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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31,
2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
.
Commission File Number:
1-8491
HECLA MINING COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware
77-0664171
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
6500 N. Mineral Drive, Suite 200
Coeur d’Alene
,
Idaho
83815-9408
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
208
)
769-4100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.25 per share
HL
New York Stock Exchange
Series B Cumulative Convertible Preferred
Stock, par value $0.25 per share
HL-PB
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☑
No
__
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☑
No
__
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐ No
☑
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
*Items 2 and 3 of Part II are omitted as they are not applicable.
2
Part I - Fin
ancial Information
Item 1. Fina
ncial Statements
Hecla Mining Company
Condensed Consol
idated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(Dollars and shares in thousands, except for per-share amounts)
Three Months Ended
March 31, 2025
March 31, 2024
Sales
$
261,339
$
189,528
Cost of sales and other direct production costs
148,950
121,461
Depreciation, depletion and amortization
38,385
48,907
Total cost of sales
187,335
170,368
Gross profit
74,004
19,160
Other operating expenses:
General and administrative
11,999
11,216
Exploration and pre-development
4,501
4,342
Ramp-up and suspension costs
3,306
14,523
Provision for closed operations and environmental matters
790
986
Other operating expense (income), net
1,053
(
16,971
)
Total other operating expenses
21,649
14,096
Income from operations
52,355
5,064
Other expense:
Interest expense
(
11,551
)
(
12,644
)
Fair value adjustments, net
3,627
(
1,852
)
Net foreign exchange (loss) gain
(
356
)
3,982
Other income
942
1,512
Total other expense
(
7,338
)
(
9,002
)
Income (loss) before income and mining taxes
45,017
(
3,938
)
Income and mining tax provision
(
16,145
)
(
1,815
)
Net income (loss)
28,872
(
5,753
)
Preferred stock dividends
(
138
)
(
138
)
Net income (loss) applicable to common stockholders
$
28,734
$
(
5,891
)
Comprehensive income (loss):
Net income (loss)
$
28,872
$
(
5,753
)
Change in fair value of derivative contracts designated as hedge transactions
2,434
(
5,403
)
Comprehensive income (loss)
$
31,306
$
(
11,156
)
Basic income (loss) per common share after preferred dividends
$
0.05
$
(
0.01
)
Diluted income (loss) per common share after preferred dividends
$
0.05
$
(
0.01
)
Weighted average number of common shares outstanding - basic
632,047
616,199
Weighted average number of common shares outstanding - diluted
634,708
616,199
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
3
Hecla Mining Company
Condensed Cons
olidated Statements of Cash Flows (Unaudited)
(In thousands)
Three Months Ended
March 31, 2025
March 31, 2024
Operating activities:
Net income (loss)
$
28,872
$
(
5,753
)
Non-cash elements included in net income (loss):
Depreciation, depletion and amortization
39,172
51,226
Inventory adjustments
1,558
7,671
Fair value adjustments, net
(
3,627
)
1,852
Provision for reclamation and closure costs
1,908
1,846
Stock-based compensation
1,936
1,164
Deferred income taxes
13,221
(
416
)
Net foreign exchange loss (gain)
356
(
3,982
)
Other non-cash items, net
507
519
Change in assets and liabilities:
Accounts receivable
(
29,314
)
(
17,864
)
Inventories
(
11,763
)
(
18,746
)
Other current and non-current assets
9,578
5,238
Accounts payable, accrued and other current liabilities
(
15,917
)
(
8,819
)
Accrued payroll and related benefits
(
168
)
5,498
Accrued taxes
2,769
2,085
Accrued reclamation and closure costs and other non-current liabilities
(
3,350
)
(
4,439
)
Net cash provided by operating activities
35,738
17,080
Investing activities:
Additions to property, plant and mine development
(
54,095
)
(
47,589
)
Proceeds from disposition of assets
55
47
Net cash used in investing activities
(
54,040
)
(
47,542
)
Financing activities:
Proceeds from sale of common stock, net
—
1,103
Acquisition of treasury stock
—
(
1,197
)
Borrowing of debt
107,000
27,000
Repayment of debt
(
87,000
)
(
15,000
)
Dividends paid to common and preferred stockholders
(
2,511
)
(
3,994
)
Repayments of finance leases and other
(
2,287
)
(
3,033
)
Net cash provided by financing activities
15,202
4,879
Effect of exchange rates on cash
(
100
)
(
624
)
Net decrease in cash, cash equivalents and restricted cash and cash equivalents
(
3,200
)
(
26,207
)
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period
28,045
107,539
Cash, cash equivalents and restricted cash and cash equivalents at end of period
$
24,845
$
81,332
Reconciliation of cash and cash equivalents and restricted cash and cash equivalents above to where reported on the consolidated balance sheet
Cash and cash equivalents
$
23,668
$
80,169
Non-current restricted cash and cash equivalents
$
1,177
$
1,163
Total cash and cash equivalents and restricted cash and cash equivalents as reported on the consolidated cash flow statement
$
24,845
$
81,332
Supplemental disclosure of cash flow information:
Cash paid for interest
$
20,118
$
18,706
Cash paid for income and mining taxes, net
$
864
$
127
Significant non-cash investing and financing activities:
Common stock issued as incentive compensation
$
2,503
$
3,355
Common stock issued for 401(k) match
$
1,219
$
1,251
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
4
Hecla Mining Company
Condensed Co
nsolidated Balance Sheets (Unaudited)
(In thousands, except shares)
March 31, 2025
December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents
$
23,668
$
26,868
Accounts receivable:
Trade
59,549
31,515
Other, net
20,520
17,538
Inventories:
Product inventories
45,200
34,962
Materials and supplies
72,177
69,974
Other current assets
25,199
33,295
Total current assets
246,313
214,152
Investments
37,518
33,897
Restricted cash and cash equivalents
1,177
1,177
Property, plants, equipment and mine development, net
2,700,896
2,694,119
Operating lease right-of-use assets
9,387
7,544
Other non-current assets
28,266
30,171
Total assets
$
3,023,557
$
2,981,060
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities
$
77,263
$
88,957
Accrued payroll and related benefits
18,954
22,834
Accrued taxes
9,081
6,312
Current debt
33,612
33,617
Finance leases
7,904
8,169
Accrued reclamation and closure costs
11,113
13,748
Accrued interest
5,161
14,316
Other current liabilities
9,635
9,885
Total current liabilities
172,723
197,838
Accrued reclamation and closure costs
115,024
111,162
Long-term debt including finance leases
527,137
508,927
Deferred tax liabilities
124,382
110,266
Other non-current liabilities
10,324
13,353
Total liabilities
949,590
941,546
Commitments and contingencies (Notes 4, 7, 8, and 11)
STOCKHOLDERS’ EQUITY
Preferred stock,
5,000,000
shares authorized:
Series B preferred stock, $
0.25
par value,
157,756
shares issued and outstanding, liquidation preference — $
7,889
39
39
Common stock, $
0.25
par value, authorized
750,000,000
shares; issued March 31, 2025 —
641,254,525
shares and December 31, 2024 —
640,547,918
shares
160,228
160,052
Capital surplus
2,423,631
2,418,149
Accumulated deficit
(
467,168
)
(
493,529
)
Accumulated other comprehensive loss, net
(
7,832
)
(
10,266
)
Less treasury stock, at cost; March 31, 2025 —
8,813,127
and December 31, 2024 —
8,813,127
shares issued and held in treasury
(
34,931
)
(
34,931
)
Total stockholders’ equity
2,073,967
2,039,514
Total liabilities and stockholders’ equity
$
3,023,557
$
2,981,060
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
5
Hecla Mining Company
Condensed Consolidated St
atements of Changes in Stockholders’ Equity (Unaudited)
(Dollars are in thousands, except for share and per share amounts)
Three Months Ended March 31, 2025
Series B
Preferred
Stock
Common
Stock
Capital Surplus
Accumulated
Deficit
Accumulated
Other
Comprehensive Income (Loss), net
Treasury
Stock
Total
Balances, January 1, 2025
$
39
$
160,052
$
2,418,149
$(
493,529
)
$(
10,266
)
$(
34,931
)
$
2,039,514
Net income
—
—
—
28,872
—
—
28,872
Stock-based compensation expense
—
1,936
—
—
—
1,936
Incentive compensation units distributed (
476,775
shares)
—
119
2,384
—
—
—
2,503
Common stock issued for 401(k) match (
229,832
shares)
—
57
1,162
—
—
—
1,219
Common stock ($
0.00375
per share) and Series B Preferred stock ($
0.875
per share) dividends declared
—
(
2,511
)
—
—
(
2,511
)
Other comprehensive income
—
—
—
—
2,434
—
2,434
Balances, March 31, 2025
$
39
$
160,228
$
2,423,631
$(
467,168
)
$(
7,832
)
$(
34,931
)
$
2,073,967
Three Months Ended March 31, 2024
Series B
Preferred
Stock
Common
Stock
Capital Surplus
Accumulated
Deficit
Accumulated
Other
Comprehensive Income (Loss), net
Treasury
Stock
Total
Balances, January 1, 2024
$
39
$
156,076
$
2,343,747
$(
503,861
)
$
5,837
$(
33,734
)
$
1,968,104
Net loss
—
—
—
(
5,753
)
—
—
(
5,753
)
Stock-based compensation expense
—
—
1,164
—
—
—
1,164
Common stock ($
0.00625
per share) and Series B Preferred stock ($
0.875
per share) dividends declared
—
—
—
(
3,994
)
—
—
(
3,994
)
Common stock issued for 401(k) match (
275,570
shares)
—
69
1,182
—
—
—
1,251
Common stock issued under ATM Program (
248,561
shares)
—
62
1,041
—
—
—
1,103
Common stock issued as incentive compensation (
959,615
shares)
—
240
3,115
—
—
(
1,197
)
2,158
Other comprehensive loss
—
—
—
—
(
5,403
)
—
(
5,403
)
Balances, March 31, 2024
$
39
$
156,447
$
2,350,249
$(
513,608
)
$
434
$(
34,931
)
$
1,958,630
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
6
Note 1. Bas
is of Preparation of Financial Statements
The accompanying unaudited interim condensed consolidated financial statements of Hecla Mining Company and its subsidiaries (collectively, “Hecla,” “the Company,” “we,” “our,” or “us,” except where the context requires otherwise) have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required annually by accounting principles generally accepted in the United States of America (“GAAP”). Therefore, this information should be read in conjunction with the Company’s consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2024. The consolidated December 31, 2024 balance sheet data was derived from our audited consolidated financial statements. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for the fair presentation of the results for the interim periods reported. All such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
Note 2. Business Segments and Sales of Products
We discover, acquire and develop mines and other mineral interests and produce and market (i) concentrates containing silver, gold, lead, zinc and copper, (ii) carbon material containing silver and gold, and (iii) doré containing silver and gold. We are currently organized and managed in
four
segments: Greens Creek, Lucky Friday, Keno Hill and Casa Berardi.
The Company regularly reviews its segment reporting for alignment with its strategic goals and operational structure as well as for evaluation of business performance and the allocation of resources by Hecla's President and Chief Executive Officer, who has been identified as our Chief Operating Decision Maker ("CODM"). The CODM evaluates the performance for all of our reportable segments based on segment gross profit or loss. For all segments, the CODM uses segment gross profit or loss to assess segment performance and allocate resources for each segment predominantly in the annual budget and forecasting process. The CODM considers budget to actual variances on a monthly basis when making decisions about allocating capital and personnel to the segments. Significant segment expenses that are components of total cost of goods sold and drive the financial performance of our reportable segments are (i) salaries, wages and other benefits, (ii) contractors, (iii) consumables (iv) change in product inventory and (v) other direct production costs. In further evaluating the operational performance of each segment, the CODM also considers the amount of metals production versus budget, and the grade of the metal processed.
General corporate activities not associated with operating mines and their various exploration activities, as well as idle properties and environmental remediation services in the Yukon, Canada, are presented as “other.” The nature of the items that reconcile gross profit (loss) to income (loss) before income and mining taxes are not related to our reportable segments.
7
The tables below present information about our reportable segments for the
three months ended March 31, 2025 and 2024 (in thousands):
Three months ended March 31, 2025
Greens Creek
Lucky Friday
Keno Hill
Casa Berardi
Other
Total
Metal sales
$
118,143
$
63,194
$
16,909
$
56,005
$
—
$
254,251
Environmental remediation services
—
—
—
—
7,088
7,088
Intersegment sales
—
—
986
—
—
986
Reconciliation of sales
118,143
63,194
17,895
56,005
7,088
262,325
Elimination of intersegment sales
—
—
(
986
)
—
—
(
986
)
Total consolidated sales
261,339
Cost of sales and other direct production costs
Salaries, wages and other benefits
18,253
14,776
6,472
13,190
58
52,749
Contractors
905
3,863
3,551
10,665
6,931
25,915
Materials and consumables
25,665
11,423
5,994
14,571
106
57,759
Product inventory change
901
1,182
(
7,962
)
(
3,261
)
—
(
9,140
)
Other direct production costs
10,325
(
620
)
5,014
6,948
—
21,667
Depreciation, depletion and amortization
13,589
13,425
2,802
8,569
—
38,385
Gross profit (loss)
$
48,505
$
19,145
$
1,038
$
5,323
$
(
7
)
$
74,004
Other operating expenses
(a)
21,649
Income from operations
52,355
Other Expense:
Interest expense
(
11,551
)
Fair value adjustments, net
3,627
Foreign exchange loss, net
(
356
)
Other income
942
Income before income and mining taxes
$
45,017
Capital additions
$
10,759
$
15,446
$
10,436
$
16,257
$
1,197
$
54,095
(a)
Other operating expense items include general and administrative, exploration and pre-development, provision for closed operations and environmental matters, ramp-up and suspension costs and other operating (income) expense, net.
8
Three months ended March 31, 2024
Greens Creek
Lucky Friday
Keno Hill
Casa Berardi
Other
Total
Metal sales
$
97,310
$
35,340
$
10,846
$
41,585
$
—
$
185,081
Environmental remediation services
—
—
—
—
4,447
4,447
Intersegment sales
—
—
321
—
—
321
Reconciliation of sales
97,310
35,340
11,167
41,585
4,447
189,849
Elimination of intersegment sales
—
—
(
321
)
—
—
(
321
)
Total consolidated sales
189,528
Cost of sales and other direct production costs
Salaries, wages and employee benefits
17,307
11,582
6,736
12,744
67
48,436
Contractors
1,649
2,803
4,738
5,223
3,589
18,002
Materials and consumables
26,453
10,168
7,586
12,827
185
57,219
Product inventory change
(
2,196
)
(
2,101
)
(
5,760
)
(
1,739
)
—
(
11,796
)
Other direct production costs
12,201
(
645
)
2,616
6,255
44
20,471
Transfer to ramp-up and suspension costs
(a)
—
(
2,200
)
(
8,671
)
—
—
(
10,871
)
Depreciation, depletion and amortization
14,443
7,912
3,601
22,951
—
48,907
Gross profit (loss)
$
27,453
$
7,821
$
—
$
(
16,676
)
$
562
$
19,160
Other operating expenses
(b)
14,096
Income from operations
5,064
Other Expense:
Interest expense
(
12,644
)
Fair value adjustments, net
(
1,852
)
Foreign exchange gain, net
3,982
Other income
1,512
Loss before income and mining taxes
$
(
3,938
)
Capital additions
$
8,827
$
14,988
$
10,346
$
13,316
$
112
$
47,589
(a)
Total cost of sales in excess of sales value are transferred to ramp-up and suspension costs.
