Hecla Reports 183% Increase in Third Quarter 2011 Net Income
08.11.2011 | Business Wire
THIRD QUARTER 2011 HIGHLIGHTS FINANCIAL OVERVIEW September 30, September 30, Metals Prices September 30, September 30, Base Metals Forward Sales Contracts OPERATIONS OVERVIEW September 30, September 30, Greens Creek Mine - Alaska Lucky Friday Mine - Idaho Lucky Friday #4 Shaft Construction and Optimization Study NEW APPOINTMENTS CONFERENCE CALL AND WEBCAST ABOUT HECLA Cautionary Statements Cautionary Statements to Investors on Reserves and Resources September 30, September 30, September 30, September 30, September 30, September 30, 200,961 580,211 $ 49.86 $ 48.80 $ 33.58 $ 31.11 9.64 10.85 0.12 0.12 3.7 3.6 10.0 9.9 1,350,609 4,507,727 14,217 43,073 5,799 16,007 17,318 49.913 $ (2.98 ) $ (2.04 ) $ 11,921 $ 29,106 84,531 249,034 $ 58.54 $ 59.39 $ 16.26 $ 16.20 11.74 10.68 6.84 6.46 2.74 2.81 936,652 2,484,725 5,427 14,949 1,999 6,058 $ 5.94 $ $ 16,524 $ 45,026
Hecla Mining Company ('Hecla?) (NYSE:HL)
today announced third quarter net income of $55.8 million, or $0.20 per
basic share, and earnings after adjustments applicable to common
shareholders of $35.4 million or $0.13 per basic share.1
Third quarter silver production was 2.3 million ounces at a cash cost of
$0.67 per ounce, net of by-products.2
Sales of $120.5 million, a 4% increase over the same period in 2010
Net income of $55.8 million, or $0.20 per basic share
Earnings after adjustments of $35.4 million, or $0.13 per basic share1
Operating cash flow of $60.7 million, a 49% increase over the same
period in 2010
Silver production of 2.3 million ounces at a total cash cost of $0.67
per ounce, net of by-products2
Received final court approval settling the Coeur d'Alene Basin
environmental litigation
Introduced a new quarterly silver price-linked common stock dividend
policy and declared the first dividend under the policy of $0.02 per
common stock based on an average realized silver price of $37.02 per
ounce during the quarter
Increased the capacity under the revolving credit agreement to $100
million
Cash and cash equivalents of $414 million at September ?30, ?20113
'Hecla's financial position and asset base is the strongest it's been in
its history after a unique third quarter generating the highest net
income and cash position, establishing a dividend, approving the #4
Shaft, initiating work to reopen three mines, and settling the Basin
litigation,' said Hecla's President and Chief Executive Officer,
Phillips S. Baker, Jr. 'From this quarter, we are poised to grow
production 50% over the next five years.'
In addition, Hecla issued a release yesterday providing a detailed
update on the pre-development initiatives and exploration efforts during
the third quarter, and a subsequent release was issued today announcing
the first quarterly silver price-linked common stock dividend under
Hecla's new dividend policy.
?
?
?
?
?
(1)
?
Earnings after adjustments applicable to common shareholders
represents a non-U.S. Generally Accepted Accounting Principles
(GAAP) measurement. A reconciliation of net income applicable to
common shareholders (GAAP) to earnings after adjustments can be
found at the end of the release.
?
(2)
Total cash cost per ounce of silver represents a non-U.S. Generally
Accepted Accounting Principles (GAAP) measurement. A reconciliation
of total cash cost to cost of sales and other direct production
costs and depreciation, depletion and amortization (GAAP) can be
found at the end of the release.
?
(3)
Subsequent to September 30, 2011, Hecla Limited made payments
totaling approximately $168 million for the Coeur d'Alene Basin
environmental settlement.
?
?
Hecla reported increased third quarter revenues and cash flow from
operating activities as a result of higher metals prices. Net income
applicable to common shareholders for the third quarter was impacted by
the following four items:
A $40.4 million gain on base metal derivative contracts for the third
quarter, compared to a $13.2 million loss for the same period in 2010.
A summary of the quantities of base metals committed at September 30,
2011 is included on page 3 of this release.
A $27.3 million tax provision compared to $8.1 million in the same
period in 2010, as a result of higher pre-tax income in 2011. Our
effective income tax rate to date is approximately 33% in 2011
compared to 29% in the same period in 2010.
