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Section 1: 8-K (HECLA MINING COMPANY 8-K)





UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549



FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  November 8, 2018

HECLA MINING COMPANY
(Exact Name of Registrant as Specified in Its Charter)

Delaware

 

1-8491

 

77-0664171

(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification No.)
of Incorporation)

6500 North Mineral Drive, Suite 200

Coeur d'Alene, Idaho 83815-9408

(Address of Principal Executive Offices) (Zip Code)

(208) 769-4100
(Registrant's Telephone Number, Including Area Code)

N/A
(Former name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Item 2.02.  Results of Operations and Financial Condition.

On November 8, 2018, Hecla Mining Company (the “Company”) issued a news release announcing the Company’s third quarter 2018 financial results.  The news release is attached hereto as Exhibit 99.1 to this Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1,  is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any of the Company’s filings or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01.  Other Events

On November 8, 2018, the Company announced it would pay a dividend on its shares of common stock in the amount of $0.0025, to shareholders of record as of November 20, 2018, payable on or about December 3, 2018.  The Company also announced it declared a dividend of $0.875 on its Series B Cumulative Convertible Preferred Stock, to shareholders of record as of December 14, 2018, payable on or about January 2, 2019.  A copy of the news release announcing the quarterly dividend is attached as Exhibit 99.1 to this Form 8-K.

Item 9.01.  Financial Statements and Exhibits.

 

(d)  Exhibits

 

Exhibit
Number

Description
 

99.1

News Release, dated November 8, 2018. *

 

* Furnished herewith


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:

November 8, 2018

 

 

Hecla Mining Company

 

 

By:

/s/ David C. Sienko

David C. Sienko

Vice President & General Counsel

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

Hecla Reports Third Quarter 2018 Results

Casa Berardi has record low costs

COEUR D'ALENE, Idaho--(BUSINESS WIRE)--November 8, 2018--Hecla Mining Company (NYSE:HL) today announced third quarter financial and operating results.

HIGHLIGHTS

"Our strategy is working. The EBITDA we generated despite low metals prices is a result of the improvements we made in our mines. A case in point is Casa Berardi, which is generating strong cash flow, with lower costs, higher mine throughput and an extended mine life," said Phillips S. Baker, Jr., President and CEO. "The Nevada operations are on the same path as Casa Berardi and Greens Creek, with the development and processes which should increase throughput and make the mines more efficient. In the meantime, the higher costs in Nevada are short-term and a function of electing to produce less to avoid sterilizing newly discovered mineralization."


"Greens Creek has been in production for about 30 years, but the mine continues to improve with a new mine plan that significantly increases its value. San Sebastian continues to mine the underground oxide ores and is on the verge of collecting the sulfide bulk sample which could supplement current production as well as significantly extend mine life. At Lucky Friday, our salaried employees are now focusing on production, rather than development, to minimize the financial impact of the strike. Finally, we don't have any large capital projects looming, and we plan to operate at a cash neutral basis, using our $250 million revolving line of credit sparingly to temporarily fund working capital requirements. We do not consider it a long-term source of borrowing," Mr. Baker added.

FINANCIAL OVERVIEW

  Third Quarter Ended   Nine Months Ended
HIGHLIGHTS  

September 30,
2018

 

September 30,
2017

 

September 30,
2018

 

September 30,
2017

FINANCIAL DATA                
Sales (000) $143,649   $140,839 $430,617   $417,662
Gross profit (000) $6,576 $42,963 $80,364 $106,139
(Loss) income applicable to common shareholders (000) ($23,322 ) $176 ($3,284 ) $33
Basic and diluted (loss) income per common share ($0.05 ) $— ($0.01 ) $—
(Loss) income (000) ($23,184 ) $314 ($2,870 ) $447
Cash provided by operating activities (000) $28,192 $28,294 $75,210 $74,115
 

Net loss applicable to common shareholders for the third quarter was $23.3 million, or $0.05 per share, compared to net income of $0.2 million, or $0.00 per share, for the same period a year ago, the result mainly due to the following items:


Operating cash flow was $28.2 million compared to $28.3 million in the third quarter of 2017, and included the proceeds received by monetizing the base metals hedges, offset by the net loss and lower working capital changes recorded in the third quarter 2018.

Adjusted EBITDA was $40.3 million compared to $60.5 million in the third quarter of 2017, with the decrease mainly due to lower base metals prices, higher exploration expense due to the addition of Hecla Nevada, and acquisition costs recorded in the third quarter 2018.

Capital expenditures (excluding capitalized interest) totaled $40.7 million for the third quarter 2018 compared to $25.5 million in the third quarter of 2017, with the increase mainly due to the addition of Hecla Nevada, capitalization of costs recorded in the third quarter 2018 for the Remote Vein Miner (RVM) project at Lucky Friday, and costs related to underground sulfide development at San Sebastian, partly offset by lower capital spending at Casa Berardi. Expenditures at the operations were $15.0 million at Hecla Nevada, $11.0 million at Greens Creek, $8.2 million at Casa Berardi, $4.8 million at Lucky Friday and $1.6 million at San Sebastian.

Metals Prices

The average realized silver price in the third quarter 2018 was $14.68 per ounce, 14% lower than the $17.01 price realized in the third quarter of 2017. The average realized gold price in the third quarter was $1,205 per ounce, 6% lower than the prior year period. Realized lead and zinc prices decreased by 13%, and 22% respectively, from the third quarter of 2017.

OPERATIONS OVERVIEW

Overview

The following table provides the production summary on a consolidated basis for the third quarter and nine months ended September 30, 2018 and 2017:

  Third Quarter Ended   Nine Months Ended
     

September 30,
2018

 

September 30,
2017

 

September 30,
2018

 

September 30,
2017

PRODUCTION SUMMARY            
Silver - Ounces produced 2,523,691   3,323,157 7,654,118   9,500,058
Payable ounces sold 2,588,478 2,540,817 6,993,695 8,098,652
Gold - Ounces produced 72,995 63,046 191,116 171,720
Payable ounces sold 68,568 57,380 183,050 161,921
Lead - Tons produced 4,238 5,370 15,387 18,426
Payable tons sold 3,986 2,936 12,599 13,612
Zinc - Tons produced 12,795 14,497 42,312 43,000
Payable tons sold 9,282 8,444 30,072 29,269
 

The following tables provide a summary of the final production, cost of sales, cash cost, after by-product credits, per silver and gold ounce, and AISC, after by-product credits, per silver and gold ounce for the third quarter and nine months ended September 30, 2018:

Third Quarter Ended       Greens Creek   Lucky Friday   San Sebastian   Casa Berardi   Nevada Ops
Sept 30, 2018   Silver   Gold   Silver   Gold   Silver   Silver   Gold   Gold   Silver   Gold   Silver
Production (ounces)   2,523,691     72,995     1,876,417     11,559     31,639     521,931     3,666     43,981     9,559     13,789   84,145
Increase/(decrease) over 2017   (24 )%   16 %   (20 )%   (8 )%   (64 )%   (41 )%   (42 )%   %   (1 )%   N/A   N/A
Cost of sales & other direct production costs and depreciation, depletion and amortization (000)   $ 66,487     $ 70,586     $ 52,163     N/A     N/A     $ 14,325     N/A     $ 51,267     N/A     $ 19,319   N/A
Increase/(decrease) over 2017   37 %   43 %   24 %   N/A     N/A     114 %   N/A     4 %   N/A     N/A   N/A
Cash costs, after by-prod credits, per silver or gold ounce 2,4   $ 4.12     $ 803     $ 1.92     N/A     N/A     $ 12.02     N/A     $ 686     N/A     $ 1,179   N/A
Increase/(decrease) over 2017   (754 )%   7 %   (1,380 )%   N/A     N/A     485 %   N/A     (9 )%   N/A     N/A   N/A
AISC, after by-prod credits,

per silver or gold ounce 3

  $ 15.68     $ 1,143     $ 9.20     N/A     N/A     $ 16.95     N/A     $ 896     N/A     $ 1,932   N/A
Increase/(decrease) over 2017   136 %   5 %   106 %   N/A     N/A     2,142 %   N/A     (18 )%   N/A     N/A   N/A
                                             
Nine Months Ended Greens Creek Lucky Friday San Sebastian Casa Berardi Nevada Ops
Sept 30, 2018   Silver   Gold   Silver   Gold   Silver   Silver   Gold   Gold   Silver   Gold   Silver
Production (ounces)   7,654,118     191,116     5,789,440     38,396     156,015     1,593,770     12,051     126,880     30,748     13,789   84,145
Increase/(decrease) over 2017   (19 )%   11 %   (7 )%   (2 )%   (80 )%   (36 )%   (37 )%   12 %   15 %   N/A   N/A
Cost of sales and other direct production costs and depreciation, depletion and amortization (000)   $ 178,784     $ 171,469     $ 141,763     N/A     $ 5,844     $ 31,177     N/A     $ 152,150     N/A     $ 19,319   N/A
Increase/(decrease) over 2017   3 %   24 %   1 %   N/A     (60 )%   70 %   N/A     10 %   N/A     N/A   N/A

Cash costs, after by-prod credits, per silver or gold ounce 2,4

  $ 0.05     $ 802     $ (2.22 )   N/A     N/A     $ 8.28     N/A     $ 760     N/A     $ 1,179   N/A
Increase/(decrease) over 2017   (69 )%   (7 )%   (404 )%   N/A     N/A     356 %   N/A     (11 )%   N/A     N/A   N/A
AISC, after by-prod credits, per silver or gold ounce 3   $ 10.71     $ 1,095     $ 4.71     N/A     N/A     $ 13.34     N/A     $ 1,004     N/A     $ 1,932   N/A
Increase/(decrease) over 2017   33 %   (11 )%   (16 )%   N/A     N/A     9,629 %   N/A     (18 )%   N/A     N/A   N/A
       

Greens Creek Mine - Alaska

At the Greens Creek mine, 1.9 million ounces of silver and 11,559 ounces of gold were produced in the third quarter, compared to 2.3 million ounces and 12,563 ounces, respectively, in the third quarter of 2017. Lower silver production was expected as a result of lower grades due to mine sequencing. The mill operated at an average of 2,316 tons per day (tpd) in the third quarter, 3% lower than the third quarter of 2017.

The cost of sales for the third quarter was $52.2 million, and the cash cost, after by-product credits, per silver ounce, was $1.92, compared to $41.9 million and ($0.15), respectively, for the third quarter of 2017.2 The AISC, after by-product credits, was $9.20 per silver ounce for the third quarter compared to $4.47 in the third quarter of 2017.3 The per ounce silver costs were higher primarily due to lower base metals prices and the number of tons milled.

A new 2019 mine plan should reduce the amount of development in the next four years to access significant ore reserves at shallower depth in proximity to old workings (East Ore). It also utilizes existing workings, rather than developing a new ramp system, to access these materials and brings this higher-grade ore into production beginning in 2019, instead of near the end of the mine life, which should increase revenues over the next few years. The combination of exploration success over the past year and the optimization of sequencing should enable the mine life to be maintained or extended.

"When we acquired Greens Creek, our goal was consistency of production at an increased throughput. Having achieved that we moved to continuous improvements like the increased recoveries in the mill. Now we have identified a new mine plan that improves the mine's economics by increasing production, reducing both development and the mining fleet while potentially extending the mine life. The improvements we have made to this mine demonstrate the importance of having a long mine life that allows the time to make improvements and realize their benefits," said Mr. Phillips S. Baker, Jr.

Casa Berardi - Quebec

At the Casa Berardi mine, 43,981 ounces of gold were produced in the third quarter, the second highest quarterly gold production since acquisition, including 7,614 ounces from the East Mine Crown Pillar (EMCP) pit; compared to 44,141 ounces in the third quarter of 2017. The steady production was primarily due to ore throughput. The mill operated at an average of 3,846 tpd in the third quarter, the highest rate since acquisition, and an increase of 8% over the third quarter of 2017.

The cost of sales was $51.3 million for the third quarter and the cash cost, after by-product credits, per gold ounce was $686, compared to $49.3 million and $750, respectively, in the prior year period.2,4 The decrease in cash cost, after by-product credits, per gold ounce is due to the higher gold production. The AISC, after by-product credits, was $896 per gold ounce for the third quarter compared to $1,091 in the third quarter of 2017, primarily due to lower capital spending.3

The automated 985 drift project continues to improve the operating efficiency of the mine, with the autonomous haul truck running better and with higher availability than originally anticipated. The second 40-ton Sandvik autonomous haul truck is scheduled to arrive in the fourth quarter. Operating two autonomous trucks is expected to result in operating savings of several million dollars a year.


"Casa Berardi was the standout mine for us this quarter. The improvements and innovations we have made in the mine are paying off with the declining cost profile, higher gold production and cash flow on record throughput," said Mr. Phillips S. Baker, Jr. "We are very proud of the cover story on Casa Berardi in CIM's September/October issue."

San Sebastian - Mexico

At the San Sebastian mine, 521,931 ounces of silver and 3,666 ounces of gold were produced in the third quarter, compared to 880,885 ounces and 6,342 ounces, respectively, in the third quarter of 2017. The lower silver and gold production was expected as a result of lower grades. The mill operated at an average of 432 tpd, an increase of 9% over the third quarter of 2017.

The cost of sales was $14.3 million for the third quarter and the cash cost, after by-product credits, was $12.02 per silver ounce, compared to $6.7 million and ($3.12), respectively, in the third quarter of 2017.2 The AISC, after by-product credits, was $16.95 per silver ounce for the third quarter compared to ($0.83) in the third quarter of 2017, principally due to the higher costs of mining underground versus higher-grade stockpiles and work being conducted on the Velardeña tailings facility.3 The Company plans to process a bulk sample by the end of the year with revenues expected in the first quarter of 2019. If successful, this could lead to the beginning of mining of the sulfides by late 2019.

