COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Under the "Conference Call and Webcast" heading, second sentence, the phone numbers should be replaced as follows: You may join the conference call by dialing toll-free 1-866-800-8652 or 1-617-614-2705 internationally.
The corrected release reads:
HECLA REPORTS FIRST QUARTER 2012 RESULTS
Hecla Mining Company (“Hecla”) (NYSE:HL) today announced first quarter net income applicable to common shareholders of $12.4 million, or $0.04 per basic share, and earnings after adjustments applicable to common shareholders of $16.9 million, or $0.06 per basic share. First quarter silver production was 1.3 million ounces at a cash cost of $2.24 per ounce, net of by-products.
FIRST QUARTER 2012 HIGHLIGHTS
- Sales of $91.2 million.
- Net income applicable to common shareholders of $12.4 million, or $0.04 per basic share.
- Earnings after adjustments applicable to common shareholders (a non-GAAP measure) of $16.9 million, or $0.06 per basic share.
- Operating cash flow of $41.4 million.
- Silver production of 1.3 million ounces at a total cash cost (a non-GAAP measure) of $2.24 per ounce, net of by-products.
- Cash and cash equivalents of $279 million at March 31, 2012.
- Lucky Friday rehabilitation advanced approximately 1,500 feet.
- Declaration of quarterly dividend of $0.0225 per share of common stock.
- Announced a share repurchase program.
"During the first quarter of 2012 we continued to invest in Hecla's strong and diversified assets, making excellent progress in the rehabilitation of our Lucky Friday Silver Shaft and record investment in our Greens Creek mine. We also advanced all three major pre-development projects, with the goal of increasing our silver production and reserves by moving into development quickly," said Hecla's President and Chief Executive Officer Phillips S. Baker, Jr.
"While our first quarter silver production at Greens Creek was impacted by ground support work that diverted equipment and personnel, we expect production to increase for the rest of the year," Mr. Baker added. "The combination of Hecla's strong balance sheet, including a cash balance of $279 million and substantially no debt, and its long-lived, low cost mines which provide strong cash flow will allow us to deliver an expected 50% growth in silver production while also allowing the company to deliver value to shareholders through the Company's dividend and share repurchase programs."
FINANCIAL OVERVIEW
Net income applicable to common shareholders for the first quarter was $12.4 million, or $0.04 per share, compared to $43.2 million, or $0.15 per share, for the same period a year ago and was impacted by the following items:
- Exploration and pre-development expense increased to $9.0 million in the first quarter from $3.3 million in the same period in 2011, for exploration work at Greens Creek, the Company's extensive land package in Durango, Mexico, at San Juan Silver project in Colorado, and the Star complex in North Idaho's Silver Valley near the Lucky Friday mine.
- $6.2 million in suspension-related costs at the Lucky Friday mine.
- A $5.2 million loss on base metal derivative contracts for the first quarter, compared to a $2.0 million loss for the same period in 2011. A summary of the quantities of base metals committed at March 31, 2012, is included on page 3 of this release.
- A $7.3 million tax provision compared to $23.5 million in the same period in 2011, as a result of higher pre-tax income in 2011. Our effective income tax rate is approximately 37% in 2012 compared to 33% in the same period in 2011.
- Gains of $6.1 million on provisional price adjustments compared to $7.2 million in the same period of 2011.
| First Quarter Ended | |||||||||
| HIGHLIGHTS | March 31, 2012 | March 31, 2011 | |||||||
| FINANCIAL DATA | |||||||||
| Sales (000) | $ | 91,153 | $ | 136,364 | |||||
| Gross profit (000) | $ | 48,202 | $ | 79,573 | |||||
|
Income applicable to common shareholders (000) |
$ | 12,434 | $ | 43,219 | |||||
| Basic income per common share | $ | 0.04 | $ | 0.16 | |||||
| Diluted income per common share | $ | 0.04 | $ | 0.15 | |||||
| Net income (000) | $ | 12,572 | $ | 43,357 | |||||
| Cash provided by operating activities (000) | $ | 41,426 | $ | 60,910 | |||||
Capital expenditures (including non-cash capital lease additions) at the operations totaled $26.4 million for the first quarter ended March 31, 2012. Expenditures at the Lucky Friday were $11.7 million and expenditures at Greens Creek were $14.7 million. Capital expenditures are expected to be $140.0 million for the year, primarily due to an increase in projects at Greens Creek.
