COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Hecla Mining Company (“Hecla”)(NYSE:HL) today announced record 2011 revenue of $477.6 million and gross profit of $265.0 million with net income applicable to common shareholders of $150.6 million, or $0.54 per basic share, and adjusted net income applicable to common shareholders of $130.9 million1, or $0.47 per basic share, for the year. Full year silver production was 9.5 million ounces at a total cash cost of $1.15 per ounce, net of by-products.2
FULL YEAR 2011 HIGHLIGHTS
- Achieved 9.5 million ounces of silver production in line with guidance at a total cash cost of $1.15 per ounce, net of by-products
- Silver reserves and resources increased by 4% and 13%, respectively, to 148 million ounces and 281 million ounces
- Finalized the long-standing Coeur d'Alene Basin environmental settlement paying $168 million in the fourth quarter
- Achieved operating cash flow of $69.9 million after the environmental settlement payment of $168 million
- Cash and cash equivalents of $266.5 million at December 31, 2011, and no debt
FOURTH QUARTER 2011 HIGHLIGHTS
- Net income applicable to common shareholders of $18.4 million, or $0.07 per basic share, and adjusted net income applicable to common shareholders of $18.8 million, or $0.07 per basic share1
- Silver production of 2.5 million ounces at a total cash cost of $2.28 per ounce, net of by-products2
- Acquisition of remaining 30% interest in San Juan Silver property in Creede, Colorado, in exchange for 5.4 million shares of Hecla valued at $33.8 million
- Declared quarterly common stock dividend of $0.0125 per share of common stock which includes the new quarterly minimum dividend payment of $0.0025 and $0.01 of the dividend payment is based on an average realized silver price of $31.61 per ounce pursuant to Hecla's silver price-linked dividend policy
"Hecla faced significant challenges in 2011; however, what is different today than at any other time in our history is that our financial position, asset base, and growth opportunities are the strongest they have ever been," said Hecla's President and Chief Executive Officer, Phillips S. Baker, Jr. "In 2011, we had many significant accomplishments: we achieved record revenues and profits; settled the long-standing Coeur d'Alene Basin litigation thereby removing a significant and unquantifiable liability; achieved our silver production guidance; executed a $102 million capital expenditure program; expanded growth opportunities with significant advancement in our three pre-development programs; increased silver reserves and resources for the sixth consecutive year in a row; introduced a new common stock dividend; and we acquired the minority interest in the San Juan Silver property. In addition, we finished the year with $266.5 million of cash and no debt. We did all of these things while dealing with a series of unprecedented and unfortunate, yet unrelated, events at our Lucky Friday mine."
(1) Earnings after adjustments applicable to common shareholders represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement. A reconciliation of net income applicable to common shareholders (GAAP) to earnings after adjustments can be found at the end of the release.
(2) Total cash cost per ounce of silver represents a non-GAAP measurement. A reconciliation of total cash cost to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found at the end of this release.
FINANCIAL OVERVIEW
Hecla reported record revenue and gross profit in 2011 surpassing 2010's previous record levels as a result of higher metals prices. These results were achieved despite being faced with several challenges at the Lucky Friday mine. Cash provided by operations would have also been at record levels were it not for the initial Coeur d'Alene Basin environmental settlement payment of $168 million in the fourth quarter of 2011. Without this payment, cash provided by operations would have been $238 million, a 20% increase over 2010's levels.
| Fourth Quarter Ended | Twelve Months Ended | |||||||||||||||||||
| HIGHLIGHTS | December 31, 2011 | December 31, 2010 | December 31, 2011 | December 31, 2010 | ||||||||||||||||
| FINANCIAL DATA (000s) | ||||||||||||||||||||
| Sales | $ | 102,867 | $ | 134,460 | $ | 477,634 | $ | 418,813 | ||||||||||||
| Gross profit | $ | 49,826 | $ | 74,693 | $ | 264,995 | $ | 194,819 | ||||||||||||
| Income (loss) applicable to common shareholders | $ | 18,431 | $ | (13,144 | ) | $ | 150,612 | $ | 35,350 | |||||||||||
| Basic income (loss) per common share | $ | 0.07 | $ | (0.05 | ) | $ | 0.54 | $ | 0.14 | |||||||||||
| Diluted income (loss) per common share | $ | 0.06 | $ | (0.05 | ) | $ | 0.51 | $ | 0.13 | |||||||||||
| Net income (loss) | $ | 18,569 | $ | (9,736 | ) | $ | 151,164 | $ | 48,983 | |||||||||||
| Cash provided (used) by operating activities | $ | (118,049 | ) | $ | 82,541 | $ |
69,891 |
$ | 197,809 | |||||||||||
Hecla completed a record level of capital investment at its existing operations of $28.0 million and $102.1 million for the fourth quarter and twelve-month period, respectively. Capital expenditures were higher primarily due to the #4 Shaft development at the Lucky Friday, and significant tailings and other infrastructure investment at Greens Creek.