"The upcoming bulk sample of the Hugh Zone sulfide material could significantly increase the mine life. We plan to continue our "capital lite" strategy here since we already have a contract with a third-party mill and anticipate using a contract miner. With almost no capital at risk, the returns on the investment have been extraordinary," said Mr. Phillips S. Baker, Jr.

Nevada Operations (acquired on July 20, 2018)

For the period July 20 to September 30, 2018, 13,789 ounces of gold were produced. The Nevada operations are focused on development and exploration activities at Fire Creek and Hollister at the expense of production. Little development had been undertaken during 2018 at these properties by the former owners. Our expectation is to increase Fire Creek throughput from 350 tons per day to 550 tons per day by mid-2019. The development of a drift to the Hatter Graben exploration target is underway with completion expected late in 2019.

During the reporting period, approximately $15.0 million in capital and $4.5 million in exploration expense was invested in Nevada. Of the $15.0 million in capital, $7.3 million related to the completion of the tailings facility at Midas which should provide the necessary waste capacity for the next four years, while $7.0 million was for development that is needed to increase Fire Creek and Hollister mine throughput, and $0.7 million was spent on completing the CIL circuit at the Midas Mill which is expected to increase the recoveries of the ore being processed from Hollister.


Notable highlights include:

"In the 100 days we have owned the Nevada properties we have been in continuous change - winding down Midas, resolving the roadbed issues at Fire Creek, advancing the development at Hatter Graben, and completing the capital projects on the mill and tailings facility. We expect the pace of change to continue as we commission a new batch plant that should improve ground control, test a road-header to improve mining in soft rock and rework the mine plan as we gain more knowledge. However, we don't believe we will need to make significant new financial investment to put the mine on the same improvement path that we have seen at Greens Creek and Casa Berardi," said Mr. Phillips S. Baker, Jr.

Lucky Friday Mine - Idaho

At the Lucky Friday mine, 31,639 ounces of silver were produced in the third quarter, compared to 88,298 ounces in the third quarter of 2017, with the salaried workers focused mostly on development.

There was no cost of sales for the third quarter, as there were no concentrate shipments during the quarter.

The Company is now focusing on limited production by salaried staff to help minimize the financial impact of the ongoing strike. In addition, construction of the Remote Vein Miner (RVM) continues in Sweden. The RVM has the potential to revolutionize how the mine operates, making it safer and more efficient. Costs related to care-and-maintenance of the mine are reported in a separate line item in our condensed consolidated statement of operations and are excluded from the calculation of cost of sales, cash cost, after by-product credits, per silver ounce and AISC, after by-product credits, per silver ounce.

"Lucky Friday has the longest mine life of all our properties, but at these silver prices and with the work rules the union workers have clung to, even at full production the mine doesn't generate significant free cash flow. So, we are operating to minimize the cash consumption before we go back into production which we expect to be primarily from the RVM," said Phillips S. Baker, Jr.


EXPLORATION AND PRE-DEVELOPMENT

Expenditures

Exploration (including corporate development) expenses were $12.4 million, an increase of $5.2 million compared to the third quarter of 2017. Full year exploration (including corporate development) expenses are expected to be $35 million, up from $23.5 million in 2017, in part reflecting exploration at the Nevada operations, San Sebastian, Casa Berardi and Greens Creek and drilling at Kinskuch and Little Baldy.

A complete summary of exploration for the third quarter can be found in the news release entitled "Hecla Reports Continued Drilling Success in the Third Quarter" released on November 6, 2018.

"This quarter's exploration, at $12 million, is 60% more than any quarter in the past five years primarily as a result of adding Nevada exploration to an already substantial program. While there are good results from all the programs, we plan to pare back future expenditures to operate within cash flow," said Mr. Phillips S. Baker, Jr.

PRE-DEVELOPMENT

Pre-development spending was $1.2 million for the quarter, for permitting of Rock Creek and Montanore.

In August, the U.S. Forest Service issued its Final Record of Decision (ROD) authorizing Phase 1, which is the exploration phase, for Rock Creek.

At the Montanore project, the Forest Service continues to work on a Supplemental Environmental Impact Statement (EIS), pursuant to the 2017 Montana Federal District Court remand of the previous Forest Service ROD. The court's decision allows the agency to advance authorizations for the initial evaluation phase of the project. A draft Supplemental EIS is anticipated in the first half of 2019.

BASE METALS AND CURRENCY HEDGING

Base Metals Forward Sales Contracts

There are no forward sales contracts outstanding at this time, other than provisional hedges (which address changes in prices between shipment and settlement with customers).


Foreign Currency Forward Purchase Contracts

The following table summarizes the quantities of Canadian dollars and Mexican pesos committed under financially settled forward purchase contracts at September 30, 2018:

 

Currency Under Contract
(in thousands of CAD/MXN)

  Average Exchange Rate
CAD   MXN CAD/USD   MXN/USD
2018 settlements 29,300   47,110 1.30   19.66
2019 settlements 91,200 124,320 1.31 20.28
2020 settlements 61,700 7,100 1.29 20.72
2021 settlements 36,500 1.28
2022 settlements 6,400 1.27
 

2018 ESTIMATES5

The Company is providing updated annual estimates as follows:

2018 Production Outlook

        Silver Production

(Moz)

    Gold Production

(Koz)

    Silver Equivalent

(Moz)

    Gold Equivalent

(Koz)

        Original

(if revised)

    Current     Original

(if revised)

    Current     Original

(if revised)

    Current     Original

(if revised)

    Current
Greens Creek       7.5-8.1     7.6-7.9     50-55     50-53     21.0-22.5     21.1-22.1    

300-315

    301-310
Lucky Friday                                                  
San Sebastian       2.0-2.5     2.0-2.2     15-17     15-16     2.9-3.7     2.9-3.3     41-52     41-47
Casa Berardi                   157-162     161-165     11.0-11.5     11.3-11.7     157-162     161-165
Nevada Operations             0.1-0.2     40-50     36-41     2.9-3.8     2.6-3.1     41-52     37-43
Total       9.5-10.6     9.7-10.3     262-284     262-275     37.8-41.5     37.9-40.2     539-581     540-565
                                 

2018 Cost Outlook

        Costs of Sales (million)    

Cash cost, after by-product credits, per

silver/gold ounce2,4

   

AISC, after by-product credits, per

produced silver/gold ounce3

        Original

(if revised)

    Current     Original

(if revised)

    Current     Original

(if revised)

    Current
Greens Creek       $ 198     $ 183       $ (0.50 )     $ (1.00 )     $ 7.00       $ 6.00
Lucky Friday                                              
San Sebastian       $ 44     $ 42      

$

8.50

      $ 9.50      

$

12.50

      $ 14.00
Total Silver       $ 242     $ 225       $ 1.50       $ 1.00       $ 12.75       $ 12.25
Casa Berardi       $ 185     $ 203       $ 800       $ 775       $ 1,100       $ 1,050
Nevada Operations       $ 68     $ 64       $ 800       $ 1,275       $ 1,100       $ 1,875
Total Gold       $ 253     $ 267       $ 800       $ 850       $ 1,100       $ 1,200
                         

2018 Capital and Exploration Outlook

   

Original
(if revised)

  Current
2018E Capital expenditures (excluding capitalized interest)       $140-$145 million
2018E Exploration expenditures (includes Corporate Development)   $34-$37 million   $35-$37 million
2018E Pre-development expenditures   $5 million   $4 million
2018E Research and Development expenditures   $6-$10 million   $7-$9 million
   

DIVIDENDS

The Board of Directors declared a quarterly cash dividend of $0.0025 per share of common stock, payable on or about December 3, 2018, to stockholders of record on November 20, 2018. The realized silver price was $14.68 in the third quarter and therefore did not satisfy the criteria for a larger dividend under the Company's dividend policy.