Pre-development expenditures totaled $3.4 million in the first quarter of 2012. Pre-development expenditures in 2012 are expected to be approximately $11.0 million for infrastructure at the Star mine in the Silver Valley, San Juan Silver property in Creede Colorado, and the San Sebastian property in Mexico.
Exploration expenditures for the first quarter of 2012 were $5.6 million. Exploration expenditures for 2012 are expected to be approximately $28.0 million.
Metals Prices
Realized silver prices in the first quarter of 2012 were $36.59 per ounce, consistent with average realized prices in the year ago period of $36.49 per ounce.
Overall first quarter realized metals prices were higher than those in the fourth quarter 2011, resulting in positive adjustments to provisional settlements of $6.1 million compared to net positive price adjustments to provisional settlements of $7.2 million in the same period in 2011. The adjustment to provisional settlements is largely due to an increase in prices in the time period between the shipment of concentrate and the final settlement. The provisional price adjustment related to zinc and lead contained in our concentrate shipments was largely offset by net losses on forward contracts of $1.0 million for those metals.
| First Quarter Ended | |||||||||||
| March 31, 2012 | March 31, 2011 | ||||||||||
| AVERAGE METAL PRICES | |||||||||||
| Silver - | London PM Fix ($/oz) | $ | 32.62 | $ | 31.66 | ||||||
| Realized price per ounce | $ | 36.59 | $ | 36.49 | |||||||
| Gold - | London PM Fix ($/oz) | $ | 1,691 | $ | 1,384 | ||||||
| Realized price per ounce | $ | 1,751 | $ | 1,405 | |||||||
| Lead - | LME Cash ($/pound) | $ | 0.95 | $ | 1.18 | ||||||
| Realized price per pound | $ | 1.00 | $ | 1.19 | |||||||
| Zinc - | LME Cash ($/pound) | $ | 0.92 | $ | 1.09 | ||||||
| Realized price per pound | $ | 0.95 | $ | 1.09 | |||||||
Base Metals Forward Sales Contracts
The following table summarizes the quantities of base metals committed under financially settled forward sales contracts at March 31, 2012:
| Metric Tonnes Under | Average Price per | ||||||||||||||
| Contract | Pound | ||||||||||||||
| Zinc | Lead | Zinc | Lead | ||||||||||||
| Contracts on provisional sales | |||||||||||||||
| 2012 settlements | 6,250 | 1,300 | $ | 0.94 | $ | 0.96 | |||||||||
| Contracts on forecasted sales | |||||||||||||||
| 2012 settlements | 11,850 | 5,100 | $ | 1.12 | $ | 1.13 | |||||||||
| 2013 settlements | 8,675 | 13,250 | $ | 1.13 | $ | 1.15 | |||||||||
OPERATIONS OVERVIEW
First quarter silver cash cost was $2.24 per ounce, net of by-products, compared to $1.03 per ounce in the same period in 2011. The following table provides the production summary on a consolidated basis for the first quarter ended March 31, 2012 and 2011:
| First Quarter Ended | |||||||||||
| March 31, 2012 | March 31, 2011 | ||||||||||
| PRODUCTION SUMMARY | |||||||||||
| Silver - | Ounces produced | 1,328,704 | 2,454,408 | ||||||||
| Payable ounces sold | 1,427,187 | 2,363,430 | |||||||||
| Gold - | Ounces produced | 12,652 | 14,430 | ||||||||
| Payable ounces sold | 11,860 | 11,590 | |||||||||
| Lead - | Tons produced | 4,854 | 9,655 | ||||||||
| Payable tons sold | 4,169 | 8,602 | |||||||||
| Zinc - | Tons produced | 15,943 | 17,681 | ||||||||
| Payable tons sold | 11,687 | 13,515 | |||||||||
| Total cash cost per ounce of silver produced (1) | $ | 2.24 | $ | 1.03 | |||||||
|
(1) See the attached schedule for a reconciliation to GAAP. |
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Greens Creek Mine - Alaska
Silver production at Greens Creek was 1.3 million ounces in the first quarter of 2012, compared to 1.7 million in the same period in 2011. The decrease in silver production year-over-year was due primarily to ground support rehabilitation work that diverted equipment and personnel away from production.
Mining and milling costs per ton were up by 37% and 18%, respectively, in the first quarter compared to the same period in 2011 due to lower production, as mill throughput decreased by 13%. The mining costs variance is also attributed to higher maintenance costs during the 2012 period.