(b)
Other operating expense items include general and administrative, exploration and pre-development, ramp-up and suspension costs, provision for closed operations and environmental matters, and other operating (income) expense, net.
Other sales for the three months ended March 31, 2025 and 2024
are comprised of revenue from our environmental remediation services subsidiary in the Yukon for both periods presented. During the three months ended March 31, 2025 and 2024, Keno Hill sold $
1.0
million and $
0.3
million, respectively, of zinc concentrate to Greens Creek which is eliminated upon consolidation.
Lucky Friday's income from operations for the three months ended March 31, 2024 included $
17.4
million of business interruption and property damage insurance proceeds received during the respective period related to the fire which suspended Lucky Friday's operations from August 2023 through January 8, 2024.
The insurance proceeds were recorded as part of "Other operating expense (income), net" in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
Sales by metal f
or the three months ended March 31, 2025 and 2024 were as follows (in thousands):
Three Months Ended March 31,
2025
2024
Silver
$
118,153
$
86,233
Gold
87,188
67,415
Lead
22,106
19,483
Zinc
33,125
24,964
Copper
391
—
Less: Smelter and refining charges
(
6,712
)
(
13,014
)
Total metal sales
254,251
185,081
Environmental remediation services
7,088
4,447
Total sales
$
261,339
$
189,528
9
Sales of metals for the three months ended March 31, 2025 include a net loss of
$
5.1
million
on financially-settled forward contracts for silver, gold, lead and zinc and for the three months ended March 31, 2024 include net gains of
$
3.1
million
on such contracts. See
Note 8
for more information.
The following table presents total assets by reportable segment as of
March 31, 2025 and December 31, 2024 (in thousands):
March 31, 2025
December 31, 2024
Total assets:
Greens Creek
$
576,744
$
564,334
Lucky Friday
598,453
587,945
Keno Hill
429,660
413,982
Casa Berardi
695,463
687,080
Other
723,237
727,719
$
3,023,557
$
2,981,060
Note 3. Income and Mining Taxes
Major components of our income and mining tax for the
three months ended March 31, 2025 and 2024 are as follows (in thousands):
Three Months Ended
March 31,
2025
2024
Current:
Domestic
$
(
2,615
)
$
(
992
)
Foreign
(
309
)
(
979
)
Total current income and mining tax (provision)
(
2,924
)
(
1,971
)
Deferred:
Domestic
(
11,724
)
(
5,183
)
Foreign
(
1,497
)
5,339
Total deferred income and mining tax (provision) benefit
(
13,221
)
156
Total income and mining tax (provision)
$
(
16,145
)
$
(
1,815
)
The income and mining tax provision for the three months ended March 31, 2025 and 2024 varies from the amounts that would have resulted from applying the statutory tax rates to pre-tax income or loss due primarily to the impact of taxation in foreign jurisdictions, non-recognition of net operating losses and foreign exchange gains and losses in certain jurisdictions.
For the three months ended March 31, 2025
, we used the annual effective tax rate method to calculate the tax provision. Valuation allowances on Nevada, Mexico and certain Canadian net operating losses were treated as discrete adjustments to the tax provision.
Note 4.
Employee Benefit Plans
We sponsor defined benefit pension plans covering all non-hourly U.S. employees hired prior to July 2024 and our hourly workers at the Lucky Friday mine, as well as and a Supplemental Excess Retirement Plan covering certain eligible employees.
Net periodic pension cost (
benefit) for the plans consisted of the following for the three months ended March 31, 2025 and 2024 (in thousands):
Three Months Ended
March 31,
2025
2024
Service cost
$
1,068
$
915
Interest cost
2,094
2,076
Expected return on plan assets
(
3,251
)
(
3,136
)
Amortization of prior service cost
20
66
Amortization of net loss
326
15
Net periodic pension cost (benefit)
$
257
$
(
64
)
10
For the three months ended March 31, 2025 and 2024, the service cost component of net periodic pension benefit is included in the same line items of our condensed consolidated financial statements as other employee compensation costs. The net benefit related to all other components of net periodic pension cost of
$
0.8
million
and
$
1.0
million
for the three months ended March 31, 2025, and 2024, respectively,
is included in other income on our condensed consolidated statements of operations and comprehensive income (loss).
Note 5. Earnings (Loss) Per Common Share
We calculate basic income (loss) per common share on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the period plus the effect of potential dilutive common shares during the period using the treasury stock and if-converted methods.
Potential dilutive shares of common stock include outstanding unvested restricted stock awards, deferred restricted stock units, performance based units and convertible preferred stock (collectively referred to as dilutive units) for periods in which we have reported net income. The 2025 dilutive units exclude the impact of
2,068,000
warrants exercisable at $
8.02
per warrant, due to their anti-dilutive impact. For periods in which we report net losses, potential dilutive units are excluded, as their conversion and exercise would be anti-dilutive.
The following table represents net income (loss) per common share – basic and diluted (in thousands, except income (loss) per share):
Three Months Ended March 31,
2025
2024
Numerator
Net income (loss) applicable to common stockholders
$
28,872
$
(
5,753
)
Preferred stock dividends
(
138
)
(
138
)
Net income (loss) applicable to common stockholders
$
28,734
$
(
5,891
)
Denominator
Basic weighted average common shares
632,047
616,199
Dilutive units
2,661
—
Diluted weighted average common shares
634,708
616,199
Basic earnings (loss) per common share
$
0.05
$
(
0.01
)
Diluted earnings (loss) per common share
$
0.05
$
(
0.01
)
For the three months ended March 31, 2024, all outstanding dilutive units were excluded from the computation of diluted loss per share, as our reported net loss would cause their conversion and exercise to have an anti-dilutive effect on the calculation of diluted loss per share.
Note 6. Stockholders’ Equity
At-The-Market ("ATM") Equity Distribution Agreement
Pursuant to an equity distribution agreement dated February 18, 2021, we may offer and sell up to
60
million shares of our common stock from time to time to or through sales agents. Sales of the shares, if any, will be made by means of ordinary brokers transactions or as otherwise agreed between the Company and the agents as principals. Whether or not we engage in sales from time to time may depend on a variety of factors, including our share price, our cash resources, customary black-out restrictions, and whether we have any material inside information. The agreement can be terminated by us at any time. Any sales of shares under the agreement are registered under the Securities Act of 1933, as amended, pursuant to a shelf registration statement on Form S-3.
During the three months ended March 31, 2025, we did not sell any shares under the agreement and during the three months ended March 31, 2024, we sold
248,561
shares under the agreement for proceeds of $
1.1
million, net of commissions and fees of $
0.04
million.
Stock-based Compensation Plans
The Company has stock incentive plans for executives, directors and eligible employees, under which performance shares, restricted stock and shares of common stock are granted. Stock-based compensation expense for restricted stock units, performance-based grants and common stock grants (collectively "incentive compensation") to employees, totaled
$
1.9
million and
$
1.2
million
for
11
the three months ended March 31, 2025, and 2024, respectively. At March 31, 2025, there
was $
8.3
million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of
1.9
years.
The following table summarizes the incentive compensation grants awarded during the three months ended March 31, 2025:
Grant date
Award type
Number granted
Grant date fair value per share
January 15, 2025
Restricted stock
325,016
5.41
March 24, 2025
Restricted stock
23,826
5.44
In connection with the vesting of incentive compensation, employees have in the past, at their election and when permitted by us, chosen to satisfy their minimum tax withholding obligations through net share settlement, pursuant to which the Company withholds the number of shares necessary to satisfy such withholding obligations and pays the obligations in cash. As a result, in the three months ended March 31, 2024, we withheld
277,966
shares valued at approximately $
1.2
million, or approximately $
4.31
per
share.
Common Stock Dividends
During the three months ended March 31, 2025, our Board of Directors declared and we paid a quarterly dividend of $
0.00375
per common share, pursuant to our dividend policy.
Accumulated Other Comprehensive Income (Loss), Net
The following table lists the beginning balance, quarterly activity and ending balances, net of income and mining tax, of each component of “Accumulated other comprehensive income (loss), net” (in thousands):
Changes in fair value of derivative contracts designated as hedge transactions
Adjustments
For Pension Plans
Total
Accumulated
Other
Comprehensive
Income (Loss), Net
Balance January 1, 2025
$
5,994
$
(
16,260
)
$
(
10,266
)
Change in fair value of derivative contracts
2,982
—
2,982
Gains and deferred gains transferred from accumulated other comprehensive income
353
—
353
Balance March 31, 2025
$
9,329
$
(
16,260
)
$
(
6,931
)
Balance January 1, 2024
$
13,708
$
(
7,871
)
$
5,837
Changes in fair value of derivative contracts
(
6,835
)
—
(
6,835
)
Gains and deferred gains transferred from accumulated other comprehensive income
1,432
—
1,432
Balance March 31, 2024
$
8,305
$
(
7,871
)
$
434
Note 7. Debt, Credit Agreement and Leases
Our debt as of March 31, 2025 and December 31, 2024
consisted of our
7.25
% Senior Notes due February 15, 2028 (“Senior Notes”), our Series 2020-A Senior Notes due July 9, 2025 (the “IQ Notes”) and any drawn amounts on our
$
225
million Credit Agreement
, which is described separately below.
The following tables summarize our current and long-term debt balances, including principal amounts outstanding under the Credit Agreement, as of
March 31, 2025 and December 31, 2024 (in thousands):
March 31, 2025
Senior Notes
IQ Notes
Credit Agreement
Total
Principal
$
475,000
$
33,554
$
43,000
$
551,554
Unamortized discount/premium and issuance costs
(
2,588
)
58
—
(
2,530
)
Total debt
$
472,412
$
33,612
$
43,000
$
549,024
Less: current debt
—
$
(
33,612
)
—
(
33,612
)
Long-term debt
$
472,412
$
—
$
43,000
$
515,412
12
December 31, 2024
Senior Notes
IQ Notes
Credit Agreement
Total
Principal
$
475,000
$
33,525
$
23,000
$
531,525
Unamortized discount/premium and issuance costs
(
2,816
)
92
—
(
2,724
)
Total debt
$
472,184
$
33,617
$
23,000
$
528,801
Less: current debt
$
—
$
(
33,617
)
$
—
$
(
33,617
)
Long-term debt
$
472,184
$
—
$
23,000
$
495,184
The following table summarizes the scheduled annual future payments, including interest, for our Senior Notes, IQ Notes, and finance and operating leases as of
March 31, 2025 (in thousands). Operating leases are included in other current and non-current liabilities on our condensed consolidated balance sheets. The amounts for the IQ Notes are stated in U.S. dollars (“USD”) based on the USD/Canadian dollar (“CAD”) exchange rate as of March 31, 2025.
Twelve-month period ending March 31,
Senior Notes
IQ Notes
Finance Leases
Operating Leases
2026
$
34,438
$
34,649
$
9,198
$
3,016
2027
34,438
—
7,039
1,275
2028
505,286
—
2,855
1,185
2029
—
—
1,100
1,185
2030
—
—
1,100
1,096
Thereafter
—
—
275
4,973
574,162
34,649
21,567
12,730
Less: effect of discounting
—
—
(
1,938
)
(
2,892
)
Total
$
574,162
$
34,649
$
19,629
$
9,838
Credit Agreement
On July 21, 2022, we entered into a revolving credit agreement (the "Original Credit Agreement") with various financial institutions (the “Lenders”), Bank of Montreal and Bank of America, N.A. as letters of credit issuers, and Bank of America, N.A., as administrative agent for the Lenders and as swingline lender. The Original Credit Agreement was amended on May 3, 2024, when we entered into a First Amendment to Credit Agreement (the “First Amendment”), which made certain changes to the Original Credit Agreement (the Original Credit Agreement, as amended, modified and supplemented by the First Amendment, is referred to hereafter as the “Credit Agreement”). The First Amendment modified the Original Credit Agreement as follows:
•
Increased the amount available for borrowing to $
225
million from $
150
million;
•
Extended the maturity date to July 21, 2028 from July 21, 2026 (the maturity date of the Credit Agreement will be accelerated to August 15, 2027 if our Senior Notes are not refinanced by that date);
•
National Bank, TD Securities, Bank of Nova Scotia and ING were added as new Lenders and Credit Suisse AG, New York Branch assigned its interests in the Original Credit Agreement to its affiliate UBS AG, Stamford Branch immediately prior to entering into the First Amendment.
Proceeds of the revolving loans under the Credit Agreement may be used for general corporate purposes. The interest rate on the outstanding loans under the Credit Agreement is based on the Company’s net leverage ratio and is calculated at (i) Term Secured Overnight Financing Rate ("SOFR") plus
2
% to
3.5
% or (ii) Bank of America’s Base Rate plus
1
% to
2.5
% with Base Rate being the highest of (i) the Bank of America prime rate, (ii) the Federal Funds rate plus
.50
% or (iii) Term SOFR plus
1.00
%. For each amount drawn, we elect whether we draw on a one, three or six month basis or annual basis for SOFR. If we elect to draw for greater than six months, we pay interest quarterly on the outstanding amount.
We are also required to pay a commitment fee of between
0.45
% to
0.78750
%, depending on our net leverage ratio. Letters of credit issued under the Credit Agreement bear a fee between
2.00
% and
3.50
% based on our net leverage ratio, as well as a fronting fee to each issuing bank at an agreed upon rate per annum on the average daily dollar amount of our letter of credit exposure.
Hecla Mining Company and certain of our subsidiaries are the borrowers under the Credit Agreement, while certain of our other subsidiaries are guarantors of the borrowers’ obligations under the Credit Agreement. As further security, the Credit Agreement is collateralized by a mortgage on the Greens Creek mine, the equity interests of subsidiaries that own the Greens Creek mine or are part of the Greens Creek Joint Venture and our subsidiary Hecla Admiralty Company (the “Greens Creek Group”), and by all of the Greens
13
Creek Group’s rights and interests in the Greens Creek Joint Venture Agreement, and in all assets of the joint venture and of any member of the Greens Creek Group.
At March 31, 2025, we had net draws of
$
43.0
million
outstanding at an interest rate of
6.7
%
, and
$
6.6
million
of outstanding letters of credit under the Credit Agreement. Letters of credit that are outstanding reduce availability under the Credit Agreement.
We believe we were in compliance with all covenants under the Credit Agreement as of March 31, 2025
.
Note 8. Derivative Instruments
General
Our current risk management policy provides that up to
75
% of
five years
of our foreign currency, and 100% of our metals price exposure may be covered under a derivatives program, with certain other limitations. Our program also utilizes derivatives to manage price risk exposure created from when revenue is recognized from a shipment of concentrate until final settlement.
These instruments expose us to (i) credit risk in the form of non-performance by counterparties for contracts in which the contract price exceeds the spot price of the hedged commodity or foreign currency and (ii) price risk to the extent that the spot price or currency exchange rate exceeds the contract price for quantities of our production and/or forecasted costs covered under contract positions.
