Hecla Reports 2010 Record Operating Cash Flow of $198 Million and Updates Basin Litigation
25.02.2011 | Business Wire
FULL YEAR 2010 HIGHLIGHTS - RECORD FINANCIAL RESULTS FOURTH QUARTER 2010 HIGHLIGHTS 1) The adjusted income applicable to common shareholders represents 2) Total cash cost per ounce of silver represents a non-U.S. FINANCIAL OVERVIEW Coeur d′Alene Basin Litigation Metals Prices OPERATIONS OVERVIEW (1) Total cash cost per ounce of silver represents a non-U.S. Greens Creek Lucky Friday #4 Shaft Project 2011 GUIDANCE DIVIDEND ON SERIES B PREFERRED STOCK CONFERENCE CALL AND WEBCAST ABOUT HECLA Cautionary Statements Cautionary Statements to Investors on Reserves and Resources HECLA MINING COMPANY HECLA MINING COMPANY HECLA MINING COMPANY HECLA MINING COMPANY (1) Gold, lead and zinc produced have been treated as HECLA MINING COMPANY (1) Cash cost per ounce of silver represents non-U.S. HECLA MINING COMPANY Metric tonnes under (1) Adjusted income (loss) and adjusted income (loss) per
Hecla Mining Company ('Hecla?) (NYSE:HL)
today announced record operating cash flow of $197.8 million, net income
applicable to common shareholders of $35.4 million, or $0.14 per basic
share, and adjusted net income applicable to common shareholders of
$82.6 million1 or $0.33 per basic share for the year. Full
year silver production was 10.6 million ounces at a total cash cost of
negative $1.46 per ounce, net of by-products.2
Highest annual revenue and operating cash flow in Hecla′s 120-year
history
Revenue of $418.8 million, a $106.3 million increase over 2009
Net income applicable to common shareholders of $35.4 million, or
$0.14 per basic share
Adjusted net income applicable to common shareholders of $82.6
million, or $0.33 per basic share
Operating cash flow of $197.8 million, a 66% increase over 2009
Silver production of 10.6 million ounces at a total cash cost of
negative $1.46 per ounce, net of by-products
Silver reserves and resources increased to 142 million ounces and 248
million ounces, respectively
Significant advancement with the Lucky Friday #4 Shaft Project
Cash and cash equivalents of $283.6 million at December 31, 2010 and
no debt
Revenue of $134.5 million, a $46.4 million increase over the same
period in 2009
Net loss applicable to common shareholders of $13.1 million, or $0.05
per basic share, after giving effect to certain significant items:
$193.2 million accrual on the Coeur d'Alene Basin litigation
$133.6 million in tax benefit
Adjusted net income applicable to common shareholders of $30.6
million, or $0.12 per basic share
Operating cash flow of $85.8 million, a 34% increase over the same
period in 2009
Silver production of 2.7 million ounces at a total cash cost of
negative $0.14 per ounce, net of by-products
'The fourth quarter and year-end results were record setting in a number
of areas, reflecting increased throughput and low costs at our Greens
Creek and Lucky Friday operations, and strong metals prices,? said
Hecla′s President and Chief Executive Officer, Phillips S. Baker, Jr.
'After considering all investing and financing activities, we generated
$178.9 million in net cash flow last year. Our strong balance sheet and
growing cash flow should be sufficient to meet our financial obligations
of a potential Basin litigation settlement, as well as continuing to
fund capital projects to expand our operations and explore our large
land packages in the U.S. and Mexico.?
a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement.
A reconciliation of net income applicable to common shareholders (GAAP)
to adjusted income can be found at the end of the release.
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.
