Hecla Reports First Quarter 2021 Results

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·30-min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Record cash margin and adjusted EBITDA and second highest revenue in 130-year history

Hecla Mining Company (NYSE:HL) (Hecla or the Company) today announced first quarter 2021 financial and operating results.

HIGHLIGHTS

  • Sales of $210.9 million, second highest in the 130-year history, a 54% increase over prior year.

  • Gross profit of $64.8 million, an increase of $53.4 million over prior year.

  • Cash provided by operating activities of $37.9 million and $16.5 million of quarterly free cash flow1.

  • Silver production of 3.5 million ounces, a 7% increase over prior year period.

  • Net income applicable to common shareholders of $18.8 million, or $0.04 per share (basic).

  • Adjusted net income applicable to common stockholders of $30.6 million, or $0.06 per share.2

  • Record Adjusted EBITDA of $86.1 million; net debt/adjusted EBITDA (last 12 months) of 1.4x.4

  • Strong liquidity with quarter-end cash position of $139.8 million and undrawn revolving credit facility.

  • Increased the silver -linked dividend at the $25 per ounce silver price threshold by 50% to $0.03 annually. Board has also increased each level of the silver-linked dividend by $0.01 per year.

  • Greens Creek AISC6 in the first quarter of $1.59 per silver ounce and a new estimate for the year of less than $7.25.

  • Ratings upgrade from Moody's with Corporate Family Rating (CFR) upgraded to B2 from B3.

  • Continued safe management of COVID-19 across all our operations.

  • Sustainability report outlining our 2020 ESG performance and exploration results to be released in conjunction with the Company's Annual Meeting of Shareholders on May 19, 2021.

"The strong performance Hecla has had in five of the last six quarters continued in the first quarter of 2021 with the second highest sales in our history, a new record for EBITDA and gross profit on sales that is about a third higher than the next closest quarter," said Phillips S. Baker, Jr., President and CEO. "Free cash flow generation was the most Hecla has had in the first quarter in a decade. Since the first quarter is typically our smallest quarter, we anticipate cash flow increasing over the rest of the year. Therefore, the Board has increased the silver-linked dividend at the $25 price threshold by 50% to $0.03 per share annually."

Mr. Baker continued, "The backdrop for silver remains very positive with improving industrial demand due to global policies that support green energy where silver is a key component, strong investment demand and tight supply. Hecla is in a key position as the United States' largest silver producer, mining more than a third of all U.S. production, which should increase as our U.S. silver production is anticipated to be 15 million ounces by 2023 with the Lucky Friday's silver production expected to increase to 5 million ounces by then."

FINANCIAL OVERVIEW

First Quarter Ended

HIGHLIGHTS

March 31, 2021

March 31, 2020

FINANCIAL DATA (000s except per share)

Sales (000)

$

210,852

$

136,925

Gross profit (000)

$

64,812

$

11,372

Income (loss) applicable to common stockholders (000)

$

18,833

$

(17,323)

Basic income (loss) per common share

$

0.04

$

(0.03)

Diluted income (loss) per common share

$

0.03

$

(0.03)

Cash provided by operating activities (000)

$

37,936

$

4,927

Income applicable to common shareholders for the first quarter was $18.8 million, or $0.04 per share, compared to a loss of $17.3 million, or ($0.03 per share), in the first quarter of 2020, and was impacted by the following factors:

  • Gross profit increased by $53.4 million due primarily to higher metal prices and production of silver, lead, and zinc. Production increased due to higher grades and Lucky Friday being in full production. Profit also improved due to lower treatment charges at Greens Creek. Casa Berardi also contributed with strong gold production from higher grades, recovery, and improved throughput in the current period.

  • Ramp-up and suspension costs decreased by $8.7 million primarily due to Lucky Friday's return to full production in the fourth quarter of 2020.

  • Lower interest expense by $5.6 million due to the following items in the first quarter of 2020: (i) interest recognized on both the 7.25% Senior Notes due 2028 and since-redeemed 2021 Notes for an overlapping period, (ii) $1.7 million in unamortized initial purchaser discount on the 2021 Notes recognized as expense upon their redemption, and (iii) amounts drawn on our revolving credit facility.

  • Provision for closed operations and environmental matters increased by $3.2 million due to an increase at an historic site.

  • Exploration and pre-development expense increased by $3.6 million. In the first quarter of 2021, exploration was primarily at our San Sebastian, Casa Berardi and Nevada Operations units.

  • Higher other operating expense by $2.7 million due to operational improvement project costs at Casa Berardi.

  • A gain on metal derivatives contracts of $0.5 million compared to a gain of $7.9 million in the first quarter of 2020.

  • A net foreign exchange loss of $2.1 million versus a net gain of $6.6 million in the first quarter of 2020, with the variance primarily related to the impact of strengthening of the Canadian dollar relative to the U.S. dollar.

  • An income and mining tax provision of $4.6 million compared to an income and mining tax benefit of $1.1 million in the first quarter of 2020 due to increased income at Casa Berardi and the inclusion of $3.1 million following reclassification of the Alaska mine license tax. Cash income and mining taxes paid for the first quarter totaled $2.5 million.

Cash provided by operating activities of $37.9 million increased $33.0 million compared to the first quarter of 2020, primarily due to higher gross profit, partially offset by negative working capital changes of $29.3 million related to lower accounts payable and accrued liabilities, the timing of payment of incentive compensation related to prior-year performance and higher accounts receivable due to the timing of concentrate shipments.

Adjusted EBITDA3 of $86.1 million increased 145% compared to the first quarter of 2020, primarily due to higher sales partially offset by lower gross margins at Nevada and San Sebastian. Adjusted EBITDA is $12 million more than any quarter in Hecla's history.

Capital expenditures totaled $24.7 million compared to $20.0 million in the first quarter of 2020, with the increase primarily due to spending at Lucky Friday and Casa Berardi. Capital expenditures during the first quarter of 2021 at Casa Berardi, Greens Creek, Lucky Friday, and Nevada operations were $13.8 million, $4.9 million, $5.9 million, and $0.1 million, respectively.

Metals Prices

Three Months Ended March 31

2021

2020

AVERAGE METAL PRICES

Silver -

London PM Fix ($/oz)

$

26.29

$

16.94

Realized price per ounce

$

25.66

$

14.48

Gold -

London PM Fix ($/oz)

$

1,798

$

1,583

Realized price per ounce

$

1,770

$

1,588

Lead -

LME Cash ($/pound)

$

0.92

$

0.84

Realized price per pound

$

0.92

$

0.78

Zinc -

LME Cash ($/pound)

$

1.25

$

0.96

Realized price per pound

$

1.32

$

0.88

Realized prices are calculated by dividing gross revenues for each metal (which include the price adjustments and gains and losses on the forward contracts discussed below) by the payable quantities of each metal included in products sold during the period.

Base Metals Forward Sales Contracts

The following table summarizes the quantities of base metals committed under financially settled forward sales contracts, other than provisional hedges (which address changes in prices between shipment and settlement with customers), at March 31, 2021.

