Strong silver free cash flow generation affirming silver guidance
COEUR D’ALENE, Idaho–(BUSINESS WIRE)–Hecla Mining Company (NYSE:HL) today announced second quarter 2023 financial and operating results.
SECOND QUARTER HIGHLIGHTS
Operational
- Produced 3.8 million ounces of silver, 7.9 million ounces in the first half of the year; third highest silver production over a six-month period in Company history.
- Restarted the mill at Keno Hill, producing 184,264 ounces of silver, with full production expected by year-end.
- Lucky Friday’s silver production of 1.3 million ounces was the highest since the first quarter of 2000.
- Silver production and cost guidance affirmed; gold production guidance adjusted based on reduced underground mining and wildfires-related suspension of operations at Casa Berardi.
Financial
- Sales of $178.1 million, with 45% from silver and 35% from gold.
- Consolidated silver total cost of sales of $96.8 million and cash cost and AISC per silver ounce (each after by-product credits) of $3.32 and $11.63, respectively.3,4
- Consolidated cash flow from operations of $23.8 million for the quarter, and year to date $64.4 million; with silver operations generating $62.2 million in cash flow from operations for the quarter and year to date $151.7 million.
- Silver operations generated $38.8 million in free cash flow for the quarter, and year to date $107.4 million.2 Since 2020, silver operations have generated cash flow from operations of $788 million and free cash flow of $566 million.
- Net loss applicable to common stockholders of $(15.8) million or $(0.03) per share and adjusted net income of $15.1 million or $0.03 per share.5
- Strong balance sheet with $106.8 million in cash and cash equivalents, and available liquidity of $219 million.
Environmental, Social, Governance
- Strong safety performance with an all-injury frequency rate of 1.18, the lowest in Company history.
Strategic
- Acquired ATAC Resources on July 7th for $18.8 million in Hecla stock, adding a massive land package of over 700 square miles comprised of the Rackla and Connaught properties in the Yukon.
«Our silver operations reported another solid quarter of operational and financial performance with strong free cash flow generation and our lowest all-injury frequency rate in our history,» said Phillips S. Baker Jr., President and CEO. «Greens Creek continued its strong and consistent performance, Lucky Friday produced the most silver in a quarter since 2000, and with the service hoist now operational, this mine is closer to achieving 425,000 ore tons in annual throughput by year-end, and we restarted the Keno Hill mill during the quarter.»
Baker continued, «Our silver mines have generated $107 million in free cash flow in the first half of the year and in excess of $560 million since 2020. With this free cash flow, we are investing to extend the mine lives and increase the production of our mines making Hecla the fastest growing established silver producer with 17 million ounces of production expected this year and about 20 million ounces by 2025, all in the U.S. and Canada.»
Baker concluded, “Silver is an essential metal in powering the transition to a green economy, particularly photovoltaics, whose rapid growth is now using 15 to 20% of global annual silver production. Hecla, with our growing, long-lived, low-cost mines, is well positioned to reliably provide the silver the world needs.»
FINANCIAL OVERVIEW
In the following table and throughout this release, «total cost of sales» is comprised of cost of sales and other direct production costs and depreciation, depletion and amortization.