Foreign Currency
Our wholly-owned subsidiaries owning the Casa Berardi operation and Keno Hill operation are USD-functional entities which routinely incur expenses denominated in CAD. Such expenses expose us to exchange rate fluctuations between the USD and CAD. We have a program to manage our exposure to fluctuations in the USD exchange rate for these subsidiaries' future operating and capital costs denominated in CAD. The program related to forecasted cash operating costs at Casa Berardi and Keno Hill utilizes forward contracts to buy CAD, some of which are designated as cash flow hedges. As of March 31, 2025, we
have a total of
328
forward contracts outstanding to buy a total of CAD $
285.6
million having a notional amount of USD $
208.3
million to hedge the following exposures for 2025 through 2026:
•
Forecasted cash operating costs at Casa Berardi and Keno Hill of CAD $
166.4
million at an average CAD-to-USD exchange rate of
1.346
.
•
Forecasted capital expenditures at Casa Berardi of CAD $
12.6
million at an average CAD-to-USD exchange rate of
1.3432
.
•
Forecasted capital expenditures at Keno Hill of CAD $
53.4
million at an average CAD-to-USD exchange rate of
1.3985
.
•
Forecasted exploration expenditures at Casa Berardi and Keno Hill of CAD $
5.4
million at an average CAD-to-USD exchange rate of
1.4054
.
•
Forecasted Corporate costs of CAD $
7.8
million at an average CAD-to-USD exchange rate of
1.3732
.
As of
March 31, 2025 and December 31, 2024, we recorded the following balances for the fair value of the foreign currency forward contracts (in millions):
March 31,
December 31,
Balance sheet line item:
2025
2024
Other current assets
$
0.3
$
—
Other non-current assets
$
0.1
$
—
Other current liabilities
$
(
6.4
)
$
(
8.2
)
Other non-current liabilities
$
(
1.4
)
$
(
2.0
)
Net unrealized losses of $
6.5
million related to the effective portion of the foreign currency forward contracts designated as hedges are included in accumulated other comprehensive income (loss) as of March 31, 2025
. Unrealized gains and losses will be transferred from accumulated other comprehensive income (loss) to current earnings as the underlying operating expenses are recognized. We estimate $
5.0
million in net unrealized losses included in accumulated other comprehensive income (loss) as of March 31, 2025 will be reclassified to current earnings in the next twelve months.
14
Net realized losses of
$
1.8
million
and
$
0.4
million
for the three months ended March 31, 2025 and 2024, on contracts related to underlying expenses which have been recognized were transferred from accumulated other comprehensive income (loss) and included in cost of sales and other direct production costs.
A net gain of
$
0.1
million
and a net loss of
$
1.9
million
for the three months ended March 31, 2025 and 2024, respectively, were related to contracts not designated as hedges.
No
net unrealized gains or losses related to ineffectiveness of the hedges are included in fair value adjustments, net on our consolidated statements of operations and comprehensive income (loss)
for the three months ended March 31, 2025 and 2024, respectively.
Metals Prices
We are currently using financially-settled forward contracts to manage our exposure to:
•
changes in prices of silver, gold, zinc and lead contained in our concentrate shipments between the time of shipment and final settlement; and
•
changes in prices of zinc and lead (but not silver and gold) contained in our forecasted future concentrate shipments.
The following tables summarize the quantities of metals committed under forward metals contracts at
March 31, 2025 and December 31, 2024:
March 31, 2025
Ounces/pounds under contract (in 000's except gold)
Average price per ounce/pound
Silver
Gold
Zinc
Lead
Silver
Gold
Zinc
Lead
(ounces)
(ounces)
(pounds)
(pounds)
(ounces)
(ounces)
(pounds)
(pounds)
Contracts on provisional sales
2025 settlements
1,848
5
15,487
13,889
$
32.74
2,937
$
1.39
$
0.98
Contracts on forecasted sales
2025 settlements
—
—
41,061
33,069
N/A
N/A
$
1.40
$
0.99
2026 settlements
—
—
16,755
52,911
N/A
N/A
$
1.36
$
1.03
December 31, 2024
Ounces/pounds under contract (in 000's except gold)
Average price per ounce/pound
Silver
Gold
Zinc
Lead
Silver
Gold
Zinc
Lead
(ounces)
(ounces)
(pounds)
(pounds)
(ounces)
(ounces)
(pounds)
(pounds)
Contracts on provisional sales
2025 settlements
1,535
2
20,834
14,661
$
31.46
$
2,673
$
1.40
$
0.97
Contracts on forecasted sales
2025 settlements
—
—
59,194
47,840
N/A
N/A
$
1.39
$
0.99
2026 settlements
—
—
6,283
52,911
N/A
N/A
$
1.41
$
1.03
We recorded the following balances for the fair value of the forward metals contracts as of
March 31, 2025 and December 31, 2024 (in millions):
March 31,
December 31,
Balance sheet line item:
2025
2024
Other current assets
$
7.7
$
11.5
Other non-current assets
$
4.7
$
6.6
Other current liabilities
$
—
$
—
Other non-current liabilities
$
—
$
—
Net realized and unrealized gains of $
1
5.2
million related to the effective portion of the forward metals contracts designated as hedges were included in accumulated other comprehensive income (loss) as of March 31, 2025
. Unrealized gains and losses will be transferred from accumulated other comprehensive income (loss) to current earnings as the underlying forecasted sales are recognized. We estimate $
12.1
million in net realized and unrealized gains included in accumulated other comprehensive income (loss) as of March 31, 2025
would be reclassified to current earnings in the next twelve months. The realized gains arose due to cash settlement of zinc contracts prior to maturity in 2022 and zinc and lead contracts during 2023 for net proceeds of $
17.4
million and $
8.5
million, respectively.
We recognized a
net loss of $
5.3
million, including a $
2.2
million gain
transferred from accumulated other comprehensive income (loss), and a net gain
of $
3.1
million, including a $
1.9
million
gain transferred from accumulated other comprehensive income
15
(loss)
during the three months ended March 31, 2025 and 2024, respectively. These gains and losses were recognized on the contracts utilized to manage exposure to prices of metals in our concentrate shipments, which are included in sales. The net losses and gains recognized on the contracts offset gains and losses related to price adjustments on our provisional concentrate sales due to changes to silver, gold, lead and zinc prices between the time of sale and final settlement.
In the first quarter of 2025, we established price protection for
590,000
ounces of silver from our Lucky Friday mine that will be settled during the second quarter of 2025. We used financial instruments called "collars" that set both a minimum price of $
31.40
and a maximum price of $
33.97
per ounce. These collars provide us a contractual right to receive at least $
31.40
per ounce even if market prices fall below this level, while limiting our potential gains to $
33.97
per ounce even if market prices rise higher. This strategy helps protect us from significant price drops while still allowing for some upside potential within this range. As of March 31, 2025, these collars had a fair value of $
0.6
million. For accounting purposes, they are not designated as hedges.
Credit-risk-related Contingent Features
Certain of our derivative contracts contain cross default provisions which provide that a default under our Credit Agreement would cause a default under the derivative contract. As of March 31, 2025
, we have not posted any collateral related to these contracts. The fair value of derivatives in a net liability position related to these agreements was $
10.5
million as of
March 31, 2025, which includes accrued interest but excludes any adjustment for nonperformance risk. If we were in breach of any of these provisions at March 31, 2025
, we could have been required to settle our obligations under the agreements at their termination value of $
10.5
million.
Note 9. Fair Value Measurement
Fair value adjustments, net is comprised of the following (in thousands):
Three Months Ended March 31,
2025
2024
Loss on derivative contracts
$
(
14
)
$
(
1,899
)
Unrealized gain on equity securities investments
3,641
47
Total fair value adjustments, net
$
3,627
$
(
1,852
)
Accounting guidance has established a hierarchy for inputs used to measure assets and liabilities at fair value on a recurring basis. The three levels included in the hierarchy are:
Level 1: quoted prices in active markets for identical assets or liabilities;
Level 2: significant other observable inputs; and
Level 3: significant unobservable inputs.
The table below sets forth our assets and liabilities that were accounted for at fair value on a recurring basis and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category (in thousands).
16
Description
Balance at
March 31,
2025
Balance at
December 31,
2024
Input
Hierarchy Level
Assets:
Cash and cash equivalents:
Money market funds and other bank deposits
$
23,668
$
26,868
Level 1
Current and non-current investments:
Equity securities
36,836
33,158
Level 1
Trade accounts receivable:
Receivables from provisional concentrate sales
59,549
31,515
Level 2
Restricted cash and cash equivalent balances:
Certificates of deposit and other deposits
1,177
1,177
Level 1
Derivative contracts - current and non-current derivative assets:
Foreign exchange contracts
368
—
Level 2
Metal forward contracts
12,399
18,039
Level 2
Liabilities:
Derivative contracts - current and non-current derivative liabilities:
Foreign exchange contracts
$
7,818
$
10,176
Level 2
Cash and cash equivalents consist primarily of money market funds and are valued at cost, which approximates fair value.
Current and non-current restricted cash and cash equivalent balances consist primarily of certificates of deposit, U.S. Treasury securities, and other deposits and are valued at cost, which approximates fair value.
Our non-current investments consist of marketable equity securities of companies in the mining industry which are valued using quoted market prices for each security.
Trade accounts receivable from provisional concentrate sales are subject to final pricing and valued using quoted prices based on forward curves for the particular metals.
We use financially-settled forward contracts to manage exposure to changes in the exchange rate between USD and CAD, and the impact on CAD-denominated operating and capital costs incurred at our Casa Berardi and Keno Hill operations (see
Note 8
for more information). The fair value of each contract represents the present value of the difference between the forward exchange rate for the contract settlement period as of the measurement date and the contract settlement exchange rate.
We use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our concentrate shipments that have not reached final settlement. We also use financially-settled forward contracts to manage the exposure to changes in prices of gold, zinc and lead contained in our forecasted future sales (see
Note 8
for more information). The fair value of each forward contract represents the present value of the difference between the forward metal price for the contract settlement period as of the measurement date and the contract settlement metal price.
At March 31, 2025, our Senior Notes and IQ Notes were recorded at their carrying value of $
472.4
million and $
33.6
million, respectively, net of unamortized initial purchaser discount/premium and issuance costs. The estimated fair values of our Senior Notes and IQ Notes were $
479.5
million and $
34.4
million, respectively, at March 31, 2025
. Quoted market prices, which are considered to be Level 1 inputs, are utilized to estimate fair values of the Senior Notes. Unobservable inputs which are considered to be Level 3, including an assumed current annual yield of
6.50
%, are utilized to estimate the fair value of the IQ Notes. See
Note 7
for more information. The Credit Agreement, which we consider to be Level 1 in the fair value hierarchy, has a carrying and fair value of
$
43.0
million
.
Note 10. Product Inventories
Our major components of product inventories are (in thousands):
March 31, 2025
December 31, 2024
Concentrates
$
24,255
$
15,030
Stockpiled ore
12,569
13,168
In-process
8,376
6,764
Total product inventories
$
45,200
$
34,962
17
Note 11. Commitments, Contingencies and Obligations
San Mateo Creek Basin, New Mexico
In July 2018, the EPA informed Hecla Limited that it and several other potentially responsible parties (“PRPs”) may be liable for cleanup of the San Mateo Creek Basin (“SMCB”), which is an approximately 321 square mile area in New Mexico that contains numerous legacy uranium mines and mills. At the time, the EPA stated it had incurred approximately $
9.6
million in response costs. Also, in May, 2022 and August, 2024, Hecla Limited received a letter from a PRP notifying Hecla Limited that other PRPs may seek cost recovery and contribution from Hecla Limited under CERCLA for certain investigatory work performed by the PRPs at the SMCB site. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by the various PRPs.
Carpenter Snow Creek and Barker-Hughesville Sites in Montana
In July 2010, the EPA made a formal request to Hecla for information regarding the Carpenter Snow Creek Superfund site located in Cascade County, Montana. The Carpenter Snow Creek site is located in a historical mining district, and in the early 1980s Hecla Limited leased 6 mining claims and performed limited exploration activities at the site. Hecla Limited terminated the mining lease in 1988.
In June 2011, the EPA informed Hecla Limited that it believes Hecla Limited, and several other PRPs, may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA stated in the letter that it has incurred approximately $
4.5
million in response costs and estimated that total remediation costs may exceed $
100
million. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by various other PRPs.
In February 2017, the EPA made a formal request to Hecla for information regarding the Barker-Hughesville Mining District Superfund site located in Judith Basin and Cascade Counties, Montana. Hecla Limited submitted a response in April 2017. The Barker-Hughesville site is located in a historic mining district, and between approximately June and December 1983, Hecla Limited was party to an agreement with another mining company under which limited exploration activities occurred at or near the site.
In August 2018, the EPA informed Hecla Limited that it and several other PRPs may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA did not include an amount of its alleged response costs to date. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning past or anticipated future costs at the site and the relative contributions of contamination by various other PRPs.
Litigation Related to Klondex Acquisition
On May 24, 2019, a purported Hecla stockholder filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York against Hecla and certain of our executive officers, one of whom was also a director. The complaint, purportedly brought on behalf of all purchasers of Hecla common stock from March 19, 2018 through and including May 8, 2019, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks, among other things, damages and costs and expenses. Specifically, the complaint alleges that Hecla, under the authority and control of the individual defendants, made certain materially false and misleading statements and omitted certain material information regarding Hecla’s Nevada assets. The complaint was dismissed by the Federal District Court with prejudice on September 30, 2024. On October 28, 2024, the plaintiffs filed a notice of appeal with the United States Court of Appeals for the Second Circuit. The appeal has been briefed and oral arguments are scheduled for May 2025.
Related to this class action lawsuit, Hecla has been named as a nominal defendant in a shareholder derivative lawsuit which also names as defendants certain current and past members of Hecla’s Board of Directors and certain past officers of Hecla. The case was filed on May 4, 2022 in the Delaware Chancery Court. In general terms, the suit alleges breaches of fiduciary duties by the individual defendants, waste of corporate assets and unjust enrichment, and seeks damages, purportedly on behalf of Hecla.
Debt
See
Note 7
for information on the commitments related to our debt arrangements as of March 31, 2025.
18
Indirect Taxes
In May 2024, our Keno Hill subsidiary received a notice of assessment ("NOA") for goods and services tax ("GST") on its 2023 sales for CAD $
1,973,181
from the Canada Revenue Agency ("CRA"). As Keno Hill's sales are to a non-Canadian party, we do not believe Keno Hill is subject to collect and remit GST, and we have disputed the NOA and proposed audit adjustments. On April 30, 2025, the CRA advised that they agreed with our position and the matter is resolved. In addition, in May 2024 Keno Hill also received correspondence from the CRA for GST on Keno Hill's sales and input tax credits from 2020 through 2022 of CAD$
1,038,834
. This matter was resolved with the CRA during January 2025 for a cash payment of approximately CAD$
32,000
.
Other Commitments
Our contractual obligations as of March 31, 2025 included open purchase orders and commitments of
$
11.7
million, $
7.6
million, $
11.1
million, $
7.6
million and $
1.9
million for various capital and non-capital items at Greens Creek, Lucky Friday, Keno
Hill, Casa Berardi and Other, respectively. We also have total commitments of $
19.6
million relating to scheduled payments on finance leases, including interest, primarily for equipment at our operations, and total commitments of $
9.8
million relating to payments on operating leases (see
Note 7
for more information). As part of our ongoing business and operations, we are required to provide surety bonds, bank letters of credit, and restricted deposits for various purposes, including financial support for environmental reclamation obligations and workers compensation programs. As of March 31, 2025, we had surety bonds totaling
$
215.6
million and letters of credit totaling
$
6.6
million
in place as financial support for future reclamation and closure costs, self-insurance, and employee benefit plans
.