Pounds Under Contract (in thousands)

Average Price per Pound

Zinc

Lead

Zinc

Lead

Contracts on forecasted sales

2021 settlements

33,841

30,479

$ 1.20

$ 0.89

2022 settlements

53,407

42,715

$ 1.26

$0.96

2023 settlements

41,171

$ 1.27

The contracts represent 46% of the forecasted payable zinc production for the next three years at an average price of $1.25 per pound, and 45% of the forecasted payable lead production for the next two years at an average price of $0.93 per pound.

Foreign Currency Forward Purchase Contracts

The following table summarizes the Canadian dollars the Company has committed to purchase under foreign exchange forward contracts at March 31, 2021:

Currency Under Contract
(in thousands of CAD)

Average Exchange Rate

CAD

CAD/USD

2021 settlements

93,026

1.32

2022 settlements

84,754

1.31

2023 settlements

52,565

1.32

2024 settlements

26,446

1.33

OPERATIONS OVERVIEW

The following table provides the production summary on a consolidated basis:

First Quarter Ended

March 31, 2021

March 31, 2020

PRODUCTION SUMMARY

Silver -

Ounces produced

3,459,446

3,245,469

Payable ounces sold

3,030,026

2,582,279

Gold -

Ounces produced

52,004

58,792

Payable ounces sold

57,286

57,103

Lead -

Tons produced

10,704

5,893

Payable tons sold

8,668

4,130

Zinc -

Tons produced

16,107

12,847

Payable tons sold

11,027

9,836

The following table provides a summary of the production, cost of sales and other direct production costs and depreciation, depletion and amortization (referred to herein as "cost of sales"), cash cost, after by-product credits ("cash cost"), per silver or gold ounce, and All In Sustaining Cost, after by-product credits ("AISC"), per silver or gold ounce, for the quarters ended March 31, 2021 and 2020.

First Quarter Ended March 31, 2021

Greens Creek

Lucky
Friday

San Sebastian

Casa Berardi

Nevada
Operations

Silver

Gold

Silver

Gold

Silver

Silver

Gold

Gold

Silver

Gold

Silver

Production (ounces)

3,459,446

52,004

2,584,870

13,266

863,901

36,190

10,675

2,548

Increase/(decrease)

7

%

(12)

%

(7)

%

8

%

802

%

(100)

%

(100)

%

35

%

80

%

(85)

%

(100)

%

Cost of sales (000)

$

76,069

$

69,971

$

53,181

$

$

22,794

$

94

-

$

62,516

$

$

7,455

-

Increase/(decrease)

26

%

7

%

8

%

N/A

705

%

(99)

%

N/A

29

%

N/A

(56)

%

N/A

Cash cost per silver or gold ounce 5

$

1.40

$

1,052

$

(0.67)

-

$

7.62

N/A

-

$

1,027

-

$

1,416

-

Increase/(decrease)

(76)

%

(1)

%

(112)

%

N/A

N/A

(100)

%

N/A

(19)

%

N/A

92

%

N/A

AISC per silver or gold ounce6

$

7.21

$

1,284

$

1.59

-

$14.24

N/A

-

1,272

-

$

1,461

-

Increase/(decrease)

(35)

%

(1)

%

(80)

%

N/A

N/A

(100)

%

N/A

(21)

%

N/A

81

%

N/A

Greens Creek Mine - Alaska

Greens Creek continued its strong performance with slightly lower silver grades due to normal variations in the ore body and produced 2.6 million ounces of silver and 13,266 ounces of gold compared to 2.8 million ounces of silver and 12,273 ounces of gold in the first quarter of 2020. The decrease in silver production was primarily due to lower grade, with the increase in gold production resulting from higher grade, as planned. Compared to 2020, cost per ounce decreased primarily due to $5.7 million in lower treatment costs as a result of favorable smelter terms, of which $4 million are nonrecurring, and the reclassification of the Alaska mine license tax to income and mining tax provision effective January 1, 2021. With higher by-product prices, the cash cost5 and AISC6, after by-product credits, per silver ounce decreased by $6.30 and $6.31 per ounce, respectively. The mill operated at an average of 2,156 tons per day (tpd) in the first quarter compared to 2,185 tpd in the first quarter of 2020.

The Company reaffirms estimated 2021 silver production of 9.5 - 10.2 million ounces of silver and 40 - 43 thousand ounces of gold. The estimate for 2021 cost of sales is $213 million. Estimated cash cost, after by-product credits5, and AISC, after by-product credits6, each per silver ounce is $1.50-$2.25 and $6.50-$7.25, respectively, with lower costs due to anticipated higher by-product credits, lower treatment charges, and the reclassification of mine license tax from production costs to income and mining tax provision effective January 1, 2021.

Casa Berardi Mine - Quebec

At the Casa Berardi Mine, 36,190 ounces of gold were produced compared to 26,752 ounces in the first quarter of 2020. This represents an increase of 35% due to higher tonnage, grades and recoveries. The mill operated at an average of 4,093 tpd in the first quarter of 2021 compared to 3,644 tpd in 2020. The increase in cost of sales was primarily due to higher sales volume. The decrease in cash cost and AISC, after by-product credits5,6, per gold ounce for the first quarter of 2021 compared to the first quarter of 2020 was primarily the result of higher gold production, with AISC also impacted by lower sustaining capital spending, partially offset by higher exploration spending.

Business improvement activities continued in 2021 and these efforts are expected to reduce costs and increase cash flow over the next two years.

Lucky Friday Mine - Idaho

At the Lucky Friday Mine, 0.9 million ounces of silver were produced in the first quarter of 2021. Lucky Friday returned to full production in the fourth quarter of 2020 with estimated annual production in excess of 3.4 million ounces of silver in 2021. The mill operated at an average of 901 tpd. We continue to test and optimize the new mining method to improve safety and increase productivity which could allow Lucky Friday to increase production beyond the 5 million ounces expected by 2023 due to grade.

The cost of sales for the first quarter was $22.8 million, and the cash cost, after by-product credits, per silver ounce5 was $7.62. AISC6, after by-product credits, was $14.24 per silver ounce.

Nevada Operations

At the Nevada operations, 2,548 ounces of gold were produced from 16,459 tons of a stockpiled bulk sample of refractory material processed at a third-party facility. Cost of sales for the first quarter were $7.5 million and cash cost5 and AISC6, after by-product credits, per gold ounce was $1,416 and $1,461, respectively in the first quarter of 2021. The increase over the prior year period was the result of the lower gold production.

In the second quarter of 2021, the Company expects to process oxide material through the Midas mill. Over the remainder of the year, 22,000 tons of refractory material are expected to be processed in third-party facilities, roughly 12,000 tons in a roaster and 10,000 tons in an autoclave. Production for the remainder of the year is expected to be in the range of 17,000 to 19,000 ounces of gold. Fire Creek and the Midas mill are expected to be on care and maintenance by the end of the second quarter. Activities will be limited primarily to development at Hollister for Hatter Graben and exploration at Midas.

PRE-DEVELOPMENT

Pre-development spending was $0.7 million for the quarter, principally in connection with permitting of Rock Creek and Montanore. The Federal District Court's recent ruling set aside the U.S. Forest Service's 2018 Record of Decision and the U.S. Fish & Wildlife Service's 2019 Supplement to the Biological Opinion for the evaluation phase of the Rock Creek project. While we await action by the Federal agencies on possible appeal of this decision, the Company will reconsider its evaluation plan for the Rock Creek project and continue to advance the Montanore evaluation project.