|
In Thousands unless stated otherwise |
|
2Q-2023 |
|
1Q-2023 |
|
4Q-2022 |
|
3Q-2022 |
|
2Q-2022 |
|
YTD-2023 |
|
YTD-2022 |
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|
FINANCIAL AND PRODUCTION SUMMARY |
|
|||||||||||||||||||||||||||
|
Sales |
|
$ |
178,131 |
|
|
$ |
199,500 |
|
|
$ |
194,825 |
|
|
$ |
146,339 |
|
|
$ |
191,242 |
|
|
$ |
377,631 |
|
|
$ |
377,741 |
|
|
Total cost of sales |
|
$ |
140,472 |
|
|
$ |
164,552 |
|
|
$ |
169,807 |
|
|
$ |
137,892 |
|
|
$ |
153,979 |
|
|
$ |
305,024 |
|
|
$ |
295,049 |
|
|
Gross profit |
|
$ |
37,659 |
|
|
$ |
34,948 |
|
|
$ |
25,018 |
|
|
$ |
8,447 |
|
|
$ |
37,263 |
|
|
$ |
72,607 |
|
|
$ |
82,692 |
|
|
Net(loss) applicable to common stockholders |
|
$ |
(15,832 |
) |
|
$ |
(3,311 |
) |
|
$ |
(4,590 |
) |
|
$ |
(23,664 |
) |
|
$ |
(13,661 |
) |
|
$ |
(19,143 |
) |
|
$ |
(9,646 |
) |
|
Basic (loss) per common share (in dollars) |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.02 |
) |
|
Adjusted EBITDA1 |
|
$ |
67,739 |
|
|
$ |
61,903 |
|
|
$ |
62,261 |
|
|
$ |
26,555 |
|
|
$ |
70,474 |
|
|
$ |
129,642 |
|
|
$ |
128,676 |
|
|
Net Debt to Adjusted EBITDA1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1 |
|
|
|
1.9 |
|
|||||
|
Cash provided by operating activities |
|
$ |
23,777 |
|
|
$ |
40,603 |
|
|
$ |
36,120 |
|
|
$ |
(24,322 |
) |
|
$ |
40,183 |
|
|
$ |
64,380 |
|
|
$ |
78,092 |
|
|
Capital Expenditures |
|
$ |
(51,468 |
) |
|
$ |
(54,443 |
) |
|
$ |
(56,140 |
) |
|
$ |
(37,430 |
) |
|
$ |
(34,329 |
) |
|
$ |
(105,911 |
) |
|
$ |
(55,807 |
) |
|
Free Cash Flow2 |
|
$ |
(27,691 |
) |
|
$ |
(13,840 |
) |
|
$ |
(20,020 |
) |
|
$ |
(61,752 |
) |
|
$ |
5,854 |
|
|
$ |
(41,531 |
) |
|
$ |
22,285 |
|
|
Silver ounces produced |
|
|
3,832,559 |
|
|
|
4,040,969 |
|
|
|
3,663,433 |
|
|
|
3,549,392 |
|
|
|
3,645,454 |
|
|
|
7,873,528 |
|
|
|
6,970,162 |
|
|
Silver payable ounces sold |
|
|
3,360,694 |
|
|
|
3,604,494 |
|
|
|
3,756,701 |
|
|
|
2,479,724 |
|
|
|
3,387,909 |
|
|
|
6,965,188 |
|
|
|
6,075,170 |
|
|
Gold ounces produced |
|
|
35,251 |
|
|
|
39,717 |
|
|
|
43,634 |
|
|
|
44,747 |
|
|
|
45,719 |
|
|
|
74,822 |
|
|
|
87,361 |
|
|
Gold payable ounces sold |
|
|
31,961 |
|
|
|
39,619 |
|
|
|
40,097 |
|
|
|
40,443 |
|
|
|
44,225 |
|
|
|
71,580 |
|
|
|
85,278 |
|
|
Cash Costs and AISC, each after by-product credits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Silver cash costs per ounce 3 |
|
$ |
3.32 |
|
|
$ |
2.14 |
|
|
$ |
4.79 |
|
|
$ |
3.43 |
|
|
$ |
(1.14 |
) |
|
$ |
2.70 |
|
|
$ |
(0.07 |
) |
|
Silver AISC per ounce 4 |
|
$ |
11.63 |
|
|
$ |
8.96 |
|
|
$ |
13.98 |
|
|
$ |
12.93 |
|
|
$ |
8.08 |
|
|
$ |
10.21 |
|
|
$ |
7.75 |
|
|
Gold cash costs per ounce 3 |
|
$ |
1,658 |
|
|
$ |
1,775 |
|
|
$ |
1,696 |
|
|
$ |
1,349 |
|
|
$ |
1,371 |
|
|
$ |
1,725 |
|
|
$ |
1,440 |
|
|
Gold AISC per ounce 4 |
|
$ |
2,147 |
|
|
$ |
2,392 |
|
|
$ |
2,075 |
|
|
$ |
1,669 |
|
|
$ |
1,605 |
|
|
$ |
2,286 |
|
|
$ |
1,680 |
|
|
Realized Prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Silver, $/ounce |
|
$ |
23.67 |
|
|
$ |
22.62 |
|
|
$ |
22.03 |
|
|
$ |
18.30 |
|
|
$ |
20.68 |
|
|
$ |
23.12 |
|
|
$ |
22.45 |
|
|
Gold, $/ounce |
|
$ |
1,969 |
|
|
$ |
1,902 |
|
|
$ |
1,757 |
|
|
$ |
1,713 |
|
|
$ |
1,855 |
|
|
$ |
1,928 |
|
|
$ |
1,867 |
|
|
Lead, $/pound |
|
$ |
0.99 |
|
|
$ |
1.02 |
|
|
$ |
1.05 |
|
|
$ |
0.95 |
|
|
$ |
0.97 |
|
|
$ |
1.00 |
|
|
$ |
1.02 |
|
|
Zinc, $/pound |
|
$ |
1.13 |
|
|
$ |
1.39 |
|
|
$ |
1.24 |
|
|
$ |
1.23 |
|
|
$ |
1.44 |
|
|
$ |
1.26 |
|
|
$ |
1.61 |
|
Sales in the second quarter declined by 11% to $178.1 million from the first quarter of 2023 («prior quarter») due to lower quantities of all metals sold and lower realized lead and zinc prices, partially offset by higher precious metals prices.