Hecla reported 2010 and fourth quarter record revenues and cash flow
from operating activities, surpassing the previous 120-year record set
in 2009, as a result of increased tonnage at Lucky Friday and Greens
Creek, and higher metals prices. Net income applicable to common
shareholders for the full year and net loss applicable to common
shareholders for the fourth quarter were impacted by the following three
items:
An accrual of $193.2 million in the fourth quarter 2010 due to an
increase in Hecla Limited′s estimated liability for environmental
obligations in Idaho′s Coeur d′Alene Basin caused by historic mining
activity. The increased accrual is based on a potential settlement
that includes all Basin claims in the litigation. Hecla Limited′s
accrual now stands at $262 million (see Coeur d′Alene Basin Litigation
below).
A change in net income tax benefits, as a result of higher metals
prices, increased profitability, and the recognition of the tax effect
of the environmental liability accrual described above.
A $20.8 million loss, primarily non-cash in 2010 related to long-term
base metal hedging, which includes a loss of $9.6 million in the
fourth quarter 2010 due to rising base-metals prices, and
mark-to-market changes in the value of base metal derivative
contracts. A summary of the quantities of base metals committed at
December 31, 2010 is included at the end of this release.
Fourth Quarter Ended
Year Ended
Dec 31, 2010
Dec 31, 2009
Dec 31, 2010
Dec 31, 2009
SUMMARY FINANCIAL DATA (000s)
Sales
$
134,460
$
88,036
$
418,813
$
312,548
Gross Profit
$
74,693
$
35,928
$
194,819
$
101,069
Environmental remediation accrual for the Coeur d′Alene Basin
$
(193,196
)
$
- -
$
(193,196
)
$
- -
Losses on forecast derivative contracts
$
(9,562
)
$
- -
$
(20,758
)
$
- -
Tax benefit from decreased deferred tax asset valuation allowance
$
80,410
$
7,100
$
88,069
$
7,100
Tax effect of Basin accrual
$
78,592
$
- -
$
78,592
$
- -
Income (loss) applicable to common shareholders
$
(13,144
)
$
28,660
$
35,350
$
54,193
Basic income (loss) per common share
$
(0.05
)
$
0.12
$
0.14
$
0.24
Diluted income (loss) per common share
$
(0.05
)
$
0.11
$
0.13
$
0.23
Cash flow provided by operating activities
$
85,824
)
$
63,860
$
197,809
$
119,165
Hecla′s cash position at December 31, 2010 was $284 million, compared to
$105 million of cash on hand at December 31, 2009.
Capital expenditures at our operations totaled $72.7 million for the
full year 2010 and $23.2 million for the fourth quarter. Full year
expenditures incurred at Lucky Friday were $54.4 million, which included
$15.8 million in the fourth quarter. The majority of the expenditures at
Lucky Friday were on the #4 Shaft Project. Full year expenditures
incurred at Greens Creek were $18.3 million, which included $7.4 million
for the fourth quarter.
Exploration expenditures for the fourth quarter and full year 2010 were
$5.4 million and $21.6 million, respectively. As detailed in the
exploration news release issued on February 24th, 2011, Hecla achieved
the highest level of silver reserves and resources in its history with
142 million ounces and 248 million ounces, respectively. Updated
reserves and resources at December 31, 2010 also include gold reserves
and resources of 757,000 ounces and 450,700 ounces, respectively; lead
reserves and resources of 556,200 tons and 1.2 million tons,
respectively; and zinc reserves and resources of 859,000 tons and
831,900 tons, respectively.
The negotiators representing Hecla, the United States, the Coeur d′Alene
Indian Tribe, and the State of Idaho with respect to the Coeur d′Alene
Basin environmental litigation and related claims have reached an
understanding on proposed financial terms to be incorporated into a
comprehensive settlement that would contain additional terms yet to be
negotiated.
'Determining the financial terms of any settlement of this longstanding
litigation is an important step forward in finally resolving this
dispute,? said Mr. Baker. 'While the cost is significant, we believe the
terms are consistent with both our current plans and adding
opportunities that will allow Hecla to grow further. We hope a final
settlement can be achieved by the end of the second quarter.?