At Hollister, development of the decline to allow drilling of the Hatter Graben has commenced. The pre-development cost in 2021 is expected to be about $4 million.

2021 ESTIMATES7

The Company has updated its guidance for annual production, cost and expenditures as follows:

2021 Production Outlook

Silver Production

(Moz)

Gold Production

(Koz)

Silver Equivalent

(Moz)

Gold Equivalent

(Koz)

Greens Creek *

9.5-10.2

40-43

20.5-21.5

227-237

Lucky Friday *

3.4-3.8

N/A

6.2-6.4

67-70

Casa Berardi

N/A

125-128

11.5-11.7

125-128

Nevada Operations

N/A

20-22

1.8-2.0

20-22

2021 Total

12.9-14.0

185-193

40.0-41.6

439-457

2022 Total

13.7-14.5

173-181

41.0-42.5

448-465

2023 Total

14.2-15.0

177-186

42.5-44.5

467-485

* Equivalent ounces include Lead and Zinc production

2021 Cost Outlook

Cost of Sales
(millions)

Cash cost, after by-product
credits, per silver/gold ounce4

AISC, after by-product credits,
per produced silver/gold ounce5

Original

Current

Original

Current

Original

Current

Greens Creek

$220

$213

$5.75-$6.25

$1.50-$2.25

$10.25-$11.00

$6.50-$7.25

Lucky Friday

$91

$91

$7.75-$9.75

$7.75-$9.75

$13.75-$16.50

$13.75-$16.50

Total Silver

$311

$304

$6.25-$7.25

$3.25-$4.25

$13.50-$15.00

$10.75-$12.50

Casa Berardi

$176

$212

$900-$975

$900-$975

$1,185-$1,275

$1,185-$1,275

Nevada Operations

$41

$41

$1,300-$1,425

$1,300-$1,425

$1,385-$1,525

$1,385-$1,525

Total Gold

$217

$253

$950-$1,050

$950-$1,050

$1,200-$1,300

$1,200-$1,300

2021 Capital and Exploration Outlook

(millions)

Original

Current

Capital expenditures

$110

$110

Exploration expenditures (including Corporate Development)

$30

$30

Pre-development expenditures

$4.5

$8.5

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held Thursday, May 6, at 10:00 a.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-833-350-1380 or for international dialing 1-647-689-6934. The Conference ID is 7584113. Please dial-in and provide the Conference ID number at least 10 minutes prior to the start time to join the call and mitigate any hold times.

Hecla's live and archived webcast can be accessed at www.hecla-mining.com under Investors/Events & Webcasts (https://ir.hecla-mining.com/news-events/events-webcasts/default.aspx). The webcast will also be archived on the site.

ABOUT HECLA

Founded in 1891, Hecla Mining Company (NYSE:HL) is the largest U.S. silver producer with operating mines in Alaska and Idaho and is a growing gold producer with an operating mine in Quebec, Canada. The Company also has exploration and pre-development properties in seven world-class silver and gold mining districts throughout North America.

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) Free cash flow is a non-GAAP measure calculated as cash provided by operating activities less additions to properties, plants and equipment.

(2) Adjusted net income (loss) applicable to common stockholders is a non-GAAP measurement, a reconciliation of which to net income (loss) applicable to common stockholders, the most comparable GAAP measure, can be found at the end of the release. Adjusted net income (loss) is a measure used by management to evaluate the Company's operating performance but should not be considered an alternative to net income (loss) as defined by GAAP. They exclude certain impacts which are of a nature which we believe are not reflective of our underlying performance. Management believes that adjusted net income (loss) per common share provides investors with the ability to better evaluate our underlying operating performance.

(3) 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.

(4) Net debt to adjusted EBITDA is a non-GAAP measurement, a reconciliation of adjusted EBITDA and net debt to the closest GAAP measurements of net income (loss) and debt can be found at the end of the release. It is an important measure for management to measure relative indebtedness and the ability to service the debt relative to its peers. It is calculated as total debt outstanding less total cash on hand divided by adjusted EBITDA.

(5) 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 cash cost, after by-product credits, per silver ounce 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. Gold, lead and zinc produced have been treated as by-product credits in calculating silver costs per ounce. With regard to Casa Berardi and Nevada Operations, management uses cash cost, after by-product credits, per gold ounce to compare its performance with other gold mines with a by-product credit recognized for the value of their silver 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.

(6) 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.

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 AISC 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.

Other

(7) Calculations for 2021 include silver, gold, lead and zinc production from Greens Creek, San Sebastian, Casa Berardi and Nevada Operations converted using Au $1,525/oz, Ag $17/oz, Zn $1.00/lb, and Pb $0.85/lb.

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. When a forward-looking statement 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. Forward-looking statements often address our expected future business and financial performance and financial condition and often contain words such as "anticipate," "intend," "plan," "will," "could," "would," "estimate," "should," "expect," "believe," "project," "target," "indicative," "preliminary," "potential" and similar expressions. Forward-looking statements in this news release may include, without limitation: (i) the Company will increase cash flow generation over the rest of the year; (ii) expected increase of the Company’s silver production to 15 million ounces by 2023; (iii) expected increase in Lucky Friday’s silver production to 5 million ounces by 2023; (iv) the new mining method being tested at Lucky Friday could improve safety and productivity at the mine beyond the 5 million ounces expected by 2023 due to grade; (v) Greens Creek estimates of full-year 2021 silver and gold production reaffirmed at 9.5 -10.2 million and 40-43 thousand, respectively, estimated 2021 cost of sales updated to $213 million, estimated cash costs, after by-product credits, and AISC, after by-product credits, each per silver ounce updated to $1.50 - $2.25 and $6.50 - $7.25, respectively; (vi) ability of business improvement activities at Casa Berardi to reduce costs and increase cash flow over the next two years; (vii) expectation of the Company to process 25,000 ore tons through the Midas mill and roughly 12,000 tons through a third-party roasting facility, and an additional 10,000 tons for processing at a third-party autoclave facility in the second half of the year with production in the range of 17,000 to 19,000 ounces of gold at the Nevada operations; and (viii) Company-wide estimates of future production, sales, costs of sales, cash costs, after by-product credits, AISC, after by-product credits, as well as estimated spending on capital, exploration and pre-development for 2021. The material factors or assumptions used to develop such forward-looking statements or forward-looking information include that 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, to which the Company’s operations are subject.

Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect, which could cause actual results to differ from forward-looking statements. 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 rate for the USD/CAD and USD/MXN, 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; (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; (ix) counterparties performing their obligations under hedging instruments and put option contracts; (x) sufficient workforce is available and trained to perform assigned tasks; (xi) weather patterns and rain/snowfall within normal seasonal ranges so as not to impact operations; (xii) relations with interested parties, including Native Americans, remain productive; (xiii) economic terms can be reached with third-party mill operators who have capacity to process our ore; (xiv) maintaining availability of water rights; (xv) factors do not arise that reduce available cash balances; and (xvi) there being no material increases in our current requirements to post or maintain reclamation and performance bonds or collateral related thereto.