Gross profit increased to $37.7 million, an increase of 8% over the prior quarter, as lower total cost of sales attributable to lower quantities of metals sold offset lower sales.
Net loss applicable to common stockholders was $(15.8) million in the second quarter due to:
- Increased ramp-up and suspension costs of $5.0 million, reflecting the impact of the suspension of operations at Casa Berardi in June due to wildfires in Quebec and the start-up of Keno Hill.
- Increased provision for closed operations and environmental matters of $2.1 million reflecting adjustments to the reclamation costs at the legacy Johnny M and Durita properties.
- An unrealized loss on investments of $5.6 million compared to a gain of $2.2 million, reflecting changes in the fair value of our marketable securities portfolio.
- A foreign exchange loss of $3.9 million compared to a gain of $0.1 million, reflecting the impact of the appreciation of the Canadian dollar on our monetary assets and liabilities.
- Increased income and mining tax expense of $1.9 million, reflecting increased taxable income from our U.S. assets.
The above items were partly offset by:
- Lower adjustments of inventory to net realizable value of $1.5 million at our Casa Berardi and Nevada operations.
- Lower depreciation, depletion, and amortization expense of $6.3 million, reflecting the impact of the suspension of operations in June at Casa Berardi and lower silver sales.
Consolidated silver’s total cost of sales in the second quarter decreased by 4% to $96.8 million from the prior quarter, primarily due to lower concentrate tons sold, partially offset by higher production costs at Lucky Friday. Cash costs and AISC per silver ounce, each after by-product credits, were $3.32 and $11.63, respectively.3,4 The increase in cash costs per ounce was due to higher production costs at Lucky Friday, lower consolidated silver production, and lower base metal by-product credits attributable to lower realized prices partially offset by higher Greens Creek gold production and realized price. AISC was further impacted by higher planned sustaining capital spending at the silver operations.3,4
Consolidated total gold cost of sales decreased by 32% to $43.6 million in the second quarter due to lower production costs attributable to the June wildfires-related suspension at Casa Berardi. Cash costs and AISC per gold ounce, each after by-product credits, were $1,658 and $2,147, respectively.3,4 The decrease in cash costs per ounce was attributable to lower production costs partially offset by lower gold production at Casa Berardi, with AISC also impacted by lower sustaining capital spend.
Adjusted EBITDA for the second quarter increased by 9% to $67.7 million compared to the prior quarter due to higher gross profit, lower general and administrative expenses, and monetization of zinc hedges. During the quarter, average zinc prices declined to $1.15/lb., the lowest since April 2020 and a 19% decrease over the prior quarter. The Company monetized its zinc hedge contracts for proceeds of $7.6 million during the quarter.
The ratio of net debt to Adjusted EBITDA increased to 2.1 for the second quarter due primarily to the wildfires-related suspension at the Casa Berardi mine. With Keno Hill’s ongoing ramp-up to full production, and Casa Berardi resuming production, the Company expects net debt to Adjusted EBITDA ratio to decline to less than the Company’s target of 2.1
Cash and cash equivalents at the end of the second quarter were $106.8 million and included $31 million drawn on the revolving credit facility. Available liquidity was $219 million as of the end of the quarter.
Cash provided by operating activities was $23.8 million and decreased by $16.8 million over the prior quarter primarily due to unfavorable working capital changes partially attributable to the increase in product inventory at the Lucky Friday and Keno Hill as it commenced production during the quarter, and payment of 2022 incentive compensation.