The Board of Directors also declared the regular quarterly dividend of $0.875 per share on the 157,816 outstanding shares of Series B Cumulative Convertible Preferred Stock. This represents a total amount to be paid of approximately $138,000. The cash dividend is payable on or about January 2, 2019 to shareholders of record on December 14, 2018.

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held Thursday, November 8, at 10:00 a.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-855-760-8158 or for international dialing 1-720-634-2922. 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

Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska, Idaho, and Mexico and is a growing gold producer with operating mines in Quebec, Canada and in Nevada. The Company also has exploration and pre-development properties in eight world-class silver and gold mining districts in the U.S., Canada and Mexico.

NOTES

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles in the United States (GAAP). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

(1) Adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to net income (loss), the most comparable GAAP measure, can be found at the end of the release. Adjusted EBITDA is a measure used by management to evaluate the Company's operating performance but should not be considered an alternative to net income (loss), or cash provided by operating activities as those terms are defined by GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. In addition, the Company may use it when formulating performance goals and targets under its incentive program.


(2) Cash cost, after by-product credits, per silver or gold ounce is a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (sometimes referred to as "cost of sales" in this release), can be found at the end of the release. It is an important operating statistic that management utilizes to measure each mine's operating performance. It also allows the benchmarking of performance of each mine versus those of our competitors. As a primary silver mining company, management also uses the statistic on an aggregate basis - aggregating the Greens Creek, Lucky Friday and San Sebastian mines - to compare performance with that of other primary silver mining companies. With regard to Casa Berardi and the Nevada operations, management uses cash cost, after by-product credits, per gold ounce to compare its performance with other gold mines. Similarly, the statistic is useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics. In addition, the Company may use it when formulating performance goals and targets under its incentive program. Cash cost, after by-product credits, per silver ounce is not presented for Lucky Friday for the third quarters of 2018 and 2017 and year to date 2018, as production was limited due to the strike and results are not comparable to those from prior periods and are not indicative of future operating results under full production. The estimated fair value of the stockpile acquired at Hollister has been removed from the cash cost, after by-product credits calculation.

(3) All in sustaining cost (AISC), after by-product credits, is a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the closest GAAP measurement, can be found in the end of the release. AISC, after by-product credits, includes cost of sales and other direct production costs, expenses for reclamation and exploration at the mine sites, corporate exploration related to sustaining operations, and all site sustaining capital costs. AISC, after by-product credits, is calculated net of depreciation, depletion, and amortization and by-product credits. AISC, after by-product credits, per silver ounce is not presented for Lucky Friday for the second quarters of 2018 and 2017 and the first half of 2018, as production was limited due to the strike and results are not comparable to those from prior periods and are not indicative of future operating results under full production.

Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. Management believes that all in sustaining costs is a non-GAAP measure that provides additional information to management, investors and analysts to help in the understanding of the economics of our operations and performance compared to other producers and in the investor's visibility by better defining the total costs associated with production. Similarly, the statistic is useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics. In addition, the Company may use it when formulating performance goals and targets under its incentive program.

(4) Cash cost, after by-product credits, per gold ounce is only applicable to Casa Berardi and Nevada production. Gold produced from Greens Creek and San Sebastian is treated as a by-product credit against the silver cash cost.

Other

(5) Expectations for 2018 includes silver, gold, lead and zinc production from Greens Creek, San Sebastian, Casa Berardi and Nevada operations converted using Au $1,250/oz, Ag $16.00/oz, Zn $1.25/lb, and Pb $1.00/lb. Lucky Friday expectations are currently suspended as there is currently a strike. Numbers may be rounded.


Cautionary Statements to Investors on Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian securities laws. Such forward-looking statements may include, without limitation: (i) estimates of future production and sales; (ii) the impact of the Klondex acquisition on the Company's operations and results; (iii) expectations regarding the development, growth potential, financial performance of the Company’s projects; (iv) ability to complete construction of the remote vein miner and for it to operate successfully; (v) impact of the Lucky Friday strike on production and cash flow; (vi) ability to generate value from innovations being introduced into the mines; (vii) impact of metals prices on cash costs, after by-product credits; and (viii) ability to permit and timing of Montana projects. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political/regulatory developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) the exchange rates for the Canadian dollar and Mexican peso to the U.S. dollar, being approximately consistent with current levels; (v) certain price assumptions for gold, silver, lead and zinc; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy of our current mineral reserve and mineral resource estimates; and (viii) the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements.” Such risks include, but are not limited to gold, silver and other metals price volatility, operating risks, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, community relations, conflict resolution and outcome of projects or oppositions, litigation, political, regulatory, labor and environmental risks, and exploration risks and results, including that mineral resources are not mineral reserves, they do not have demonstrated economic viability and there is no certainty that they can be upgraded to mineral reserves through continued exploration. For a more detailed discussion of such risks and other factors, see the Company’s 2017 Form 10-K, filed on February 15, 2018, and Forms 10-Q filed on May 10, 2018 and August 9, 2018, with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings. The Company does not undertake any obligation to publicly release revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.


           

HECLA MINING COMPANY

Condensed Consolidated Statements of (Loss) Income

(dollars and shares in thousands, except per share amounts - unaudited)

 
Third Quarter Ended Nine Months Ended

September 30,

2018

     

September 30,

2017

September 30,

2018

     

September 30,

2017

Sales of products $ 143,649   $ 140,839   $ 430,617   $ 417,662  
Cost of sales and other direct production costs 93,609 68,358 246,918 224,537
Depreciation, depletion and amortization 43,464   29,518   103,335   86,986  
137,073   97,876   350,253   311,523  
Gross profit 6,576   42,963   80,364   106,139  
 