In addition, material risks that could cause actual results to differ from forward-looking statements include, but are not limited to: (i) gold, silver and other metals price volatility; (ii) operating risks; (iii) currency fluctuations; (iv) increased production costs and variances in ore grade or recovery rates from those assumed in mining plans; (v) community relations; (vi) conflict resolution and outcome of projects or oppositions; (vii) litigation, political, regulatory, labor and environmental risks; (viii) 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; (ix) the failure of counterparties to perform their obligations under hedging instruments; (x) we take a material impairment charge on our Nevada operations; (xi) we are unable to remain in compliance with all terms of the credit agreement in order to maintain continued access to the revolver, and (xii) we are unable to refinance the maturing senior notes. For a more detailed discussion of such risks and other factors, see the Company’s 2020 Form 10-K, filed on February 18, 2021, with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly 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 Operations

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

Three Months Ended

March 31, 2021

March 31, 2020

Sales of products

$

210,852

$

136,925

Cost of sales and other direct production costs

96,709

85,887

Depreciation, depletion and amortization

49,331

39,666

146,040

125,553

Gross profit

64,812

11,372

Other operating expenses:

General and administrative

8,007

8,939

Exploration

5,951

2,530

Pre-development

739

535

Other operating expense

3,639

920

Provision for closed operations and environmental matters

3,709

516

Ramp-up and suspension costs

4,318

12,996

26,363

26,436

Income (loss) from operations

38,449

(15,064

)

Other income (expense):

Gain on derivative contracts

473

7,893

Other expense

(161

)

(423

)

Gain on exchange of investments

1,158

Unrealized loss on investments

(3,506

)

(978

)

Net foreign exchange (loss) gain

(2,064

)

6,636

Interest expense

(10,744

)

(16,311

)

(14,844

)

(3,183

)

Income (loss) before income and mining taxes

23,605

(18,247

)

Income and mining tax (provision) benefit

(4,634

)

1,062

Net income (loss)

18,971

(17,185

)

Preferred stock dividends

(138

)

(138

)

Income (loss) applicable to common stockholders

$

18,833

$

(17,323

)

Basic earnings (loss) per common share after preferred dividends

$

0.04

$

(0.03

)

Diluted earnings (loss) per common share after preferred dividends

$

0.03

$

(0.03

)

Weighted average number of common shares outstanding - basic

534,101

523,215

Weighted average number of common shares outstanding - diluted

540,527

523,215

HECLA MINING COMPANY

Condensed Consolidated Statements of Cash Flows

(dollars in thousands - unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

OPERATING ACTIVITIES

Net income (loss)

$

18,971

$

(17,185)

Non-cash elements included in net income (loss):

Depreciation, depletion and amortization

49,546

41,630

Gain on exchange of investments

(1,158)

Unrealized loss on investments

3,506

978

Provision for reclamation and closure costs

4,529

1,548

Stock compensation

500

1,219

Deferred taxes

32

(3,252)

Amortization of loan origination fees

539

2,140

Gain on derivative contracts

(10,962)

(10,437)

Foreign exchange (gain) loss

1,755

(8,066)

Other non-cash charges, net

8

(104)

Change in assets and liabilities:

Accounts receivable

(2,664)

9,955

Inventories

2,120

(6,602)

Other current and non-current assets

1,528

(2,642)

Accounts payable and accrued liabilities

(24,545)

(11,879)

Accrued payroll and related benefits

(7,995)

9,495

Accrued taxes

2,031

1,332

Accrued reclamation and closure costs and other non-current liabilities

195

(3,203)

Cash provided by operating activities

37,936

4,927

INVESTING ACTIVITIES

Additions to properties, plants, equipment and mineral interests

(21,413)

(19,870)

Proceeds from disposition of properties, plants and equipment

19

154

Net cash used in investing activities

(21,394)

(19,716)

FINANCING ACTIVITIES

Dividends paid to common stockholders

(4,688)

(1,304)

Dividends paid to preferred stockholders

(138)

(138)

Debt origination fees

(82)

(458)

Borrowings on debt

679,500

Payments on debt

(506,500)

Repayments of finance leases

(1,881)

(1,284)

Net cash (used in) provided by financing activities

(6,789)

169,816

Effect of exchange rates on cash

167

(1,736)

Net increase in cash, cash equivalents and restricted cash and cash equivalents

9,920

153,291

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period

130,883

63,477

Cash, cash equivalents and restricted cash and cash equivalents at end of period

$

140,803

$

216,768

HECLA MINING COMPANY

Condensed Consolidated Balance Sheets

(dollars and shares in thousands - unaudited)

March 31, 2021

December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

139,750

$

129,830

Accounts receivable:

Trade

35,274

27,864

Other, net

8,475

11,329

Inventories

94,252

96,544

Derivative assets

7,195

3,470

Other current assets

12,971

15,644

Total current assets

297,917

284,681

Investments

11,717

15,148

Restricted cash and investments

1,053

1,053

Properties, plants, equipment and mineral interests, net

2,320,547

2,345,219

Operating lease right-of-use asset

9,775

10,628

Deferred taxes

3,886

2,912

Derivatives assets

6,346

4,558

Other non-current assets

3,836

3,525

Total assets

$

2,655,077

$

2,667,724

LIABILITIES

Current liabilities:

Accounts payable and accrued liabilities

$

53,130

$

68,516

Accrued payroll and related benefits

22,800

31,807

Accrued taxes

7,854

8,349

Finance leases

6,706

6,491

Operating leases

2,832

3,008

Accrued reclamation and closure costs

6,592

5,582

Derivatives liabilities

3,906

11,737

Other current liabilities

5,298

14,295

Total current liabilities

109,118

149,785

Finance leases

10,304

9,274

Operating leases

6,954

7,634

Long-term debt - Senior Notes

507,992

507,242

Deferred tax liability

149,220

144,330

Accrued reclamation and closure costs

113,671

110,466

Pension liability

28,797

44,144

Other non-current liabilities

4,146

4,364

Total liabilities

930,202

977,239

STOCKHOLDERS’ EQUITY

Preferred stock

...

39

Common stock

135,546

134,629

Capital surplus

2,021,072

2,003,576

Accumulated deficit

(377,229

)

(391,374

)

Accumulated other comprehensive loss

(31,057

)

(32,889

)

Treasury stock

(23,496

)

...

(23,496

)

Total stockholders’ equity

1,724,875

1,690,485

Total liabilities and stockholders’ equity

$

2,655,077

$

2,667,724

Common shares outstanding

535,334

531,666

HECLA MINING COMPANY

Production Data

Three Months Ended

March 31, 2021

March 31, 2020

GREENS CREEK UNIT

Tons of ore milled

194,080

198,804

Total production cost per ton

$

182.61

$

185.92

Ore grade milled - Silver (oz./ton)

16.01

16.87

Ore grade milled - Gold (oz./ton)

0.09

0.08

Ore grade milled - Lead (%)

3.06

3.12

Ore grade milled - Zinc (%)

7.62

6.89

Silver produced (oz.)