Capital expenditures were $51.5 million (net of finance leases of $15.2 million) in the second quarter, compared to $54.4 million in the prior quarter (net of finance leases of $0.9 million). Capital spend at Casa Berardi was for purchases of open pit equipment for approximately $11.9 million (partially financed by leases of $6.6 million) as the mine begins the transition from underground and open pit production to all production from surface operations. The increase in Greens Creek’s capital spend was related to the timing of equipment purchases and seasonal surface projects, with the increase in Lucky Friday’s capital spend also impacted by the timing of equipment purchases and the service hoist and coarse ore bunker projects. Keno Hill’s capital spend was $3.5 million (net of finance leases of $6.7 million) and declined over the prior quarter as the mine began ramp-up to full production during the quarter.
Free cash flow for the quarter was negative $27.7 million, compared to negative $13.8 million in the prior quarter. The decrease in free cash flow was attributable to lower cash flow from operations attributable to unfavorable working capital changes during the quarter.2
Forward Sales Contracts for Base Metals and Foreign Currency
The Company uses financially settled forward sales contracts to manage exposures to zinc and lead price changes in forecasted concentrate shipments. On June 30, 2023, the Company had contracts covering approximately 39% of the forecasted payable lead production from 2023 – 2025 at an average price of $0.99 per pound.
The Company also manages CAD exposure through forward contracts. At June 30, 2023, the Company had hedged approximately 48% of forecasted Casa Berardi CAD direct production costs through 2026 at an average CAD/USD rate of 1.32. The Company has also hedged approximately 22% of Casa Berardi capital costs through 2026 at 1.35. At Keno Hill, 54% of the total planned spend for 2023 and 2024 is hedged at an average CAD/USD rate of 1.36.
OPERATIONS OVERVIEW
|
Greens Creek Mine – Alaska |
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Dollars are in thousands except cost per ton |
2Q-2023 |
1Q-2023 |
4Q-2022 |
3Q-2022 |
2Q-2022 |
YTD-2023 |
YTD-2022 |
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|
GREENS CREEK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Tons of ore processed |
|
232,465 |
|
|
233,167 |
|
|
230,225 |
|
|
229,975 |
|
|
209,558 |
|
|
465,632 |
|
|
421,245 |
|
|||||||
|
Total production cost per ton |
$ |
194.94 |
|
$ |
198.60 |
|
$ |
211.29 |
|
$ |
185.34 |
|
$ |
197.84 |
|
$ |
196.77 |
|
$ |
194.98 |
|
|||||||
|
Ore grade milled – Silver (oz./ton) |
|
12.8 |
|
|
14.4 |
|
|
13.1 |
|
|
13.6 |
|
|
14.0 |
|
|
13.6 |
|
|
13.9 |
|
|||||||
|
Ore grade milled – Gold (oz./ton) |
|
0.10 |
|
|
0.08 |
|
|
0.08 |
|
|
0.07 |
|
|
0.08 |
|
|
0.09 |
|
|
0.08 |
|
|||||||
|
Ore grade milled – Lead (%) |
|
2.5 |
|
|
2.6 |
|
|
2.6 |
|
|
2.4 |
|
|
3.0 |
|
|
2.6 |
|
|
2.9 |
|
|||||||
|
Ore grade milled – Zinc (%) |
|
6.5 |
|
|
6.0 |
|
|
6.7 |
|
|
6.3 |
|
|
7.2 |
|
|
6.2 |
|
|
6.9 |
|
|||||||
|
Silver produced (oz.) |
|
2,355,674 |
|
|
2,772,859 |
|
|
2,433,275 |
|
|
2,468,280 |
|
|
2,410,598 |
|
|
5,128,533 |
|
|
4,840,380 |
|
|||||||
|
Gold produced (oz.) |
|
16,351 |
|
|
14,884 |
|
|
12,989 |
|
|
11,412 |
|
|
12,413 |
|
|
31,235 |
|
|
23,815 |
|
|||||||
|
Lead produced (tons) |
|
4,726 |
|
|
5,202 |
|
|
4,985 |
|
|
4,428 |
|
