Hecla Reports Second Quarter 2024 Results
COEUR D’ALENE, Idaho– Hecla Mining Company (NYSE:HL, “Company”) today announced second quarter 2024 financial and operating results.
SECOND QUARTER HIGHLIGHTS
Operational
- Production of 4.5 million silver ounces, second highest in Company history.
- Lucky Friday’s silver production of 1.3 million ounces was the highest since 2000. Record mill throughput of 1,181 tons per day (“tpd”).
- Keno Hill All-Injury Frequency Rate (“AIFR”) improved by 12% to 1.98, while producing a record 0.9 million ounces of silver, a 39% increase over the first quarter of 2024.
- 2024 silver production and consolidated cost guidance reiterated, gold production guidance increased.
Financial
- Revenues of $245.7 million, highest in Company history, 46% from silver and 34% from gold.
- Net income applicable to common stockholders of $27.7 million or $0.04 per share, adjusted net income applicable to common stockholders of $12.3 million or $0.02 per share.1
- Trailing twelve month Adjusted EBITDA of $242.8 million, net leverage ratio* improved to 2.3.5
- Cash provided by operating activities of $78.7 million, free cash flow of $28.3 million.2
- Free cash flow generated at all operations, particularly strong at Greens Creek and Lucky Friday.
- Greens Creek generated $43.3 million in cash flow from operations and $33.6 million in free cash flow.2
- Lucky Friday generated $44.5 million in cash flow from operations and $33.7 million in free cash flow (including $17.8 million in insurance receipts).2
- Consolidated silver total cost of sales of $123.3 million and cash cost and all-in sustaining cost (“AISC”) per silver ounce (each after by-product credits) of $2.08 and $12.54, respectively.3,4
- Received $17.8 million in Lucky Friday insurance claim proceeds, $35.2 million received to date.
- Realized silver price of $29.77 per ounce, $0.01375 cash dividend per common share, includes silver-linked component of $0.01 per share.
Exploration
- Drilling at Keno Hill intersected significant widths of high-grade silver mineralization at both the Bermingham and Flame & Moth deposits, confirmed and expanded mineralization in both areas. Highlights include:
- Bermingham Bear Vein: 35.4 oz/ton silver, 2.2% lead, and 2.0% zinc over 20.2 feet.
- Flame & Moth Veins 0, 1, and Stockwork: 28.6 oz/ton silver, 3.3% lead, and 6.2% zinc over 22.3 feet.
- Drilling at Greens Creek intersected strong mineralization in multiple ore zones adding confidence and expanding mineralization. Most notably, the West Zone: 72.7 oz/ton silver, 0.23 oz/ton gold, 9.6% zinc, and 5.2% lead over 26.9 feet.
* Net Leverage ratio is calculated as long-term debt and finance leases less cash to adjusted EBITDA.
“Hecla saw significant improvement in gross profit and free cash flow during the quarter – with our gross profit increasing more than 1.5 times over the prior quarter, and free cash flow generation of $28.3 million, which allowed us to reduce our net debt by $25.1 million,” said Cassie Boggs, interim President and CEO. “This financial performance was driven by strong results and free cash flow generated at Greens Creek and Lucky Friday, while Keno Hill’s ramp-up progressed well with throughput in excess of 400 tpd. With this strong performance and favorable price environment, we will continue our focus on reducing debt while continuing to invest in our operations and exploration programs.”
Boggs continued, “At Keno Hill, while the ramp-up has gone well, our focus will be to ensure Hecla’s culture of safety and environmental excellence is instilled in the operational and mining practices. As a result, we expect costs and investment at the mine will remain at current levels as more work is required to deliver long-term value. We are committed to collaborating and working with the First Nation of Na-Cho Nyäk Dun as they work through the clean-up work after the heap leach failure at Victoria Gold’s Eagle Gold mine. We have offered our assistance and will continue to be available where we can during this time of crisis.”
Boggs concluded, “Silver demand is projected to remain robust, supported by the growing solar demand as the world transitions to a cleaner, greener economy. With Hecla’s silver production expected at about 17 million ounces this year, potentially increasing to 20 million ounces by 2026, Hecla remains the fastest growing established silver producer with growth in the best mining jurisdictions.”
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 first quarter of 2024.