On February 18, 2011, the Idaho Federal District Court issued an Order
giving the parties to the litigation until April 15, 2011 to inform the
Court of the status of settlement negotiations. During this time period,
the negotiators will work towards finalizing and agreeing to the
settlement terms, followed by a recommendation for approval to their
respective parties. If the parties are able to complete terms of
settlement, it is expected that a Consent Decree would be lodged,
followed by a public comment period of 30 days and a period for
responses to those public comments. The Consent Decree would also
require approval by the Idaho Federal District Court. If the Consent
Decree is entered, Hecla would make the following payments:
$102 million of cash and $55.5 million of cash or stock 30 days after
entry of the Consent Decree
$25 million of cash 30 days after the first anniversary of entry of
the Consent Decree
$15 million of cash 30 days after the second anniversary of entry of
the Consent Decree
$65.9 million by August 2014, as quarterly payments of the proceeds
from the exercise of any outstanding Series 1 and Series 3 warrants
(which have an exercise price of between $2.45 and $2.50 per share)
during the quarter, with the balance of the $65.9 million due in
August 2014 (regardless of the amount of warrants that have been
exercised)
While the negotiators have reached an understanding on proposed
financial terms, no party has agreed to any of these terms as final, nor
has any party represented that any of these terms are final or agreed
to. There can be no assurance that a final settlement will be reached.
Realized metals prices increased significantly in 2010 compared to 2009.
In the fourth quarter and full year, realized metals prices exceeded
market prices primarily because of provisional price gains of $9.6
million in the fourth quarter and $16.6 million for the year due largely
to increased precious metals prices in the time period between the
shipment of concentrate and final settlement.
Fourth Quarter Ended
Year Ended
Dec 31, 2010
Dec 31, 2009
Dec 31, 2010
Dec 31, 2009
AVERAGE METAL PRICES
Silver ? London PM Fix ($/oz.)
26.43
17.58
20.16
14.65
Realized price per ounce
32.51
18.67
22.70
15.63
Gold ? London PM Fix ($/oz.)
1,367
1,102
1,225
973
Realized price per ounce
1,426
1,190
1,271
1,017
Lead ? LME Cash ($/pound)
1.08
1.04
0.97
0.78
Realized price per pound
1.10
1.08
0.98
0.88
Zinc ? LME Cash ($/pound)
1.05
1.01
0.98
0.75
Realized price per pound
1.09
1.20
0.96
0.90
In spite of higher mine and mill throughput at both Greens Creek and
Lucky Friday, silver production decreased slightly in 2010 due to lower
silver ore grades at both operations, which was anticipated. However,
production of lead and zinc, which are important by-products, increased
to record levels in 2010 due to higher grades and ore volumes. Fourth
quarter silver production was higher compared to a year ago mainly due
to higher milled tonnage.
The key drivers for the reduction in total cash cost per ounce of silver
year-over-year are higher metals prices and increased production of
gold, lead and zinc. The increase in the fourth quarter total cash cost
per ounce of silver, in comparison to the same period in 2009, is due to
lower zinc and lead grades resulting in lower by-product credits.
Fourth Quarter Ended
Year Ended
Dec 31, 2010
Dec 31, 2009
Dec 31, 2010
Dec 31, 2009
PRODUCTION SUMMARY ? TOTALS
Silver ? Ounces produced
2,741,106
2,411,122
10,566,352
10,989,660
Payable ounces sold
2,413,620
1,832,579
9,360,172
9,798,473
Gold ? Ounces produced
16,111
16,489
68,838
67,278
Payable ounces sold
14,466
11,763
57,386
54,801
Lead ? Tons produced
10,739
11,588
46,955
44,263
Payable tons sold
9,485
8,981
40,434
37,210
Zinc ? Tons produced
18,771
22,258
83,782
80,995
Payable tons sold
14,485
17,386
62,851
60,722
Average cost per ounce of silver produced1:
Total cash costs ($/oz.)
(0.14
)
(2.00
)
(1.46
)
1.91
Total production costs ($/oz.)
5.06
4.76
4.28
7.77
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 the release.