The cash cost per ounce of silver increased by $2.97 for the first quarter compared to the same period in 2011, mainly attributable to lower silver ounces produced due to the decrease in mill throughput and lower silver ore grades ($4.71 per ounce), treatment and freight costs ($2.68 per ounce), and mine license tax and other costs ($0.97 per ounce). These factors were partially offset by higher by-product credits of $5.39 per ounce due to higher average gold prices and higher zinc and lead ore grades.
Lucky Friday Mine - Idaho
At the Lucky Friday mine, the $19.9 million decrease in gross profit in the first quarter compared to the same period in 2011 resulted from the temporary suspension of production at the mine during the 2012 period. The mine's Silver Shaft is undergoing rehabilitation and extensive improvements, with operations and silver production expected to resume as planned in early 2013. Through the first quarter, all surface work needed for the rehabilitation project was completed, including winches, generators and revised shaft collar structure.
As of early May, approximately 1,500 feet of rehabilitation work on the Silver Shaft had been completed, slightly ahead of plan. This work involves the removal of cementitious material along the main shaft, as well as installation of a metal brattice between the east and west halves of the shaft, repairing shaft steel, and installation of a new power cable, along with additional work, which is expected to improve the shaft's functionality and possibly improve its hoisting capacity. Work along the entire 6,100 foot Silver Shaft is expected to be completed in December 2012.
According to the plan submitted and approved by MSHA, once restoration work in the Silver Shaft is complete through the 4900 level, work crews are expected to be brought back in for development work to prepare the mine for resumption of production.
Care and maintenance costs incurred at the Lucky Friday totaled $6.2 million for the first quarter of 2012.
Exploration
Exploration expenditures for the first quarter were $5.6 million with $1.8 million for exploration at San Juan Silver in Colorado, $1.5 million for San Sebastian in Mexico, $0.6 million at Greens Creek, $0.5 million at the Star and $0.4 million for the Silver Valley. Expenditures for 2012 are expected to be approximately $28.0 million.
Drilling at Greens Creek continues to define ore-grade mineralization along trend of the Gallagher and 9a Zones and South West Bench. Drilling of the 9a Zone has likely extended the resource to the south and drilling of the South West Bench has defined ore-grade material to the north and the east of the existing reserve model. At the Gallagher, drilling continues to define two discrete high-grade zones that are strong to the south and to the east near the Gallagher Fault.
At the north end of the recently expanded Star Complex resource, there are now two drills defining high-grade, northerly and down-dip extensions to the Moffitt, North Star and Noonday veins. Drilling of the Moffitt veins includes intersections of 8.0 opt silver, 26.9% lead, 6.7% zinc over 5.3 feet; 5.0 opt silver, 16.9% lead, 0.7% zinc over 1.5 feet; and 2.6 opt silver, 7.9% lead, 12.9% zinc over 4.3 feet. The North Star is a 42-foot wide stringer zone that includes four separate veins ranging from 1.0 to 2.2 opt silver and 6 to 20% lead-zinc across widths of 1.5 to 5.8 feet.
Most of the exploration drilling in the first quarter occurred underground in the Equity at the San Juan Silver property in Colorado. Initial high-grade gold-silver results at the Equity mine were provided in a press release on February 27, 2012. New drilling has extended the strike length another 50 feet to 200 feet. The plunge of the mineralized zone has now doubled to about 450 feet. Drilling continues to identify strong breccia and vein mineralization that varies from 7 to 25 feet wide with fine-grained sulfides and silver sulfosalts-rich intervals. A second parallel mineralized structure appears in several drill holes.
Assay results from drilling since the February 27 press release include several samples from the Equity vein; 0.17 opt gold and 16.8 opt silver over 6.4 feet; 0.09 opt gold and 23.5 opt silver over 5.2 feet; 0.38 opt gold and 40.2 opt silver over 6.8 feet; and 0.08 opt gold and 9.2 opt silver over 6.4 feet. A second drill is being mobilized to test additional targets.
In Mexico, two drills have been actively drilling extensions to the Andrea vein resource and the Antonella, a parallel, subsidiary vein. Drilling of the Andrea vein to the southeast continues to define a strong vein and breccia varying in width from 4 feet to 16 feet with bands of precious metal bearing sulfides. Step-out holes to the southeast continue to intersect the wide-mineralized Andrea vein that extends 500 meters beyond the 1.7 km strike resource.