Pre-development expenditures totaled $2.7 million and $4.4 million for the fourth quarter and twelve-month period ended December 31, 2011. Pre-development expenditures in the fourth quarter were primarily for infrastructure at the Star mine in the Silver Valley, and San Juan Silver property in Creede, Colorado.
Exploration expenditures for the fourth quarter and twelve months were $7.9 million and $27.0 million, respectively. In 2011, Hecla increased the exploration drilling targets at each of its four district-sized land packages in the United States and Mexico.
Metals Prices
Realized metals prices continued to increase significantly in 2011 compared to 2010. While the realized silver prices in the fourth quarter of 2011 were 3% less than that in the same period in 2010, the twelve-month period realized prices were 56% higher.
Decreases in prices in the time period between the shipment of concentrate and final settlement resulted in negative adjustments to provisional settlements of $9.8 million in 2011 compared to net positive price adjustments to provisional settlements of $14.9 million in the same period in 2010. The provisional price adjustments related to zinc and lead contained in Hecla's concentrate shipments were largely offset by net gains on forward contracts of $7.1 million for those metals in 2011.
| Fourth Quarter Ended | Twelve Months Ended | ||||||||||||||||
| December 31, 2011 | December 31, 2010 | December 31, 2011 | December 31, 2010 | ||||||||||||||
| AVERAGE METAL PRICES | |||||||||||||||||
|
Silver - London PM Fix ($/oz) |
$ | 31.82 | $ | 26.43 | $ | 35.11 | $ | 20.16 | |||||||||
| Realized price per ounce | $ | 31.61 | $ | 32.51 | $ | 35.30 | $ | 22.70 | |||||||||
|
Gold - London PM Fix ($/oz) |
$ | 1,685 | $ | 1,367 | $ | 1,569 | $ | 1,225 | |||||||||
| Realized price per ounce | $ | 1,640 | $ | 1,426 | $ | 1,592 | $ | 1,271 | |||||||||
|
Lead - LME Cash ($/pound) |
$ | 0.90 | $ | 1.08 | $ | 1.09 | $ | 0.97 | |||||||||
| Realized price per pound | $ | 0.82 | $ | 1.10 | $ | 1.05 | $ | 0.98 | |||||||||
|
Zinc - LME Cash ($/pound) |
$ | 0.86 | $ | 1.05 | $ | 1.00 | $ | 0.98 | |||||||||
| Realized price per pound | $ | 0.87 | $ | 1.09 | $ | 1.00 | $ | 0.96 | |||||||||
Base Metals Forward Sales Contracts
The following table summarizes the quantities of base metals committed under financially settled forward sales contracts at December 31, 2011:
| Metric Tonnes Under Contract | Average Price per Pound | ||||||||||||||
| Zinc | Lead | Zinc | Lead | ||||||||||||
| Contracts on provisional sales | |||||||||||||||
| 2012 settlements | 9,600 | 2,600 | $ | 0.86 | $ | 0.89 | |||||||||
| Contracts on forecasted sales | |||||||||||||||
| 2012 settlements | 20,500 | 15,900 | $ | 1.12 | $ | 1.12 | |||||||||
| 2013 settlements | 8,275 | 11,150 | $ | 1.14 | $ | 1.19 | |||||||||
OPERATIONS OVERVIEW
Silver production was in-line with guidance despite challenges faced at the Lucky Friday mine. Production was down year-over-year due to lower grade as a result of mine sequencing at Greens Creek. Fourth quarter and full year silver cash cost, net of by-product credits, was $2.28 per ounce and $1.15 per ounce, respectively, compared to $(0.14) per ounce and $(1.46) per ounce, respectively, in the same period in 2010.