Full year silver production at Greens Creek was 7.2 million ounces,
which included 1.9 million ounces in the fourth quarter, in comparison
to 7.5 million ounces and 1.5 million ounces, respectively, in the same
periods in 2009. The decrease in silver production year-over-year is due
to lower silver ore grade. The lower silver grade, along with the higher
zinc and lead ore grades, were expected and are due to differences in
the sequencing of production according to the mine plan. The increase in
silver production in the fourth quarter over the same period in 2009 is
attributable to higher silver, gold, lead and zinc grades and
recoveries, and increased mill throughput. The Company is working to
optimize mill capacity at Greens Creek and has successfully increased
throughput by approximately 10% since 2008 to 2200 tons per day, and
will work towards increasing throughput to 2250 tons per day in 2011.
Total cash cost at Greens Creek for the full year was negative $3.90 per
ounce, net of by-products and was negative $1.93 per ounce for the
fourth quarter, net of by-product credits, compared to $0.35 and
negative $4.85 per ounce, respectively, for the same periods in 2009.
The increase in total cash cost in the fourth quarter over the same
period in 2009 is due in part to lower by-product credits. The total
decrease in cash cost per ounce of silver produced year-over-year was
primarily due to increased by-product production credits, partially
offset by higher treatment and freight costs, production costs, and
production taxes. The higher treatment and freight costs in 2010 are due
to increased price participation charges by smelters.
Full year silver production at Lucky Friday was 3.4 million ounces and
819,317 ounces in the fourth quarter, compared to 3.5 million ounces and
865,595 ounces, in the respective periods in 2009. The overall decrease
in production year-over-year and quarter-over-quarter is primarily due
to lower silver ore grade, which was expected. The operation achieved
record lead and zinc production in 2010 with 21,619 tons and 9,286 tons,
respectively, which included 5,356 tons and 2,214 tons, respectively, in
the fourth quarter.
Total cash cost at Lucky Friday for the full year was $3.76 per ounce,
net of by-product credits and $4.06 per ounce in the fourth quarter, net
of by-product credits, in comparison to $5.21 and $3.10 per ounce,
respectively, for the same periods in 2009. The decrease in total cash
cost per ounce year-over-year is due to higher by-product credits
resulting from higher lead and zinc prices, partially offset by higher
employee profit sharing, production costs, expensed site infrastructure,
and treatment and freight costs. The increase in total cash cost per
ounce over the fourth quarter in 2009 is attributable to lower silver
grades.
Michael Dexter, until recently the Lucky Friday General Manager, retired
after 25 years with Hecla. 'We are grateful for Mike′s valuable
contribution and leadership over more than two decades,? said Mr. Baker.
'Not only has Lucky Friday been operating for 69 years, but with the
current proposed development of the #4 Shaft, the mine is expected to
produce beyond 2030. This would not have been possible without the hard
work and dedication of Mike and his team. We wish him all the best in
his retirement and look forward to working with him as our community
relations representative in the Silver Valley. We would also like to
congratulate John Jordan, who will be taking the helm as General
Manager, and guiding Lucky Friday to continued success. John was
previously the Mine Superintendent at Lucky Friday and has 30 years
experience in the mining industry.?
The #4 Shaft Project at Lucky Friday is progressing well and Hecla
believes that the project could increase Lucky Friday′s annual silver
production by approximately 60% from current levels and extend the mine
life beyond 2030. Total estimated capital expenditures are expected to
be approximately $200 million, for an internal shaft descending from the
4900 level to the 8800 level, with expected completion in 2014. As of
December 31, 2010, approximately $50 million in total capital
expenditures has been spent since inception of the proposed project,
which includes $37.7 million spent in 2010. Capital expenditures for the
#4 Shaft Project in 2011 are expected to be approximately $45 million.
Final approval of the total project by Hecla′s board of directors could
come as early as mid-2011.
In the fourth quarter, basic engineering work for a centralized
refrigeration system was completed. The scope of work for the project
was revised to include additional shaft depth from the 7800 level to the
8800 level. As of December 31, 2010, off-shaft development and shaft
development have advanced a total of 5,359 feet and 78 feet,
respectively. Construction of the hoist is proceeding with all major
mechanical components installed and operational.
Hecla expects silver production in 2011 to range between 9 and 10
million ounces. Silver production is expected to be slightly lower in
2011 compared to 2010, due to lower silver grades, along with higher
zinc and lead ore grades, which are all linked to mine sequencing at
Greens Creek and Lucky Friday. Silver production is expected to increase
in 2012 as grades increase at both properties. Total cash cost is
forecast to be approximately zero dollars per ounce of silver produced,
net of by-product credits, at current metals prices ($1,350 per ounce of
gold, and $1.05 per pound of lead and zinc).
Capital expenditures in 2011 are expected to be approximately $100
million. Hecla expects to spend approximately $27 million in exploration
in 2011.
Mr. Baker said, 'One of our key areas of focus in 2011 will be to work
towards enhancing our production pipeline through our aggressive
exploration program in the four districts we dominate, and to bring new
assets into the company via mergers and acquisitions. In addition to the
development of the #4 Shaft Project at our Lucky Friday operation, which
is expected to provide production growth beyond 2015, we are working
towards increasing near-term and future production.?
Hecla's board of directors has elected to declare the regular quarterly
dividend of $0.875 per share on the outstanding Series B Cumulative
Convertible Preferred Stock, on a total of 157,816 shares outstanding.
This represents a total amount to be paid of approximately $138,000. The
cash dividend is payable April 1, 2011, to shareholders of record on
March 15, 2011.
A conference call and webcast will be held Friday, February 25, at 10
a.m. Eastern Time to discuss these results. You may join the conference
call by dialing toll-free 1-800-299-8538 or 1-617-786-2902
internationally. The participant passcode is HECLA.
Hecla′s live and archived webcast can be accessed at www.hecla-mining.com
under Investor Relations or via Thomson StreetEvents Network. Individual
investors can listen to the call at www.earnings.com,
Thomson's individual investor portal, powered by StreetEvents.
Institutional investors can access the call via Thomson Street Events (www.streetevents.com),
a password-protected event management site.
Established in 1891, Hecla Mining Company is 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.
Statements made which are not historical facts, such as anticipated
payments, litigation outcome, 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, and 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 and has no intention 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
10Q. You can review and obtain copies of these filings from the SEC′s
website at www.sec.gov.
Consolidated Statements of Operations
(dollars and shares in thousands, except per share amounts -
unaudited)
Fourth Quarter Ended
Year Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2010
Dec. 31, 2009
Sales of products
$
134,460
$
88,036
$
418,813
$
312,548
Cost of sales and other direct production costs
45,811
36,402
163,983
148,642
Depreciation, depletion and amortization
13,956
15,706
60,011
62,837
59,767
52,108
223,994
211,479
Gross profit
74,693
35,928
194,819
101,069
Other operating expenses
General and administrative
5,758
4,817
18,219
18,624
Exploration
5,439
4,246
21,605
9,247
Other operating expense
1,309
1,674
5,334
5,389
Gain on sale of properties, plants and equipment
80
- -
80
(6,234
)
Termination of employee benefit plan
- -
- -
- -
(8,950
)
Provision for closed operations and environmental matters
195,409
5,306
201,136
7,721
207,995
16,043
246,374
25,797
Income (loss) from operations
(133,302
)
19,885
(51,555
)
75,272
Other income (expense):
Loss on derivative contracts
(9,562
)
- -
(20,758
)
- -
Gain (loss) on sale or (impairment) of investments
- -
4,070
(151
)
1,052
Interest and other income (expense)
(11
)
749
126
1,121
Debt-related fees
- -
(248
)
- -
(5,973
)
Interest expense
(499
)
(1,095
)
(2,211
)
(11,326
)
(10,072
)
3,476
(22,994
)
(15,126
)
Income (loss) from operations before income taxes
(143,374
)
23,361
(74,549
)
60,146
Income tax benefit
133,638
8,707
123,532
7,680
Net income (loss)
(9,736
)
32,068
48,983
67,826
Preferred stock dividends
(3,408
)
(3,408
)
(13,633
)
(13,633
)
Income (loss) applicable to common shareholders
$
(13,144
)
$
28,660
$
35,350
$
54,193
Income per common share (after preferred dividends)
Basic
$
(0.05
)
$
0.12
$
0.14
$
0.24
Diluted
$
(0.05
)
$
0.11
$
0.13
$
0.23
Basic weighted average number of common shares outstanding
257,403
237,935
251,146
224,933
Diluted weighted average number of common shares outstanding
257,403
258,607
269,601
233,618
Consolidated Balance Sheets
(dollars and shares in thousands - unaudited)
Dec. 31, 2010
Dec. 31, 2009
ASSETS
Current assets:
Cash and cash equivalents
$
283,606
$
104,678
Short-term investments and securities held for sale
1,474
1,138
Accounts receivable
36,840
27,427
Inventories
19,131
21,466
Deferred taxes
87,287
7,176
Other current assets
3,683
4,578
Total current assets
432,021
166,463
Investments
1,194
2,157
Restricted cash and investments
10,314
10,945
Properties, plants and equipment, net
833,288
819,518
Deferred taxes
100,072
38,476
Other noncurrent assets
5,604
9,225
Total assets
$
1,382,493
$
1,046,784
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses
$
31,725
$
13,998
Accrued payroll and related benefits
10,789
14,164
Accrued taxes
16,042
6,240
Current portion of accrued reclamation and closure costs
175,484
5,773
Current portion of capital leases
2,481
1,560
Current derivative contract liabilities (Note 10)
20,016
- -
Total current liabilities
256,537
41,735
Long-term capital leases
3,792
3,281
Accrued reclamation and closure costs
143,313
125,428
Other noncurrent liabilities
16,598
10,855
Total liabilities
420,240
181,299
SHAREHOLDERS′ EQUITY
Preferred stock
543
543
Common stock
64,704
59,604
Capital surplus
1,179,751
1,121,076
Accumulated deficit
(265,577
)
(300,915
)
Accumulated other comprehensive loss
(15,117
)
(14,183
)
Treasury stock
(2,051
)
(640
)
Total shareholders' equity
962,253
865,485
Total liabilities and shareholders' equity
$
1,382,493
$
1,046,784
Common shares outstanding at end of year
258,486
238,336
Consolidated Statements of Cash Flows
(dollars in thousands - unaudited)
Year Ended
Dec. 31, 2010
Dec. 31, 2009
OPERATING ACTIVITIES
Net income
$
48,983
$
67,826
Noncash elements included in net income (loss):
Depreciation, depletion and amortization
60,235
63,061
Gain on sale of investments
(588
)
(4,070
)
Loss on impairment of investments
739
3,018
Gain on disposition of properties, plants and equipment
80
(6,234
)
Provision for reclamation and closure costs
196,262
5,172
Stock compensation
3,446
2,746
Provision (benefit) for deferred taxes
(141,707
)
(7,100
)
Preferred shares issued for bank fees
- -
4,262
Amortization of loan origination fees
621
3,993
Gain on termination of employee benefit plan
- -
(8,950
)
Loss on derivative contracts
20,795
2,139
Other, net
885
1,333
Change in assets and liabilities:
Accounts and notes receivable
(9,404
)
(18,117
)
Inventories
2,335
(135
)
Other current and noncurrent assets
3,279
(1,526
)
Accounts payable and accrued expenses
10,896
(3,663
)
Accrued payroll and related benefits
(3,376
)
6,015
Accrued taxes
9,802
4,866
Other noncurrent liabilities
3,192
2,989
Accrued reclamation and closure costs
(8,666
)
1,540
Net cash provided by operating activities
197,809
119,165
INVESTING ACTIVITIES
Additions to properties, plants and equipment
(67,414
)
(27,704
)
Proceeds from sale of investments
1,138
4,091
Proceeds from disposition of properties, plants and equipment
29
8,023
Redemption of restricted cash
1,459
3,487
Net cash used in investing activities
(64,788
)
(12,103
)
FINANCING ACTIVITIES
Proceeds from exercise of warrants and stock options
53,093
- -
Common stock issued
- -
128,334
Dividends paid to preferred shareholders
(4,513
)
- -
Payments on interest rate swap
- -
(3,013
)
Loan origination fees
(200
)
(1,467
)
Treasury share purchase
(693
)
- -
Repayments of debt and capital leases
(1,780
)
(162,708
)
Net cash provided by (used in) financing activities
45,907
(38,854
)
Net increase in cash and cash equivalents
178,928
68,208
Cash and cash equivalents at beginning of year
104,678
36,470
Cash and cash equivalents at end of year
$
283,606
$
104,678
Production Data
Fourth Quarter Ended
Year Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2010
Dec. 31, 2009
GREENS CREEK UNIT
Tons of ore milled
193,674
189,281
800,397
790,871
Mining cost per ton
$
45.88
$
44.89
$
43.00
$
42.33
Milling cost per ton
$
28.14
$
25.99
$
24.23
$
23.22
Ore grade milled ? Silver (oz./ton)
13.16
11.45
12.30
13.01
Silver produced (oz.)
1,921,789
1,545,527
7,206,973
7,459,170
Gold produced (oz.)
16,111
16,489
68,838
67,278
Lead produced (tons)
5,383
6,129
25,336
22,253
Zinc produced (tons)
16,558
19,550
74,496
70,379
Average cost per ounce of silver produced (1):
Total cash costs
$
(1.93
)
$
(4.85
)
$
(3.90
)
$
0.35
Total production costs
$
4.22
$
4.01
$
3.36
$
7.65
Capital additions (in thousands)
$
7,355
$
2,656
$
18,280
$
17,520
LUCKY FRIDAY UNIT
Tons of ore processed
90,191
87,480
351,074
346,395
Mining cost per ton
$
53.61
$
60.30
$
54.27
$
58.56
Milling cost per ton
$
14.73
$
15.34
$
14.74
$
14.98
Ore grade milled ? Silver (oz./ton)
9.73
10.53
10.25
10.86
Silver produced (oz.)
819,317
865,595
3,359,379
3,530,490
Lead produced (tons)
5,355
5,459
21,619
22,010
Zinc produced (tons)
2,213
2,708
9,286
10,616
Average cost per ounce of silver produced (1):
Total cash costs
$
4.06
$
3.10
$
3.76
$
5.21
Total production costs
$
7.03
$
6.09
$
6.25
$
8.02
Capital additions (in thousands)
$
15,840
$
3,536
$
54,370
$
15,990
by-product credits in calculating silver cost per ounce. Total
cash cost per ounce of silver represents non-U.S. Generally
Accepted Accounting Principles (GAAP) measurements. A
reconciliation of total cash cost 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.