In Thousands unless stated otherwise |
|
2Q-2024 |
|
|
1Q-2024 |
|
|
4Q-2023 |
|
|
3Q-2023 |
|
|
2Q-2023 |
|
|
YTD-2024 |
|
|
YTD-2023 |
|
|||||||
FINANCIAL AND PRODUCTION SUMMARY |
|
|||||||||||||||||||||||||||
Sales |
|
$ |
245,657 |
|
|
$ |
189,528 |
|
|
$ |
160,690 |
|
|
$ |
181,906 |
|
|
$ |
178,131 |
|
|
$ |
435,185 |
|
|
$ |
377,631 |
|
Total cost of sales |
|
$ |
194,227 |
|
|
$ |
170,368 |
|
|
$ |
153,825 |
|
|
$ |
148,429 |
|
|
$ |
140,472 |
|
|
$ |
364,595 |
|
|
$ |
305,024 |
|
Gross profit |
|
$ |
51,430 |
|
|
$ |
19,160 |
|
|
$ |
6,865 |
|
|
$ |
33,477 |
|
|
$ |
37,659 |
|
|
$ |
70,590 |
|
|
$ |
72,607 |
|
Net income (loss) applicable to common stockholders |
|
$ |
27,732 |
|
|
$ |
(5,891 |
) |
|
$ |
(43,073 |
) |
|
$ |
(22,553 |
) |
|
$ |
(15,832 |
) |
|
$ |
21,841 |
|
|
$ |
(19,143 |
) |
Basic income (loss) per common share (in dollars) |
|
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
$ |
(0.03 |
) |
Adjusted EBITDA1 |
|
$ |
90,895 |
|
|
$ |
72,699 |
|
|
$ |
32,907 |
|
|
$ |
46,251 |
|
|
$ |
67,740 |
|
|
$ |
163,594 |
|
|
$ |
129,642 |
|
Total Debt |
|
$ |
590,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
571,030 |
|
|||||
Net Debt to Adjusted EBITDA1 |
|
|
2.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1 |
|
|||||
Cash provided by operating activities |
|
$ |
78,718 |
|
|
$ |
17,080 |
|
|
$ |
884 |
|
|
$ |
10,235 |
|
|
$ |
23,777 |
|
|
$ |
95,798 |
|
|
$ |
64,380 |
|
Capital Expenditures |
|
$ |
(50,420 |
) |
|
$ |
(47,589 |
) |
|
$ |
(62,622 |
) |
|
$ |
(55,354 |
) |
|
$ |
(51,468 |
) |
|
$ |
(98,009 |
) |
|
$ |
(105,911 |
) |
Free Cash Flow2 |
|
$ |
28,298 |
|
|
$ |
(30,509 |
) |
|
$ |
(61,738 |
) |
|
$ |
(45,119 |
) |
|
$ |
(27,691 |
) |
|
$ |
(2,211 |
) |
|
$ |
(41,531 |
) |
Silver ounces produced |
|
|
4,458,484 |
|
|
|
4,192,098 |
|
|
|
2,935,631 |
|
|
|
3,533,704 |
|
|
|
3,832,559 |
|
|
|
8,650,582 |
|
|
|
7,873,528 |
|
Silver payable ounces sold |
|
|
3,785,285 |
|
|
|
3,481,884 |
|
|
|
2,847,591 |
|
|
|
3,142,227 |
|
|
|
3,360,694 |
|
|
|
7,267,169 |
|
|
|
6,965,188 |
|
Gold ounces produced |
|
|
37,324 |
|
|
|
36,592 |
|
|
|
37,168 |
|
|
|
39,269 |
|
|
|
35,251 |
|
|
|
73,916 |
|
|
|
74,822 |
|
Gold payable ounces sold |
|
|
35,276 |
|
|
|
32,189 |
|
|
|
33,230 |
|
|
|
36,792 |
|
|
|
31,961 |
|
|
|
67,465 |
|
|
|
71,580 |
|
Cash Costs and AISC, each after by-product credits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Silver cash costs per ounce 3 |
|
$ |
2.08 |
|
|
$ |
4.78 |
|
|
$ |
4.94 |
|
|
$ |
3.31 |
|
|
$ |
3.32 |
|
|
$ |
3.38 |
|
|
$ |
2.70 |
|
Silver AISC per ounce 4 |
|
$ |
12.54 |
|
|
$ |
13.10 |
|
|
$ |
17.48 |
|
|
$ |
11.39 |
|
|
$ |
11.63 |
|
|
$ |
12.81 |
|
|
$ |
10.21 |
|
Gold cash costs per ounce 3 |
|
$ |
1,701 |
|
|
$ |
1,669 |
|
|
$ |
1,702 |
|
|
$ |
1,475 |
|
|
$ |
1,658 |
|
|
$ |
1,685 |
|
|
$ |
1,725 |
|
Gold AISC per ounce 4 |
|
$ |
1,825 |
|
|
$ |
1,899 |
|
|
$ |
1,969 |
|
|
$ |
1,695 |
|
|
$ |
2,147 |
|
|
$ |
1,861 |
|
|
$ |
2,286 |
|
Realized Prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Silver, $/ounce |
|
$ |
29.77 |
|
|
$ |
24.77 |
|
|
$ |
23.47 |
|
|
$ |
23.71 |
|
|
$ |
23.67 |
|
|
$ |
27.37 |
|
|
$ |
23.12 |
|
Gold, $/ounce |
|
$ |
2,338 |
|
|
$ |
2,094 |
|
|
$ |
1,998 |
|
|
$ |
1,908 |
|
|
$ |
1,969 |
|
|
$ |
2,222 |
|
|
$ |
1,928 |
|
Lead, $/pound |
|
$ |
1.06 |
|
|
$ |
0.97 |
|
|
$ |
1.09 |
|
|
$ |
1.07 |
|
|
$ |
0.99 |
|
|
$ |
1.02 |
|
|
$ |
1.00 |
|
Zinc, $/pound |
|
$ |
1.51 |
|
|
$ |
1.10 |
|
|
$ |
1.39 |
|
|
$ |
1.52 |
|
|
$ |
1.13 |
|
|
$ |
1.30 |
|
|
$ |
1.26 |
|
Sales in the second quarter increased by 30% from the prior quarter to $245.7 million due to higher quantities sold of all metals produced except zinc, as well as higher realized prices for all metals. The higher sales volumes were due to a full quarter of production at Lucky Friday, increased sales at Keno Hill and Casa Berardi, partially offset by lower volumes sold at Greens Creek.
