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Hecla Reports 22 Percent Higher Silver, 4 Percent Higher Gold Production, Lower Debt, Growing Cash Balances

Jan 9, 2020 | Mining, News

COEUR D’ALENE, IDAHO—Hecla Mining Company announced preliminary silver and gold production results for the fourth quarter and full year 2019 as well as a significant reduction of net debt and an increase in cash position. The Lucky Friday Union workers have ratified the collective bargaining agreement, reversing the result of the vote held in early December, and many of the workers are expected to return to work.

2019 HIGHLIGHTS

  • Silver production of 12.6 million ounces, an increase of 22 percent and gold production of 272,873 ounces, an increase of 4 percent. The gold production in 2019 was the highest in Hecla’s history.
  • Silver equivalent production of 47.2 million ounces and gold equivalent production of 549,172 ounces.
  • Year-end cash and cash equivalents of approximately $62 million.
  • Net debt reduction of approximately $136 million, or 23 percent, from the net debt high mid-2019.
  • Generated sufficient free cash flow to fully repay the $50 million drawn from the revolving line of credit at the end of the third quarter.
  • Raised approximately $49 million from issuing 21.4 million shares from the At The Market (ATM) facility in the fourth quarter.
  • Exchanged $31 million of debt owed to Ressources Québec for 10.7 million shares of common stock and their option to be allocated up to $35 million of a new bond offering.
  • Union workers at Lucky Friday ratified the collective bargaining agreement and many are expected to return to work.

“2019 marked a year of higher metal production and in the second half of the year, strong cash flow generation and an improved balance sheet,” said Phillips S. Baker, Jr., Hecla’s President and CEO. “While gold & silver prices have increased, Greens Creek’s record silver production combined with the most gold production in Hecla’s history were the primary reasons for the cash flow strength.”

We are pleased that the union has ratified the collective bargaining agreement at Lucky Friday and are expected to return to work. While this has been a challenging time for the mine and the local community, we believe the return of the workforce will help it reach full production by year-end 2020 and help the Silver Valley community,” Mr. Baker added.

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Alaska Business October 2020 Cover

October 2020

Greens Creek

At the Greens Creek mine in 2019, 9.9 million ounces of silver and 56,624 ounces of gold were produced. For the fourth quarter, 2.7 million ounces of silver and 15,356 ounces of gold were produced. Silver production for 2019 was the highest it has been since Hecla acquired 100 percent ownership of the mine in 2008. The mill operated at an average of 2,318 tons per day (tpd) in 2019, which was a record.

Casa Berardi

At the Casa Berardi mine in 2019, 134,409 ounces of gold were produced, including 27,588 ounces from the East Mine Crown Pillar pit. For the fourth quarter, 34,793 ounces of gold were produced including 8,287 ounces from the East Mine Crown Pillar pit. As expected, gold production for the year was lower compared to 2018, which was the highest annual gold production at Casa Berardi since Hecla acquired it in mid-2013. Gold production for the fourth quarter was within 3 percent of the ounces produced in the fourth quarter of 2018. The mill operated at an average of 3,776 tpd in 2019.

San Sebastian

At the San Sebastian mine in 2019, 1.9 million ounces of silver and 15,673 ounces of gold were produced. For the fourth quarter, 422,434 ounces of silver and 3,897 ounces of gold were produced. If the Hugh Zone metal production is included, silver equivalent production for the year is the same as 2018. The mill operated at an average of 479 tpd in 2019.

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Nevada Operations

At the Nevada operations in 2019, 66,167 ounces of gold and 181,741 ounces of silver were produced. For the fourth quarter, 20,727 ounces of gold and 21,476 ounces of silver were produced. Ore was processed at an average of 576 tpd.

Lucky Friday

At the Lucky Friday mine, 625,432 ounces and 208,977 ounces of silver were produced for the year and the fourth quarter, respectively. Limited production and capital improvements, performed by salaried staff, and limited shipments of concentrate occurred in the fourth quarter. The Company anticipates re-staffing of the mine to take place in stages, with a ramp-up to full production levels expected by the end of 2020.

PRODUCTION SUMMARY

 

Fourth Quarter Ended

 

Twelve Months Ended

 

 

December 31,
2019

December 31,
2018

 

December 31,
2019

December 31,
2018

 

PRODUCTION

 

 

Increase/

(Decrease)

 

 

Increase/

(Decrease)

Silver (oz)

3,404,475

2,715,385

25%

12,597,722

10,369,503

22%

Gold (oz)

74,773

70,987

5%

272,873

262,103

4%

Lead (tons)

6,778

4,704

44%

24,184

20,091

20%

Zinc (tons)

16,188

13,711

18%

58,860

56,023

5%

Greens Creek – Silver (oz)

2,741,090

2,163,563

27%

9,890,125

7,953,003

24%

Greens Creek – Gold (oz)

15,356

13,097

17%

56,624

51,493

10%

Lucky Friday – Silver (oz)

208,977

13,026

1,504%

625,432

169,041

270%

San Sebastian – Silver (oz)

422,434

443,302

(5)%

1,868,884

2,037,072

(8)%

San Sebastian – Gold (oz)

3,897

2,928

33%

15,673

14,979

5%

Casa Berardi – Gold (oz)

34,793

35,864

(3)%

134,409

162,744

(17)%

Nevada Operations – Silver (oz)

21,476

88,156

(76)%

181,741

172,301

N/A

Nevada Operations – Gold (oz)

20,727

19,099

9%

66,167

32,887

N/A

Strengthening the Balance Sheet

Cash and cash equivalents were approximately $62 million at December 31, 2019, with the revolving line of credit undrawn. The net debt has been reduced by approximately $136 million, or 23 percent, since June 30, 2018.

On December 18, 2019, the company entered into an exchange agreement with Ressources Québec in which it issued 10,654,856 shares of the company’s common stock as prepayment of approximately $30.5 million of Series 2018-A Senior Notes due May 1, 2021. Ressources Québec has the option to participate up to $35 million (or more as the parties may decide) in any future offering of debt securities as part of any refinancing of the outstanding 6.875 percent Senior Notes due 2021.

Hecla issued 21.4 million shares under its At The Market (“ATM”) facility in the fourth quarter for net proceeds of $49.0 million.

 

Alaska Business Magazine October 2020 Cover

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One factor that contributes to successful business operations is the ability to adapt to new situations; rare is the organization that flourishes without changing at all. This year, as we are all acutely aware by now, will go down in history for many, many things including the wide range of methods implemented by businesses as they adapted to the new landscape presented to them by COVID-19.

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