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Press Release

Hecla Reports First Quarter 2017 Results

Company Release - 5/8/2017 3:00 AM ET

For Period Ended: March 31, 2017

COEUR D'ALENE, Idaho--(BUSINESS WIRE)-- Hecla Mining Company (NYSE:HL) (Hecla or the Company) today announced first quarter financial and operating results.

FIRST QUARTER 2017 HIGHLIGHTS

  • Net income applicable to common stockholders of $26.7 million, or $0.07 per basic share.
  • Adjusted net income applicable to common stockholders of $16.7 million, or $0.04 per basic share.1
  • Sales of $142.5 million.
  • Cash provided by operating activities of $38.3 million.
  • Adjusted EBITDA of $53.9 million and net debt/adjusted EBITDA (last 12 months) of 1.1x.2,3
  • Free cash flow of $16.6 million.4
  • Cost of sales and other direct production costs and depreciation, depletion and amortization ("cost of sales") of $107.6 million.
  • Silver cash cost, after by-product credits, of $0.84 per ounce, the lowest in over five years.5
  • All in sustaining cost (AISC), after by-product credits, of $7.60 per silver ounce.6
  • Cash and cash equivalents and short-term investments of $213.3 million.

"We have started 2017 with strong sales, net income and free cash flow, and our silver margins remain among the top in the industry, driving an increase in cash balances and strengthening our balance sheet," said Phillips S. Baker, Jr., President and CEO. "While the increase of cost of sales over last year reflected the higher throughput from the Casa Berardi open pit operations, our cash cost, after by-product credits, declined 73% to $0.84 per silver ounce and our AISC, after by-product credits, declined 24% to $7.60 per silver ounce. For the remainder of 2017, our focus is on growing reserves and resources, investing in new technologies that will increase productivity, mine life and margins, and advancing the underground at San Sebastian as well as optimizing the open pits at Casa Berardi. In addition, we are focused on working to end the strike at Lucky Friday. In the meantime, we are suspending our Lucky Friday and Company-wide estimates for silver production and cost, until it is resolved."

FINANCIAL OVERVIEW

                First Quarter Ended
HIGHLIGHTS       March 31, 2017       March 31, 2016
FINANCIAL DATA                
Sales (000) $ 142,544       $ 131,017
Gross profit (000) $ 34,916 $ 30,822
Income (loss) applicable to common stockholders (000) $ 26,696 $ (756 )
Basic and diluted income per common share $ 0.07 $
Net income (loss) (000) $ 26,834 $ (618 )
Cash provided by operating activities (000) $ 38,285 $ 18,748
 

Net income applicable to common stockholders for the first quarter of $26.7 million, or $0.07 per share, an increase of $27.5 million from the first quarter of 2016, was impacted by the following factors:

  • Sales were 9% higher despite lower silver production, mainly due to higher average metals prices.
  • Tax benefit of $29.1 million, primarily related to the impact of receiving IRS approval to accelerate the timing of deductions for the Lucky Friday #4 Shaft development costs, compared to an income tax provision of $1.7 million in the first quarter of 2016.
  • Net foreign exchange loss of $2.3 million compared to a loss of $8.2 million in the first quarter of 2016 due primarily to the impact of a stronger Canadian dollar (CAD) on deferred tax liabilities.
  • Interest expense, net of amount capitalized, of $8.5 million in the first quarter of 2017, increased over the $5.71 million recognized in first quarter of 2016, due to lower levels of capitalized interest resulting from completion of the #4 Shaft.
  • A derivative loss of $7.8 million, mostly unrealized, recognized on metal derivative contract activity in the first quarter of 2017 due to higher base metals prices at quarter-end, as compared to no gain or loss recognized in the first quarter of 2016.
  • An increase of $2.4 million in exploration and pre-development expenditures over the first quarter of 2016.

Operating cash flow of $38.3 million increased 104% over the first quarter of 2016 principally due to the timing of (i) sales at Greens Creek and Casa Berardi and (ii) payment of incentive compensation.

The adjusted EBITDA of $53.9 million increased 16% over the first quarter of 2016 mainly due to higher metals prices.

Capital expenditures (excluding capitalized interest) totaled $23.3 million for the first quarter of 2017 compared to $34.7 million in the prior year period, with the decrease due mainly to completion of the #4 Shaft. Expenditures at Casa Berardi, Greens Creek, Lucky Friday and San Sebastian were $12.4 million, $5.2 million, $4.0 million, and $1.7 million respectively.

Metals Prices

Average realized silver prices in the first quarter of 2017 were $17.90 per ounce, 20% higher than the $14.93 price realized in the first quarter of 2016. Realized gold, lead and zinc prices also increased 3%, 36%, and 59%, respectively.

Base Metals Forward Sales Contracts

The following table summarizes the quantities of base metals committed under financially settled forward sales contracts at March 31, 2017:

               

Pounds Under Contract

(in thousands)

      Average Price per Pound
Zinc       Lead Zinc       Lead
Contracts on forecasted sales            
2017 settlements 17,527 11,133 <