A $4.9 million provision for closed operations and environmental
matters primarily for reclamation work at the Grouse Creek site in
Idaho.
$3.6 million loss related to provisional metals settlements.
?
Third Quarter Ended
?
?
Nine Months Ended HIGHLIGHTS
?
2011
?
September 30,
2010
?
?
2011
?
?
September 30,
2010
FINANCIAL DATA
?
?
?
?
?
?
?
?
?
?
Sales
$ 120,543
?
$
115,847
$ 374,767
?
?
$
284,353
Gross profit
$ 67,805
$
54,524
$ 215,169
$
120,126
Income applicable to common shareholders
$ 55,783
$
16,383
$ 132,181
$
48,494
Basic income per common share
$ 0.20
$
0.06
$ 0.47
$
0.19
Diluted income per common share
$ 0.19
$
0.06
$ 0.45
$
0.18
Net income
$ 55,921
$
19,791
$ 132,595
$
58,719
Cash provided by operating activities
$ 60,721
$
40,682
$ 187,938
$
115,473
?
Capital expenditures (including non-cash capital lease additions) at the
operations totaled $28.4 million and $74.1 million, respectively, for
the third quarter and nine-month period ended September ?30, ?2011. Lucky
Friday's expenditures for the third quarter and first nine months of
2011 were $16.5 million and $45.0 million, respectively, of which the
majority was spent on the Lucky Friday #4 Shaft. Greens Creek's
expenditures in the third quarter and first nine months of 2011 were
$11.9 million and $29.1 million, respectively. Capital expenditures for
2011 are expected to be $110.0 million primarily due to the #4 Shaft
construction and an increase in scope of work at Greens Creek.
Pre-development expenditures totaled $1.8 million in the third quarter
2011. This is the first quarter Hecla has incurred expenditures under
the pre-development initiatives. Pre-development expenditures in the
fourth quarter are expected to be approximately $4.5 million for
infrastructure at the Star mine in the Silver Valley, and San Juan
Silver JV property in Creede Colorado.
Exploration expenditures for the third quarter and nine-month period
ended September ?30, ?2011 were $9.9 million and $19.0 million,
respectively. Exploration expenditures for 2011 are expected to be
approximately $27.0 million.
Realized metals prices continued to increase significantly in 2011
compared to 2010. Realized silver prices in the third quarter of 2011
exceeded those of the same period last year by 73%, while for the first
nine months of the year, realized prices were 89% higher than in the
same period in 2010.
Third quarter 2011 realized metals prices were lower than those in the
second quarter resulting in negative adjustments to provisional
settlements of $9.6 million compared to net positive price adjustments
to provisional settlements of $11.8 million in the same period in 2010.
The negative adjustment to provisional settlements is due largely to a
decrease 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 were
largely offset by net gains on forward contracts of $6.0 million for
those metals. In addition, results were impacted by a brief delay in
concentrate shipments from Greens Creek which reduced sales by $4.6
million and income from operations by $1.4 million.
?
Third Quarter Ended
?
?
Nine Months Ended
?
?
2011
?
September 30,
2010
?
?
2011
?
September 30,
2010
AVERAGE METAL PRICES
?
?
?
?
?
?
?
?
?
Silver -
?
London PM Fix ($/oz)
$ 38.79
?
$
18.96
$ 36.21
?
$
18.07
Realized price per ounce
$ 37.02
$
21.45
$ 36.45
$
19.29
Gold -
London PM Fix ($/oz)
$ 1,700
$
1,227
$ 1,530
$
1,177
Realized price per ounce
$ 1,799
$
1,284
$ 1,578
$
1,219
Lead -
LME Cash ($/pound)
$ 1.12
$
0.92
$ 1.15
$
0.94
Realized price per pound
$ 1.01
$
0.96
$ 1.11
$
0.94
Zinc -
LME Cash ($/pound)
$ 1.01
$
0.92
$ 1.04
$
0.96
Realized price per pound
$ 1.04
$
0.93
$ 1.05
$
0.93
?
The following table summarizes the quantities of base metals committed
under financially settled forward sales contracts at September ?30, ?2011:
?
Metric Tonnes Under Contract
?
?
?
Average Price per Pound
?
?
Zinc
?
Lead
?
?
?
Zinc
?
Lead
Contracts on provisional sales
?
?
2011 settlements
5,125
2,800
$
1.03
$
1.00
?