2,584,870

2,775,707

Gold produced (oz.)

13,266

12,273

Lead produced (tons)

4,924

5,198

Zinc produced (tons)

13,354

12,487

Cash cost, after by-product credits, per silver ounce (1)

$

(0.67

)

$

5.63

AISC, after by-product credits, per silver ounce (1)

$

1.59

$

7.90

Capital additions (in thousands)

$

4,892

$

5,510

LUCKY FRIDAY UNIT

Tons of ore processed

81,071

10,219

Total production cost per ton

$

181.28

$

Ore grade milled - Silver (oz./ton)

11.18

9.87

Ore grade milled - Lead (%)

7.51

7.23

Ore grade milled - Zinc (%)

3.70

3.85

Silver produced (oz.)

863,901

95,748

Lead produced (tons)

5,780

695

Zinc produced (tons)

2,753

360

Cash cost, after by-product credits, per silver ounce (1)

$

7.62

$

AISC, after by-product credits, per silver ounce (1)

$

14.24

$

Capital additions (in thousands)

$

5,912

$

4,295

CASA BERARDI UNIT

Tons of ore milled - underground

186,919

160,937

Tons of ore milled - surface pit

181,484

170,681

Tons of ore milled - total

368,403

331,618

Surface tons mined - ore and waste

1,991,087

1,724,974

Total production cost per ton

$

99.67

$

102.45

Ore grade milled - Gold (oz./ton) - underground

0.147

0.170

Ore grade milled - Gold (oz./ton) - surface pit

0.048

0.068

Ore grade milled - Gold (oz./ton) - combined

0.120

0.102

Ore grade milled - Silver (oz./ton)

0.04

0.02

Gold produced (oz.) - underground

27,569

17,581

Gold produced (oz.) - surface pit

8,621

9,171

Gold produced (oz.) - total

36,190

26,752

Silver produced (oz.)

10,675

5,934

Cash cost, after by-product credits, per gold ounce (1)

$

1,027

$

1,268

AISC, after by-product credits, per gold ounce (1)

$

1,272

$

1,615

Capital additions (in thousands)

$

13,847

$

8,506

SAN SEBASTIAN UNIT

Tons of ore milled

35,476

Total production cost per ton

$

$

178.02

Ore grade milled - Silver (oz./ton)

10.64

Ore grade milled - Gold (oz./ton)

0.091

Silver produced (oz.)

346,625

Gold produced (oz.)

2,802

Cash cost, after by-product credits, per silver ounce (1)

$

$

6.91

AISC, after by-product credits, per silver ounce (1)

$

$

9.59

Capital additions (in thousands)

$

$

803

NEVADA OPERATIONS UNIT

Tons of ore milled

16,459

17,298

Total production cost per ton

$

360.72

$

745.14

Ore grade milled - Gold (oz./ton)

0.185

1.055

Ore grade milled - Silver (oz./ton)

1.470

Gold produced (oz.)

2,548

16.965

Silver produced (oz.)

21.455

Cash cost, after by-product credits, per gold ounce (1)

$

1,416

$

735

AISC, after by-product credits, per gold ounce (1)

$

1,461

$

808

Capital additions (in thousands)

$

89

$

857

(1) Cash cost, after by-product credits, per ounce and AISC, after by-products credits, per ounce represent a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement. A reconciliation of cash cost, after by-product credits and AISC, after by-products credits to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) 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 and Nevada Operations is gold, with a by-product credit for the value of silver production.

Reconciliation of Total cost of sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits and All-In Sustaining Costs, 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-month periods ended March 31, 2021 and 2020.

Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce are measures developed by precious metals companies (including the Silver Institute and the World Gold Council) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that these non-GAAP measures as we report them are the same as those reported by other mining companies.

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 measures 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 silver mining companies, and aggregating Casa Berardi and Nevada Operations for comparison to 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, and royalties. 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, Nevada Operations and combined gold properties information below reports Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce for the production of gold, its 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 is 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. Similarly, the silver produced at our other three units is not included as a by-product credit when calculating the gold metrics for Casa Berardi and Nevada Operations.

In thousands (except per ounce amounts)

Three Months Ended March 31, 2021

Greens
Creek

Lucky
Friday

San

Sebastian

Corporate(3)

Total
Silver

Total cost of sales

$

53,181

$

22,794

$

94

$

76,069

Depreciation, depletion and amortization

(14,821

)

(6,336

)

(21,157

)

Treatment costs

10,541

4,978

15,519

Change in product inventory

401

(93

)

308

Reclamation and other costs

(261

)

(233

)

(94

)

(588

)

Cash Cost, Before By-product Credits (1)

49,041

21,110

70,151

Reclamation and other costs

848

264

1,112

Exploration

123

435

558

Sustaining capital

4,892

5,454

10,346

General and administrative

8,007

8,007

AISC, Before By-product Credits (1)

54,904

26,828

90,174

By-product credits:

Zinc

(22,767

)

(4,753

)

(27,520

)

Gold

(20,996

)

(20,996

)

Lead

(7,020

)

(9,775

)

(16,795

)

Total By-product credits

(50,783

)

(14,528

)

(65,311

)

Cash Cost, After By-product Credits

$

(1,742

)

$

6,582

$

$

4,840

AISC, After By-product Credits

$

4,121

$

12,300

$

$

24,863

Divided by ounces produced

2,585

864

3,449

Cash Cost, Before By-product Credits, per Silver Ounce

$

18.98

$

24.43

$

$

20.34

By-product credits per ounce

(19.65

)

(16.81

)

(18.94

)

Cash Cost, After By-product Credits, per Silver Ounce

$

(0.67

)

$

7.62

$

$

1.40

AISC, Before By-product Credits, per Silver Ounce

$

21.24

$

31.05

$

$

26.15

By-product credits per ounce

(19.65

)

(16.81

)

(18.94

)

AISC, After By-product Credits, per Silver Ounce

$

1.59

$

14.24

$

$

7.21

In thousands (except per ounce amounts)

Three Months Ended March 31, 2021

Casa Berardi (4)

Nevada
Operations (5)

Total Gold

Total cost of sales

$

62,516

$

7,455

$

69,971

Depreciation, depletion and amortization

(25,541

)

(2,633

)

(28,174

)

Treatment costs

714

11

725

Change in product inventory

(47

)

(1,084

)

(1,131

)

Reclamation and other costs

(208

)

(27

)

(235

)

Cash costs excluded

(115

)

(115

)

Cash Cost, Before By-product Credits (1)

37,434

3,607

41,041

Reclamation and other costs

208

27

235

Exploration

907

907

Sustaining capital

7,758

89

7,847

General and administrative

AISC, Before By-product Credits (1)

46,307

3,723

50,030

By-product credits:

Silver

(278

)

(278

)

Total By-product credits

(278

)

(278

)

Cash Cost, After By-product Credits

$

37,156

$

3,607

$

40,763

AISC, After By-product Credits

$

46,029

$

3,723

$

49,752

Divided by ounces produced

36

3

39

Cash Cost, Before By-product Credits, per Gold Ounce

$

1,035

$

1,416

$

1,059

By-product credits per ounce

$

(8

)

$

$

(7

)