The obligations associated with these instruments are generally related to performance requirements that we address through ongoing operations. As the requirements are met, the beneficiary of the associated instruments cancels or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure of the sites. We believe we are in compliance with all applicable bonding requirements and will be able to satisfy future bonding requirements as they arise.
Other Contingencies
We also have certain other contingencies resulting from litigation, claims, EPA investigations, and other commitments and are subject to a variety of environmental and safety laws and regulations incident to the ordinary course of business. We currently have no basis to conclude that any or all of such contingencies will materially affect our financial position, results of operations or cash flows. However, in the future, there may be changes to these contingencies, or additional contingencies may occur, any of which might result in an accrual or a change in current accruals recorded by us, and there can be no assurance that their ultimate disposition will not have a material adverse effect on our financial position, results of operations or cash flows.
Note 12. Recent Accounting Pronouncements
Accounting Standards Updates to Become Effective in Future Periods
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the impact of this update on our consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures, which includes amendments to require the disclosure of certain specific costs and expenses that are included in a relevant expense caption on the face of the income statement. Specific costs and expenses that would be required to be disclosed include: purchases of inventory, employee compensation, depreciation and intangible asset amortization. Additionally, a qualitative description of other items is required, equal to the difference between the relevant expense caption and the separately disclosed specific costs. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, and are applied either prospectively or retrospectively at the option of the Company. We are evaluating the impact of the amendments on our consolidated financial statements and disclosures.
19
Forward-Looking Statements
Certain statements contained in this Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, are intended to be covered by the safe harbor provided for under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Our forward-looking statements include our current expectations and projections about future results, performance, results of litigation, prospects and opportunities, including reserves and other mineralization. We have tried to identify these forward-looking statements by using words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,” “plan,” “estimate,” “project,” “forecast” and similar expressions. These forward-looking statements are based on information currently available to us and are expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.
These risks, uncertainties and other factors include, but are not limited to, those set forth under
Part II, Item 1A. – Risk Factors of this Form 10-Q and Part I, Item 1A. – Risk Factors
in our 2024 Form 10-K. Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to Hecla Mining Company or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
20
Item 2. Management's Discuss
ion and Analysis of Financial Condition and Results of Operations
In this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), “Hecla,” “the Company,” “we,” “us” and “our” refer to Hecla Mining Company and its consolidated subsidiaries, except where the context requires otherwise. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties for the year ended December 31, 2024, filed with the United States Securities and Exchange Commission (the “SEC”). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Forward-Looking Statements” above for further discussion). References to “Notes” are Notes included in our Notes to Condensed Consolidated Financial Statements (Unaudited). Throughout this MD&A, all references to income or losses per share are on a diluted basis.
O
verview
Hecla Mining Company stands as North America's leading silver producer, with a rich heritage dating back to 1891. Our operations at Greens Creek, Lucky Friday, and Keno Hill combined to produce 35% of 2024 silver production in the U.S. and Canada, complemented by significant gold production from Casa Berardi and Greens Creek. We began ramp-up of the Keno Hill mill during the second quarter of 2023 after acquiring it in September 2022. Our strategic positioning in the stable jurisdictions of U.S. and Canada provides us with distinct operational advantages and reduced political risk compared to our global peers. Our operational and strategic framework centers on four core pillars:
1.
Achieving operational excellence through standardized systems and continuous improvement
2.
Optimizing our portfolio through strategic reviews and targeting highest risk-adjusted return projects
3.
Intensifying our focus on financial discipline with a rigorous capital allocation framework
4.
Leveraging our position as North America's largest silver producer to meet growing demand from green technology markets
First Quarter 2025 Highlights
Operational Achievements:
•
Consistent Production
- Progress at key operations delivering 4.1 million ounces of silver with increased silver production at Lucky Friday and Keno Hill offsetting decreases at Greens Creek. Produced 34,232 ounces of gold with expected decreases at Casa Berardi and Greens Creek. See
Consolidated Results of Operations
below for information on total cost of sales, as well as cash costs and all-in sustaining costs, each after by-product credits, per silver and gold ounce for the three-month periods ended March 31, 2025 and 2024.
•
Established a new quarterly milling record at Lucky Friday of 108,745 tons, beating the prior record set in fourth quarter 2024.
Financial Performance:
•
Revenue Generation
- Generated record sales of $261.3 million a 38% increase over the comparable period sales.
•
Continuous Improvement
- Turned Keno Hill profitable for the first time under our ownership, delivering $1.0 million in gross profit.
•
Shareholder Returns
- Generated net income applicable to common stockholders of $28.7 million, compared to a loss of $5.9 million in the comparable 2024 period and returned $2.5 million in dividends to common stockholders.
•
Investment in Operations
- Made capital expenditures of approximately $54.1 million, including $10.8 million at Greens Creek, $15.4 million at Lucky Friday, $16.3 million at Casa Berardi and $10.4 million at Keno Hill.
Exploration:
•
Extended Greens Creek mineralization 400 feet down plunge to the south in the 200 South Zone
•
Confirmed and expanded mineralization at Keno Hill in the Bermingham Deposit through continued drilling.
•
Initiated surface exploration programs at Midas and Greens Creek, with drilling set to begin in May.
External Factors that Impact our Results
Our financial results vary as a result of fluctuations in market prices primarily for silver and gold and, to a lesser extent, zinc, lead and copper. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Although we have not been materially impacted to date, our financial results could in the future be materially impacted by the introduction of tariffs and other global restraints on trade. Historically our US operations have had significant sales into China and Canada, and each of those countries is or could be subject to tariffs, and each has or may retaliate in kind. Notwithstanding these recent developments, we believe that the outlook for precious metals fundamentals in the medium- and long-term is favorable due to macro-economic factors such as lower interest rate expectations, geopolitical uncertainty and global growth expectations, which have resulted
21
in significant volatility in the financial and commodities markets, including the precious metals market. See Part II, Item 1A. “Risk Factors” of this Form 10-Q and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K"), for further discussion. Because we cannot control the price of our products, except to the extent we have entered into hedging transactions, the key measures that management focuses on in operating our business are production volumes, payable sales volumes, Cash Cost, After By-product Credits, per Ounce (non-GAAP) and All-In Sustaining Cost, After By-product Credits, per Ounce (“AISC”) (non-GAAP), operating cash flows, capital expenditures, free cash flow and adjusted EBITDA. The average realized prices for all metals sold by us continued to exhibit significant volatility during the period. We have also experienced significant cost inflation across our operations, principally associated with higher energy prices, increased costs for other consumables such as reagents, explosives and steel, and higher labor and contractor costs.
C
onsolidated Results of Operations
Total sales for the three months ended March 31, 2025 and 2024 were as follows:
Three Months Ended
March 31,
(in thousands)
2025
2024
Silver
$
118,153
$
86,233
Gold
87,188
67,415
Lead
22,106
19,483
Zinc
33,125
24,964
Copper
391
-
Less: Smelter and refining charges
(6,712
)
(13,014
)
Total metal sales
254,251
185,081
Environmental remediation services
7,088
4,447
Total sales
$
261,339
$
189,528
Environmental remediation services revenue is generated by performing remediation work in the historical Yukon Territory mining district on behalf of the Canadian government. The scope and estimated cost of all work is agreed to in advance by the Canadian government, and the expenses incurred are essentially passed through to the government for reimbursement with minimal margin generated by our subsidiary in performing this work.
Total metal sales for the three months ended March 31, 2025 and 2024, and the approximate variances attributed to differences in metals prices, sales volumes and smelter terms, were as follows:
(in thousands)
Silver
Gold
Base metals
Less: smelter and refining charges
Total sales of products
Three months ended March 31, 2024
$
86,233
$
67,415
$
44,447
$
(13,014
)
$
185,081
Variances - 2025 versus 2024:
Price
31,109
25,106
3,929
—
60,144
Volume
811
(5,333
)
7,246
772
3,496
Smelter terms
—
—
5,530
5,530
Three months ended March 31, 2025
$
118,153
$
87,188
$
55,622
$
(6,712
)
$
254,251
22
The fluctuation in sales for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to the following:
•
Higher average realized prices for all metals, except lead, during the three months ended March 31, 2025, compared to the same period in 2024.
The table below summarizes average spot prices and our average realized prices for the commodities we sell:
Three Months Ended
March 31,
2025
2024
Silver –
London PM Fix ($/ounce)
$
31.91
$
23.36
Realized price per ounce
$
33.59
$
24.77
Gold –
London PM Fix ($/ounce)
$
2,863
$
2,072
Realized price per ounce
$
2,940
$
2,094
Lead –
LME Final Cash Buyer ($/pound)
$
0.89
$
0.94
Realized price per pound
$
0.92
$
0.97
Zinc –
LME Final Cash Buyer ($/pound)
$
1.29
$
1.11
Realized price per pound
$
1.29
$
1.10
Copper –
LME Final Cash Buyer ($/pound)
$
4.24
$
—
Realized price per pound
$
4.41
$
—
Average realized prices typically differ from average market prices primarily because concentrate sales are generally recorded as revenues at the time of shipment at forward prices for the estimated month of settlement, which differ from average market prices. Due to the time elapsed between shipment of concentrates and final settlement with the customers, we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices each period through final settlement.
We recorded net positive price adjustments to provisional settlements of $6.9 million and $3.5 million for the three months ended March 31, 2025 and 2024, respectively. The price adjustments related to silver, gold, zinc, lead and copper contained in our concentrate shipments were partially offset by gains and losses on forward contracts for those metals. See
Note 8
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
for more information. The gains and losses on these contracts are included in revenues and impact the realized prices for silver, gold, lead, zinc and copper. 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 above) by the payable quantities of each metal included in concentrate, doré and carbon material shipped during the period.
•
The positive effect of higher metal prices was partially counterbalanced by lower sales volumes during the quarter compared to the comparable period in 2024. Gold sales decreased, though this decline was somewhat mitigated by increased sales volumes for silver and all base metals. The reduction in gold sold stemmed primarily from decreased production at both Greens Creek and Casa Berardi operations. However, this was partially counterbalanced by production growth at Lucky Friday and Keno Hill mines, which contributed to higher silver and base metal sales volumes. The Company's production mix shifted, with silver and base metals gaining greater prominence in the overall sales portfolio compared to the previous year's period. See
The Greens Creek Segment,
The Lucky Friday Segment, The Keno Hill Segment, and Casa Berardi Segment
sections below for more information on metal production and sales volumes at each of our operating segments. Total metals production and sales volumes for each period are shown in the following table:
Three Months Ended
March 31,
2025
2024
Silver -
Ounces produced
4,112,394
4,192,098
Payable ounces sold
3,517,970
3,481,884
Gold -
Ounces produced
34,232
36,592
Payable ounces sold
29,655
32,189
Lead -
Tons produced
14,007
11,922
Payable tons sold
11,990
10,020
Zinc -
Tons produced
16,935
16,389
Payable tons sold
12,847
11,322
Copper
Tons produced
411
495
Payable tons sold
44
—
23
The difference between what we report as “ounces/tons produced” and “payable ounces/tons sold” is attributable to the difference between the quantities of metals contained in the concentrates we produce versus the portion of those metals actually paid for by our customers according to the terms of our sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades which impact the amount of metals contained in concentrates produced and sold.
Sales, total cost of sales, gross profit (loss), Cash Cost, After By-product Credits, per Ounce (“Cash Cost”) (non-GAAP) and AISC (non-GAAP) at our operating segments for the three months ended March 31, 2025 and 2024 were as follows (in thousands, except for Cash Cost and AISC):
Silver
Gold and Other
Greens Creek
Lucky Friday
Keno Hill
Total Silver
(2)
Casa Berardi
Other
(3)
Total Gold and Other
Three Months Ended March 31, 2025:
Sales
$118,143
$63,194
$16,909
$198,246
$56,005
$7,088
$63,093
Total cost of sales
(69,638)
(44,049)
(15,871)
(129,558)
(50,682)
$(7,095)
(57,777)
Gross profit
$48,505
$19,145
$1,038
$68,688
$5,323
$(7)
$5,316
Cash Cost
(1)
$(4.08)
$9.37
$—
$1.29
$2,195
$—
$2,195
AISC
(1)
$(0.03)
$20.08
$—
$11.91
$2,303
$—
$2,303
Three Months Ended March 31, 2024:
Sales
$97,310
$35,340
$10,847
$143,497
$41,584
$4,447
$46,031
Total cost of sales
(69,857)
(27,519)
(10,847)
(108,223)
(58,260)
(3,885)
(62,145)
Gross profit (loss)
$27,453
$7,821
$—
$35,274
$(16,676)
$562
$(16,114)
Cash Cost
(1)
$3.45
$8.85
$—
$4.78
$1,669
$—
$1,669
AISC
(1)
$7.16
$17.36
$—
$13.10
$1,899
$—
$1,899
(1)
A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in
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 Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)
.
(2)
The calculation of AISC for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining capital.
(3)
For the three months ended March 31, 2025, Other includes sales and total cost of sales of $7.1 million from our environmental remediation services in the Yukon. For the three months ended March 31, 2024, Other includes sales of $4.4 million and total cost of sales of $3.9 million.
While revenue from zinc, lead, copper and gold by-products is significant, we believe that identification of silver as the primary product of Greens Creek, Lucky Friday and Keno Hill is appropriate because:
•
silver has historically accounted for a higher proportion of revenue than any other metal and is expected to do so in the future;
•
we have historically presented the Greens Creek and Lucky Friday units as primary silver producers, based on the original analysis that justified putting the project into production, and the same analysis applies to the Keno Hill unit. Further we believe that consistency in disclosure is important to our investors regardless of the relationships of metals prices and production from year to year;
the Greens Creek, Lucky Friday and Keno Hill deposits are massive sulfide deposits containing an unusually high proportion of silver; and
•
in most of their working areas, Greens Creek, Lucky Friday and Keno Hill utilize selective mining methods in which silver is the metal targeted for highest recovery.
Accordingly, we believe the identification of gold, lead, zinc and copper as by-product credits at Greens Creek, Lucky Friday and Keno Hill is appropriate because of their lower economic value compared to silver and due to the fact that silver is the primary product we intend to produce at those locations. In addition, we have not consistently received sufficient revenue from any single by-product metal to warrant classification of such as a co-product.
We periodically review our revenues to ensure that reporting of primary products and by-products is appropriate. Because for Greens Creek, Lucky Friday and Keno Hill we consider zinc, lead, gold and copper to be by-products of our silver production, the values of these metals offset operating costs within our calculations of Cash Cost, After By-product Credits, per Silver Ounce and AISC, After
24
By-product Credits, per Silver Ounce. We currently do not report Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for our Keno Hill operation as it is in the production ramp-up phase and has not met our definition of commercial production, and accordingly it is excluded from our consolidated Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce. We define an operation as being in commercial production upon achievement of the following criteria:
•
Completion of operational commissioning of each major mine and mill component;
•
Demonstrated ability to mine and mill consistently and without significant interruption, defined as 75% of historical production levels or mill design capacity over a period of 90 days (previously 30 days);
•
Silver recoveries are at or near expected steady-state production levels;
•
All major capital expenditures have been completed; and
•
A significant portion of available funding is directed towards operating activities.