| Fourth Quarter Ended | Twelve Months Ended | |||||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
| PRODUCTION SUMMARY | ||||||||||||||||||||||
|
Silver - Ounces produced |
2,491.224 | 2,741.106 | 9,483,676 | 10,566,352 | ||||||||||||||||||
| Payable ounces sold | 1,923,365 | 2,413,620 | 8,119,634 | 9,360,172 | ||||||||||||||||||
|
Gold - Ounces produced |
13,745 | 16,111 | 56,818 | 68,838 | ||||||||||||||||||
| Payable ounces sold | 10,050 | 14,466 | 43,942 | 57,386 | ||||||||||||||||||
|
Lead - Tons produced |
8,194 | 10,739 | 39,150 | 46,955 | ||||||||||||||||||
| Payable tons sold | 7,046 | 9,485 | 33,050 | 40,434 | ||||||||||||||||||
| Zinc - Tons produced | 17,384 | 18,771 | 73,355 | 83,782 | ||||||||||||||||||
| Payable tons sold | 15,914 | 14,485 | 53,901 | 62,851 | ||||||||||||||||||
| Total cash cost per ounce of silver produced (1) | $ | 2.28 | $ | (0.14 | ) | $ | 1.15 | $ | (1.46 | ) | ||||||||||||
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(1) Total cash cost per ounce of silver represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement. A reconciliation of total cash costs to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found at the end of this release. |
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Greens Creek Mine - Alaska
Silver production at Greens Creek was 6.5 million ounces for the year and 2.0 million ounces in the fourth quarter, compared to 7.2 million ounces and 1.9 million ounces last year. The decrease in silver production year-over-year is attributable to lower ore grade which reflects mining a lower-grade portion of the mine. The increase in silver production in the fourth quarter over the same period in 2010 is attributable to higher ore grades.
Total cash cost per ounce of silver produced at Greens Creek was $(1.29) and $0.42, net of by-products, for the full year and fourth quarter of 2011, respectively, compared to $(1.93) and $(3.90) for the same respective periods in 2010. The increase in total cash cost per ounce for the full year was primarily due to higher production costs, and treatment and freight costs by $2.55 and $1.70, per ounce, respectively, partially offset by higher by-product credits of $1.65 per ounce. The increase in by-product credits is due to higher prices, despite lower ore grades for by-product metals. The increased treatment costs are the result of higher metals prices.
In 2012, Hecla is planning the largest investment in Greens Creek's history, approximately $90 million. Some of the key capital expenditures include Deep 200 South access development ($18 million), mining fleet replacement and additions ($14 million), tailings dam expansion ($10 million), East Ore access and ventilation rehabilitation ($6 million), definition drilling ($5 million), and the construction of expanded and upgraded camp facilities ($5 million).
Lucky Friday Mine - Idaho
Silver production at Lucky Friday was 3.0 million ounces for the year and .5 million ounces in the fourth quarter, compared to 3.4 million ounces and .8 million ounces in the respective periods in 2010. The overall decrease in production was primarily due to lower ore throughput resulting from the interruptions to operations during 2011.
Total cash cost per ounce of silver produced at Lucky Friday was $6.47 and $9.68, net of by-product credits, for the full year and fourth quarter, respectively, compared to $3.76 and $4.06, for the same periods in 2010. The increase in total cash cost per ounce for the full year was primarily due to higher employee profit sharing, higher treatment and freight costs, and higher production costs by $1.76, $1.24, and $0.21 per ounce, respectively, which were partially offset by higher by-product credits of $0.50 per ounce resulting from higher prices. Higher profit sharing and treatment costs were due to higher metals prices. In the fourth quarter, interruptions in mine operations adversely affected cost per ounce due to the inefficiencies of startup and shutdown cycles. As a result, production costs per ounce were higher by $1.24 than in the fourth quarter of 2010.
Construction at the Lucky Friday #4 Shaft advanced in 2011 with shaft sinking set-up activities, primary mechanical and electrical systems, and critical lateral development largely complete. Upon restart of the #4 Shaft construction operations, work will primarily focus on shaft sinking and station development activities until project completion. The total project is now 45% complete, and 80% of major procurements have been ordered or installed. Capital expenditures for the #4 Shaft for the full year and fourth quarter of 2011 were $9.6 million and $41.9 million, respectively, for a total of approximately $90 million invested to date on the project. Total project capital is expected to be approximately $200 million. As a result of the requirement to remove built-up material in the Silver Shaft, construction of the #4 Shaft is suspended until the work on the Silver Shaft is complete.
At the end of 2011, MSHA began a special impact inspection at the Lucky Friday mine, which resulted in an order to remove loose material from the Silver Shaft. In response, Hecla submitted a plan to MSHA and recently received approval to remove the loose cementitious material. In addition, the plan includes removal of unused utilities, construction of a water ring to prevent ice from forming in the winter, the installation of a metal brattice between the east and west half of the shaft providing a physical barrier between the two halves, repair shaft steel, and installation of a new power cable; all of which should improve the shaft's functionality and possibly its hoisting capacity. Once the shaft cleanup has been completed down to the 4900 level, work on the previously announced 5900 haulage way bypass is expected to commence. In addition to work on the Silver Shaft, other significant surface and underground capital programs are being planned. Since January, a number of other activities have been under way, of which the most significant are driving a drift to access and maintain the pumps at the 5300 level via the #2 Shaft during the standby period, with completion expected this week, ongoing work on the headframe, and termination of citations. Work on the shaft cleaning is expected to commence in the next few weeks.
Final plans are not yet complete, but Hecla expects to spend up to $50 million on all of these projects, which includes $10 million to remove the loose cementitious material, $20 million for shaft improvements and $20 million on other capital projects. Hecla expects to incur non-capitalized expenses of $17.5 million, which includes $11 million in holding costs, $4 million for the #4 Shaft care and maintenance, and $2.5 million in discretionary expenses. The mine is expected to be on standby for all of 2012 to complete this work and smelter contracts have been suspended based on force majeure.
2012 GUIDANCE
Hecla reiterates its 2012 silver production estimate of approximately 7 million ounces, which excludes production from the Lucky Friday mine. Production at the Lucky Friday mine is expected to resume in early 2013. Total cash cost net of by-products is expected to be approximately between $1.00 to $2.00 per ounce at current metal prices.
Capital expenditures are expected to be approximately $140 million, which includes $90 million at Greens Creek, and $50 million at Lucky Friday, which includes the cost of the Silver Shaft rehabilitation and related capital items.
Pre-development expenditures are expected to be approximately $11 million, which includes $6 million at San Juan Silver, $3 million at the Star, and $2 million at San Sebastian. Additional expenditures may be budgeted at the San Juan Silver property following progress on studies.
Exploration expenditures are expected to be $28 million, which includes $7 million at Greens Creek, $6 million in the Silver Valley, $8.5 million at San Juan Silver, $3 million at San Sebastian, and $3.5 million in generative activities.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held today, February 21, at 1:00 p.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-800-510-9661 or 1-617-614-3452 internationally. 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
Established in 1891, Hecla Mining Company has distinguished itself as the largest and lowest cash cost silver producer in the U.S. The company has two operating mines and exploration properties in four world-class silver mining districts in the U.S. and Mexico. With a solid asset base, a strong cash position and no debt, Hecla is poised for growth.
Cautionary Statements
Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, prospects and opportunities including reserves, resources, and mineralization, costs, and prices or sales performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may”, “will”, “should”, “expects”, “intends”, “projects”, “believes”, “estimates”, “targets”, “anticipates” and similar expressions are used to identify these forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, environmental and litigation risks, operating risks, project development risks, political and regulatory risks, labor issues, ability to raise financing and exploration risks and results. Refer to the company's Form 10-K and 10-Q reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements other than as may be required by law.
Cautionary Statements to Investors on Reserves and Resources
The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this release, such as “resource,” “other resources,” and “mineralized materials” that the SEC guidelines strictly prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K and Form 10-Q. You can review and obtain copies of these filings from the SEC's website at www.sec.gov.
For further information, please contact:
| Mélanie Hennessey | Direct Main: 800-HECLA91 (800-432-5291) | ||||||
| Vice President - Investor Relations |
Email: hmc-info@hecla-mining.com |
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| Direct: 604-694-7729 |
Website: www.hecla-mining.com |
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| Hecla Canada Ltd. | Hecla Mining Company | ||||||
| 970 - 800 W Pender Street | 6500 N. Mineral Drive, Suite 200 | ||||||
| Vancouver, British Columbia | Coeur d'Alene, Idaho 83815 | ||||||
| V6C 2V6 Canada |
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HECLA MINING COMPANY |
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Consolidated Statements of Income |
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(dollars and shares in thousands, except per share amounts - unaudited) |
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| Fourth Quarter Ended | Twelve Months Ended | ||||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
| Sales of products | $ | 102,867 | $ | 134,460 | $ | 477,634 | $ | 418,813 | |||||||||||||
| Cost of sales and other direct production costs | 40,540 | 45,811 | 165,573 | 163,983 | |||||||||||||||||
| Depreciation, depletion and amortization | 12,501 | 13,956 | 47,066 | 60,011 | |||||||||||||||||
| 53,041 | 59,767 | 212,639 | 223,994 | ||||||||||||||||||
| Gross profit | 49,826 | 74,693 | 264,995 | 194,819 | |||||||||||||||||
| Other operating expenses: | |||||||||||||||||||||
| General and administrative | 3,732 | 5,758 | 18,540 | 18,219 | |||||||||||||||||
| Exploration | 7,947 | 5,439 | 26,959 | 21,605 | |||||||||||||||||
| Pre-development | 2,694 | — | 4,446 | — | |||||||||||||||||
| Other operating expense | 1,959 | 1,309 | 7,658 | 5,334 | |||||||||||||||||
| Loss on disposition of property, plants, equipment and mineral interests | — | 80 | — | 80 | |||||||||||||||||
| Provision for closed operations and reclamation | 1,864 | 195,409 | 9,747 | 201,136 | |||||||||||||||||
| 18,196 | 207,995 | 67,350 | 246,374 | ||||||||||||||||||
| Income (loss) from operations | 31,630 | (133,302 | ) | 197,645 | (51,555 | ) | |||||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Gain (loss) on derivative contracts | (919 | ) | (9,562 | ) | 37,988 | (20,758 | ) | ||||||||||||||
| Gain on sale of investments | — | — | 611 | 588 | |||||||||||||||||
| Loss on impairment of investments | (140 | ) | — | (140 | ) | (739 | ) | ||||||||||||||
| Interest and other income (loss) | 4 | (11 | ) | (87 | ) | 126 | |||||||||||||||
| Interest expense | (491 | ) | (499 | ) | (2,875 | ) | (2,211 | ) | |||||||||||||
| (1,546 | ) | (10,072 | ) | 35,497 | (22,994 | ) | |||||||||||||||
| Income (loss) before income taxes | 30,084 | (143,374 | ) | 233,142 | (74,549 | ) | |||||||||||||||
| Income tax benefit (provision) | (11,515 | ) | 133,638 | (81,978 | ) | 123,532 | |||||||||||||||
| Net income (loss) | 18,569 | (9,736 | ) | 151,164 | 48,983 | ||||||||||||||||
| Preferred stock dividends | (138 | ) | (3,408 | ) | (552 | ) | (13,633 | ) | |||||||||||||
| Income (loss) applicable to common shareholders | $ | 18,431 | $ | (13,144 | ) | $ | 150,612 | $ | 35,350 | ||||||||||||
| Basic income (loss) per common share after preferred dividends | $ | 0.07 | $ | (0.05 | ) | $ | 0.54 | $ | 0.14 | ||||||||||||
| Diluted income (loss) per common share after preferred dividends | $ | 0.06 | $ | (0.05 | ) | $ | 0.51 | $ | 0.13 | ||||||||||||
| Weighted average number of common shares outstanding basic | 280,819 | 257,403 | 280,956 | 251,146 | |||||||||||||||||
| Weighted average number of common shares outstanding diluted | 294,133 | 276,136 | 297,033 | 269,601 | |||||||||||||||||
| HECLA MINING COMPANY | |||||||||||
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Consolidated Balance Sheets |
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(dollars and share in thousands - unaudited) |
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| December 31, 2011 | December 31, 2010 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 266,463 | $ | 283,606 | |||||||
| Investments | — | 1,474 | |||||||||
| Accounts receivable | 20,309 | 36,840 | |||||||||
| Inventories | 26,195 | 19,131 | |||||||||
| Current deferred income taxes | 27,810 | 87,287 | |||||||||
| Other current assets | 21,967 | 3,683 | |||||||||
| Total current assets | 362,744 | 432,021 | |||||||||
| Non-current investments | 3,923 | 1,194 | |||||||||
| Non-current restricted cash and investments | 866 | 10,314 | |||||||||
| Properties, plants, equipment and mineral interests, net | 923,212 | 833,288 | |||||||||
| Non-current deferred income taxes | 88,028 | 100,072 | |||||||||
| Other non-current assets and deferred charges | 17,317 | 5,604 | |||||||||
| Total assets | $ | 1,396,090 | $ | 1,382,493 | |||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 37,831 | $ | 31,725 | |||||||
| Accrued payroll and related benefits | 12,878 | 10,789 | |||||||||
| Accrued taxes | 10,354 | 16,042 | |||||||||
| Current portion of capital leases | 4,005 | 2,481 | |||||||||
| Current portion of accrued reclamation and closure costs | 42,248 | 175,484 | |||||||||
| Current derivative contract liabilities | — | 20,016 | |||||||||
| Total current liabilities | 107,316 | 256,537 | |||||||||
| Capital leases | 6,265 | 3,792 | |||||||||
| Accrued reclamation and closure costs | 111,563 | 143,313 | |||||||||
| Other non-current liabilities | 30,833 | 16,598 | |||||||||
| Total liabilities | 255,977 | 420,240 | |||||||||
| SHAREHOLDERS’ EQUITY | |||||||||||
| Preferred stock | 39 | 543 | |||||||||
| Common stock | 71,420 | 64,704 | |||||||||
| Capital surplus | 1,215,229 | 1,179,751 | |||||||||
| Accumulated deficit | (120,557 | ) | (265,577 | ) | |||||||
| Accumulated other comprehensive loss | (23,498 | ) | (15,117 | ) | |||||||
| Treasury stock | (2,520 | ) | (2,051 | ) | |||||||
| Total shareholders’ equity | 1,140,113 | 962,253 | |||||||||
| Total liabilities and shareholders’ equity | $ | 1,396,090 | $ | 1,382,493 | |||||||
| Common shares outstanding | 285,290 | 258,486 | |||||||||
| HECLA MINING COMPANY | |||||||||||
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Consolidated Statements of Cash Flows |
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(dollars in thousands - unaudited) |
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| December 31, | December 31, | ||||||||||
| 2011 | 2010 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 151,164 | $ | 48,983 | |||||||
| Non-cash elements included in net income: | |||||||||||
| Depreciation, depletion and amortization | 47,348 | 60,235 | |||||||||
| Gain on sale of investments | (611 | ) | (588 | ) | |||||||
| Loss on impairment of investments | 140 | 739 | |||||||||
| Loss (gain) on disposition of properties, plants, equipment and mineral interests | — | 80 | |||||||||
| Provision for reclamation and closure costs | 7,004 | 196,262 | |||||||||
| Deferred income taxes | 76,944 | (141,707 | ) | ||||||||
| Stock compensation | 2,073 | 3,446 | |||||||||
| Amortization of loan origination fees | 598 | 621 | |||||||||
| Amortization of intangible asset | — | 1,380 | |||||||||
| (Gain) loss on derivative contracts | (53,545 | ) | 20,795 | ||||||||
| Other non-cash charges, net | 1,209 | (495 | ) | ||||||||
| Change in assets and liabilities: | |||||||||||
| Accounts receivable | 16,531 | (9,404 | ) | ||||||||
| Inventories | (7,064 | ) | 2,335 | ||||||||
| Other current and non-current assets | 2,164 | 3,279 | |||||||||
| Accounts payable and accrued liabilities | 1,466 | 10,896 | |||||||||
| Accrued payroll and related benefits | 2,090 | (3,376 | ) | ||||||||
| Accrued taxes | (5,688 | ) | 9,802 | ||||||||
| Accrued reclamation and closure costs and other non-current liabilities | (172,855 | ) | (8,666 | ) | |||||||
| Other non-current liabilities | 923 | 3,192 | |||||||||
| Cash provided by operating activities | 69,891 | 197,809 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Additions to properties, plants, equipment and mineral interests | (87,546 | ) | (67,414 | ) | |||||||
| Proceeds from sale of investments | 1,366 | 1,138 | |||||||||
| Proceeds from disposition of properties, plants and equipment | 113 | 29 | |||||||||
| Purchases of investments | 9,448 | 1,459 | |||||||||
| Changes in restricted cash and investment balances | (3,200 | ) | — | ||||||||
| Net cash used in investing activities | (79,819 | ) | (64,788 | ) | |||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from exercise of stock options and warrants | 5,786 | 53,093 | |||||||||
| Acquisition of treasury shares | (469 | ) | (693 | ) | |||||||
| Dividend paid to common shareholders | (5,592 | ) | — | ||||||||
| Dividends paid to preferred shareholders | (3,822 | ) | (4,513 | ) | |||||||
| Loan origination fees paid | (180 | ) | (200 | ) | |||||||
| Repayments of capital leases | (2,938 | ) | (1,780 | ) | |||||||
| Net cash (used) provided by financing activities | (7,215 | ) | 45,907 | ||||||||
| Net increase (decrease) in cash and cash equivalents | (17,143 | ) | 178,928 | ||||||||
| Cash and cash equivalents at beginning of year | 283,606 | 104,678 | |||||||||
| Cash and cash equivalents at end of year | $ | 266,463 | $ | 283,606 | |||||||
| HECLA MINING COMPANY | ||||||||||||||||||||
|
Production Data |
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| Fourth Quarter Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| GREENS CREEK UNIT | ||||||||||||||||||||
| Tons of ore milled | 191,858 | 193,674 | 772,069 | 800,397 | ||||||||||||||||
| Mining cost per ton | $ | 50.85 | $ | 45.88 | $ | 49.31 | $ | 43.00 | ||||||||||||
| Milling cost per ton | $ | 29.41 | $ | 28.14 | $ | 30.69 | $ | 24.23 | ||||||||||||
| Ore grade milled - Silver (oz./ton) | 13.5 | 13.2 | 11.5 | 12.3 | ||||||||||||||||
| Ore grade milled - Gold (oz./ton) | 0.1 | 0.1 | 0.1 | 0.1 | ||||||||||||||||
| Ore grade milled - Lead (%) | 3.4 | 3.6 | 3.5 | 4.1 | ||||||||||||||||
| Ore grade milled - Zinc (%) | 9.5 | 9.9 | 9.8 | 10.7 | ||||||||||||||||
| Silver produced (oz.) | 1,990,610 | 1,921,789 | 6,498,337 | 7,206,973 | ||||||||||||||||
| Gold produced (oz.) | 13,745 | 16,111 | 56,818 | 68,838 | ||||||||||||||||
| Lead produced (tons) | 5,048 | 5,383 | 21,055 | 25,336 | ||||||||||||||||
| Zinc produced (tons) | 16,137 | 16,558 | 66,050 | 74,496 | ||||||||||||||||
| Total cash cost per ounce of silver produced (1) | $ | 0.42 | $ | (1.93 | ) | $ | (1.29 | ) | $ | (3.90 | ) | |||||||||
| Capital additions (in thousands) | $ | 12,551 | $ | 7,355 | $ | 41,657 | $ | 18,280 | ||||||||||||
| LUCKY FRIDAY UNIT | ||||||||||||||||||||
| Tons of ore processed | 49,638 | 90,191 | 298,672 | 351,074 | ||||||||||||||||
| Mining cost per ton | $ | 67.62 | $ | 53.61 | $ | 60.76 | $ | 54.27 | ||||||||||||
| Milling cost per ton | $ | 20.79 | $ | 14.73 | $ | 16.96 | $ | 14.74 | ||||||||||||
| Ore grade milled - Silver (oz./ton) | 10.8 | 9.7 | 10.7 | 10.3 | ||||||||||||||||
| Ore grade milled - Lead (%) | 6.8 | 6.4 | 6.5 | 6.6 | ||||||||||||||||
| Ore grade milled - Zinc (%) | 2.9 | 2.9 | 2.8 | 3.0 | ||||||||||||||||
| Silver produced (oz.) | 500,614 | 819,317 | 2,985,339 | 3,359,379 | ||||||||||||||||
| Lead produced (tons) | 3,146 | 5,356 | 18,095 | 21,619 | ||||||||||||||||
| Zinc produced (tons) | 1,247 | 2,213 | 7,305 | 9,286 | ||||||||||||||||
| Total cash cost per ounce of silver produced (1) | $ | 9.68 | $ | 4.06 | $ | 6.47 | $ | 3.76 | ||||||||||||
| Capital additions (in thousands) | $ | 15,428 | $ | 15,840 | $ | 60,454 | $ | 54,370 | ||||||||||||
|
(1) Total cash cost per ounce of silver represents non-U.S. Generally Accepted Accounting Principles (GAAP) measurement. A reconciliation of total cash costs to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the cash costs 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. |
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| HECLA MINING COMPANY | |||||||||||||||||||||
|
Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP)(1) |
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(dollars and ounces in thousands, except per ounce - unaudited) |
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| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
| RECONCILIATION TO GAAP, ALL OPERATIONS | |||||||||||||||||||||
| Total cash costs | $ | 5,677 | $ | (377 | ) | $ | 10,934 | $ | (15,435 | ) | |||||||||||
| Divided by ounces produced | 2,490 | 2,741 | 9,483 | 10,566 | |||||||||||||||||
| Total cash cost per ounce produced | $ | 2.28 | $ | (0.14 | ) | $ | 1.15 | $ | (1.46 | ) | |||||||||||
| Reconciliation to GAAP: | |||||||||||||||||||||
| Total cash costs | $ | 5,677 | $ | (377 | ) | $ | 10,934 | $ | (15,435 | ) | |||||||||||
| Depreciation, depletion and amortization | 12,501 | 13,956 | 47,066 | 60,011 | |||||||||||||||||
| Treatment costs | (22,758 | ) | (23,733 | ) | (99,019 | ) | (92,144 | ) | |||||||||||||
| By-product credits | 53,530 | 67,375 | 254,372 | 267,272 | |||||||||||||||||
| Change in product inventory | 836 | 2,303 | (4,805 | ) | 3,660 | ||||||||||||||||
| Suspension-related costs (2) | 2,495 | — | 4,135 | — | |||||||||||||||||
| Reclamation and other costs | 760 | 243 | (44 | ) | 630 | ||||||||||||||||
| Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) | $ | 53,041 | $ | 59,767 | $ | 212,639 | $ | 223,994 | |||||||||||||
| GREENS CREEK UNIT | |||||||||||||||||||||
| Total cash costs | $ | 829 | $ | (3,705 | ) | $ | (8,387 | ) | $ | (28,073 | ) | ||||||||||
| Divided by ounces produced | 1,990 | 1,922 | 6,498 | 7,207 | |||||||||||||||||
| Total cash cost per ounce produced | $ | 0.42 | $ | (1.93 | ) | $ | (1.29 | ) | $ | (3.90 | ) | ||||||||||
| Reconciliation to GAAP: | |||||||||||||||||||||
| Total cash costs | $ | 829 | $ | (3,705 | ) | $ | (8,387 | ) | $ | (28,073 | ) | ||||||||||
| Depreciation, depletion and amortization | 11,032 | 11,531 | 41,013 | 51,671 | |||||||||||||||||
| Treatment costs | (19,612 | ) | (18,773 | ) | (79,134 | ) | (73,817 | ) | |||||||||||||
| By-product credits | 46,375 | 52,914 | 205,961 | 214,462 | |||||||||||||||||
| Change in product inventory | 720 | 2,248 | (4,966 | ) | 3,685 | ||||||||||||||||
| Reclamation and other costs | 745 | 218 | (81 | ) | 567 | ||||||||||||||||
| Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) | $ | 40,089 | $ | 44,433 | $ | 154,406 | $ | 168,495 | |||||||||||||
| LUCKY FRIDAY UNIT | |||||||||||||||||||||
| Total cash costs | $ | 4,848 | $ | 3,328 | $ | 19,321 | $ | 12,638 | |||||||||||||
| Divided by silver ounces produced | 500 | 819 | 2,985 | 3,359 | |||||||||||||||||
| Total cash cost per ounce produced | $ | 9.68 | $ | 4.06 | $ | 6.47 | $ | 3.76 | |||||||||||||
| Reconciliation to GAAP: | |||||||||||||||||||||
| Total cash costs | $ | 4,848 | $ | 3,328 | $ | 19,321 | $ | 12,638 | |||||||||||||
| Depreciation, depletion and amortization | 1,469 | 2,426 | 6,053 | 8,340 | |||||||||||||||||
| Treatment costs | (3,146 | ) | (4,960 | ) | $ | (19,885 | ) | (18,327 | ) | ||||||||||||
| By-product credits | 7,155 | 14,461 | 48,411 | 52,810 | |||||||||||||||||
| Change in product inventory | 116 | 54 | $ | 161 | (25 | ) | |||||||||||||||
| Suspension-related costs (2) | 2,495 | — | 4,135 | — | |||||||||||||||||
| Reclamation and other costs | 15 | 25 | 37 | 63 | |||||||||||||||||
| Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) | $ | 12,952 | $ | 15,334 | $ | 58,233 | $ | 55,499 | |||||||||||||
|
(1) Cash costs per ounce of silver 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. "Total cash cost per ounce" is a measure developed by gold companies in an effort to provide a comparable standard; however, there can be no assurance that our reporting of this non-GAAP measure is similar to that reported by other mining companies. Cost of sales and other direct production costs and depreciation, depletion and amortization, was the most comparable financial measures calculated in accordance with GAAP to total cash costs. |
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(2) Various accidents and other events resulted in temporary suspensions of production at the Lucky Friday unit during 2011. See the Lucky Friday Segment section for more discussion of these events. Care-and-maintenance, mine rehabilitation, investigation, and other costs incurred during the suspension periods not related to production have been excluded from total cash costs and the calculation of total cash cost per ounce produced. |
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| HECLA MINING COMPANY | |||||||||||||||||||||
|
Reconciliation of Net Income Applicable to Common Shareholders (GAAP) to Earnings After Adjustments(1) |
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|
(dollars and ounces in thousands, except per share amounts - unaudited) |
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| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
| Net income applicable to common shareholders (GAAP) | $ | 18,431 | $ | (13,144 | ) | $ | 150,612 | $ | 35,350 | ||||||||||||
| Adjusting items: | |||||||||||||||||||||
| (Gains)/losses on derivatives contracts | 919 | 9,562 | (37,988 | ) |
20,758 |
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| Environmental accruals | 336 | 193,183 | 4,990 | 195,558 | |||||||||||||||||
| Provisional price (gains)/losses | (728 | ) | (9,804 | ) | 2,611 | (11,817 | ) | ||||||||||||||
| Income tax effect of above adjustments | (184 | ) | (67,529 | ) | 10,635 | (71,575 | ) | ||||||||||||||
| Earnings after adjustments applicable to common shareholders | $ | 18,774 | $ | 112,268 | $ | 130,860 | $ | 168,274 | |||||||||||||
| Weighted average shares - basic | 280,819 | 257,403 | 280,956 | 251,146 | |||||||||||||||||
| Weighted average shares - diluted | 294,133 | 276,136 | 297,033 | 269,601 | |||||||||||||||||
| Basic earnings after adjustments per common share | $ | 0.07 | $ | 0.44 | $ | 0.47 | $ | 0.67 | |||||||||||||
| Diluted earnings after adjustments per common share | $ | 0.06 | $ | 0.41 | $ | 0.44 | $ | 0.62 | |||||||||||||
|
(1) Earnings After Adjustments and Earnings After Adjustments per share are non-GAAP measures 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 earnings after adjustments per common share provides investors with the ability to better evaluate our underlying operating performance. |
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