Cash Cost, After By-product Credits, per Gold Ounce

$

1,027

$

1,416

$

1,052

AISC, Before By-product Credits, per Gold Ounce

$

1,280

$

1,461

$

1,291

By-product credits per ounce

$

(8

)

$

$

(7

)

AISC, After By-product Credits, per Gold Ounce

$

1,272

$

1,461

$

1,284

In thousands (except per ounce amounts)

Three Months Ended March 31, 2021

Total Silver

Total Gold

Total

Total cost of sales

$

76,069

$

69,971

$

146,040

Depreciation, depletion and amortization

(21,157

)

(28,174

)

(49,331

)

Treatment costs

15,519

725

16,244

Change in product inventory

308

(1,131

)

(823

)

Reclamation and other costs

(588

)

(235

)

(823

)

Cash costs excluded

(115

)

(115

)

Cash Cost, Before By-product Credits (1)

70,151

41,041

111,192

Reclamation and other costs

1,112

235

1,347

Exploration

558

907

1,465

Sustaining capital

10,346

7,847

18,193

General and administrative

8,007

8,007

AISC, Before By-product Credits (1)

90,174

50,030

140,204

By-product credits:

Zinc

(27,520

)

(27,520

)

Gold

(20,996

)

(20,996

)

Lead

(16,795

)

(16,795

)

Silver

(278

)

(278

)

Total By-product credits

(65,311

)

(278

)

(65,589

)

Cash Cost, After By-product Credits

$

4,840

$

40,763

$

45,603

AISC, After By-product Credits

$

24,863

$

49,752

$

74,615

Divided by ounces produced

3,449

39

Cash Cost, Before By-product Credits, per Ounce

$

20.34

$

1,059

By-product credits per ounce

(18.94

)

$

(7

)

Cash Cost, After By-product Credits, per Ounce

$

1.40

$

1,052

AISC, Before By-product Credits, per Ounce

$

26.15

$

1,291

By-product credits per ounce

(18.94

)

$

(7

)

AISC, After By-product Credits, per Ounce

$

7.21

$

1,284

In thousands (except per ounce amounts)

Three Months Ended March 31, 2020

Greens
Creek

Lucky
Friday(2)

San
Sebastian

Corporate(3)

Total
Silver

Total cost of sales

$

49,182

$

2,832

$

8,300

$

60,314

Depreciation, depletion and amortization

(12,429

)

(302

)

(1,473

)

(14,204

)

Treatment costs

15,826

432

104

16,362

Change in product inventory

2,870

914

253

4,037

Reclamation and other costs

319

(361

)

(42

)

Exclusion of Lucky Friday costs

(3,876

)

(3,876

)

Cash Cost, Before By-product Credits (1)

55,768

6,823

62,591

Reclamation and other costs

788

114

902

Exploration

4

767

350

1,121

Sustaining capital

5,510

56

5,566

General and administrative

8,939

8,939

AISC, Before By-product Credits (1)

62,070

7,760

79,119

By-product credits:

Zinc

(16,026

)

(16,026

)

Gold

(17,197

)

(4,429

)

(21,626

)

Lead

(6,926

)

(6,926

)

Total By-product credits

(40,149

)

(4,429

)

(44,578

)

Cash Cost, After By-product Credits

$

15,619

$

$

2,394

$

18,013

AISC, After By-product Credits

$

21,921

$

$

3,331

$

34,541

Divided by ounces produced

2,776

347

3,123

Cash Cost, Before By-product Credits, per Ounce

$

20.09

$

$

19.67

$

20.04

By-product credits per ounce

(14.46

)

(12.76

)

(14.27

)

Cash Cost, After By-product Credits, per Ounce

$

5.63

$

$

6.91

$

5.77

AISC, Before By-product Credits, per Ounce

$

22.36

$

$

22.35

$

25.33

By-product credits per ounce

(14.46

)

(12.76

)

(14.27

)

AISC, After By-product Credits, per Ounce

$

7.90

$

$

9.59

$

11.06

In thousands (except per ounce amounts)

Three Months Ended March 31, 2020

Casa
Berardi

Nevada
Operations

Total Gold

Total cost of sales

$

48,325

$

16,914

$

65,239

Depreciation, depletion and amortization

(16,397

)

(9,065

)

(25,462

)

Treatment costs

574

26

600

Change in product inventory

1,608

5,280

6,888

Reclamation and other costs

(97

)

(326

)

(423

)

Cash Cost, Before By-product Credits (1)

34,013

12,829

46,842

Reclamation and other costs

96

327

423

Exploration

691

85

776

Sustaining capital

8,506

826

9,332

AISC, Before By-product Credits (1)

43,306

14,067

57,373

By-product credits:

Silver

(100

)

(353

)

(453

)

Total By-product credits

(100

)

(353

)

(453

)

Cash Cost, After By-product Credits

$

33,913

$

12,476

$

46,389

AISC, After By-product Credits

$

43,206

$

13,714

$

56,920

Divided by ounces produced

27

17

44

Cash Cost, Before By-product Credits, per Ounce

$

1,272

$

756

$

1,071

By-product credits per ounce

(4

)

(21

)

(10

)

Cash Cost, After By-product Credits, per Ounce

$

1,268

$

735

$

1,061

AISC, Before By-product Credits, per Ounce

$

1,619

$

829

$

1,312

By-product credits per ounce

(4

)

(21

)

(10

)

AISC, After By-product Credits, per Ounce

$

1,615

$

808

$

1,302

In thousands (except per ounce amounts)

Three Months Ended March 31, 2020

Total Silver

Total Gold

Total

Total cost of sales

$

60,314

$

65,239

$

125,553

Depreciation, depletion and amortization

(14,204)

(25,462)

(39,666)

Treatment costs

16,362

600

16,962

Change in product inventory

4,037

6,888

10,925

Reclamation and other costs

(42)

(423)

(465)

Exclusion of Lucky Friday costs

(3,876)

(3,876)

Cash Cost, Before By-product Credits (1)

62,591

46,842

109,433

Reclamation and other costs

902

423

1,325

Exploration

1,121

776

1,897

Sustaining capital

5,566

9,332

14,898

General and administrative

8,939

8,939

AISC, Before By-product Credits (1)

79,119

57,373

136,492

By-product credits:

Zinc

(16,026)

(16,026)

Gold

(21,626)

(21,626)

Lead

(6,926)

(6,926)

Silver

(453)

(453)

Total By-product credits

(44,578)

(453)

(45,031)

Cash Cost, After By-product Credits

$

18,013

$

46,389

$

64,402

AISC, After By-product Credits

$

34,541

$

56,920

$

91,461

Divided by ounces produced

3,123

44

Cash Cost, Before By-product Credits, per Ounce

$

20.04

$

1,071

By-product credits per ounce

(14.27)

(10)

Cash Cost, After By-product Credits, per Ounce

$

5.77

$

1,061

AISC, Before By-product Credits, per Ounce

$

25.33

$

1,312

(14.27)

(10)

AISC, After By-product Credits, per Ounce

$

11.06

$

1,302

In thousands (except per ounce amounts)

Original Estimate for Twelve Months Ended December 31, 2021

Greens
Creek

Lucky Friday

San
Sebastian

Corporate(3)