Pre-Development
Pre-development expenditures for the first quarter of 2012 were $3.4 million with $2.2 million at the San Juan Silver property in Colorado, $1.1 million at the Star property in Idaho and the remaining funds in Mexico. Pre-development expenditures for 2012 are expected to total approximately $11.0 million.
In Colorado at the Equity, crews are continuing to rehabilitate underground workings, install utilities down the decline and develop additional drill stations as drilling continues to intercept high-grade mineralization. At the Bulldog, the design of the decline is being finalized and steel sets for installation at the portal have been received. In addition, surface maintenance facilities have been completed at the Equity and Bulldog project sites.
In Idaho's Silver Valley, as the result of completing Star’s mineability study, which has defined the mining method, a preliminary economic analysis is being prepared which is expected in the third quarter. Rehabilitation on the Star 2000 level continues around the shaft stations, the Star #4 hoist room and the Star #5 shaft where a connection to the Grouse 700 Level will provide secondary surface access. In addition, surface maintenance facilities have been completed.
At the San Sebastian project in Mexico, options for accessing the existing resources at the Hugh Zone and a new mine plan have been completed. A preliminary economic analysis is expected to be completed during the third quarter of this year.
A work plan and drill program to define the hydrology of the Andrea area, which is located on the same property package as the Hugh Zone, has been completed and preliminary mine designs have begun. Initial metallurgical testing indicates the Andrea ores are amenable to cyanidation and produce a high-grade gravity concentrate. Further studies will optimize grind versus recovery, leach time, cyanide concentration and consumption, gravity concentrations and carbon loading for a potential CIL circuit.
NEW STAFF APPOINTMENTS
During the first quarter, the Company announced the appointments of Ed Sutich as Vice President and General Manager of the Lucky Friday mine, John Jordan as the new Vice President of Technical Services, and Michael Wegleitner as Director of Health and Safety.
“These professionals have a combined 88 years of mining experience, and we are confident in their ability to deliver on our continued and relentless focus on the highest levels of mine safety, planned mine development, and expected silver production increases,” said Hecla CEO Phillips S. Baker, Jr.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Tuesday, May 8, at 1:00 p.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-866-800-8652 or 1-617-614-2705 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 (including settlement negotiations), production, sales of assets, exploration results and plans, 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, litigation, regulatory and environmental risks, operating risks, project development risks, political 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.
| HECLA MINING COMPANY | |||||||||||
|
Condensed Consolidated Statements of Income |
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|
(dollars and shares in thousands, except per share amounts - unaudited) |
|||||||||||
| First Quarter Ended | |||||||||||
| March 31, 2012 | March 31, 2011 | ||||||||||
| Sales of products | $ | 91,153 | $ | 136,364 | |||||||
| Cost of sales and other direct production costs | 33,290 | 44,529 | |||||||||
| Depreciation, depletion and amortization | 9,661 | 12,262 | |||||||||
| 42,951 | 56,791 | ||||||||||
| Gross profit | 48,202 | 79,573 | |||||||||
| Other operating expenses: | |||||||||||
| General and administrative | 4,501 | 4,699 | |||||||||
| Exploration | 5,611 | 3,301 | |||||||||
| Pre-development | 3,366 | — | |||||||||
| Other operating expense | 944 | 1,817 | |||||||||
| Provision for closed operations and reclamation | 2,178 | 1,021 | |||||||||
| Lucky Friday suspension-related costs | 6,166 | — | |||||||||
| 22,766 | 10,838 | ||||||||||
| Income from operations | 25,436 | 68,735 | |||||||||
| Other income (expense): | |||||||||||
| Gain on sale or impairment of investments | — | 611 | |||||||||
| Loss on derivative contracts | (5,231 | ) | (2,034 | ) | |||||||
| Interest and other income | 149 | 18 | |||||||||
| Interest expense | (467 | ) | (477 | ) | |||||||
| (5,549 | ) | (1,882 | ) | ||||||||
| Income before income taxes | 19,887 | 66,853 | |||||||||
| Income tax provision | (7,315 | ) | (23,496 | ) | |||||||
| Net income | 12,572 | 43,357 | |||||||||
| Preferred stock dividends | (138 | ) | (138 | ) | |||||||
| Income applicable to common shareholders | $ | 12,434 | $ | 43,219 | |||||||
| Basic income per common share after preferred dividends | $ | 0.04 | $ | 0.16 | |||||||
| Diluted income per common share after preferred dividends | $ | 0.04 | $ | 0.15 | |||||||
| Weighted average number of common shares outstanding - basic | 285,292 | 278,448 | |||||||||
| Weighted average number of common shares outstanding - diluted | 296,928 | 296,244 | |||||||||
| HECLA MINING COMPANY | |||||||||||
|
Condensed Consolidated Balance Sheets |
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|
(dollars and share in thousands - unaudited) |
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| March 31, 2012 | December 31, 2011 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 278,504 | $ | 266,463 | |||||||
| Accounts receivable: | |||||||||||
| Trade | 5,849 | 10,996 | |||||||||
| Other, net | 6,445 | 9,313 | |||||||||
| Inventories | 24,247 | 26,195 | |||||||||
| Current deferred income taxes | 23,534 | 27,810 | |||||||||
| Other current assets | 14,851 | 21,967 | |||||||||
| Total current assets | 353,430 | 362,744 | |||||||||
| Non-current investments | 3,584 | 3,923 | |||||||||
| Non-current restricted cash and investments | 866 | 866 | |||||||||
| Properties, plants, equipment and mineral interests, net | 938,879 | 923,212 | |||||||||
| Non-current deferred income taxes | 89,478 | 88,028 | |||||||||
| Other non-current assets and deferred charges | 11,496 | 17,317 | |||||||||
| Total assets | $ | 1,397,733 | $ | 1,396,090 | |||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 30,125 | $ | 37,831 | |||||||
| Accrued payroll and related benefits | 9,008 | 12,878 | |||||||||
| Accrued taxes | 13,244 | 10,354 | |||||||||
| Current portion of capital leases | 4,797 | 4,005 | |||||||||
| Current portion of accrued reclamation and closure costs | 40,230 | 42,248 | |||||||||
| Total current liabilities | 97,404 | 107,316 | |||||||||
| Capital leases | 8,826 | 6,265 | |||||||||
| Accrued reclamation and closure costs | 111,706 | 111,563 | |||||||||
| Other noncurrent liabilities | 30,476 | 30,833 | |||||||||
| Total liabilities | 248,412 | 255,977 | |||||||||
| SHAREHOLDERS’ EQUITY | |||||||||||
| Preferred stock | 39 | 39 | |||||||||
| Common stock | 71,422 | 71,420 | |||||||||
| Capital surplus | 1,215,785 | 1,215,229 | |||||||||
| Accumulated deficit | (111,688 | ) | (120,557 | ) | |||||||
| Accumulated other comprehensive loss | (23,717 | ) | (23,498 | ) | |||||||
| Treasury stock | (2,520 | ) | (2,520 | ) | |||||||
| Total shareholders’ equity | 1,149,321 | 1,140,113 | |||||||||
| Total liabilities and shareholders’ equity | $ | 1,397,733 | $ | 1,396,090 | |||||||
| Common shares outstanding | 285,298 | 285,290 | |||||||||
| HECLA MINING COMPANY | |||||||||||
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Condensed Consolidated Statements of Cash Flows |
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(dollars in thousands - unaudited) |
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| Three Months Ended | |||||||||||
| March 31, 2012 | March 31, 2011 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 12,572 | $ | 43,357 | |||||||
| Non-cash elements included in net income: | |||||||||||
| Depreciation, depletion and amortization | 11,269 | 12,327 | |||||||||
| Gain on sale of investments | — | (611 | ) | ||||||||
| Gain on disposition of properties, plants, equipment and mineral interests | (28 | ) | — | ||||||||
| Provision for reclamation and closure costs | 1,427 | 279 | |||||||||
| Stock compensation | 558 | 377 | |||||||||
| Deferred income taxes | 2,826 | 23,135 | |||||||||
| Amortization of loan origination fees | 100 | 166 | |||||||||
| (Gain) loss on derivative contracts | 12,140 | (5,186 | ) | ||||||||
| Other non-cash charges, net | 270 | 324 | |||||||||
| Change in assets and liabilities: | |||||||||||
| Accounts receivable | 8,014 | (13,395 | ) | ||||||||
| Inventories | 1,948 | 1,310 | |||||||||
| Other current and non-current assets | 549 | 1,683 | |||||||||
| Accounts payable and accrued liabilities | (5,580 | ) | 1,043 | ||||||||
| Accrued payroll and related benefits | (3,870 | ) | (1,188 | ) | |||||||
| Accrued taxes | 2,890 | (1,333 | ) | ||||||||
| Accrued reclamation and closure costs and other non-current liabilities | (3,659 | ) | (1,378 | ) | |||||||
| Cash provided by operating activities | 41,426 | 60,910 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Additions to properties, plants, equipment and mineral interests | (24,652 | ) | (21,831 | ) | |||||||
| Proceeds from sale of investments | — | 1,366 | |||||||||
| Proceeds from disposition of properties, plants and equipment | 35 | 112 | |||||||||
| Purchases of investments | — | (3,200 | ) | ||||||||
| Changes in restricted cash and investment balances | — | 5 | |||||||||
| Net cash used in investing activities | (24,617 | ) | (23,548 | ) | |||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from exercise of stock options and warrants | — | 4,739 | |||||||||
| Acquisition of treasury shares | — | (18 | ) | ||||||||
| Dividends paid to common shareholders | (3,566 | ) | — | ||||||||
| Dividends paid to preferred shareholders | (138 | ) | (3,408 | ) | |||||||
| Repayments of capital leases | (1,064 | ) | (619 | ) | |||||||
| Net cash (used in) provided by financing activities | (4,768 | ) | 694 | ||||||||
| Net increase in cash and cash equivalents | 12,041 | 38,056 | |||||||||
| Cash and cash equivalents at beginning of period | 266,463 | 283,606 | |||||||||
| Cash and cash equivalents at end of period | $ | 278,504 | $ | 321,662 | |||||||
| HECLA MINING COMPANY | ||||||||||
|
Production Data |
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| Three Months Ended | ||||||||||
| March 31, 2012 | March 31, 2011 | |||||||||
| GREENS CREEK UNIT | ||||||||||
| Tons of ore milled | 165,516 | 189,767 | ||||||||
| Mining cost per ton | $ | 64.04 | $ | 46.64 | ||||||
| Milling cost per ton | $ | 32.58 | $ | 27.64 | ||||||
| Ore grade milled - Silver (oz./ton) | 11.08 | 12.50 | ||||||||
| Ore grade milled - Gold (oz./ton) | 0.12 | 0.12 | ||||||||
| Ore grade milled - Lead (%) | 3.84 | 3.28 | ||||||||
| Ore grade milled - Zinc (%) | 11.00 | 9.38 | ||||||||
| Silver produced (oz.) | 1,328,704 | 1,697,584 | ||||||||
| Gold produced (oz.) | 12,652 | 14,430 | ||||||||
| Lead produced (tons) | 4,854 | 4,711 | ||||||||
| Zinc produced (tons) | 15,943 | 15,526 | ||||||||
| Total cash cost per ounce of silver produced (1) | $ | 2.24 | $ | (0.73 | ) | |||||
| Capital additions (in thousands) | $ | 14,713 | $ | 4,860 | ||||||
| LUCKY FRIDAY UNIT | ||||||||||
| Tons of ore processed | — | 88,760 | ||||||||
| Mining cost per ton | $ | — | $ | 58.51 | ||||||
| Milling cost per ton | $ | — | $ | 15.40 | ||||||
| Ore grade milled - Silver (oz./ton) | — | 9.27 | ||||||||
| Ore grade milled - Lead (%) | — | 6.08 | ||||||||
| Ore grade milled - Zinc (%) | — | 2.85 | ||||||||
| Silver produced (oz.) | — | 756,824 | ||||||||
| Lead produced (tons) | — | 4,944 | ||||||||
| Zinc produced (tons) | — | 2,155 | ||||||||
| Total cash cost per ounce of silver produced (1) | $ | — | $ | 4.99 | ||||||
| Capital additions (in thousands) | $ | 11,697 | $ | 14,410 | ||||||
|
(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 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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Non-GAAP Measures
(Unaudited)
This release contains references to a non-GAAP measure of cash costs per ounce. 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.