Contracts on forecasted sales
2011 settlements
2,300
2,275
$
0.99
$
1.05
2012 settlements
26,650
18,000
$
1.11
$
1.11
2013 settlements
8,275
11,150
$
1.14
$
1.17
?
Third quarter silver cash cost, net of by-product credits, was $0.67 per
ounce, compared to negative $1.01 per ounce in the same period in 2010.
Based on our current 2011 production and cost estimates, and assuming
recent metals prices remain for the fourth quarter of 2011, total cash
costs, net of by-product credits, are expected to be approximately $1.00
per ounce of silver for the year 2011. The following table provides the
production summary on a consolidated basis which includes Greens Creek
and Lucky Friday for the third quarter and nine months ended
September ?30, ?2011 and 2010:
?
Third Quarter Ended
?
?
Nine Months Ended
2011
?
September 30,
2010
2011
?
September 30,
2010
PRODUCTION SUMMARY
Silver -
?
Ounces produced
2,287,262
2,712,848
6,992,453
7,825,246
Payable ounces sold
1,954,120
2,877,284
6,196,269
6,946,554
Gold -
Ounces produced
14,217
17,985
43,073
52,727
Payable ounces sold
10,558
16,646
33,892
42,921
Lead -
Tons produced
11,226
12,453
30,956
36,217
Payable tons sold
9,218
12,168
26,004
30,951
Zinc -
Tons produced
19,316
21,176
55,970
65,011
Payable tons sold
11,804
15,410
37,987
48,366
Total cash cost per ounce of silver produced (1)
$ 0.67
$
(1.01
)
$ 0.75
$
(1.92
)
?
?
?
?
?
?
(1)
?
Total cash cost per ounce of silver represents a non-U.S. Generally
Accepted Accounting Principles (GAAP) measurement. A reconciliation
of total cash costs to cost of sales and other direct production
costs and depreciation, depletion and amortization (GAAP) can be
found at the end of this release.
?
?
Silver production at Greens Creek was 1.4 million ounces in the third
quarter of 2011 and 4.5 million ounces in the first nine months of 2011,
compared to 1.9 million ounces and 5.3 million ounces, respectively, in
the same periods in 2010. The decrease in silver production
year-over-year is due to lower silver ore grade and reduced ore volume.
As expected, the lower silver grades in the third quarter are due to
differences in the sequencing of production according to the mine plan.
Mining and milling costs per ton were up by 16% and 37%, respectively,
for the third quarter and 16% and 35%, respectively, for the first nine
months of 2011. The increase in both periods was driven primarily by
lower ore volume and higher electric power costs. Electric power costs
in 2011 have been higher than in 2010 since there has been reduced
availability of less expensive hydroelectric power due to lower amounts
of precipitation in Southeastern Alaska. Hecla benefited from increased
hydroelectric power availability in September 2011 due to higher amounts
of precipitation, and anticipate its sustained use for the remainder of
the year.
Total cash cost per ounce of silver produced at Greens Creek was
negative $2.98 and negative $2.04 net of by-products, for the third
quarter and first nine months of 2011, respectively, compared to
negative $3.05 and negative $4.61 for the same respective periods in
2010. The increase in total cash cost per ounce quarter-over-quarter is
due to higher production costs, treatment costs, and mine license tax by
$6.22, $5.98, and $0.49 per ounce, respectively. The increase in
production costs is mainly attributable to lower silver ounces produced,
and to a lesser extent, higher power costs due to increased reliance on
more expensive diesel-generated power. This is partially offset by
higher by-product credits of $12.62 per ounce resulting from higher
average market zinc, lead, and gold prices. The higher mine license tax
and treatment costs are the result of higher metals prices.
Silver production at Lucky Friday was 0.9 million ounces in the third
quarter of 2011 and 2.5 million ounces in the first nine months of 2011,
which is substantially equal to the silver production for the respective
periods in 2010.
Mining and milling costs per ton were up by 7% and 11%, respectively,
for the third quarter and up by 9% and 10%, respectively, for the first
nine months of 2011, driven primarily by increased cost of fuel,
consumable underground materials, reagents, electric power, and
maintenance supplies.
Total cash cost per ounce of silver produced at Lucky Friday was $5.94
and $5.82, net of by-product credits, for the third quarter and first
nine months of 2011, respectively, compared to $3.38 and $3.67, for the
same periods in 2010. The increase in total cash cost per ounce
quarter-over-quarter was primarily due to higher employee profit
sharing, higher treatment costs, and lower lead and zinc by-product
credits by $1.82, $0.72, and $1.06 per ounce, respectively, which were
partially offset by lower production costs of $1.12 per ounce. Higher
profit sharing and treatment costs were due to higher metals prices and
lower by-product credits as the result of lower lead and zinc production.
Construction at the Lucky Friday #4 Shaft continued to advance in the
third quarter. With set-up activities for the #4 Shaft largely complete,
work will now be primarily focused on shaft sinking activities until
project completion. The total project is now 41% complete, and 80% of
major procurements have been ordered or installed. The #4 Shaft
construction remains on time and on budget with an expected completion
by year-end 2014.
Capital expenditures for the #4 Shaft in the third quarter and year to
date were $9.9 million and $32.3 million, respectively, for a total of
approximately $81 million invested to date on the project. Total project
capital is expected to be approximately $200 ?million.
In addition, an optimization study is underway at the Lucky Friday to
evaluate throughput increases at the mine. Production is limited by mill
capacity; therefore, this study will determine the mine's capacity and
the economics of increasing mill capacity. This study is expected to be
complete by year-end.
Hecla welcomed Mr. Larry Radford as the new Vice President of Operations
on October 19, 2011. In this role, Mr. Radford will oversee Hecla's
operations, development projects, and pre-development initiatives and
will be based in the Coeur d'Alene corporate office in Idaho. Mr.
Radford is a Mining Engineer with about 30 years of experience in the
mining industry, providing operational and technical support to
large-scale operations in the United States, Chile, Brazil, and
Australia.
A conference call and webcast will be held Tuesday, November 8, at 1:00
p.m. Eastern Time to discuss these results. You may join the conference
call by dialing toll-free 1-866-543-6407 or 1-617-213-8898
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.
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.
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, environmental and litigation
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 of updating forward-looking
statements other than as may be required by law.
The United States Securities and Exchange Commission permits mining
companies, in their filings with the SEC, to disclose only those mineral
deposits that a company can economically and legally extract or produce.
We use certain terms on this release, such as 'resource,? 'other
resources,? and 'mineralized materials? that the SEC guidelines strictly
prohibit us from including in our filings with the SEC. U.S. investors
are urged to consider closely the disclosure in our Form 10-K and Form
10-Q. You can review and obtain copies of these filings from the SEC's
website at www.sec.gov.
For further information, please contact:
M?lanie Hennessey
?
?
?
Direct Main: 800-HECLA91 (800-432-5291)
Vice President - Investor Relations
Email: hmc-info@hecla-mining.com
Direct: 604-694-7729
Website: www.hecla-mining.com
?
Hecla Canada Ltd.
Hecla Mining Company
400 - 580 Hornby Street
6500 N. Mineral Drive, Suite 200
Vancouver, British Columbia
Coeur d'Alene, Idaho 83815
V6C 3B6 Canada
?
?
HECLA MINING COMPANY
Consolidated Statements of Income
(dollars and shares in thousands, except per share amounts -
unaudited)
?
?
Third Quarter Ended
Nine Months Ended
2011
?
September 30,
2010
2011
?
September 30,
2010
Sales of products
$ 120,543
?
$
115,847
?
$ 374,767
?
$
284,353
?
Cost of sales and other direct production costs
41,639
46,357
125,033
118,172
Depreciation, depletion and amortization
11,099
?
14,966
?
34,565
?
46,055
?
52,738
?
61,323
?
159,598
?
164,227
?
Gross profit
67,805
?
54,524
?
215,169
?
120,126
?
?
Other operating expenses:
General and administrative
5,559
3,684
14,808
12,461
Exploration
9,872
6,917
19,012
16,166
Pre-development
1,752
?
1,752
?
Other operating expense
1,612
1,460
5,699
4,025
Provision for closed operations and reclamation
5,521
?
962
?
7,883
?
5,727
?
24,316
?
13,023
?
49,154
?
38,379
?
Income from operations
43,489
?
41,501
?
166,015
?
81,747
?
Other income (expense):
Gain (loss) on sale or impairment of investments
?
?
611
(151
)
Gain (loss) on derivative contracts
40,382
(13,195
)
38,907
(11,196
)
Interest and other income
(214 )
70
(91 )
137
Interest expense
(411 )
(505
)
(2,384 )
(1,712
)
39,757
?
(13,630
)
37,043
?
(12,922
)
Income before income taxes
83,246
27,871
203,058
68,825
Income tax provision
(27,325 )
(8,080
)
(70,463 )
(10,106
)
Net income
55,921
19,791
132,595
58,719
Preferred stock dividends
(138 )
(3,408
)
(414 )
(10,225
)
Income applicable to common shareholders
$ 55,783
?
$
16,383
?
$ 132,181
?
$
48,494
?
Basic income per common share after preferred dividends
$ 0.20
?
$
0.06
?
$ 0.47
?
$
0.19
?
Diluted income per common share after preferred dividends
$ 0.19
?
$
0.06
?
$ 0.45
?
$
0.18
?
Weighted average number of common shares outstanding ? basic
279,541
?
256,095
?
279,067
?
249,039
?
Weighted average number of common shares outstanding ? diluted
295,000
?
270,508
?
295,739
?
266,145
?
?
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and share in thousands - unaudited)
?
?
?
2011
December 31,
2010
ASSETS
?
?
?
?
?
Current assets:
Cash and cash equivalents
$ 413,743
$
283,606
Investments
?
1,474
Accounts receivable
29,095
36,840
Inventories
25,739
19,131
Current deferred income taxes
54,774
87,287
Other current assets
19,461
?
3,683
?
Total current assets
542,812
432,021
Non-current investments
3,305
1,194
Non-current restricted cash and investments
926
10,314
Properties, plants, equipment and mineral interests, net
872,860
833,288
Non-current deferred income taxes
71,795
100,072
Other non-current assets and deferred charges
24,022
?
5,604
?
Total assets $ 1,515,720
?
$
1,382,493
?
?
?
?
?
?
?
LIABILITIES
?
?
?
?
?
Current liabilities:
Accounts payable and accrued liabilities
$ 51,630
$
31,725
Accrued payroll and related benefits
11,369
10,789
Accrued taxes
9,766
16,042
Current portion of capital leases
3,514
2,481
Current portion of accrued reclamation and closure costs
178,415
175,484
Current derivative contract liabilities
?
?
20,016
?
Total current liabilities
254,694
256,537
Capital leases
4,070
3,792
Accrued reclamation and closure costs
141,923
143,313
Other noncurrent liabilities
15,990
?
16,598
?
Total liabilities 416,677
?
420,240
?
?
?
?
?
?
?
SHAREHOLDERS′ EQUITY
?
?
?
?
?
Preferred stock
39
543
Common stock
70,003
64,704
Capital surplus
1,181,559
1,179,751
Accumulated deficit
(133,398 )
(265,577
)
Accumulated other comprehensive loss
(16,640 )
(15,117
)
Treasury stock
(2,520 )
(2,051
)
Total shareholders′ equity 1,099,043
?
962,253
?
Total liabilities and shareholders′ equity $ 1,515,720
?
$
1,382,493
?
Common shares outstanding
279,621
?
258,486
?
?
HECLA MINING COMPANY
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
?
Nine Months Ended
?
?
2011
?
September 30,
2010
OPERATING ACTIVITIES
?
?
?
?
Net income
$ 132,595
?
$
58,719
Non-cash elements included in net income:
Depreciation, depletion and amortization
34,769
46,190
Gain on sale of investments
(611 )
(588
)
Loss on impairment of investments
?
739
Provision for reclamation and closure costs
832
2,784
Stock compensation
1,497
3,336
Deferred income taxes
60,790
2,070
Amortization of loan origination fees
498
468
(Gain) loss on derivative contracts
(56,512 )
11,586
Other non-cash charges, net
932
690
Change in assets and liabilities:
Accounts receivable
7,745
(22,385
)
Inventories
(6,608 )
512
Other current and non-current assets
373
1,026
Accounts payable and accrued liabilities
17,233
16,537
Accrued payroll and related benefits
581
(5,207
)
Accrued taxes
(6,276 )
4,367
Accrued reclamation and closure costs and other non-current
liabilities
100
?
(5,371
)
Cash provided by operating activities 187,938
?
115,473
?
?
?
?
?
?
INVESTING ACTIVITIES
?
?
?
?
Additions to properties, plants, equipment and mineral interests
(64,381 )
(48,725
)
Proceeds from sale of investments
1,366
1,138
Proceeds from disposition of properties, plants and equipment
113
?
Purchases of investments
(3,200 )
?