Total Silver

Total cost of sales

$

220,000

$

90,400

$

$

310,400

Depreciation, depletion and amortization

(46,000

)

(26,000

)

(72,000

)

Treatment costs

49,000

17,100

66,100

Change in product inventory

(5,700

)

(5,700

)

Reclamation and other costs

1,500

1,000

2,500

Cash Cost, Before By-product Credits (1)

218,800

82,500

301,300

Reclamation and other costs

3,400

500

3,900

Exploration

4,000

4,000

Sustaining capital

38,000

22,000

60,000

General and administrative

32,000

32,000

AISC, Before By-product Credits (1)

264,200

105,000

401,200

By-product credits:

Zinc

(70,000

)

(14,500

)

(84,500

)

Gold

(62,000

)

(62,000

)

Lead

(28,000

)

(38,900

)

(66,900

)

Total By-product credits

(160,000

)

(53,400

)

(213,400

)

Cash Cost, After By-product Credits

$

58,800

$

29,100

$

$

87,900

AISC, After By-product Credits

$

104,200

$

51,600

$

$

187,800

Divided by silver ounces produced

9,850

3,600

13,450

Cash Cost, Before By-product Credits, per Silver Ounce

$

22.21

$

22.92

$

$

22.40

By-product credits per silver ounce

(16.24

)

(14.83

)

(15.87

)

Cash Cost, After By-product Credits, per Silver Ounce

$

5.97

$

8.09

$

$

6.53

AISC, Before By-product Credits, per Silver Ounce

$

26.82

$

29.17

$

$

29.83

By-product credits per silver ounce

(16.24

)

(14.83

)

(15.87

)

AISC, After By-product Credits, per Silver Ounce

$

10.58

$

14.34

$

$

13.96

In thousands (except per ounce amounts)

Original Estimate for Twelve Months Ended

December 31, 2021

Casa Berardi

Nevada
Operations

Total Gold

Total cost of sales

$

175,900

$

41,000

$

216,900

Depreciation, depletion and amortization

(61,000

)

(5,600

)

(66,600

)

Treatment costs

400

4,600

5,000

Change in product inventory

600

(11,600

)

(11,000

)

Reclamation and other costs

300

500

800

Cash Cost, Before By-product Credits (1)

116,200

28,900

145,100

Reclamation and other costs

500

100

600

Exploration

3,800

3,800

Sustaining capital

31,500

2,000

33,500

AISC, Before By-product Credits (1)

152,000

31,000

183,000

By-product credits:

Silver

(600

)

(550

)

(1,150

)

Total By-product credits

(600

)

(550

)

(1,150

)

Cash Cost, After By-product Credits

$

115,600

$

28,350

$

143,950

AISC, After By-product Credits

$

151,400

$

30,450

$

181,850

Divided by gold ounces produced

127

21

148

Cash Cost, Before By-product Credits, per Gold Ounce

$

919

$

1,376

$

984

By-product credits per gold ounce

(5

)

(26

)

(8

)

Cash Cost, After By-product Credits, per Gold Ounce

$

914

$

1,350

$

976

AISC, Before By-product Credits, per Gold Ounce

$

1,201

$

1,476

$

1,241

By-product credits per gold ounce

(5

)

(26

)

(8

)

AISC, After By-product Credits, per Gold Ounce

$

1,196

$

1,450

$

1,233

In thousands (except per ounce amounts)

Original Estimate for Twelve Months Ended

December 31, 2021

Total Silver

Total Gold

Total

Total cost of sales

$

310,400

$

216,900

$

527,300

Depreciation, depletion and amortization

(72,000

)

(66,600

)

(138,600

)

Treatment costs

66,100

5,000

71,100

Change in product inventory

(5,700

)

(11,000

)

(16,700

)

Reclamation and other costs

2,500

800

3,300

Cash Cost, Before By-product Credits (1)

301,300

145,100

446,400

Reclamation and other costs

3,900

600

4,500

Exploration

4,000

3,800

7,800

Sustaining capital

60,000

33,500

93,500

General and administrative

32,000

32,000

AISC, Before By-product Credits (1)

401,200

183,000

584,200

By-product credits:

Zinc

(84,500

)

(84,500

)

Gold

(62,000

)

(62,000

)

Lead

(66,900

)

(66,900

)

Silver

(1,150

)

(1,150

)

Total By-product credits

(213,400

)

(1,150

)

(214,550

)

Cash Cost, After By-product Credits

$

87,900

$

143,950

$

231,850

AISC, After By-product Credits

$

187,800

$

181,850

$

369,650

Divided by ounces produced

13,450

148

Cash Cost, Before By-product Credits, per Ounce

$

22.40

$

984

By-product credits per ounce

(15.87

)

(8

)

Cash Cost, After By-product Credits, per Ounce

$

6.53

$

976

AISC, Before By-product Credits, per Ounce

$

29.83

$

1,241

By-product credits per ounce

(15.87

)

(8

)

AISC, After By-product Credits, per Ounce

$

13.96

$

1,233

In thousands (except per ounce amounts)

Current Estimate for Twelve Months Ended December 31, 2021

Greens
Creek

Lucky Friday

San
Sebastian

Corporate(3)

Total Silver

Total cost of sales

$

213,000

$

90,400

$

$

303,400

Depreciation, depletion and amortization

(55,000)

(26,000)

(81,000)

Treatment costs

38,000

17,100

55,100

Change in product inventory

4,000

4,000

Reclamation and other costs

4,500

1,000

5,500

Cash Cost, Before By-product Credits (1)

204,500

82,500

287,000

Reclamation and other costs

4,500

500

5,000

Exploration

4,000

4,000

Sustaining capital

36,000

22,000

58,000

General and administrative

34,500

34,500

AISC, Before By-product Credits (1)

249,000

105,000

388,500

By-product credits:

Zinc

(86,000)

(14,500)

(100,500)

Gold

(70,000)

(70,000)

Lead

(28,000)

(38,900)

(66,900)

Total By-product credits

(184,000)

(53,400)

(237,400)

Cash Cost, After By-product Credits

$

20,500

$

29,100

$

$

49,600

AISC, After By-product Credits

$

65,000

$

51,600

$

$

151,100

Divided by silver ounces produced

9,850

3,600

13,450

Cash Cost, Before By-product Credits, per Silver Ounce

$

20.76

$

22.92

$

$

21.34

By-product credits per silver ounce

(18.68)

(14.83)

(17.65)

Cash Cost, After By-product Credits, per Silver Ounce

$

2.08

$

8.09

$

$

3.69

AISC, Before By-product Credits, per Silver Ounce

$

25.28

$

29.17

$

$

28.88

By-product credits per silver ounce

(18.68)

(14.83)

(17.65)

AISC, After By-product Credits, per Silver Ounce

$

6.60

$

14.34

$

$

11.23

In thousands (except per ounce amounts)

Current Estimate for Twelve Months Ended

December 31, 2021

Casa Berardi

Nevada
Operations

Total Gold

Total cost of sales

$

212,000

$

41,000

$

253,000

Depreciation, depletion and amortization

(87,500

)

(5,600

)