Other operating expenses:
General and administrative 10,327 9,529 27,849 29,044
Exploration 12,411 7,255 27,609 17,622
Pre-development 1,195 1,757 3,615 4,061
Research and development 1,269 1,130 5,042 2,125
Other operating expense 448 134 1,767 1,590
Gain on disposition of properties, plants, equipment and mineral interests (3,208 ) (4,830 ) (3,374 ) (4,924 )
Provision or closed operations and reclamation 1,852 2,940 4,534 5,044
Suspension-related costs 6,519 4,780 18,337 14,385
Acquisition costs 6,139     9,656   25  
36,952   22,695   95,035   68,972  
Income from operations (30,376 ) 20,268   (14,671 ) 37,167  
Other income (expense):
Gain (loss) on derivative contracts 19,460 (11,226 ) 40,271 (16,548 )
Loss on disposition of investments (36 ) (36 ) (167 )
Unrealized (loss) gain on investments (2,207 ) (124 ) (2,461 ) (73 )
Foreign exchange (loss) gain (2,212 ) (4,917 ) 2,856 (10,258 )
Interest income and other (expense) income (346 ) 541 (294 ) 1,185
Interest expense, net of amount capitalized (10,146 ) (9,358 ) (30,019 ) (28,423 )
4,513   (25,084 ) 10,317   (54,284 )
(Loss) income before income taxes (25,863 ) (4,816 ) (4,354 ) (17,117 )
Income tax benefit 2,679   5,130   1,484   17,564  
Net (loss) income (23,184 ) 314 (2,870 ) 447
Preferred stock dividends (138 ) (138 ) (414 ) (414 )
(Loss) income applicable to common shareholders $ (23,322 ) $ 176   $ (3,284 ) $ 33  
Basic (loss) income per common share after preferred dividends $ (0.05 ) $   $ (0.01 ) $  
Diluted (loss) income per common share after preferred dividends $ (0.05 ) $   $ (0.01 ) $  
Weighted average number of common shares outstanding - basic 452,636   398,848   417,532   396,809  
Weighted average number of common shares outstanding - diluted 452,636   401,258   417,532  

400,176

 
 
 

                       

HECLA MINING COMPANY

Condensed Consolidated Balance Sheets

(dollars and share in thousands - unaudited)

 
                September 30, 2018           December 31, 2017
ASSETS                            
Current assets:
Cash and cash equivalents $ 60,856 $ 186,107
Short-term investments and securities 33,758
Accounts receivable:
Trade 12,947 14,805
Other, net 26,928 17,385
Inventories 76,088 55,466
Other current assets 21,510   13,715  
Total current assets 198,329 321,236
Non-current investments 7,190 7,561
Non-current restricted cash and investments 1,010 1,032
Properties, plants, equipment and mineral interests, net 2,487,429 1,999,311
Non-current deferred income taxes 1,601 1,509
Other non-current assets and deferred charges 14,699   14,509  
Total assets $ 2,710,258   $ 2,345,158  
                             
LIABILITIES                            
Current liabilities:
Accounts payable and accrued liabilities $ 65,755 $ 46,549
Accrued payroll and related benefits 29,488 31,259
Accrued taxes 8,274 5,919
Current portion of capital leases 6,069 5,608
Current portion of accrued reclamation and closure costs 6,621 6,679
Other current liabilities 16,249   16,116  
Total current liabilities 132,456 112,130
Capital leases 8,638 6,193
Accrued reclamation and closure costs 99,314 79,366
Long-term debt 534,067 502,229
Non-current deferred tax liability 164,928 124,352
Non-current pension liability 44,097 46,628
Other non-current liabilities 4,689   12,983  
Total liabilities 988,189   883,881  
                             
SHAREHOLDERS’ EQUITY                            
Preferred stock 39 39
Common stock 121,283 100,926
Capital surplus 1,872,946 1,619,816
Accumulated deficit (223,280 ) (218,089 )
Accumulated other comprehensive loss (28,183 ) (23,373 )
Treasury stock (20,736 ) (18,042 )
Total shareholders’ equity 1,722,069   1,461,277  
Total liabilities and shareholders’ equity $ 2,710,258   $ 2,345,158  
Common shares outstanding 479,909 399,176
 
 

             

HECLA MINING COMPANY

Condensed Consolidated Statements of Cash Flows(dollars in thousands - unaudited)

 
Nine Months Ended
               

September 30,

2018

       

September 30,

2017

OPERATING ACTIVITIES                          
Net (loss) income $ (2,870 )         $ 447
Non-cash elements included in net (loss) income:
Depreciation, depletion and amortization 108,814 91,255
Loss on disposition of investments 167
Gain on disposition of properties, plants, equipment and mineral interests (3,374 ) (4,924 )
Unrealized loss on investments 2,461 73
Adjustment of inventory to market value 7,232
Provision for reclamation and closure costs 3,957 3,379
Stock compensation 4,672 4,943
Deferred income taxes (4,637 ) (23,467 )
Amortization of loan origination fees 1,471 1,415
(Gain) loss on derivative contracts (15,208 ) 16,718
Foreign exchange (gain) loss (2,032 ) 10,520
Other non-cash items, net (37 ) (1 )
Change in assets and liabilities:
Accounts receivable (4,424 ) 4,903
Inventories (18,954 ) (9,611 )
Other current and non-current assets (5,569 ) (2,685 )
Accounts payable and accrued liabilities 12,308 (7,759 )
Accrued payroll and related benefits (4,207 ) (913 )
Accrued taxes 845 (4,469 )
Accrued reclamation and closure costs and other non-current liabilities (5,238 ) (5,876 )
Cash provided by operating activities 75,210   74,115  
                           
INVESTING ACTIVITIES                          
Additions to properties, plants, equipment and mineral interests (83,285 ) (70,390 )
Acquisition of Klondex, net of cash and restricted cash acquired (139,326 )
Proceeds from disposition of properties, plants and equipment 722 151
Insurance proceeds received for damaged property 4,377 5,628
Purchases of investments (31,971 ) (36,916 )
Maturities of short-term investments 64,895   31,169  
Net cash used in investing activities (184,588 ) (70,358 )
                           
FINANCING ACTIVITIES                          
Proceeds from issue of stock, net of related costs 3,085 9,610
Acquisition of treasury shares (2,694 ) (2,993 )
Dividends paid to common shareholders (3,193 ) (2,978 )
Dividends paid to preferred shareholders (414 ) (414 )
Debt origination fees (2,460 ) (476 )
Repayments of debt (82,036 ) (470 )
Borrowings on debt 78,024
Payments on capital leases (5,992 ) (5,065 )
Net cash used in financing activities (15,680 ) (2,786 )
Effect of exchange rates on cash (215 ) 1,051  
Net increase in cash, cash equivalents and restricted cash and cash equivalents (125,273 ) 2,022
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 187,139   171,977  
Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 61,866   $ 173,999  
 
 

           

HECLA MINING COMPANY

Production Data

 
Three Months Ended         Nine Months Ended  
       

September 30,

2018

     

September 30,

2017

     

September 30,

2018

     