Currently we meet only one of the above criteria - silver recoveries are at expected steady state-state production levels. Determination of when these criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.
As Keno Hill has not yet been determined to be in commercial production, its costs and by-product credits are excluded from our consolidated Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce because (i) by definition it has not reached the sustaining stage and (ii) including its costs and by-product credits we believe would distort consolidated Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce of our operating silver mines that are in commercial production and operating as designed, and not facilitate a meaningful comparison of our performance versus that of our peers who do not report such metrics for mines that are not in commercial production.
We believe the identification of silver as a by-product credit is appropriate at Casa Berardi because of its lower economic value compared to gold and due to the fact that gold is the primary product we intend to produce there. In addition, we do not receive sufficient revenue from silver at the Casa Berardi mine to warrant classification of such as a co-product. Because we consider silver to be a by-product of our gold production at Casa Berardi, the value of silver offsets operating costs within our calculations of Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce.
We reported net income applicable to common stockholders of $28.7 million for the three months ended March 31, 2025, compared to a net loss applicable to common stockholders of $5.9 million in the comparable period in 2024. The following were the significant drivers of the change:
•
Consolidated gross profit increased by $54.8 million. See
The Greens Creek Segment,
The Lucky Friday Segment, The Keno Hill Segment, and The Casa Berardi Segment
sections below for a discussion on the key drivers by operating unit.
•
Ramp-up and suspension costs decreased by $11.2 million due to the current period containing no ramp-up costs for Keno Hill, as the site recorded gross profit, whereas in the prior period lower revenue led to a cost of sales transfer of $8.7 million to ramp-up and suspension costs. In addition, the prior period included $2.2 million of suspension costs related to the temporary suspension of operations at Lucky Friday due to the underground fire prior to the restart of operations on January 8, 2024.
•
Fair value adjustments, net increased by $5.5 million primarily due to $3.6 million in unrealized gains on our marketable equity securities portfolio in the current period. In addition, the prior period contained $1.9 million in losses on our undesignated derivative contracts.
The positive movements mentioned above were partly offset by:
•
Other operating expense (income), net increased by $18.0 million primarily due to the prior period containing $17.4 million of insurance proceeds received related to the Lucky Friday fire.
•
Net foreign exchange loss increased by $4.3 million to a loss of $0.4 million, compared to a gain of $3.9 million in the comparable period. During the current period, exchange rates remained relatively stable, whereas the prior period saw a strengthening of the US dollar against Canadian dollar.
•
Income and mining tax expense increased by $14.3 million due to higher taxable income generated by our US tax group.
25
Greens Creek
Dollars are in thousands (except per ounce and per ton amounts)
Three Months Ended
March 31,
2025
2024
Sales
$
118,143
$
97,310
Cost of sales and other direct production costs
(56,049
)
(55,414
)
Depreciation, depletion and amortization
(13,589
)
(14,443
)
Total cost of sales
(69,638
)
(69,857
)
Gross profit
$
48,505
$
27,453
Tons of ore milled
212,899
232,188
Production:
Silver (ounces)
2,002,560
2,478,594
Gold (ounces)
13,759
14,588
Lead (tons)
4,496
4,834
Zinc (tons)
12,835
13,062
Copper (tons)
411
495
Payable metal quantities sold:
Silver (ounces)
1,744,652
2,090,449
Gold (ounces)
10,478
12,186
Lead (tons)
3,321
3,670
Zinc (tons)
9,507
9,564
Copper (tons)
44
—
Ore grades:
Silver ounces per ton
11.8
13.3
Gold ounces per ton
0.09
0.09
Lead percent
2.6
%
2.6
%
Zinc percent
6.8
%
6.3
%
Copper percent
0.3
%
0.2
%
Total production cost per ton
$
240.00
$
212.92
Cash Cost, After By-product Credits, per Silver Ounce
(1)
$
(4.08
)
$
3.45
AISC, After By-Product Credits, per Silver Ounce
(1)
$
(0.03
)
$
7.16
Capital additions
$
10,759
$
8,827
(1)
A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in
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 Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)
.
The $21.1 million increase in gross profit for the three months ended March 31, 2025, compared to the same period in 2024 was primarily due to higher realized sales prices for silver, gold and zinc, partially offset by lower metals sales volumes. Capital additions in the current quarter were $1.9 million higher than the prior year period and included $3.1 million for primary ore access development, $1.4 million for mine development and $1.2 million for definition drilling.
Production during the three months ended March 31, 2025, declined primarily due to a combination of lower tons milled reflecting a combination of lower heading availability, long hole mining and lower grade ore.
26
The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, per Silver Ounce for Greens Creek:
Three Months Ended March 31,
2025
2024
Cash Cost, Before By-product Credits, per Silver Ounce
$
28.46
$
25.13
By-product credits
(32.54
)
(21.68
)
Cash Cost, After By-product Credits, per Silver Ounce
$
(4.08
)
$
3.45
Three Months Ended March 31,
2025
2024
AISC, Before By-product Credits, per Silver Ounce
$
32.51
$
28.84
By-product credits
(32.54
)
(21.68
)
AISC, After By-product Credits, per Silver Ounce
$
(0.03
)
$
7.16
For the three months ended March 31, 2025, the
decrease in Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce was primarily due to an increase in by-product credits, benefiting from higher realized gold and zinc prices, partly offset by higher production costs and lower ounces produced. AISC, After By-product Credits, per Silver Ounce also benefited from lower sustaining capital expenditures.
27
Lucky Friday
Dollars are in thousands (except per ounce and per ton amounts)
Three Months Ended
March 31,
2025
2024
Sales
$
63,194
$
35,340
Cost of sales and other direct production costs
(30,624
)
(19,608
)
Depreciation, depletion and amortization
(13,425
)
(7,911
)
Total cost of sales
(44,049
)
(27,519
)
Gross profit
$
19,145
$
7,821
Tons of ore milled
108,745
86,234
Production:
Silver (ounces)
1,332,252
1,061,065
Lead (tons)
8,480
6,689
Zinc (tons)
3,681
2,851
Payable metal quantities sold:
Silver (ounces)
1,268,845
953,891
Lead (tons)
7,978
5,992
Zinc (tons)
3,081
1,641
Ore grades:
Silver ounces per ton
13.0
12.9
Lead percent
8.2
%
8.2
%
Zinc percent
4.0
%
3.9
%
Total production cost per ton
$
258.59
$
233.10
Cash Cost, After By-product Credits, per Silver Ounce
(1)
$
9.37
$
8.85
AISC, After By-product Credits, per Silver Ounce
(1)
$
20.08
$
17.36
Capital additions
$
15,446
$
14,988
(1)
A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in
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 Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)
.
Gross profit increased by $11.3 million for the three months ended March 31, 2025 compared to the comparable period in 2024, reflecting a combination of higher sales volumes for all metals due to a full quarter of production in 2025, compared to 2024 when operations did not resume until January 9, 2024, following suspension of operations in August 2023, due to the underground fire in the secondary egress. Higher realized prices for silver and zinc also contributed to the higher gross profit, however this benefit was partly offset by higher contractor, drilling, consumables and maintenance costs reflecting the higher volumes produced and sold, and higher profit sharing costs under the collective bargaining agreement.
Capital additions increased by $0.5 million for the three months ended March 31, 2025, compared to the comparable period in 2024. Significant capital expenditures in 2025 related to capital development of $7.0 million, mobile equipment purchases of $2.6 million and definition drilling of $1.9 million.
28
The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, Per Silver Ounce for Lucky Friday:
Three Months Ended March 31,
2025
2024
Cash Cost, Before By-product Credits, per Silver Ounce
$
25.13
$
24.41
By-product credits
(15.76
)
(15.56
)
Cash Cost, After By-product Credits, per Silver Ounce
$
9.37
$
8.85
Three Months Ended March 31,
2025
2024
AISC, Before By-product Credits, per Silver Ounce
$
35.84
$
32.92
By-product credits
(15.76
)
(15.56
)
AISC, After By-product Credits, per Silver Ounce
$
20.08
$
17.36
The increase in Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the three months ended March 31, 2025, compared to the same period in 2024 was primarily due to higher production costs, partly offset by higher silver production reflecting a full quarter's production compared to operations only commencing on January 9, 2024 following suspension in August 2023. AISC, After By-product Credits, per Silver Ounce was also negatively impacted by higher sustaining capital.
29
Keno Hill
Dollars are in thousands (except per ounce and per ton amounts)
Three Months Ended
March 31,
2025
2024
Sales
$
16,909
$
10,847
Cost of sales and other direct production costs
(13,069
)
(7,245
)
Depreciation, depletion and amortization
(2,802
)
(3,602
)
Total cost of sales
(15,871
)
(10,847
)
Gross profit
$
1,038
$
—
Tons of ore milled
27,411
25,165
Production:
Silver (ounces)
772,430
646,312
Lead (tons)
1,031
576
Zinc (tons)
419
298
Payable metal quantities sold:
Silver (ounces)
499,252
432,331
Lead (tons)
691
359
Zinc (tons)
259
116
Ore grades:
Silver ounces per ton
29.0
26.3
Lead percent
4.0
%
2.4
%
Zinc percent
1.9
%
1.3
%
Capital additions
$
10,436
$
10,346
We have not disclosed cost per ounce statistics for the Keno Hill operation as it is in the production ramp-up phase and has not met our definition of commercial production. See above "Consolidated Results of Operations" for our definition of commercial production. Determination of when those criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.
We acquired our Keno Hill operations as part of the Alexco acquisition in September 2022 and have focused on development activities and began ramp-up of the mill during the second quarter of 2023. The average throughput during the three months ended March 31, 2025, was 305 tons per day (the mine is currently permitted to a maximum of an average of 440 tons per day), with silver grades milled of 29.0 ounces per ton. The mill relied on the existing ore stockpiles as the mine continues to ramp up to higher tonnage rates with mining rates of 259 tons per day during the quarter with material sourced from both the Bermingham and Flame and Moth deposits. Mill throughput was negatively impacted by events beginning in late August, 2024, and continuing into 2025 as described below.
During the three months ended March 31, 2025 and 2024, Keno Hill recorded sales of $16.9 million and $10.8 million, respectively, with the increase in sales attributable to a combination of higher realized sales prices and volumes. As a result of higher revenues, Keno Hill generated a gross profit of $1.0 million during the three months ended March 31, 2025, and did not transfer any cost of sales to ramp-up and suspension costs. During the first quarter of 2024, total cost of sales exceeded sales by $8.7 million and accordingly were reclassified to ramp-up and suspension costs in the
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (Unaudited)
. During the quarter, Keno Hill recorded capital additions of $10.4 million, related to mine development and other mining equipment purchases.
From commencement of production until late August, 2024, ore production and mill throughput generally increased as planned, leading to increased levels of production (though still not reaching profitability or the permitted capacity at the mill). However, starting in mid-2024 and continuing today, Keno Hill has been impacted by external events which have affected permitting, projects and production, and delayed our ability to reach increased, profitable production. In late June 2024, an unrelated, third party, Victoria Gold, experienced a heap leach failure at its Eagle Mine which is located near Keno Hill. This incident had several immediate and ongoing impacts on our operations. The primary impact was we were forced to suspend milling operations at Keno Hill between August 27 and October 26 due to delays in receiving an authorization for mill construction and a permit modification for Keno Hill’s dry stack tailings storage facility (“DSTF”). The delayed authorization and permit were a result of the focus of the Yukon Government (“YG”) and the First Nation of Na-Cho Nyäk Dun (“FNNND”) on the Eagle Mine incident response and not on routine permitting matters. Mill operations and design and construction projects (including DSTF construction) resumed during the fourth quarter of 2024, but permitting
30
and projects remain behind our original planned schedule, which has also impacted mine development, and these delays continue to impact our ability to ramp up production from the mine.
A second and ongoing impact of the Eagle Mine incident was the expression of strong positions by the FNNND on continuing and future mining activities at projects within their Traditional Territory, where Keno Hill (and Eagle Mine) is located, including an initial call to halt mining production. The FNNND 's position has evolved since then to support environmentally responsible mining practices. We are committed to responsible and sustainable mining that governments and local communities support, including the FNNND, and this factors into to our evolving plans and projections for Keno Hill.
Then, starting in late October 2024, Keno Hill began experiencing power curtailments when Yukon Energy experienced a turbine failure at its hydroelectric plant in Whitehorse. That failure and Yukon Energy’s resulting focus on line maintenance, combined with cold temperatures in the Yukon (and the resulting increase in demand for power), caused Yukon Energy to reduce power to Keno Hill, resulting in the operation’s inability to fully power the mine and mill on several occasions in late 2024 and for 8 days in the first quarter of 2025. We estimate that this caused us, on a cumulative basis through March 31, 2025, to incur (i) a delay of approximately 130,000 ounces of silver production and (ii) labor costs for idled employees of approximately $500,000. We do not expect these disruptions to continue as the weather improves, during which time it is expected YEC's generating demand is lower, except that we expect a 6-day outage in August 2025 when the turbine at Yukon Energy's hydroelectric plant in Whitehorse is scheduled to be fixed. There can be no assurance that Keno Hill will not face power supply constraints in the future.
Permitting is one of the most important factors in our ability to reach sustainable, profitable production at Keno Hill. Increased production means a need for increased tailings storage, waste storage, water treatment, camp space and reliable power. These projects require new or modified permits, including from the YG to exceed 440 tons per day, as well as the capital to implement them. Although we continue to make progress on permitting matters, we have yet to make up for the delays described above. We also continue to face operational challenges such as work force availability, dilution, execution of projects, limited camp space, and the ramp-up of the Company's environmental remediation services group activities in the summer (which adds incremental demand on Keno Hill's infrastructure and resources, most notably camp space). As a result, we continue to project 2025 silver production to be comparable to 2024 levels. The projected flat production levels at Keno Hill for 2025 should allow us to focus on (i) permitting, (ii) stakeholder outreach and ensuring we have local support, (iii) projects such as tailings storage expansion, construction of a cemented tails batch plant and the Bermingham water treatment plant improvements, (iv) mine development and (v) meeting the above-mentioned operational challenges.
As stated above, Keno Hill has generated marginal profits for us at current throughput rates and prices. Our immediate focus is to advance permits and successfully execute infrastructure projects, with the goal of putting the mine on a path toward achieving its current permitted capacity of 440 tons per day which, at current prices, we project would generate positive cash flow. We estimate that to be sustainably profitable at our current long-range metals prices (which are significantly lower than current prices), throughput rates would need to reach approximately 500 to 600 tons per day, due to Keno Hill's high fixed costs. To reach this level of throughput, we would need ore from both the Bermingham deposit and the lower grade Flame & Moth deposit. Currently Keno Hill is not configured to sustainably produce 440 tons per day
(although the mill has achieved that rate for multiple weeks on end during test run periods). Achieving 440 or higher tons per day would require continuing high silver prices, significant capital expenditures, obtaining permits, executing projects, mine development and maintaining community support. If any one of these were not to occur, particularly if prices were to decrease from current prices, Keno Hill as currently configured would not be profitable, and placing the operation on care and maintenance would be an option. See
Item 1A. Risk Factors - We may not realize all of the anticipated benefits from our acquisitions, including our 2022 acquisition of Alexco
.
Casa Berardi
31
Dollars are in thousands (except per ounce and per ton amounts)
Three Months Ended
March 31,
2025
2024
Sales
$
56,005
$
41,584
Cost of sales and other direct production costs
(42,113
)
(35,309
)
Depreciation, depletion and amortization
(8,569
)
(22,951
)
Total cost of sales
(50,682
)
(58,260
)
Gross profit (loss)
$
5,323
$
(16,676
)
Tons of ore milled
391,168
381,626
Production:
Gold (ounces)
20,473
22,004
Silver (ounces)
5,152
6,127
Payable metal quantities sold:
Gold (ounces)
19,177
20,003
Silver (ounces)
5,221
5,213
Ore grades:
Gold ounces per ton
0.06
0.07
Silver ounces per ton
0.02
0.02
Total production cost per ton
$
115.19
$
96.53
Cash Cost, After By-product Credits, per Gold Ounce
(1)
$
2,195
$
1,669
AISC, After By-product Credits, per Gold Ounce
(1)
$
2,303
$
1,899
Capital additions
$
16,257
$
13,316
(1)
A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in
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 Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)
.
Casa Berardi is advancing toward a more streamlined and efficient surface-only operation, with plans to focus exclusively on the 160 pit by mid-2025. This transition follows the successful extraction of higher-margin stopes from the west underground mine, positioning the Company for continued productivity and cost-effective mining. Our previously announced strategic review is ongoing and includes evaluating the following scenarios (i) an outright disposal, (ii) joint venturing the asset, (iii) spin-out of the asset, (iv) extending the underground mine, and (iv) accelerating future cash flows to capture part of the current record gold prices via a prepayment structure or other financing arrangement. If underground mining is not extended, Casa Berardi is expected to only produce gold from the 160 open pit, and at lower volumes than historic production levels, with production expected to conclude at the 160 open pit in 2027. We forecast a gap in production commencing in 2027 and lasting until 2032 or later, when no ore is expected to be mined and no revenue is expected. During this hiatus, our focus is expected to be on investing in infrastructure and equipment, permitting and de-watering and stripping two expected new open pits, Principal and West Mine Crown Pillar. Upon successful completion of permitting, design, and construction of the new open pits (which is not assured), we expect Casa Berardi to generate substantial free cash flow at current gold prices when production resumes. This long-term approach aligns with our commitment to maximizing the value of our assets through strategic mine planning and operational flexibility.
Gross profit increased by $22.0 million to $5.3 million for the three months ended March 31, 2025, compared to a gross loss of $16.7 million in the same period in 2024. The increase in gross profit is primarily related to higher realized prices, partly offset by lower gold ounces sold and higher contractor costs. The prior period gross loss also included higher depreciation expense related to accelerated depreciation of the west underground mine and a product inventory net realizable value write down of $5.1 million. Capital additions increased by $2.9 million to $16.3 million during the quarter, compared to the same period in 2024, and primarily related to a tailings dam raise.
Although Casa Berardi generated gross profits during the last three quarters, it has generated gross losses for the prior three fiscal years and for seven of the last ten quarters. This lack of profitability, the expected hiatus in future production discussed above, the uncertainty surrounding permitting and pit design and construction, and the time involved to resolve these uncertainties, has caused us to undertake a review of how Casa Berardi fits into the Company's future strategy. While it is possible we may continue down the path towards future production at the Principal and West Mine Crown Pillar pits, we are also examining potential strategic alternatives.
32
The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, Per Gold Ounce for Casa Berardi:
Three Months Ended March 31,
2025
2024
Cash Cost, Before By-product Credits, per Gold Ounce
$
2,203
$
1,675
By-product credits
(8
)
(6
)
Cash Cost, After By-product Credits, per Gold Ounce
$
2,195
$
1,669
Three Months Ended March 31,
2025
2024
AISC, Before By-product Credits, per Gold Ounce
$
2,311
$
1,905
By-product credits
(8
)
(6
)
AISC, After By-product Credits, per Gold Ounce
$
2,303
$
1,899
The increase in Cash Cost After By-product Credits, per Gold Ounce, and AISC, After By-product Credits, per Gold Ounce for the three months ended March 31, 2025, compared to the same period in 2024 was primarily due to lower gold production and higher production costs. AISC, After By-product Credits, per Gold Ounce benefited from lower sustaining capital over the comparable period in 2024.
Corporate Matters
Income Taxes
During the three months ended March 31, 2025, an income and mining tax provision of $16.1 million resulted in an effective tax rate of 35.9%. This compares to an income and mining tax provision of $1.8 million which resulted in an effective tax rate of (46.1%), for the three months ended March 31, 2024. The comparability of our income and mining tax provision and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) foreign exchange rates including non-recognition of foreign exchange gains and losses; (v) percentage depletion; and (vi) the non-recognition of tax assets. The effective tax rate will fluctuate, sometimes significantly, period to period. The change in the effective tax rate during the three months ended March 31, 2025, compared to the comparable periods in 2024 is primarily related to the reported consolidated income (loss) as well as the losses incurred at our consolidated Alexco subsidiaries, and our Nevada subsidiaries, for which no tax benefit is recognized due to uncertainty surrounding our ability to utilize these future tax benefits.
33
Each reporting period we assess our deferred tax balances based on a review of long-range forecasts and quarterly activity. A valuation allowance is provided for deferred tax assets for which it is more likely than not the related tax benefits will not be realized. We analyze our deferred tax assets and, if it is determined that we will not realize all or a portion of our deferred tax assets, we record or increase a valuation allowance. Conversely, if it is determined we will ultimately more likely than not be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact our ability to realize our deferred tax assets. Valuation allowances are provided on deferred tax assets in Nevada, Mexico, and certain Canadian jurisdictions. For additional information, please see risk factors
Our accounting and other estimates may be imprecise
and
Our ability to recognize the benefits of deferred tax assets related to net operating loss carryforwards and other items is dependent on future cash flows generating taxable income
in
Item 1A - Risk Factors
in our 2024 Form 10-K.
Re
conciliation of Total Cost of Sales to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)
The tables below present reconciliations between the most comparable GAAP measure of total cost of sales to the non-GAAP measures of (i) Cash Cost, Before By-product Credits, (ii) Cash Cost, After By-product Credits, (iii) AISC, Before By-product Credits and (iv) AISC, After By-product Credits for our operations and for the Company for the three months ended March 31, 2025 and 2024.
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. We use AISC, After By-product Credits, per Ounce as a measure of our mines' net cash flow after costs for reclamation and sustaining capital. This is similar to the Cash Cost, After By-product Credits, per Ounce non-GAAP measure we report, but also includes reclamation and sustaining capital costs. 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 and Lucky Friday mines to compare our performance with that of other silver 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.
We have not disclosed cost per ounce statistics for the Keno Hill operation as it is in the production ramp-up phase and has not met our definition of commercial production. See above "
Consolidated Results of Operations
" for our definition of commercial production. Determination of when those criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.
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, royalties and mining production taxes. AISC, Before By-product Credits for each mine also includes reclamation and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense and sustaining capital costs. 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.
In addition to the uses described above, 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. We currently do not report Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for our Keno Hill operation as it is in the ramp-up phase of production and accordingly it is excluded from our consolidated Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce.
Casa Berardi reports Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce for the production of gold, their primary product, and by-product revenues earned from silver, which is a by-product at Casa Berardi. Only costs and ounces produced relating to units with the same primary product are combined to represent Cash Cost, After
34
By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce. Thus, the gold produced at Casa Berardi 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 and Lucky Friday, 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.
In thousands (except per ounce amounts)
Three Months Ended March 31, 2025
Greens Creek
Lucky Friday
Keno Hill
(5)
Corporate
(2)
Total Silver
Total cost of sales
$
69,638
$
44,049
$
15,871
$
—
$
129,558
Depreciation, depletion and amortization
(13,589
)
(13,425
)
(2,802
)
—
(29,816
)
Treatment costs
2,143
3,963
—
—
6,106
Change in product inventory
(901
)
(839
)
—
—
(1,740
)
Reclamation and other costs
(307
)
(273
)
—
—
(580
)
Exclusion of Keno Hill cash costs
(5)
—
—
(13,069
)
—
(13,069
)
Cash Cost, Before By-product Credits
(1)
56,984
33,475
—
—
90,459
Reclamation and other costs
757
195
—
—
952
Sustaining capital
7,368
14,070
—
1,025
22,463
General and administrative
—
—
—
11,999
11,999
AISC, Before By-product Credits
(1)
65,109
47,740
—
13,024
125,873
By-product credits:
Zinc
(23,374
)
(6,950
)
—
—
(30,324
)
Gold
(34,977
)
—
—
—
(34,977
)
Lead
(6,091
)
(14,043
)
—
—
(20,134
)
Copper
(729
)
—
—
—
(729
)
Total By-product credits
(65,171
)
(20,993
)
—
—
(86,164
)
Cash Cost, After By-product Credits
$
(8,187
)
$
12,482
$
—
$
—
$
4,295
AISC, After By-product Credits
$
(62
)
$
26,747
$
—
$
13,024
$
39,709
Ounces produced
2,003
1,332
3,335
Cash Cost, Before By-product Credits, per Ounce
$
28.46
$
25.13
$
27.13
By-product credits per ounce
(32.54
)
(15.76
)
(25.84
)
Cash Cost, After By-product Credits, per Ounce
$
(4.08
)
$
9.37
$
1.29
AISC, Before By-product Credits, per Ounce
$
32.51
$
35.84
$
37.75
By-product credits per ounce
(32.54
)
(15.76
)
(25.84
)
AISC, After By-product Credits, per Ounce
$
(0.03
)
20.08
$
11.91
35
In thousands (except per ounce amounts)
Three Months Ended March 31, 2025
Gold - Casa Berardi
Other
(4)
Total Gold and Other
Total cost of sales
$
50,682
$
7,095
$
57,777
Depreciation, depletion and amortization
(8,569
)
—
(8,569
)
Treatment costs
45
—
45
Change in product inventory
3,258
—
3,258
Reclamation and other costs
(312
)
—
(312
)
Exclusion of Other costs
(7,095
)
(7,095
)
Cash Cost, Before By-product Credits
(1)
45,104
—
45,104
Reclamation and other costs
312
—
312
Sustaining capital
1,894
—
1,894
AISC, Before By-product Credits
(1)
47,310
—
47,310
By-product credits:
Silver
(165
)
—
(165
)
Total By-product credits
(165
)
—
(165
)
Cash Cost, After By-product Credits
$
44,939
$
—
$
44,939
AISC, After By-product Credits
$
47,145
$
—
$
47,145
Divided by ounces produced
20
—
20
Cash Cost, Before By-product Credits, per Ounce
$
2,203
$
—
$
2,203
By-product credits per ounce
(8
)
—
(8
)
Cash Cost, After By-product Credits, per Ounce
$
2,195
$
—
$
2,195
AISC, Before By-product Credits, per Ounce
$
2,311
$
—
$
2,311
By-product credits per ounce
(8
)
—
(8
)
AISC, After By-product Credits, per Ounce
$
2,303
$
—
$
2,303
36
In thousands (except per ounce amounts)
Three Months Ended March 31, 2025
Total Silver
Total Gold and Other
Total
Total cost of sales
$
129,558
$
57,777
$
187,335
Depreciation, depletion and amortization
(29,816
)
(8,569
)
(38,385
)
Treatment costs
6,106
45
6,151
Change in product inventory
(1,740
)
3,258
1,518
Reclamation and other costs
(580
)
(312
)
(892
)
Exclusion of Keno Hill cash costs
(5)
(13,069
)
—
(13,069
)
Exclusion of Other costs
—
(7,095
)
(7,095
)
Cash Cost, Before By-product Credits
(1)
90,459
45,104
135,563
Reclamation and other costs
952
312
1,264
Sustaining capital
22,463
1,894
24,357
General and administrative
11,999
—
11,999
AISC, Before By-product Credits
(1)
125,873
47,310
173,183
By-product credits:
Zinc
(30,324
)
—
(30,324
)
Gold
(34,977
)
—
(34,977
)
Lead
(20,134
)
—
(20,134
)
Silver
—
(165
)
(165
)
Copper
(729
)
—
(729
)
Total By-product credits
(86,164
)
(165
)
(86,329
)
Cash Cost, After By-product Credits
$
4,295
$
44,939
$
49,234
AISC, After By-product Credits
$
39,709
$
47,145
$
86,854
Divided by ounces produced
3,335
20
Cash Cost, Before By-product Credits, per Ounce
$
27.13
$
2,203
By-product credits per ounce
(25.84
)
(8
)
Cash Cost, After By-product Credits, per Ounce
$
1.29
$
2,195
AISC, Before By-product Credits, per Ounce
$
37.75
$
2,311
By-product credits per ounce
(25.84
)
(8
)
AISC, After By-product Credits, per Ounce
$
11.91
$
2,303
37
In thousands (except per ounce amounts)
Three Months Ended March 31, 2024
Greens Creek
Lucky Friday
Keno Hill
(5)
Corporate
(2)
Total Silver
Total cost of sales
$
69,857
$
27,519
$
10,847
$
—
$
108,223
Depreciation, depletion and amortization
(14,443
)
(7,911
)
(3,602
)
—
(25,956
)
Treatment costs
9,724
3,223
—
—
12,947
Change in product inventory
(2,196
)
611
—
—
(1,585
)
Reclamation and other costs
(655
)
(102
)
—
—
(757
)
Exclusion of Lucky Friday cash costs
(3)
—
(3,634
)
—
—
(3,634
)
Exclusion of Keno Hill cash costs
(5)
—
—
(7,245
)
—
(7,245
)
Cash Cost, Before By-product Credits
(1)
62,287
19,706
—
—
81,993
Reclamation and other costs
785
222
—
—
1,007
Sustaining capital
8,416
12,051
—
66
20,533
Exclusion of Lucky Friday sustaining costs
—
(5,396
)
—
—
(5,396
)
General and administrative
—
—
—
11,216
11,216
AISC, Before By-product Credits
(1)
71,488
26,583
—
11,282
109,353
By-product credits:
Zinc
(20,206
)
(4,785
)
—
—
(24,991
)
Gold
(26,551
)
—
—
—
(26,551
)
Lead
(6,980
)
(11,720
)
—
—
(18,700
)
Exclusion of Lucky Friday by-product credits
—
3,943
—
—
3,943
Total By-product credits
(53,737
)
(12,562
)
—
—
(66,299
)
Cash Cost, After By-product Credits
$
8,550
$
7,144
$
—
$
—
$
15,694
AISC, After By-product Credits
$
17,751
$
14,021
$
—
$
11,282
$
43,054
Ounces produced
2,479
1,061
3,540
Exclusion of Lucky Friday ounces produced
—
(253
)
(253
)
Divided by ounces produced
2,479
808
3,287
Cash Cost, Before By-product Credits, per Ounce
$
25.13
$
24.41
$
24.95
By-product credits per ounce
(21.68
)
(15.56
)
(20.17
)
Cash Cost, After By-product Credits, per Ounce
$
3.45
$
8.85
$
4.78
AISC, Before By-product Credits, per Ounce
$
28.84
$
32.92
$
33.27
By-product credits per ounce
(21.68
)
(15.56
)
(20.17
)
AISC, After By-product Credits, per Ounce
$
7.16
$
17.36
$
13.10
38
In thousands (except per ounce amounts)
Three Months Ended March 31, 2024
Gold - Casa Berardi
Other
(4)
Total Gold and Other
Total cost of sales
$
58,260
$
3,885
$
62,145
Depreciation, depletion and amortization
(22,951
)
—
(22,951
)
Treatment costs
24
—
24
Change in product inventory
1,739
—
1,739
Reclamation and other costs
(209
)
—
(209
)
Exclusion of Other costs
—
(3,885
)
(3,885
)
Cash Cost, Before By-product Credits
(1)
36,863
—
36,863
Reclamation and other costs
209
—
209
Sustaining capital
4,861
—
4,861
AISC, Before By-product Credits
(1)
41,933
—
41,933
By-product credits:
Silver
(143
)
—
(143
)
Total By-product credits
(143
)
—
(143
)
Cash Cost, After By-product Credits
$
36,720
$
—
$
36,720
AISC, After By-product Credits
$
41,790
$
—
$
41,790
Divided by ounces produced
22
—
22
Cash Cost, Before By-product Credits, per Ounce
$
1,675
$
—
$
1,675
By-product credits per ounce
(6
)
—
(6
)
Cash Cost, After By-product Credits, per Ounce
$
1,669
$
—
$
1,669
AISC, Before By-product Credits, per Ounce
$
1,905
$
—
$
1,905
By-product credits per ounce
(6
)
—
(6
)
AISC, After By-product Credits, per Ounce
$
1,899
$
—
$
1,899
39
In thousands (except per ounce amounts)
Three Months Ended March 31, 2024
Total Silver
Total Gold and Other
Total
Total cost of sales
$
108,223
$
62,145
$
170,368
Depreciation, depletion and amortization
(25,956
)
(22,951
)
(48,907
)
Treatment costs
12,947
24
12,971
Change in product inventory
(1,585
)
1,739
154
Reclamation and other costs
(757
)
(209
)
(966
)
Exclusion of Other costs
—
(3,885
)
(3,885
)
Exclusion of Lucky Friday cash costs
(3)
(3,634
)
—
(3,634
)
Exclusion of Keno Hill cash costs
(5)
(7,245
)
—
(7,245
)
Cash Cost, Before By-product Credits
(1)
81,993
36,863
118,856
Reclamation and other costs
1,007
209
1,216
Sustaining capital
20,533
4,861
25,394
Exclusion of Lucky Friday sustaining costs
(3)
(5,396
)
—
(5,396
)
General and administrative
11,216
—
11,216
AISC, Before By-product Credits
(1)
109,353
41,933
151,286
By-product credits:
Zinc
(24,991
)
—
(24,991
)
Gold
(26,551
)
—
(26,551
)
Lead
(18,700
)
—
(18,700
)
Silver
—
(143
)
(143
)
Exclusion of Lucky Friday by-product credits
(3)
3,943
—
3,943
Total By-product credits
(66,299
)
(143
)
(66,442
)
Cash Cost, After By-product Credits
$
15,694
$
36,720
$
52,414
AISC, After By-product Credits
$
43,054
$
41,790
$
84,844
Ounces produced
3,540
22
Exclusion of Lucky Friday ounces produced
(3)
(253
)
—
Divided by ounces produced
3,287
22
Cash Cost, Before By-product Credits, per Ounce
$
24.95
$
1,675
By-product credits per ounce
(20.17
)
(6
)
Cash Cost, After By-product Credits, per Ounce
$
4.78
$
1,669
AISC, Before By-product Credits, per Ounce
$
33.27
$
1,905
By-product credits per ounce
(20.17
)
(6
)
AISC, After By-product Credits, per Ounce
$
13.10
$
1,899
(1)
Includes all direct and indirect operating costs related 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, before by-product revenues earned from all metals other than the primary metal produced at each operation. AISC, Before By-product Credits also includes reclamation and sustaining capital costs.