(93,100

)

Treatment costs

400

4,600

5,000

Change in product inventory

(9,000

)

(11,600

)

(20,600

)

Reclamation and other costs

300

500

800

Cash Cost, Before By-product Credits (1)

116,200

28,900

145,100

Reclamation and other costs

500

100

600

Exploration

3,800

3,800

Sustaining capital

31,500

2,000

33,500

AISC, Before By-product Credits (1)

152,000

31,000

183,000

By-product credits:

Silver

(600

)

(550

)

(1,150

)

Total By-product credits

(600

)

(550

)

(1,150

)

Cash Cost, After By-product Credits

$

115,600

$

28,350

$

143,950

AISC, After By-product Credits

$

151,400

$

30,450

$

181,850

Divided by gold ounces produced

127

21

148

Cash Cost, Before By-product Credits, per Gold Ounce

$

919

$

1,376

$

984

By-product credits per gold ounce

(5

)

(26

)

(8

)

Cash Cost, After By-product Credits, per Gold Ounce

$

914

$

1,350

$

976

AISC, Before By-product Credits, per Gold Ounce

$

1,201

$

1,476

$

1,241

By-product credits per gold ounce

(5

)

(26

)

(8

)

AISC, After By-product Credits, per Gold Ounce

$

1,196

$

1,450

$

1,233

In thousands (except per ounce amounts)

Current Estimate for Twelve Months Ended

December 31, 2021

Total Silver

Total Gold

Total

Total cost of sales

$

303,400

$

253,000

$

556,400

Depreciation, depletion and amortization

(81,000)

(93,100)

(174,100)

Treatment costs

55,100

5,000

60,100

Change in product inventory

4,000

(20,600)

(16,600)

Reclamation and other costs

5,500

800

6,300

Cash Cost, Before By-product Credits (1)

287,000

145,100

432,100

Reclamation and other costs

5,000

600

5,600

Exploration

4,000

3,800

7,800

Sustaining capital

58,000

33,500

91,500

General and administrative

34,500

34,500

AISC, Before By-product Credits (1)

388,500

183,000

571,500

By-product credits:

Zinc

(100,500)

(100,500)

Gold

(70,000)

(70,000)

Lead

(66,900)

(66,900)

Silver

(1,150)

(1,150)

Total By-product credits

(237,400)

(1,150)

(238,550)

Cash Cost, After By-product Credits

$

49,600

$

143,950

$

193,550

AISC, After By-product Credits

$

151,100

$

181,850

$

332,950

Divided by ounces produced

13,450

148

Cash Cost, Before By-product Credits, per Ounce

$

21.34

$

984

By-product credits per ounce

(17.65)

(8)

Cash Cost, After By-product Credits, per Ounce

$

3.69

$

976

AISC, Before By-product Credits, per Ounce

$

28.88

$

1,241

By-product credits per ounce

(17.65)

(8)

AISC, After By-product Credits, per Ounce

$

11.23

$

1,233

(1)

Includes all direct and indirect operating costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, and royalties, after by-product revenues earned from all metals other than the primary metal produced at each unit. AISC, Before By-product Credits also includes on-site exploration, reclamation, and sustaining capital cost.

(2)

The unionized employees at Lucky Friday were on strike from March 2017 until January 2020, and production at Lucky Friday had been limited from the start of the strike until the ramp-up was substantially completed in the fourth quarter of 2020. Costs related to ramp-up activities totaling $6.3 million, along with $1.8 million in non-cash depreciation expense, in the first quarter of 2020 have been excluded from the calculations of cost of sales and other direct production costs and depreciation, depletion and amortization, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

(3)

AISC, Before By-product Credits for our consolidated silver properties includes corporate costs for general and administrative expense, exploration and sustaining capital.

(4)

In late March, the Government of Quebec ordered the mining industry to reduce to minimum operations as part of the fight against the COVID-19 virus, causing us to suspend our Casa Berardi operations from approximately March 24 until April 15, when limited mining operations resumed, resulting in the reduced mill throughput. Suspension-related costs totaling $0.9 million for the first quarter of 2020 are reported in a separate line item on our consolidated statements of operations and excluded from the calculations of cost of sales and other direct production costs and depreciation, depletion and amortization and Cash Cost and AISC, After By-product Credits, per Gold Ounce.

(5)

Production was suspended at the Hollister and Midas mines and Aurora mill in the latter part of 2019. Suspension-related costs at Nevada Operations totaling $3.6 million and $4.0 million for the first quarters of 2021 and 2020, respectively, are reported in a separate line item on our consolidated statements of operations and excluded from the calculations of cost of sales and other direct production costs and depreciation, depletion and amortization and Cash Cost and AISC, After By-product Credits, per Gold Ounce.

Reconciliation of Net Income (Loss) Applicable to Common Stockholders (GAAP) to Adjusted Net Income (Loss) Applicable to Common Stockholders (non-GAAP)

This release refers to a non-GAAP measure of adjusted net income (loss) applicable to common stockholders and adjusted net income (loss) per share, 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 adjusted net income (loss) per common share provides investors with the ability to better evaluate our underlying operating performance.

Dollars are in thousands (except per share amounts)

Three Months Ended March 31,

2021

2020

Income (loss) income applicable to common stockholders (GAAP)

$

18,833

$

(17,323

)

Adjusting items:

Gain on derivatives contracts

(473

)

(7,893

)

Ramp-up and suspension costs

4,318

12,996

Provisional price gains

(552

)

(2,610

)

Environmental accruals

2,882

Additional interest associated with early repayment of long-term debt

2,902

Loss on extinguishment of debt

1,666

Net foreign exchange loss (gain)

2,064

(6,636

)

Unrealized loss on investments

3,506

978

Gain on disposition of properties, plants, equipment and mineral interests

9

(104

)

Adjusted net income (loss) applicable to common stockholders

$

30,587

$

(16,024

)

Weighted average shares - basic

534,101

523,215

Weighted average shares - diluted

540,527

523,215

Basic and diluted adjusted net income (loss) per common share

$

0.06

$

(0.03

)

Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to Adjusted EBITDA (non-GAAP) and Net Debt (non-GAAP)

This release refers to the non-GAAP measures of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), which is a measure of our operating performance, and net debt to adjusted EBITDA for the last 12 months (or "LTM adjusted EBITDA"), which is a measure of our ability to service our debt. Adjusted EBITDA is calculated as net income (loss) before the following items: interest expense, income and mining tax provision (benefit), depreciation, depletion, and amortization expense, acquisition costs,, foreign exchange gains and losses, unrealized gains and losses on derivative contracts, suspension-related costs, provisional price gains and losses, stock-based compensation, unrealized gains and losses on investments, provisions for closed operations, and interest and other income (expense). Net debt is calculated as total debt, which consists of the liability balances for our Senior Notes and 2021 Notes and capital leases, less the total of our cash and cash equivalents and short-term investments. Management believes that, when presented in conjunction with comparable GAAP measures, Adjusted EBITDA and net debt to LTM adjusted EBITDA are useful to investors in evaluating our operating performance and ability to meet our debt obligations. The following table reconciles net (loss) income and debt to Adjusted EBITDA and net debt: