior quarter partially offset lower sales volumes from other operations.

Gross profit increased by 15% to $59.3 million, primarily attributable to the lower cost of sales at Keno Hill and Casa Berardi partially offset by higher cost of sales at Greens Creek due to higher volumes of metals sold.

Net income applicable to common stockholders for the quarter was $1.6 million, a $26.1 million reduction from the prior quarter, primarily because of:

• A non-cash write down of $14.5 million, $13.9 million related to the remote vein miner. The machine was determined to be obsolete due to the success of the Underhand Closed Bench mining method at Lucky Friday and the decision by the vendor to terminate the program and exit that line of business.
• Ramp-up and suspension costs increased by $8.1 million to $13.7 million, reflecting the lower mill throughput at Keno Hill due to delays of the DSTF described above.
• Foreign exchange loss of $3.2 million, compared to a gain of $2.7 million in the prior quarter, due to the appreciation of the Canadian dollar against the U.S. dollar.
• Exploration and pre-development increased by $3.9 million, due to increased activity over the summer months.
• Income and mining tax provision increased by $2.4 million to $11.5 million reflecting higher taxable income of our US operations compared to consolidated book income.

The above items were partly offset by:

• General and administrative costs decreased by $4.3 million primarily due to costs related to the departure of the former CEO in the prior quarter.
• Interest expense decreased by $1.6 million reflecting a decrease in the Company’s borrowing on its revolving credit facility.

Consolidated silver total cost of sales in the third quarter increased by 8% to $132.7 million, reflecting a product inventory draw down at Greens Creek. Consolidated cash costs and AISC per silver ounce, each after by-product credits, were $4.46 and $15.29 respectively and only include costs of Greens Creek and Lucky Friday for the full quarter (commercial production has not been declared at Keno Hill). The increase in cash costs was primarily due to lower silver production and by-product credits (lower production for all metals except zinc and lower realized prices for all metals except gold).^3,4

Consolidated gold total cost of sales were $46.3 million, reflecting a decrease in sales at Casa Berardi. Cash costs and AISC per gold ounce, each after by-product credits, increased to $1,754 and $2,059, respectively, as lower production costs were offset by lower gold production, with AISC also impacted by higher planned capital investment in tailings construction.^3,4

Adjusted EBITDA for the quarter was $88.9 million, in line with the prior quarter (which was a record).⁵ The net leverage ratio improved to 1.8 times from 2.3 times in the prior quarter due to a reduction in total debt of $50.6 million as the Company decreased borrowings under its revolving credit facility. Cash and cash equivalents at the end of the quarter were $22.3 million and included $13.0 million drawn on the revolving credit facility. Borrowing on the revolving credit facility decreased by $49.0 million in the quarter as the Company utilized insurance proceeds and equity issuances under the At-The-Market (“ATM”) program to reduce the drawn amount. At current price levels and expected production, the Company anticipates continuing to reduce borrowings on the revolving credit facility.

Cash provided by operating activities was $55.0 million and decreased by $23.7 million from the prior quarter due to a decrease in net income adjusted for non-cash items of $13.4 million and unfavorable working capital changes of $10.3 million.

Capital investment of $55.7 million increased by $5.3 million from the prior quarter. Capital investments at the operations were as follows (i) $11.5 million at Greens Creek related to development, mill projects including replacement of tails and concentrate filter presses, definition drilling, and equipment purchases, (ii) $18.6 million at Casa Berardi, primarily related to tailings construction activities, (iii) $11.2 million at Lucky Friday primarily related to equipment purchases, pre-production drilling, and development and (iv) $14.4 million at Keno Hill, primarily related to DSTF work, equipment purchases, and capital development.

Free cash flow for the quarter was negative $0.7 million, compared to $28.3 million in the prior quarter.² The decrease in free cash flow is primarily attributable to lower cash flow from operations and increased capital investment.

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