(2)
AISC, Before By-product Credits for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining capital.
(3)
Lucky Friday operations were suspended in August 2023 following the underground fire in the #2 shaft secondary egress and resumed on January 9, 2024. The portion of cash costs, sustaining costs, by-product credits, and silver production incurred during the suspension period are excluded from the calculation of total cost of sales, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.
(4)
Other includes $7.1 million and $3.9 million of total cost of sales for the three months ended March 31, 2025, and 2024, respectively related to our environmental remediation services business.
(5)
Keno Hill is in the ramp-up phase of production and is excluded from the calculation of Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.
40
Fin
ancial Liquidity and Capital Resources
We have a disciplined cash management strategy of maintaining financial flexibility to execute our capital priorities and provide long-term value to our stockholders. Consistent with that strategy, we aim to maintain an acceptable level of net debt and sufficient liquidity to fund debt service costs, operations, capital expenditures, exploration and pre-development projects, while returning cash to stockholders through dividends and potential share repurchases.
At March 31, 2025, we had $23.7 million in cash and cash equivalents, of which $3.1 million was held in foreign subsidiaries' local currency that we anticipate utilizing for near-term operating, exploration or capital costs by those foreign subsidiaries. At March 31, 2025, we had $43.0 million drawn on our $225 million credit facility, and additional $6.6 million used for letters of credit, leaving $175 million for additional borrowings. We also have USD cash and cash equivalent balances held by our foreign subsidiaries that, if repatriated, may be subject to withholding taxes. We expect that there would be no additional tax burden upon repatriation after considering the cash cost associated with the withholding taxes. We believe that our liquidity and capital resources from our U.S. operations are adequate to fund our U.S. operations and corporate activities.
Pursuant to our common stock dividend policy described in
Note 12
of
Notes to Consolidated Financial Statements
in our consolidated financial statements and notes for the year ended December 31, 2024, our Board of Directors declared and paid dividends on our common and preferred stock of $2.5 million and $3.9 million during the three months ended March 31, 2025 and 2024, respectively. Our common stock dividend policy anticipates paying an annual minimum dividend of $0.015 per share. Prior to the first quarter of 2025, our dividend policy previously had an additional silver-linked component which tied the amount of declared common stock dividends to our realized silver price for the preceding quarter.
The declaration and payment of dividends on our common stock is at the sole discretion of our Board of Directors, and there can be no assurance that we will continue to declare and pay common stock dividends in the future.
Pursuant to our stock repurchase program described in
Note 12
of
Notes to Consolidated Financial Statements
in our consolidated financial statements and notes for the year ended December 31, 2024, we are authorized to repurchase up to 20 million shares of our outstanding common stock from time to time in open market or privately negotiated transactions, depending on prevailing market conditions and other factors. The repurchase program may be modified, suspended or discontinued by us at any time. Whether or not we engage in repurchases from time to time may depend on a variety of factors, including not only price and cash resources, but customary black-out restrictions, whether we have any material inside information, limitations on share repurchases or cash usage that may be imposed by our credit agreement or in connection with issuances of securities, alternative uses for cash, applicable law, and other investment opportunities from time to time.
As of March 31, 2025 and December 31, 2024, 934,100 shares had been purchased in prior periods at an average price of $3.99 per share, leaving 19.1 million shares that may yet be purchased under the program. We have not repurchased any shares since June 2014.
As discussed in
Note 6
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
pursuant to an equity distribution agreement dated February 18, 2021, there are 36,156,316 remaining shares of our common stock that we may offer and sell from time to time in “at-the-market” offerings. Sales of the shares, if any, will be made by means of ordinary brokers transactions or as otherwise agreed between the Company and the agents as principals. Whether or not we engage in sales from time to time may depend on a variety of factors, including share price, our cash resources, customary black-out restrictions, and whether we have any material inside information. The equity distribution agreement can be terminated by us at any time. Any sales of shares under that agreement are registered under the Securities Act of 1933, as amended, pursuant to a shelf registration statement on Form S-3. During the three months ended March 31, 2025, we did not sell any shares under the agreement.
As a result of our current cash balances, the performance of our current and expected operations, current metals prices, proceeds from potential at-the-market sales of common stock, and availability under our Credit Agreement, we believe we will be able to meet our obligations and other potential cash requirements during the next 12 months and beyond. Our obligations and other uses of cash may include, but are not limited to: debt service obligations related to the Senior Notes and IQ Notes; principal and interest payments under our Credit Agreement; ramp up and suspension costs; capital expenditures at our operations; potential acquisitions of other mining companies or properties; regulatory matters; litigation; potential repurchases of our common stock under the program described above; and payment of dividends on common stock, if declared by our Board of Directors.
We currently estimate a range of approximately $222 to $242
million (before any lease financing) will be invested in 2025 on capital expenditures, primarily for equipment, infrastructure, and development at our mines, including $54.1 million already incurred as of March 31, 2025. We also estimate exploration and pre-development expenditures will total approximately $28.0 million in 2025, including $4.5 million already incurred as of March 31, 2025. Our expenditures for these items and our related plans for 2025 may change based upon our financial position, metals prices, and other considerations. Our ability to fund the activities described above will depend on our operating performance, metals prices, our ability to estimate revenues and costs, sources of liquidity available to us, including the revolving credit facility (which requires compliance with certain financial and other covenants), and other factors. A
41
sustained downturn in metals prices, significant increase in operational or capital costs or other uses of cash, poor results of our operating units, our inability to access the credit facility or the sources of liquidity discussed above, or other factors beyond our control could impact our plans.
We may defer some capital investment and/or exploration and pre-development activities, engage in asset sales or secure additional capital if necessary to maintain liquidity. We may also pursue additional acquisition opportunities, which could require additional equity issuances or other forms of financing. There can be no assurance that such financing will be available to us.
Our liquid assets include (in millions):
March 31, 2025
December 31, 2024
Cash and cash equivalents held in U.S. dollars
$
20.6
$
24.5
Cash and cash equivalents held in foreign currency
3.1
2.4
Total cash and cash equivalents
23.7
26.9
Marketable equity securities - non-current
36.8
33.2
Total cash, cash equivalents and investments
$
60.5
$
60.1
Cash and cash equivalents decreased by $3.2 million in the first three months of 2025. Cash held in foreign currencies represents balances in Canadian dollars and Mexican Pesos. The value of non-current marketable equity securities increased by $3.6 million.
Three Months Ended
March 31, 2025
March 31, 2024
Cash provided by (used in) operating activities (in millions)
$
35.7
$
17.1
Cash provided by operating activities for the three months ended March 31, 2025, of $35.7 million represents a $18.7 million increase compared to the $17.1 million of cash used in operations during the same period of 2024. $29.8 million of the variance was attributable to higher income adjusted for non-cash items, reflecting higher net income driven by higher revenues, partly offset by lower non-cash depreciation, depletion and amortization expense. The increase was partly offset by negative net working capital changes resulting from higher accounts receivable balances reflecting the timing of sales at all sites and higher vendor payments at Greens Creek, Casa Berardi and Keno Hill, partly offset by a lower inventory build.
Three Months Ended
March 31, 2025
March 31, 2024
Cash used in investing activities (in millions)
$
(54.0
)
$
(47.5
)
During the three months ended March 31, 2025, we invested $54.0 million in capital expenditures, an increase of $6.5 million compared to the same period in 2024.
Three Months Ended
March 31, 2025
March 31, 2024
Cash provided by financing activities (in millions)
$
15.2
$
4.9
During the three months ended March 31, 2025, we had net borrowings of $20.0 million on our revolving credit facility resulting in $43.0 million outstanding at an interest rate of 6.7% on
March 31, 2025
. In addition, during the three months ended March 31, 2025 and 2024:
•
we paid cash dividends on our common and preferred stock totaling $2.5 million and $3.9 million, respectively;
•
we made repayments on our finance leases of $2.3 million and $3.0 million, respectively; and
•
we issued stock under our ATM program described above for net proceeds of $1.1 million, in 2024.
42
Cont
ractual Obligations, Contingent Liabilities and Commitments
The table below presents our fixed, non-cancelable contractual obligations and commitments primarily related to our Senior Notes, IQ Notes, credit facility, outstanding purchase orders (including certain capital expenditures) and lease arrangements as of March 31, 2025 (in thousands):
Payments Due By Period
Less than 1 year
1-3 years
4-5 years
More than
5 years
Total
Purchase obligations
(1)
$
39,935
$
—
$
—
$
—
$
39,935
Credit facility
(2)
1,600
2,631
43,400
—
47,631
Finance lease commitments
(3)
9,198
9,894
2,200
275
21,567
Operating lease commitments
(4)
3,016
2,460
2,281
4,973
12,730
Senior Notes
(5)
34,438
539,724
—
—
574,162
IQ Notes
(6)
34,649
—
—
—
34,649
Total contractual cash obligations
$
122,836
$
554,709
$
47,881
$
5,248
$
730,674
(1)
Consists of open purchase orders and commitments of approximately $11.7 million, $7.6
million, $11.1 million, $7.6 million and $1.9 million for various capital and non-capital items at Greens Creek, Lucky Friday, Keno Hill, Casa Berardi and Other Operations, respectively.
(2)
The Credit Agreement provides for a $225 million revolving credit facility. We had net draws of $43.0 million and $6.6 million in letters of credit outstanding as of March 31, 2025. The amounts in the table above assume no additional amounts will be drawn in future periods, and include only the standby fee on the current undrawn balance and accrued interest. For more information on our credit facility, see
Note 7
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
.
(3)
Includes scheduled finance lease payments of $2.3 million, $4.2 million, $10.7 million, and $4.4 million for equipment at Greens Creek, Lucky Friday, Casa Berardi, and Keno Hill, respectively.
(4)
We enter into operating leases in the normal course of business. Substantially all lease agreements have fixed payment terms based on the passage of time. Some lease agreements provide us with the option to renew the lease or purchase the leased property. Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional operating lease arrangements.
(5)
On February 19, 2020, we completed an offering of $475 million in aggregate principal amount of our Senior Notes due February 15, 2028. The Senior Notes bear interest at a rate of 7.25% per year, with interest payable on February 15 and August 15 of each year. See
Note 7
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
for more information.
(6)
On July 9, 2020, we entered into a note purchase agreement pursuant to which we issued our IQ Notes for CAD $50 million (approximately USD $36.8 million at the time of the transaction) in aggregate principal amount. The IQ Notes bear interest on amounts outstanding at a rate of 6.515% per year, payable on January 9 and July 9 of each year. See
Note 7
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
for more information.
We record liabilities for costs associated with mine closure, reclamation of land and other environmental matters. At March 31, 2025, our liabilities for these matters totaled $126.1 million. Future expenditures related to closure, reclamation and environmental expenditures at our sites are difficult to estimate, although we anticipate we will incur expenditures relating to these obligations over the next 30 years. For additional information relating to our environmental obligations, see
Note 11
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
.
Criti
cal Accounting Estimates
There have been no significant changes to the critical accounting estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K.