The following table calculates cash cost per ounce:
| Three Months Ended March 31, | |||||||||||
| 2012 | 2011 | ||||||||||
| RECONCILIATION TO GAAP, ALL OPERATIONS | |||||||||||
| Total cash costs | $ | 2,976 | $ | 2,530 | |||||||
| Divided by ounces produced | 1,329 | 2,455 | |||||||||
| Total cash cost per ounce produced | $ | 2.24 | $ | 1.03 | |||||||
| Reconciliation to GAAP: | |||||||||||
| Total cash costs | $ | 2,976 | $ | 2,530 | |||||||
| Depreciation, depletion and amortization | 9,661 | 12,262 | |||||||||
| Treatment costs | (17,695 | ) | (24,236 | ) | |||||||
| By-product credits | 46,353 | 64,511 | |||||||||
| Change in product inventory | 1,805 | 1,533 | |||||||||
| Reclamation and other costs | (149 | ) | 191 | ||||||||
| Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) | $ | 42,951 | $ | 56,791 | |||||||
| GREENS CREEK UNIT | |||||||||||
| Total cash costs | $ | 2,976 | $ | (1,245 | ) | ||||||
| Divided by ounces produced | 1,329 | 1,698 | |||||||||
| Total cash cost per ounce produced | $ | 2.24 | $ | (0.73 | ) | ||||||
| Reconciliation to GAAP: | |||||||||||
| Total cash costs | $ | 2,976 | $ | (1,245 | ) | ||||||
| Depreciation, depletion and amortization | 9,661 | 10,680 | |||||||||
| Treatment costs | (17,695 | ) | (19,116 | ) | |||||||
| By-product credits | 46,353 | 50,063 | |||||||||
| Change in product inventory | 1,805 | 1,858 | |||||||||
| Reclamation and other costs | (149 | ) | 167 | ||||||||
| Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) | $ | 42,951 | $ | 42,407 | |||||||
| LUCKY FRIDAY UNIT (1) | |||||||||||
| Total cash costs | $ | — | $ | 3,775 | |||||||
| Divided by silver ounces produced | — | 757 | |||||||||
| Total cash cost per ounce produced | $ | — | $ | 4.99 | |||||||
| Reconciliation to GAAP: | |||||||||||
| Total cash costs | $ | — | $ | 3,775 | |||||||
| Depreciation, depletion and amortization | — | 1,582 | |||||||||
| Treatment costs | — | (5,120 | ) | ||||||||
| By-product credits | — | 14,448 | |||||||||
| Change in product inventory | — | (325 | ) | ||||||||
| Reclamation and other costs | — | 24 | |||||||||
| Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) | $ | — | $ | 14,384 | |||||||
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(1) Production has been temporarily suspended at the Lucky Friday Unit as work is performed to rehabilitate the Silver Shaft, the primary access from surface to the underground workings at the Lucky Friday mine. See the Lucky Friday Segment section above for further discussion of the Silver Shaft work and temporary suspension of operations. Care and maintenance costs incurred at the Lucky Friday during the suspension of production are included in a separate line item under Other operating expenses on the Condensed Consolidated Statement of Operations and Comprehensive Income (Unaudited), and have been excluded from the calculation of total cash costs for the three month period ended March 31, 2012. |
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This release also refers to a non-GAAP measure of earnings after adjustments. 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. The following table reconciles net income applicable to common shareholders to earnings after adjustments applicable to common shareholders:
| Three Months Ended March 31, | |||||||||||
| 2012 | 2011 | ||||||||||
| Net income applicable to common shareholders (GAAP) | $ | 12,434 | $ | 43,219 | |||||||
| Adjusting items: | |||||||||||
| Losses on derivatives contracts | 5,231 | 2,034 | |||||||||
| Environmental accruals | 769 | — | |||||||||