Changes in restricted cash and investment balances
9,388
?
1,476
?
Net cash used in investing activities (56,714 ) (46,111 )
?
?
?
?
?
FINANCING ACTIVITIES
?
?
?
?
Proceeds from exercise of stock options and warrants
5,108
45,562
Acquisition of treasury shares
(469 )
(693
)
Dividends paid to preferred shareholders
(3,684 )
(1,105
)
Repayments of capital leases
(2,042 )
(1,227
)
Net cash (used) provided by financing activities (1,087 ) 42,537
?
Net increase in cash and cash equivalents
130,137
111,899
Cash and cash equivalents at beginning of period
283,606
?
104,678
?
Cash and cash equivalents at end of period
$ 413,743
?
$
216,577
?
?
HECLA MINING COMPANY
Production Data
?
?
Third Quarter Ended
Nine Months Ended
?
?
2011
?
September 30,
2010
?
2011
?
September 30,
2010
GREENS CREEK UNIT
?
?
?
?
?
?
?
?
Tons of ore milled
?
203,627
?
606,723
Mining cost per ton
$
42.90
$
42.07
Milling cost per ton
$
24.57
$
22.98
Ore grade milled - Silver (oz./ton)
12.76
12.03
Ore grade milled - Gold (oz./ton)
0.14
0.13
Ore grade milled - Lead (%)
4.3
4.2
Ore grade milled - Zinc (%)
10.4
10.9
Silver produced (oz.)
1,852,250
5,285,184
Gold produced (oz.)
17,985
52,727
Lead produced (tons)
6,738
19,953
Zinc produced (tons)
18,777
57,938
Total cash cost per ounce of silver produced (1)
$
(3.05
)
$
(4.61
)
Capital additions (in thousands)
?
?
?
$
5,174
?
?
?
?
$
10,925
?
LUCKY FRIDAY UNIT
?
?
?
?
?
?
?
?
Tons of ore processed
89,414
260,883
Mining cost per ton
$
54.62
$
54.48
Milling cost per ton
$
14.63
$
14.73
Ore grade milled - Silver (oz./ton)
10.26
10.42
Ore grade milled - Lead (%)
6.8
6.68
Ore grade milled - Zinc (%)
3.04
3.09
Silver produced (oz.)
860,598
2,540,062
Lead produced (tons)
5,716
16,264
Zinc produced (tons)
2,400
7,073
Total cash cost per ounce of silver produced (1)
$
3.38
5.82
$
3.67
Capital additions (in thousands)
$
18,001
$
38,530
?
?
?
?
?
?
(1)
?
Total cash costs 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.
?
?
HECLA MINING COMPANY
Reconciliation of Cash Costs per Ounce to Generally Accepted
Accounting Principles (GAAP)(1)
(dollars and ounces in thousands, except per ounce - unaudited)
?
?
?
Three Months Ended
September 30,
?
Nine Months Ended
September 30,
?
?
2011
?
?
2010
?
?
2011
?
?
2010
RECONCILIATION TO GAAP, ALL OPERATIONS
?
?
?
?
?
?
?
?
?
?
?
Total cash costs
$ 1,533
?
?
$
(2,741
)
$ 5,257
?
?
$
(15,058
)
Divided by ounces produced
2,288
?
2,713
?
6,993
?
7,825
?
Total cash cost per ounce produced
$ 0.67
?
$
(1.01
)
$ 0.75
?
$
(1.92
)
Reconciliation to GAAP:
Total cash costs
$ 1,533
$
(2,741
)
$ 5,257
$
(15,058
)
Depreciation, depletion and amortization
11,099
14,966
34,565
46,055
Treatment costs
(26,078 )
(22,217
)
(76,261 )
(68,411
)
By-product credits
69,400
66,436
200,842
199,897
Change in product inventory
(3,010 )
4,215
(5,641 )
1,357
Reclamation and other costs
(206 )
664
?
836
?
387
?
Cost of sales and other direct production costs and depreciation,
depletion and amortization (GAAP)
?
$ 52,738
?
?
?
$
61,323
?
?
?
$ 159,598
?
?
?
$
164,227
?
GREENS CREEK UNIT
?
?
?
?
?
?
?
?
?
?
?
Total cash costs
$ (4,029 )
$
(5,657
)
$ (9,216 )
$
(24,368
)
Divided by ounces produced
1,351
?
1,852
?
4,508
?
5,285
?