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
Year Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2010
Dec. 31, 2009
RECONCILIATION TO GAAP, ALL OPERATIONS
Total cash costs
$
(377
)
$
(4,818
)
$
(15,435
)
$
20,958
Divided by silver ounces produced
2,741
2,411
10,566
10,989
Total cash cost per ounce produced
$
(0.14
)
$
(2.00
)
$
(1.46
)
$
1.91
Reconciliation to GAAP:
Total cash costs
$
(377
)
$
(4,818
)
$
(15,435
)
$
20,958
Depreciation, depletion and amortization
13,956
15,706
60,011
62,837
Treatment costs
(23,733
)
(25,517
)
(92,144
)
(80,830
)
By-product credits
67,375
69,276
267,272
206,608
Change in product inventory
2,303
(3,991
)
3,660
310
Reclamation, severance and other costs
243
1,453
630
1,596
Costs of sales and other direct production costs and depreciation,
depletion and amortization (GAAP)
$
59,767
$
52,109
$
223,994
$
211,479
GREENS CREEK UNIT
Total cash costs
$
(3,705
)
$
(7,497
)
$
(28,073
)
$
2,582
Divided by silver ounces produced
1,922
1,546
7,207
7,459
Total cash cost per ounce produced
$
(1.93
)
$
(4.85
)
$
(3.90
)
$
0.35
Reconciliation to GAAP:
Total cash costs
(3,705
)
(7,497
)
(28,073
)
2,582
Depreciation, depletion and amortization
11,531
13,117
51,671
52,909
Treatment costs
(18,773
)
(20,076
)
(73,817
)
(62,037
)
By-product credits
52,914
54,248
214,462
161,537
Change in product inventory
2,248
(4,230
)
3,685
14
Reclamation, severance and other costs
218
1,436
567
1,574
Costs of sales and other direct production costs and depreciation,
depletion and amortization (GAAP)
$
44,433
$
36,998
$
168,495
$
156,579
LUCKY FRIDAY UNIT
Total cash costs
$
3,328
$
2,679
$
12,638
$
18,376
Divided by silver ounces produced
819
865
3,359
3,530
Total cash cost per ounce produced
$
4.06
$
3.10
$
3.76
$
5.21
Reconciliation to GAAP:
Total cash costs
$
3,328
$
2,679
$
12,638
$
18,376
Depreciation, depletion and amortization
2,426
2,589
8,340
9,928
Treatment costs
(4,960
)
(5,441
)
(18,327
)
(18,793
)
By-product credits
14,461
15,028
52,810
45,071
Change in product inventory
54
239
(25
)
296
Reclamation and other costs
25
17
63
22
Costs of sales and other direct production costs and depreciation,
depletion and amortization (GAAP)
$
15,334
$
15,111
$
55,499
$
54,900
Generally Accepted Accounting Principles (GAAP) measurements that
the Company believes provide management and investors an
indication of net cash flow, after consideration of the realized
price received for production sold. 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.
Base Metals Forward Sales Contracts
The following table summarizes the quantities of base metals
committed under forward sales contracts at December 31, 2010:
Average price per pound
contract
Zinc
Lead
Zinc
Lead Contracts on provisional sales
2011 settlements
11,575
3,925
$1.05
$1.11
Contracts on forecasted sales
2011 settlements
19,475
15,550
$0.96
$0.96
2012 settlements
21,475
15,000
$1.11
$1.11
Reconciliation of Net Income Applicable to Common Shareholders
(GAAP) to Adjusted Income (1)
(dollars in thousands, except per share amounts - unaudited)
Fourth Quarter Ended
Year Ended
December 31,
December 31,
2010
2009
2010
2009
Net income (loss) (GAAP) applicable to common shareholders
$
(13,144
)
$
28,660
$
35,350
$
54,193
Adjusting items:
Loss on derivative contracts
9,562
-
20,758
-
Environmental accrual
193,196
3,964
193,196
3,964
Deferred tax asset on environmental accrual
(78,592
)
-
(78,592
)
-
Decreased deferred tax asset valuation allowance
(80,410
)
(7,100
)
(88,069
)
(7,100
)
Adjusted income applicable to common shareholders
$
30,612
$
25,524
$
82,643
$
51,057
Weighted average shares outstanding - basic
257,403
237,935
251,146
224,933
Weighted average shares outstanding - diluted
295,007
258,607
269,601
233,618
Basic adjusted income per common share
$
0.12
$
0.11
$
0.33
$
0.23
Diluted adjusted income per common share
$
0.10
$
0.10
$
0.31
$
0.22
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 adjusted income (loss) and
adjusted income (loss) per common share provide investors with the
ability to better evaluate our underlying operating performance.
Hecla Mining Company
M?nie Hennessey, 604-694-7729
Direct
Main: 800-HECLA91 (800-432-5291)
Vice President ? Investor Relations
hmc-info@hecla-mining.com
www.hecla-mining.com