| Provisional price gains | (5,137 | ) | (7,822 | ) | |||||||
| Lucky Friday suspension-related costs | 6,166 | — | |||||||||
| Income tax effect of above adjustments | (2,530 | ) | 2,084 | ||||||||
| Earnings after adjustments applicable to common shareholders | $ | 16,933 | $ | 39,515 | |||||||
| Weighted average shares - basic | 285,292 | 278,448 | |||||||||
| Weighted average shares - diluted | 296,928 | 296,244 | |||||||||
| Basic earnings after adjustments per common share | $ | 0.06 | $ | 0.14 | |||||||
| Diluted earnings after adjustments per common share | $ | 0.06 | $ | 0.13 | |||||||
Assay Results - Q1 2012
| Gold | Zinc | Lead | ||||||||||||||||||||||
| MINE / PROJECT | Zone | Width (Feet) | Silver (oz/ton) | (oz/ton) | (%) | (%) | ||||||||||||||||||
| GREENS CREEK | 200 South | 16.8 | 32.0 | 0.02 | 8.1 | 4.0 | ||||||||||||||||||
| 200 South | 9.9 | 17.9 | 0.05 | 7.6 | 3.7 | |||||||||||||||||||
| 5250 South | 2.0 | 9.8 | 0.16 | 10.6 | 6.0 | |||||||||||||||||||
| Southwest Bench | 4.4 | 25.6 | 0.03 | 5.4 | 3.3 | |||||||||||||||||||
| Southwest Bench | 6.5 | 19.2 | 0.23 | 5.8 | 2.8 | |||||||||||||||||||
| 9a Zone | 16.8 | 32.0 | 0.02 | 8.1 | 4.0 | |||||||||||||||||||
| 9a Zone | 10.0 | 15.3 | 0.02 | 1.3 | 0.4 | |||||||||||||||||||
| 9a Zone | 8.7 | 20.7 | 0.02 | 18.2 | 8.7 | |||||||||||||||||||
| 9a Zone | 19.8 | 26.1 | 0.02 | 11.5 | 6.6 | |||||||||||||||||||
| 9a Zone | 21.2 | 9.7 | 0.04 | 33.4 | 10.9 | |||||||||||||||||||
| 9a Zone | 8.9 | 18.0 | 0.02 | 8.2 | 4.8 | |||||||||||||||||||
| 9a Zone | 22.9 | 11.6 | 0.07 | 5.9 | 3.5 | |||||||||||||||||||
| 9a Zone | 6.0 | 16.5 | 0.04 | 12.9 | 2.8 | |||||||||||||||||||
| 9a Zone | 3.2 | 46.6 | 0.52 | 9.3 | 2.4 | |||||||||||||||||||
| MINE / PROJECT | Vein Area | Width (Feet) | Gold (oz/ton) | Silver (oz/ton) | ||||||||||||
| SAN JUAN SILVER (CREEDE) | Equity | 18.5 | 0.45 | 36.8 | ||||||||||||
| including | 6.1 | 1.14 | 90.9 | |||||||||||||
| Equity | 29.6 | 0.11 | 11.3 | |||||||||||||
| including | 12.5 | 0.20 | 19.6 | |||||||||||||
| Equity | 4.6 | 0.07 | 8.3 | |||||||||||||
| Equity | 6.4 | 0.17 | 16.8 | |||||||||||||
| Equity | 5.2 | 0.09 | 23.5 | |||||||||||||
| Equity | 6.8 | 0.38 | 40.2 | |||||||||||||
| Equity | 6.4 | 0.08 | 9.2 | |||||||||||||
| Equity | 4.4 | 0.23 | 10.7 | |||||||||||||
| Equity | 4.3 | 0.08 | 8.2 | |||||||||||||
| Equity | 6.0 | 0.05 | 12.4 | |||||||||||||
| Equity | 8.4 | 0.10 | 14.4 | |||||||||||||
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| MINE / PROJECT | Vein Number / Area | Width (Feet) | Silver (oz/ton) | Zinc (%) | Lead (%) | |||||||||||||||
| SILVER VALLEY DRILLING | ||||||||||||||||||||
| STAR COMPLEX | Moffitt | 4.3 | 10.2 | 6.6 | 34.9 | |||||||||||||||
| Moffitt | 4.3 | 2.6 | 12.9 | 7.9 | ||||||||||||||||
| Moffitt | 4.3 | 0.7 | 2.7 | 5.2 | ||||||||||||||||
| Moffitt | 1.1 | 12.2 | 0.3 | 16.9 | ||||||||||||||||
| North Star | 5.8 | 2.3 | 0.8 | 7.9 | ||||||||||||||||
| North Star | 1.3 | 2.1 | 5.3 | 3.8 | ||||||||||||||||
| North Wall | 1.0 | 3.0 | 11.8 | 13.6 | ||||||||||||||||
| Noonday Split | 1.0 | 4.4 | 18.9 | 7.8 | ||||||||||||||||
| MINE / PROJECT | Area | Width (Meters) | Silver (g/tonne) | Gold (g/tonne) | ||||||||||||
| MEXICO - SAN SEBASTIAN | Andrea | 1.0 | 160.3 | 0.8 | ||||||||||||
| Andrea | 1.6 | 298.0 | 0.5 | |||||||||||||
| Andrea | 1.4 | 199.4 | 2.4 | |||||||||||||
| Andrea | 0.7 | 354.0 | 0.4 | |||||||||||||
| Andrea | 4.2 | 159.1 | 3.8 | |||||||||||||
| Andrea | 1.8 | 98.0 | 3.2 | |||||||||||||
| Andrea | 4.2 | 36.3 | 1.2 | |||||||||||||
| Andrea | 0.5 | 481.0 | 3.0 |