Gross profit increased by 168% to $51.4 million, reflecting higher realized prices and higher sales volumes at Lucky Friday and Casa Berardi.
Net income applicable to common stockholders for the quarter was $27.7 million, a $33.6 million improvement from the prior quarter, primarily because of:
- Ramp-up and suspension costs decreased by $9.0 million to $5.5 million, reflecting a full quarter of Lucky Friday production following the restart in January and improved performance at Keno Hill.
- Fair value adjustments, net increased by $6.9 million due to unrealized gains on both our derivative contracts not designated as accounting hedges, and marketable equity securities portfolio.
The above items were partly offset by:
- Income and mining tax provision increased by $7.3 million to $9.1 million reflecting higher taxable income of our US operations.
- General and administrative costs increased by $3.5 million due to costs incurred related to the former CEO’s retirement, which were primarily non cash equity compensation costs.
Consolidated silver total cost of sales in the second quarter increased by 14% to $123.3 million, reflecting a full quarter of production at Lucky Friday and increased sales at Keno Hill. Consolidated cash costs and AISC per silver ounce, each after by-product credits, were $2.08 and $12.54 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 decrease in cash costs and AISC per silver ounce was due to higher silver production and higher by-product credits partially offset by higher production costs.3,4
Consolidated gold total cost of sales were $67.3 million, reflecting an increase in sales volumes at Casa Berardi. Cash costs and AISC per gold ounce, each after by-product credits, were $1,701 and $1,825, respectively.3,4 The increase in cash costs per ounce was attributable to higher contractor, maintenance and consumables costs partially offset by higher gold production at Casa Berardi, with AISC also impacted by lower sustaining capital.
Adjusted EBITDA for the quarter was a record $90.9 million, an increase of $18.2 million primarily due to higher gross profit for the reasons mentioned above.5 The net leverage ratio improved to 2.3 from 2.7 in the prior quarter due to higher adjusted EBITDA and a reduction in net debt of $25.1 million as the Company decreased borrowings under its revolving credit facility.5 Cash and cash equivalents at the end of the quarter were $24.6 million and included $62.0 million drawn on the revolving credit facility. Borrowing on the revolving credit facility decreased by $78 million in the quarter as the Company utilized free cash flow and insurance proceeds to reduce the drawn amount. At current price levels and expected production, the Company anticipates the net leverage ratio to return to the Company’s target of less than 2.0 by the end of the year 2024.5
Cash provided by operating activities was $78.7 million and increased by $61.6 million due to an increase in net income adjusted for non-cash items of $32.3 million and a favorable working capital change of $29.3 million.
Capital expenditures of $50.4 million increased by $2.8 million from the prior quarter. Capital investments at the operations were as follows (i) $11.7 million at Greens Creek related to development, equipment purchases and surface projects, (ii) $12.4 million at Casa Berardi, primarily related to tailings construction activities, (iii) $10.8 million at Lucky Friday primarily related to development, pre-production drilling, and equipment purchases, and (iv) $14.5 million at Keno Hill, related to underground development, mobile equipment purchases, and camp expansion.
Free cash flow for the quarter was $28.3 million, compared to negative $30.5 million in the prior quarter.2 The improvement in free cash flow was attributable to a full quarter of Lucky Friday production and improved performance at Keno Hill which led to higher sales volumes and realized prices.
NT4
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