September 30,

2017

GREENS CREEK UNIT                                        
Tons of ore milled 213,037       219,983 632,876       627,900
Mining cost per ton $ 68.76 $ 69.46 $ 69.19 $ 69.64
Milling cost per ton $ 31.97 $ 31.01 $ 32.73 $ 32.38
Ore grade milled - Silver (oz./ton) 11.65 13.65 11.94 12.84
Ore grade milled - Gold (oz./ton) 0.087 0.089 0.094 0.095
Ore grade milled - Lead (%) 2.40 2.77 2.84 2.83
Ore grade milled - Zinc (%) 6.87 7.47 7.58 7.49
Silver produced (oz.) 1,876,417 2,344,315 5,789,440 6,205,659
Gold produced (oz.) 11,559 12,563 38,396 39,289
Lead produced (tons) 4,026 4,851 14,352 14,080
Zinc produced (tons) 12,695 14,325 41,673 40,697
Cash cost, after by-product credits, per silver ounce (1) $ 1.92 $ (0.15 ) $ (2.22 ) $ 0.73
AISC, after by-product credits, per silver ounce (1) $ 9.20 $ 4.47 $ 4.71 $ 5.60
Capital additions (in thousands)       $ 11,029         $ 8,206         $ 34,694         $ 24,891  
LUCKY FRIDAY UNIT                                        
Tons of ore milled 3,006 7,302 16,012 64,371
Mining cost per ton $ $ 150.89 $ 87.79 $ 112.60
Milling cost per ton $ $ 13.15 $ 14.26 $ 22.93
Ore grade milled - Silver (oz./ton) 11.41 12.87 11.06 12.45
Ore grade milled - Lead (%) 8.06 7.68 7.21 7.12
Ore grade milled - Zinc (%) 3.64 3.21 4.28 3.90
Silver produced (oz.) 31,639 88,298 156,015 769,080
Lead produced (tons) 212 518 1,035 4,346
Zinc produced (tons) 100 172 639 2,303
Cash cost, after by-product credits, per silver ounce (1) N/A $ 11.60 N/A $ 6.58
AISC, after by-product credits, per silver ounce (1) N/A $ 13.37 N/A $ 12.21
Capital additions (in thousands)       $ 4,840         $ 208         $ 6,889         $ 5,000  
SAN SEBASTIAN                                        
Tons of ore milled 39,739 36,482 111,916 111,623
Mining cost per ton $ 171.87 $ 35.69 $ 157.21 $ 38.70
Milling cost per ton $ 65.98 $ 69.42 $ 66.16 $ 66.64
Ore grade milled - Silver (oz./ton) 14.16 25.48 15.36 23.71
Ore grade milled - Gold (oz./ton) 0.108 0.184 0.12 0.183
Silver produced (oz.) 521,931 880,885 1,593,770 2,498,638
Gold produced (oz.) 3,666 6,342 12,051 19,222
Cash cost, after by-product credits, per silver ounce (1) $ 12.02 $ (3.12 ) $ 8.28 $ (3.23 )
AISC, after by-product credits, per silver ounce (1) $ 16.95 $ (0.83 ) $ 13.34 $ (0.14 )
Capital additions (in thousands)       $ 1,582         $ 3,350         $ 3,692         $ 7,480  
CASA BERARDI UNIT                                        
Tons of ore milled - underground 181,285 206,209 556,991 606,201
Tons of ore milled - surface pit 172,555 119,936 495,335 343,745
Tons of ore milled - total 353,840 326,145 1,052,326 949,946
Surface tons mined - ore and waste 1,492,041 2,010,524 5,129,646 6,427,067
Mining cost per ton of ore - underground $ 104.31 $ 98.96 $ 102.56 $ 98.71
Mining cost per ton of ore - combined $ 65.97 $ 82.95 $ 72.15 $ 81.95
Mining cost per ton of ore and waste - surface tons mined $ 4.10 $ 3.42 $ 3.66 $ 2.84
Milling cost per ton $ 15.05 $ 16.19 $ 15.91 $ 16.28
Ore grade milled - Gold (oz./ton) - underground 0.229 0.193 0.204 0.167
Ore grade milled - Gold (oz./ton) - surface pit 0.050 0.084 0.064 0.086
Ore grade milled - Gold (oz./ton) - combined 0.140 0.153 0.138 0.137
Ore grade milled - Silver (oz./ton) 0.03 0.03 0.03 0.03
Gold produced (oz.) - underground 36,367 35,192 99,632 87,622
Gold produced (oz.) - surface pit 7,614 8,949 27,248 25,587
Gold produced (oz.) - total 43,981 44,141 126,880 113,209
Cash cost, after by-product credits, per gold ounce (1) $ 686 $ 750 $ 760 $ 858
AISC, after by-product credits, per gold ounce (1) $ 896 $ 1,091 $ 1,004 $ 1,226
Capital additions (in thousands)       $ 8,244         $ 13,775         $ 27,120         $ 38,249  
Nevada Operations                                        
Tons of ore milled 55,899 N/A 55,899 N/A
Mining cost per ton $ 186.12 N/A $ 186.12 N/A
Milling cost per ton $ 70.39 N/A $ 70.39 N/A
Ore grade milled - Gold (oz./ton) 0.288 N/A 0.288 N/A
Silver produced (oz.) 84,145 N/A 84,145 N/A
Gold produced (oz.) 13,789 N/A 13,789 N/A
Cash cost, after by-product credits, per silver ounce (1) $ 1,179 N/A $ 1,179 N/A
AISC, after by-product credits, per silver ounce (1) $ 1,932 N/A $ 1,932 N/A
Capital additions (in thousands)       $ 14,998         N/A         $ 14,998         N/A  
 
(1)     Cash cost, after by-product credits, per ounce and AISC, after by-product credits. per ounce represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements. A reconciliation of cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) to cash cost, after by-product credits can be found in the cash cost 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. The primary metal produced at Casa Berardi is gold, with a by-product credit for the value of silver production.
 

Non-GAAP Measures
(Unaudited)

Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)

The tables below present reconciliations between the most comparable GAAP measure of cost of sales and other direct production costs and depreciation, depletion and amortization to the non-GAAP measures of Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits and AISC, After By-product Credits for our operations at the Greens Creek, Lucky Friday, San Sebastian, Casa Berardi and Nevada Operations units for the three- and nine-month periods ended September 30, 2018 and 2017, and for estimated results for the full year ended December 31, 2018.

Cash Cost, After By-product Credits, per Ounce is an important operating statistic that we utilize to measure each mine's operating performance. AISC, After By-product Credits, per Ounce is an important operating statistic that we utilize as a measure of our mines' net cash flow after costs for exploration, pre-development, reclamation, and sustaining capital. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce also allow us to benchmark the performance of each of our mines versus those of our competitors. As a silver and gold mining company, we also use these statistics on an aggregate basis - aggregating the Greens Creek, Lucky Friday and San Sebastian mines, to compare our performance with that of other primary silver mining companies and aggregating Casa Berardi and Nevada Operations for comparison with other gold mining companies. Similarly, these statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.

Cash Cost, Before By-product Credits and AISC, Before By-product Credits include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. AISC, Before By-product Credits for each mine also includes on-site exploration, reclamation, and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense, reclamation, exploration, and pre-development. By-product credits include revenues earned from all metals other than the primary metal produced at each unit. As depicted in the tables below, by-product credits comprise an essential element of our silver unit cost structure, distinguishing our silver operations due to the polymetallic nature of their orebodies. Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce provide management and investors an indication of operating cash flow, after consideration of the average price, received from production. We also use these measurements for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. Cash Cost, After By-product Credits, per Ounce is a measure developed by precious metals companies (including the Silver Institute) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that our reporting of these non-GAAP measures are the same as those reported by other mining companies.

