COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Hecla Mining Company (NYSE:HL) today announced third quarter financial and operating results.
HIGHLIGHTS (Compared to Third Quarter of 2016)
- Net income applicable to common stockholders of $1.3 million, or $0.00 per share.
- Adjusted net income applicable to common stockholders of $16.0 million, or $0.04 per share.1
- Cost of sales and other direct production costs and depreciation, depletion and amortization ("cost of sales") of $97.2 million.
- Silver cash cost, after by-product credits, of negative $0.63 per ounce, the lowest in 7 years.2
- All in sustaining cost ("AISC"), after by-product credits, of $6.65 per silver ounce, down 47%.3
- Gold production of 63,046 ounces, up 21% as a result of strongest performance of Casa Berardi since its acquisition.
- Capital expenditures of $24.4 million, a 44% decline.
- Cash and cash equivalents and short-term investments of $205.9 million at September 30, 2017, up $4 million over the second quarter.
- Lowering estimates for annual cash cost, after by-product credits, per silver ounce for Greens Creek and San Sebastian.
- The strike by the union workers at Lucky Friday continues.
"The third quarter continued Hecla's strong operating performance, which coupled with higher zinc and lead prices, resulted in silver cash costs, after by-product credits, of negative $0.63 per ounce, the lowest in 7 years and allows us to lower our cost guidance," said Phillips S. Baker Jr., President and CEO. "Both Casa Berardi and Greens Creek set records for throughput and San Sebastian had its strongest silver production of the year. The operating performance combined with lower capital expenditure allows Hecla to continue to generate positive cash flow and strengthen our balance sheet."
Net income applicable to common shareholders for the third quarter was $1.3 million, or $0.00 per share, compared to $25.7 million, or $0.07 per share, for the same period a year ago, the result mainly due to the following items:
- Sales of $140.8 million impacted by the ongoing strike at Lucky Friday and build-up of product inventory during the quarter of approximately $12.9 million, primarily due to the timing of concentrate shipments at Greens Creek.
- Lower realized silver and gold prices, partially offset by higher zinc and lead prices.
- Mark to market loss on base metal derivatives contracts of $11.2 million due to the higher zinc and lead prices, compared to the third quarter of 2016 when there wasn't an active hedging program.
- Net foreign exchange loss of $4.8 million versus a gain of $2.4 million in third quarter of 2016 due to the strength of the Canadian dollar.
- Interest expense, net of amount capitalized, of $9.4 million in the third quarter of 2017, increased over the $5.6 million recognized in the third quarter of 2016, primarily due to interest being capitalized in the 2016 period related to construction of the #4 Shaft.
- An increase of $4.6 million in exploration and pre-development expenditures over the third quarter of 2016, particularly focused on San Sebastian and Casa Berardi.
- Lucky Friday suspension costs of $3.7 million, along with $1.1 million in non-cash depreciation expense, in the third quarter of 2017. Limited production and capital improvements are being performed by salaried staff.
Operating cash flow was $28.3 million compared to $87.0 million in the third quarter of 2016, with the decrease due to the timing of concentrate shipments, primarily at Greens Creek and increased payment of estimated income taxes in Mexico. These factors were partially offset by an increase in gold production and higher base metals prices.
Adjusted EBITDA was $60.8 million compared to $78.8 million in the third quarter of 2016, with the decrease mainly due to lower and no concentrate shipments at Greens Creek and Lucky Friday, respectively, and lower precious metals prices, partially offset by an increase in gold sales and higher base metals prices.4
Capital expenditures at the operations totaled $25.5 million for the third quarter 2017 compared to $42.0 million in the third quarter of 2016, with the decrease due to completion of the #4 Shaft, limited activity at Lucky Friday due to the ongoing strike, and reduced capital spending at Greens Creek and Casa Berardi, partially offset by costs related to underground development at San Sebastian. Expenditures were $13.8 million at Casa Berardi, $8.2 million at Greens Creek, $3.4 million at San Sebastian and $0.2 million at Lucky Friday.
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