Off-B
alance Sheet Arrangements
At March 31, 2025, we had no existing off-balance sheet arrangements, as defined under SEC regulations, that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
43
Guar
antor Subsidiaries
Presented below are Hecla’s unaudited interim condensed consolidating financial statements as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended, resulting from the guarantees by certain of Hecla's subsidiaries of the Senior Notes and IQ Notes (see
Note 7
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
for more information). The Guarantors consist of the following of Hecla's 100%-owned subsidiaries: Hecla Limited; Silver Hunter Mining Company; Rio Grande Silver, Inc.; Hecla MC Subsidiary, LLC; Hecla Silver Valley, Inc.; Burke Trading, Inc.; Hecla Montana, Inc.; Revett Silver Company; RC Resources, Inc.; Troy Mine Inc.; Revett Exploration, Inc.; Revett Holdings, Inc.; Mines Management, Inc.; Newhi, Inc.; Montanore Minerals Corp.; Hecla Alaska LLC; Hecla Greens Creek Mining Company; Hecla Admiralty Company; Hecla Juneau Mining Company; Klondex Holdings Inc.; Klondex Gold & Silver Mining Co.; Klondex Midas Holdings Limited; Klondex Aurora Mine Inc.; Klondex Hollister Mine Inc.; Hecla Quebec, Inc.; and Alexco Resource Corp. We completed the offering of the Senior Notes on February 19, 2020 under our shelf registration statement previously filed with the SEC. We issued the IQ Notes in four equal tranches between July and October 2020.
The unaudited interim condensed consolidating financial statements below have been prepared from our financial information on the same basis of accounting as the unaudited interim condensed consolidated financial statements set forth elsewhere in this report. Investments in the subsidiaries are accounted for under the equity method. Accordingly, the entries necessary to consolidate Hecla, the Guarantors, and our non-guarantor subsidiaries are reflected in the intercompany eliminations column. In the course of preparing consolidated financial statements, we eliminate the effects of various transactions conducted between Hecla and its subsidiaries and among the subsidiaries. While valid at an individual subsidiary level, such activities are eliminated in consolidation because, when taken as a whole, they do not represent business activity with third-party customers, vendors, and other parties. Examples of such eliminations include the following:
•
Investments in subsidiaries
. The acquisition of a company results in an investment in debt or equity capital on the records of the parent company and a contribution to debt or equity capital on the records of the subsidiary. Such investments and capital contributions are eliminated in consolidation.
•
Capital contributions
. Certain of Hecla's subsidiaries do not generate cash flow, either at all or that is sufficient to meet their capital needs, and their cash requirements are routinely met with inter-company advances from their parent companies. Generally on an annual basis, when not otherwise intended as debt, the Boards of Directors of such parent companies declare contributions of capital to their subsidiary companies, which increase the parents' investment and the subsidiaries' additional paid-in capital. Occasionally, parent companies may also subscribe for additional common shares of their subsidiaries. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.
•
Debt.
At times, inter-company debt agreements have been established between certain of Hecla's subsidiaries and their parents. The related debt liability and receivable balances, accrued interest expense (if any) and income activity (if any), and payments of principal and accrued interest amounts (if any) by the subsidiary companies to their parents are eliminated in consolidation.
•
Dividends.
Certain of Hecla's subsidiaries which generate cash flow routinely provide cash to their parent companies through inter-company transfers. On at least an annual basis, the Boards of Directors of such subsidiary companies declare dividends to their parent companies, which reduces the subsidiaries' retained earnings and increases the parents' dividend income. In consolidation, such activity is eliminated.
•
Deferred taxes
. Our ability to realize deferred tax assets and liabilities is considered for two consolidated tax groups of subsidiaries within the United States: The Nevada U.S. Group and the Hecla U.S. Group. Within each tax group, all subsidiaries' estimated future taxable income contributes to the ability of their tax group to realize all such assets and liabilities. However, when Hecla's subsidiaries are viewed independently, we use the separate return method to assess the realizability of each subsidiary's deferred tax assets and whether a valuation allowance is required against such deferred tax assets. In some instances, a parent company or subsidiary may possess deferred tax assets whose realization depends on the future taxable incomes of other subsidiaries on a consolidated-return basis, but would not be considered realizable if such parent or subsidiary filed on a separate stand-alone basis. In such a situation, a valuation allowance is assessed on that subsidiary's deferred tax assets, with the resulting adjustment reported in the eliminations column of the guarantor and parent's financial statements, as is the case in the unaudited interim financial statements set forth below. The separate return method can result in significant eliminations of deferred tax assets and liabilities and related income tax provisions and benefits. Non-current deferred tax asset balances are included in other non-current assets on the consolidating balance sheets and make up a large portion of that item, particularly for the guarantor balances.
Separate financial statements of the Guarantors are not presented because the guarantees by the Guarantors are joint and several and full and unconditional, except for certain customary release provisions, including: (1) the sale or disposal of all or substantially all of the assets of the Guarantor; (2) the sale or other disposition of the capital stock of the Guarantor; (3) the Guarantor is designated as an unrestricted entity in accordance with the applicable provisions of the indenture; (4) Hecla ceases to be a borrower as defined in the indenture; and (5) upon legal or covenant defeasance or satisfaction and discharge of the indenture.
Properties, plants, equipment and mineral interests, net
604
2,692,190
8,102
—
2,700,896
Intercompany receivable (payable)
(509,569
)
(768,655
)
802,605
475,619
—
Investments in subsidiaries
2,339,700
(52
)
—
(2,339,648
)
—
Other non-current assets
516,039
22,159
31,088
(492,938
)
76,348
Total assets
$
2,397,456
$
2,110,875
$
872,193
$
(2,356,967
)
$
3,023,557
Liabilities and Stockholders' Equity
Current liabilities
$
17,047
$
143,941
$
29,000
$
(17,265
)
$
172,723
Long-term debt
306,442
11,746
208,949
—
527,137
Non-current portion of accrued reclamation
—
114,918
106
—
115,024
Non-current deferred tax liability
—
124,382
—
—
124,382
Other non-current liabilities
—
10,324
—
—
10,324
Stockholders' equity
2,073,967
1,705,564
634,138
(2,339,702
)
2,073,967
Total liabilities and stockholders' equity
$
2,397,456
$
2,110,875
$
872,193
$
(2,356,967
)
$
3,023,557
As of December 31, 2024
Parent
Guarantors
Non-Guarantors
Eliminations
Consolidated
(in thousands)
Assets
Cash and cash equivalents
$
14,755
$
11,624
$
489
$
—
$
26,868
Other current assets
37,143
125,698
24,443
—
$
187,284
Properties, plants, equipment and mineral interests - net
603
2,685,407
8,109
—
$
2,694,119
Intercompany receivable (payable)
(437,765
)
(650,923
)
594,307
494,381
$
—
Investments in subsidiaries
2,451,783
(52
)
—
(2,451,731
)
$
—
Other non-current assets
502,802
21,686
28,775
(480,474
)
$
72,789
Total assets
$
2,569,321
$
2,193,440
$
656,123
$
(2,437,824
)
$
2,981,060
Liabilities and Stockholders' Equity
Current liabilities
$
41,612
$
156,652
$
24,099
$
(24,525
)
$
197,838
Long-term debt
464,075
6,406
(37
)
38,483
$
508,927
Non-current portion of accrued reclamation
—
109,650
1,512
—
$
111,162
Non-current deferred tax liability
24,122
86,141
3
—
$
110,266
Other non-current liabilities
—
13,353
—
—
$
13,353
Stockholders' equity
2,039,512
1,821,238
630,546
(2,451,782
)
$
2,039,514
Total liabilities and stockholders' equity
$
2,569,321
$
2,193,440
$
656,123
$
(2,437,824
)
$
2,981,060
45
Unaudited Interim Condensed Consolidating Statements of Operations
Three Months Ended March 31, 2025
Parent
Guarantors
Non-Guarantors
Eliminations
Consolidated
(in thousands)
Revenues
$
(5,070
)
$
266,409
$
—
$
—
$
261,339
Cost of sales
(1,825
)
(147,125
)
—
—
(148,950
)
Depreciation, depletion, amortization
—
(38,385
)
—
—
(38,385
)
General and administrative
(4,180
)
(7,341
)
(478
)
—
(11,999
)
Exploration and pre-development
(88
)
(4,006
)
(407
)
—
(4,501
)
Equity in earnings of subsidiaries
24,478
—
—
(24,478
)
—
Other income (expense)
27,004
(16,978
)
(10,288
)
(12,225
)
(12,487
)
Income before income and mining taxes
40,319
52,574
(11,173
)
(36,702
)
45,017
Benefit (provision) from income taxes
(11,449
)
(16,135
)
(789
)
12,228
(16,145
)
Net income
28,870
36,439
(11,962
)
(24,474
)
28,872
Preferred stock dividends
(138
)
—
—
—
(138
)
Income applicable to common stockholders
$
28,732
$
36,439
$
(11,962
)
$
(24,474
)
$
28,734
Net income
28,870
36,439
(11,962
)
(24,474
)
28,872
Changes in comprehensive income
2,434
—
—
—
2,434
Comprehensive income
$
31,304
$
36,439
$
(11,962
)
$
(24,474
)
$
31,306
46
Item 3. Qua
ntitative and Qualitative Disclosures About Market Risk
The following discussion about our exposure to market risks and risk management activities includes forward-looking statements that involve risks and uncertainties, as well as summarizes the financial instruments held by us at March 31, 2025, which are sensitive to changes in commodity prices and foreign exchange rates and are not held for trading purposes. Actual results could differ materially from those projected in the forward-looking statements. In the normal course of business, we also face risks that are either non-financial or non-quantifiable (See
Part I,
Item 1A. – Risk Factors
of our 2024 Form 10-K).
Metals Prices
Changes in the market prices of silver, gold, lead, zinc and copper can significantly affect our profitability and cash flow. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see
Item 1A – Risk Factors – A substantial or extended decline in metals prices would have a material adverse effect on us
in our 2024 Form 10-K). We utilize collars and financially-settled forward and put option contracts to manage our exposure to changes in prices for silver, gold, zinc and lead.
Provisional Sales
Sales of all metals products sold directly to customers, including by-product metals, are recorded as revenues when all performance obligations have been completed and the transaction price can be determined or reasonably estimated. For concentrate sales, revenues are generally recorded at the time of shipment at forward prices for the estimated month of settlement. Due to the time elapsed between shipment to the customer and the final settlement with the customer, we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices until final settlement by the customer. Changes in metals prices between shipment and final settlement will result in changes to revenues previously recorded upon shipment. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see
Item 1A – Risk Factors –
A substantial or extended decline in metals prices would have a material adverse effect on us
in our 2024 Form 10-K). At March 31, 2025, metals contained in concentrate sales and exposed to future price changes totaled 1.8 million ounces of silver, 5,000 ounces of gold, 7,025 tons of zinc and 6,300 tons of lead. If the price for each metal were to change by 10%, the change in the total value of the concentrates sold would be approximately $11.0 million. As discussed in
Note 8
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
, we utilize a program designed and intended to mitigate the risk of negative price adjustments with limited mark-to-market financially-settled forward contracts for our silver, gold, zinc, lead and copper sales.
Commodity-Price Risk Management
See
Note 8
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
for a description of our commodity-price risk management program.
Foreign Currency Risk Management
We operate and have mining interests in Canada, which exposes us to risks associated with fluctuations in the exchange rates between the USD and the CAD. We determined the functional currency for our Canadian operations is the USD. As such, foreign exchange gains and losses associated with the re-measurement of monetary assets and liabilities from CAD to USD are recorded to earnings each period. For the three months ended March 31, 2025, we recognized a net foreign exchange loss of $0.4 million, compared to a net foreign exchange gain of $4 million for the three months ended March 31, 2024. Foreign currency exchange rates are influenced by a number of factors beyond our control. A 10% change in the exchange rate between the USD and CAD from the rate at March 31, 2025 would have resulted in a change of approximately $5.9 million in our net foreign exchange gain or loss. We do not hedge the remeasurement of monetary assets and liabilities. We do hedge some of our operating and capital costs denominated in CAD.
See
Note 9
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
for a description of our foreign currency risk management program.
47
Item 4. Con
trols and Procedures
An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as required by Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were effective as of March 31, 2025, in assuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported. There were no changes in our internal control over financial reporting during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
48
Part II - Oth
er Information
Hecla Mining Company and Subsidiaries
Item 1. Leg
al Proceedings
For information concerning legal proceedings, refer to
Note 11
of
Notes to Condensed Consolidated Financial Statements (Unaudited)
, which is incorporated by reference into this Item 1.
Item 1A. Ris
k Factors
Item 1A. – Risk Factors
of our 2024 Form 10-K set forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition or operating results.
Tariffs, other import/export regulations, or trade disputes between the United States and other jurisdictions may have a negative effect on global economic conditions and on our business, financial results and financial condition.
Recently, the Trump Administration announced a 10% baseline tariff on multiple countries, including China, a country into which we sell our products. The Trump Administration then adopted additional, country-specific reciprocal tariffs. In response, China adopted retaliatory tariffs on goods imported from the U.S. On April 10, 2025, the Trump Administration suspended the country-specific reciprocal tariffs for a period of 90-days for all countries, except China, where the current applicable tariffs are 125%. Currently, we sell certain of our products into China (as well as Canada), and in the future may continue to do so. While the impacts of tariffs on us to date have been immaterial, the recently announced reciprocal Chinese tariffs might affect our products, and, in the absence of applicable exemptions (which were in place between 2018 and 2024), could have a material adverse impact on our business, financial condition, and results of operations. Further, any materials that we import to the U.S. from countries subject to tariffs could become more expensive if subject to a tariff, which could also have a material adverse impact on our business, financial condition, and results of operations.
On April 9, 2025, the Trump Administration issued Executive Order 14269, “Restoring America’s Maritime Dominance.” Among other things, this Order proposes the adoption of tariffs on maritime transport operators using Chinese- built vessels. We have significant sales of products that are shipped to Asia via oceangoing vessels that we source from maritime transport operators, and as a commodity producer, we have limited ability to pass on cost increases to our customers. If any of these tariffs were to be applied to vessels carrying our products, we could experience an increase in shipping charges, which could have a material adverse impact on our financial condition, and results of operations. As of the date of this report, we are not currently subject to any of these fees and believe there are exemptions potentially available when the tariffs go into effect.
In addition to possible impacts directly on our business, tariffs or other trade obstacles could have a material adverse effect on global economic conditions and the stability of global financial markets, and they may significantly reduce global trade, in particular, trade between China and the U.S. Any of these factors could depress economic activity, impact U.S. dollar/foreign currency exchange rates, restrict our access to customers and have a material adverse effect on our business, financial condition and results of operations.
Item 4. Mi
ne Safety Disclosures
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95 to this Quarterly Report.
Item 5. O
ther Information
During the three months ended March 31, 2025
, no director or officer of the Company
adopted
or
terminated
a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
49
Item 6. Ex
hibits
Hecla Mining Company and Wholly Owned Subsidiaries
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. **
101.SCH
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents **
104
Cover page formatted as Inline XBRL and contained in Exhibit 101 **
* Filed herewith
** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
(1) Indicates a management contract or compensatory plan or arrangement.
Items 2 and 3 of Part II are not applicable and are omitted from this report.
50
SIGN
ATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HECLA MINING COMPANY
(Registrant)
Date:
May 1, 2025
By:
/s/ Rob Krcmarov
Rob Krcmarov, President and Chief Executive Officer,
Insider Ownership of HECLA MINING CO/DE/
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