The Casa Berardi and Nevada Operations sections below report Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce for the production of gold, their primary product, and by-product revenues earned from silver, which is a by-product at Casa Berardi and Nevada Operations. Only costs and ounces produced relating to units with the same primary product are combined to represent Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce. Thus, the gold produced at our Casa Berardi and Nevada Operations units are not included as a by-product credit when calculating Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the total of Greens Creek, Lucky Friday and San Sebastian, our combined silver properties.


In thousands (except per ounce amounts)       Three Months Ended September 30, 2018

Greens

Creek

     

Lucky

Friday(2)

     

San

Sebastian

      Corporate(3)       Total Silver
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 52,163 (1 ) $ 14,325 $ 66,487
Depreciation, depletion and amortization (12,428 ) (1,795 ) (14,223 )
Treatment costs 8,267 134 205 8,606
Change in product inventory (4,480 ) (1,549 ) (6,029 )
Reclamation and other costs (965 ) 103 (458 ) (1,320 )
Exclusion of Lucky Friday costs   (236 )   (236 )

Cash Cost, Before By-product Credits(1)

42,557 10,728 53,285
Reclamation and other costs 849 105 954
Exploration 1,771 1,982 473 4,226
Sustaining capital 11,029 486 704 12,219
General and administrative       10,327 10,327  

AISC, Before By-product Credits(1)

56,206 13,301 81,011
By-product credits:
Zinc (20,674 ) (20,674 )
Gold (12,229 ) (4,450 ) (16,679 )
Lead (6,041 )     (6,041 )
Total By-product credits (38,944 )   (4,450 ) (43,394 )
Cash Cost, After By-product Credits $ 3,613   $   $ 6,278   $ 9,891  
AISC, After By-product Credits $ 17,262   $   $ 8,851   $ 37,617  
Divided by ounces produced 1,876 522 2,398
Cash Cost, Before By-product Credits, per Ounce $ 22.67 N/A $ 20.55 $ 22.22
By-product credits per ounce (20.75 ) N/A (8.53 ) (18.10 )
Cash Cost, After By-product Credits, per Ounce $ 1.92   N/A $ 12.02   $ 4.12  
AISC, Before By-product Credits, per Ounce $ 29.95 N/A $ 25.48 $ 33.78
By-product credits per ounce (20.75 ) N/A (8.53 ) (18.10 )
AISC, After By-product Credits, per Ounce $ 9.20   N/A $ 16.95   $ 15.68  
 
 

In thousands (except per ounce amounts)       Three Months Ended September 30, 2018
Casa Berardi      

Nevada Ops(4)

      Total Gold
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 51,267 $ 19,319 $ 70,586
Depreciation, depletion and amortization (20,054 ) (9,187 ) (29,241 )
Treatment costs 535 42 577
Change in product inventory (1,303 ) 7,311 6,008
Reclamation and other costs (140 )   (140 )

Cash Cost, Before By-product Credits(1)

30,305 17,485 47,790
Reclamation and other costs 138 138
Exploration 854 3,322 4,176
Sustaining capital 8,244 7,061 15,305
General and administrative      

AISC, Before By-product Credits(1)

39,541 27,868 67,409
By-product credits:
Silver (142 ) (1,232 ) (1,374 )
Total By-product credits (142 ) (1,232 ) (1,374 )
Cash Cost, After By-product Credits $ 30,163   $ 16,253   $ 46,416  
AISC, After By-product Credits $ 39,399   $ 26,636   $ 66,035  
Divided by ounces produced 44 14 58
Cash Cost, Before By-product Credits, per Ounce $ 689 $ 1,268 $ 827
By-product credits per ounce (3 ) (89 ) (24 )
Cash Cost, After By-product Credits, per Ounce $ 686   $ 1,179   $ 803  
AISC, Before By-product Credits, per Ounce $ 899 $ 2,021 $ 1,167
By-product credits per ounce (3 ) (89 ) (24 )
AISC, After By-product Credits, per Ounce $ 896   $ 1,932   $ 1,143  
 
 

In thousands (except per ounce amounts)       Three Months Ended September 30, 2018
Total Silver       Total Gold       Total
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 66,487 $ 70,586 $ 137,073
Depreciation, depletion and amortization (14,223 ) (29,241 ) (43,464 )
Treatment costs 8,606 577 9,183
Change in product inventory (6,029 ) 6,008 (21 )
Reclamation and other costs (1,320 ) (140 ) (1,460 )
Exclusion of Lucky Friday costs (236 )   (236 )

Cash Cost, Before By-product Credits(1)

53,285 47,790 101,075
Reclamation and other costs 954 138 1,092
Exploration 4,226 4,176 8,402
Sustaining capital 12,219 15,305 27,524
General and administrative 10,327     10,327  

AISC, Before By-product Credits(1)

81,011 67,409 148,420
By-product credits:
Zinc (20,674 ) (20,674 )
Gold (16,679 ) (16,679 )
Lead (6,041 ) (6,041 )
Silver   (1,374 ) (1,374 )
Total By-product credits (43,394 ) (1,374 ) (44,768 )
Cash Cost, After By-product Credits $ 9,891   $ 46,416   $ 56,307  
AISC, After By-product Credits $ 37,617   $ 66,035   $ 103,652  
Divided by ounces produced 2,398 58
Cash Cost, Before By-product Credits, per Ounce $ 22.22 $ 827
By-product credits per ounce (18.10 ) (24 )
Cash Cost, After By-product Credits, per Ounce $ 4.12   $ 803  
AISC, Before By-product Credits, per Ounce $ 33.78 $ 1,167
By-product credits per ounce (18.10 ) (24 )
AISC, After By-product Credits, per Ounce $ 15.68   $ 1,143  
 
 

In thousands (except per ounce amounts)       Nine Months Ended September 30, 2018

Greens

Creek

     

Lucky

Friday(2)

     

San

Sebastian

      Corporate(3)       Total Silver
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 141,763 $ 5,844 $ 31,177 $ 178,784
Depreciation, depletion and amortization (34,880 ) (803 ) (3,586 ) (39,269 )
Treatment costs 29,136 761 627 30,524
Change in product inventory 995 (2,182 ) 1,858 671
Reclamation and other costs (2,323 ) (1,374 ) (3,697 )
Exclusion of Lucky Friday costs   (3,620 )   (3,620 )

Cash Cost, Before By-product Credits(1)

134,691 28,702 163,393
Reclamation and other costs 2,548 314 2,862
Exploration 2,909 6,628 1,351 10,888
Sustaining capital 34,694 1,119 1,338 37,151
General and administrative         27,849 27,849  

AISC, Before By-product Credits(1)