Total cash cost per ounce produced
$ (2.98 )
$
(3.05
)
$ (2.04 )
$
(4.61
)
Reconciliation to GAAP:
Total cash costs
$ (4,029 )
$
(5,657
)
$ (9,216 )
$
(24,368
)
Depreciation, depletion and amortization
9,592
12,952
29,981
40,140
Treatment costs
(20,187 )
(17,434
)
(59,522 )
(55,044
)
By-product credits
55,522
52,772
159,586
161,548
Change in product inventory
(3,346 )
3,867
(5,686 )
1,437
Reclamation and other costs
(463 )
687
?
(826 )
349
?
Cost of sales and other direct production costs and depreciation,
depletion and amortization (GAAP)
?
$ 37,089
?
?
?
$
47,187
?
?
?
$ 114,317
?
?
?
$
124,062
?
LUCKY FRIDAY UNIT
?
?
Total cash costs
$ 5,562
$
2,916
$ 14,473
$
9,310
Divided by silver ounces produced
937
?
861
?
2,485
?
2,540
?
Total cash cost per ounce produced
$ 5.94
?
$
3.38
?
$ 5.82
?
$
3.67
?
Reconciliation to GAAP:
Total cash costs
$ 5,562
$
2,916
$ 14,473
$
9,310
Depreciation, depletion and amortization
1,507
2,014
4,584
5,914
Treatment costs
(5,891 )
(4,783
)
$ (16,739 )
(13,367
)
By-product credits
13,878
13,664
41,256
38,349
Change in product inventory
336
348
$ 45
(79
)
Reclamation and other costs
257
?
(23
)
1,662
?
38
?
Cost of sales and other direct production costs and depreciation,
depletion and amortization (GAAP)
$ 15,649
?
$
14,136
?
$ 45,281
?
$
40,165
?
?
?
?
?
?
?
(1)
?
Cash costs per ounce of silver represent non-U.S. Generally Accepted
Accounting Principles (GAAP) measurements that the Company believes
provide management and investors an indication of net cash flow.
Management also uses this measurement for the comparative monitoring
of performance of mining operations period-to-period from a cash
flow perspective. 'Total cash cost per ounce' is a measure developed
by gold companies in an effort to provide a comparable standard;
however, there can be no assurance that our reporting of this
non-GAAP measure is similar to that reported by other mining
companies. Cost of sales and other direct production costs and
depreciation, depletion and amortization, was the most comparable
financial measures calculated in accordance with GAAP to total cash
costs.
?
?
HECLA MINING COMPANY
Reconciliation of Net Income Applicable to Common Shareholders
(GAAP) to Earnings After Adjustments(1)
(dollars and ounces in thousands, except per share amounts -
unaudited)
?
?
?
Three Months Ended
September 30,
?
Nine Months Ended
September 30,
2011
?
?
2010
?
2011
?
?
2010
Net income applicable to common shareholders (GAAP)
$ 55,783
?
$
16,383
$ 132,181
?
$
48,494
Adjusting items:
(Gains)/losses on derivatives contracts
(40,382 )
13,195
(38,907 )
11,196
Environmental accruals
4,851
?
4,851
2,439
Provisional price (gains)/losses
3,621
(6,432
)
3,340
(2,013
)
Income tax effect of above adjustments
11,488
?
(2,435
)
11,058
?
(4,184
)
Earnings after adjustments applicable to common shareholders
$ 35,361
?
$
20,711
?
$ 112,523
?
$
55,932
?
Weighted average shares ? basic
279,541
256,095
279,067
249,039
Weighted average shares ? diluted
295,000
270,508
295,739
266,145
Basic earnings after adjustments per common share
$ 0.13
$
0.08
$ 0.40
$
0.22
Diluted earnings after adjustments per common share
$ 0.12
$
0.08
$ 0.38
$
0.21
?
?
?
?
?
?
(1)
?
Earnings After Adjustments and Earnings After Adjustments per share
are non-GAAP measures which are indicators of our performance. They
exclude certain impacts which are of a nature which we believe are
not reflective of our underlying performance. Management believes
that earnings after adjustments per common share provides investors
with the ability to better evaluate our underlying operating
performance.
?
?
Hecla Mining Company
M?lanie Hennessey
Vice President -
Investor Relations
Direct: 604-694-7729
Direct Main:
800-HECLA91 (800-432-5291)
hmc-info@hecla-mining.com
www.hecla-mining.com