174,842 36,763 242,143
By-product credits:
Zinc (80,308 ) (80,308 )
Gold (43,237 ) (15,505 ) (58,742 )
Lead (24,037 )     (24,037 )
Total By-product credits (147,582 )   (15,505 ) (163,087 )
Cash Cost, After By-product Credits $ (12,891 ) $   $ 13,197   $ 306  
AISC, After By-product Credits $ 27,260   $   $ 21,258   $ 79,056  
Divided by ounces produced 5,789 1,594 7,383
Cash Cost, Before By-product Credits, per Ounce $ 23.27 N/A $ 18.01 $ 22.14
By-product credits per ounce (25.49 ) N/A   (9.73 ) (22.09 )
Cash Cost, After By-product Credits, per Ounce $ (2.22 ) N/A   $ 8.28   $ 0.05  
AISC, Before By-product Credits, per Ounce $ 30.20 N/A $ 23.07 $ 32.80
By-product credits per ounce (25.49 ) N/A   (9.73 ) (22.09 )
AISC, After By-product Credits, per Ounce $ 4.71   N/A   $ 13.34   $ 10.71  
 
 

In thousands (except per ounce amounts)       Nine Months Ended September 30, 2018
Casa Berardi      

Nevada Ops(4)

      Total Gold
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 152,150 $ 19,319 $ 171,469
Depreciation, depletion and amortization (54,879 ) (9,187 ) (64,066 )
Treatment costs 1,628 42 1,670
Change in product inventory (1,482 ) 7,311 5,829
Reclamation and other costs (421 )   (421 )

Cash Cost, Before By-product Credits(1)

96,996 17,485 114,481
Reclamation and other costs 421 421
Exploration 3,374 3,322 6,696
Sustaining capital 27,120 7,061 34,181
General and administrative      

AISC, Before By-product Credits(1)

127,911 27,868 155,779
By-product credits:
Silver (491 ) (1,232 ) (1,723 )
Total By-product credits (491 ) (1,232 ) (1,723 )
Cash Cost, After By-product Credits $ 96,505   $ 16,253   $ 112,758  
AISC, After By-product Credits $ 127,420   $ 26,636   $ 154,056  
Divided by ounces produced 127 14 141
Cash Cost, Before By-product Credits, per Ounce $ 764 $ 1,268 $ 814
By-product credits per ounce (4 ) (89 ) (12 )
Cash Cost, After By-product Credits, per Ounce $ 760   $ 1,179   $ 802  
AISC, Before By-product Credits, per Ounce $ 1,008 $ 2,021 $ 1,107
By-product credits per ounce (4 ) (89 ) (12 )
AISC, After By-product Credits, per Ounce $ 1,004   $ 1,932   $ 1,095  
 
 

In thousands (except per ounce amounts)       Nine Months Ended September 30, 2018
Total Silver       Total Gold       Total
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 178,784 $ 171,469 $ 350,253
Depreciation, depletion and amortization (39,269 ) (64,066 ) (103,335 )
Treatment costs 30,524 1,670 32,194
Change in product inventory 671 5,829 6,500
Reclamation and other costs (3,697 ) (421 ) (4,118 )
Exclusion of Lucky Friday costs (3,620 )   (3,620 )

Cash Cost, Before By-product Credits(1)

163,393 114,481 277,874
Reclamation and other costs 2,862 421 3,283
Exploration 10,888 6,696 17,584
Sustaining capital 37,151 34,181 71,332
General and administrative 27,849     27,849  

AISC, Before By-product Credits(1)

242,143 155,779 397,922
By-product credits:
Zinc (80,308 ) (80,308 )
Gold (58,742 ) (58,742 )
Lead (24,037 ) (24,037 )
Silver   (1,723 ) (1,723 )

Total By-product credits

(163,087 ) (1,723 ) (164,810 )
Cash Cost, After By-product Credits $ 306   $ 112,758   $ 113,064  
AISC, After By-product Credits $ 79,056   $ 154,056   $ 233,112  
Divided by ounces produced 7,383 141
Cash Cost, Before By-product Credits, per Ounce $ 22.14 $ 814
By-product credits per ounce (22.09 ) (12 )
Cash Cost, After By-product Credits, per Ounce $ 0.05   $ 802  
AISC, Before By-product Credits, per Ounce $ 32.80 $ 1,107
By-product credits per ounce (22.09 ) (12 )
AISC, After By-product Credits, per Ounce $ 10.71   $ 1,095  
 
 

In thousands (except per ounce amounts)       Three Months Ended September 30, 2017

Greens

Creek

     

Lucky

Friday(2)

     

San

Sebastian

      Corporate(3)       Total Silver
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 41,927 $ $ 6,680 $ 48,607
Depreciation, depletion and amortization (12,607 ) (641 ) (13,248 )
Treatment costs 12,067 440 422 12,929
Change in product inventory 7,675 1,960 (627 ) 9,008
Reclamation and other costs (394 ) 18   (494 ) (870 )

Cash Cost, Before By-product Credits(1)

48,668 2,418 5,340 56,426
Reclamation and other costs 666 38 117 821
Exploration 1,944 (2 ) 1,495 477 3,914
Sustaining capital 8,210 119 402 1,105 9,836
General and administrative       9,529 9,529  

AISC, Before By-product Credits(1)

59,488 2,573 7,354 80,526
By-product credits:
Zinc (27,046 ) (293 ) (27,339 )
Gold (13,907 ) (8,088 ) (21,995 )
Lead (8,067 ) (1,102 )   (9,169 )
Total By-product credits (49,020 ) (1,395 ) (8,088 ) (58,503 )
Cash Cost, After By-product Credits $ (352 ) $ 1,023   $ (2,748 ) $ (2,077 )
AISC, After By-product Credits $ 10,468   $ 1,178   $ (734 ) $ 22,023  
Divided by ounces produced 2,344 88 880 3,312
Cash Cost, Before By-product Credits, per Ounce $ 20.75 $ 27.44 $ 6.07 $ 17.03
By-product credits per ounce (20.90 ) (15.84 ) (9.19 ) (17.66 )
Cash Cost, After By-product Credits, per Ounce $ (0.15 ) $ 11.60   $ (3.12 ) $ (0.63 )
AISC, Before By-product Credits, per Ounce $ 25.37 $ 29.21 $ 8.36 $ 24.31
By-product credits per ounce (20.90 ) (15.84 ) (9.19 ) (17.66 )
AISC, After By-product Credits, per Ounce $ 4.47   $ 13.37   $ (0.83 ) $ 6.65  
 
 

In thousands (except per ounce amounts)       Three Months Ended September 30, 2017
Casa Berardi      

Nevada Ops(4)

      Total Gold
Cost of sales and other direct production costs and depreciation, depletion and amortization $ 49,269 N/A $ 49,269
Depreciation, depletion and amortization (16,270 ) N/A (16,270 )
Treatment costs 682 N/A 682
Change in product inventory (288 ) N/A (288 )
Reclamation and other costs (124 ) N/A   (124 )

Cash Cost, Before By-product Credits(1)

33,269 33,269
Reclamation and other costs 123 N/A 123
Exploration 1,161 N/A 1,161
Sustaining capital 13,775 N/A 13,775
General and administrative   N/A    

AISC, Before By-product Credits(1)

48,328 48,328
By-product credits:
Silver (161 ) N/A   (161 )
Total By-product credits (161 ) N/A   (161 )
Cash Cost, After By-product Credits $