|
5,184 |
|
|
9,928 |
|
|
10,067 |
|
|||||||
|
Zinc produced (tons) |
|
13,255 |
|
|
12,482 |
|
|
13,842 |
|
|
12,580 |
|
|
13,396 |
|
|
25,737 |
|
|
25,890 |
|
|||||||
|
Sales |
$ |
95,891 |
|
$ |
98,611 |
|
$ |
95,374 |
|
$ |
60,875 |
|
$ |
92,723 |
|
$ |
194,502 |
|
$ |
178,813 |
|
|||||||
|
Total cost of sales |
$ |
(63,054 |
) |
$ |
(66,288 |
) |
$ |
(70,075 |
) |
$ |
(52,502 |
) |
$ |
(60,506 |
) |
$ |
(129,342 |
) |
$ |
(110,143 |
) |
|||||||
|
Gross profit |
$ |
32,837 |
|
$ |
32,323 |
|
$ |
25,299 |
|
$ |
8,373 |
|
$ |
32,217 |
|
$ |
65,160 |
|
$ |
68,670 |
|
|||||||
|
Cash flow from operations |
$ |
43,302 |
|
$ |
43,346 |
|
$ |
44,769 |
|
$ |
7,749 |
|
$ |
41,808 |
|
$ |
86,648 |
|
$ |
98,103 |
|
|||||||
|
Exploration |
$ |
1,760 |
|
$ |
448 |
|
$ |
1,050 |
|
$ |
3,776 |
|
$ |
929 |
|
$ |
2,208 |
|
$ |
1,094 |
|
|||||||
|
Capital additions |
$ |
(8,828 |
) |
$ |
(6,658 |
) |
$ |
(12,150 |
) |
$ |
(6,988 |
) |
$ |
(14,668 |
) |
$ |
(15,486 |
) |
$ |
(17,760 |
) |
|||||||
|
Free cash flow 2 |
$ |
36,234 |
|
$ |
37,136 |
|
$ |
33,669 |
|
$ |
4,537 |
|
$ |
28,069 |
|
$ |
73,370 |
|
$ |
81,437 |
|
|||||||
|
Cash cost per ounce, after by-product credits 3 |
$ |
1.33 |
|
$ |
1.16 |
|
$ |
4.26 |
|
$ |
2.65 |
|
$ |
(3.29 |
) |
$ |
1.23 |
|
$ |
(2.09 |
) |
|||||||
|
AISC per ounce, after by-product credits 4 |
$ |
5.34 |
|
$ |
3.82 |
|
$ |
8.61 |
|
$ |
7.07 |
|
$ |
3.10 |
|
$ |
4.51 |
|
$ |
2.47 |
|
|||||||
Greens Creek produced 2.4 million ounces of silver in the second quarter, a decrease of 15% over the prior quarter due to expected lower mined grades. Gold production increased by 10% to 16,351 ounces due to higher grades; zinc and lead production was consistent with the prior quarter. Throughput for the quarter was 2,555 tons per day («tpd»), and the mine remains on track to achieve an annual throughput of 2,600 tpd by year-end.
Sales in the second quarter were $95.9 million, a decrease of 3% over the prior quarter due to lower realized prices for base metals, primarily zinc, and lower payable metals sold (except gold), partially offset by higher realized prices for silver and gold. Total cost of sales were $63.1 million, and decreased by 5% over the prior quarter due to lower sales volumes, and lower production costs attributable to lower fuel prices. Cash costs and AISC per silver ounce, each after by-product credits, were $1.33 and $5.34 and increased over the prior quarter as lower production costs were offset by lower base metal by-product credits (primarily zinc, due to lower prices) and lower silver production. Increased AISC per silver ounce was attributable to higher sustaining capital spend of $8.8 million due to timing of equipment purchases and surface projects.3,4
Cash flow from operations was $43.3 million, in line with the prior quarter. Capital spend was $8.8 million (all sustaining) during the quarter, an increase of $2.2 million over the prior quarter due to the timing of equipment purchases and seasonal construction projects. Free cash flow for the quarter was $36.2 million, a slight decrease over the prior quarter due to higher exploration and capital spend. The Greens Creek mine generated $73.4 million in free cash flow during the first half of 2023.2
|
Lucky Friday Mine – Idaho |
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Dollars are in thousands except cost per ton |
|
2Q-2023 |
|
1Q-2023 |
|
4Q-2022 |
|
3Q-2022 |
|
2Q-2022 |
|
YTD-2023 |
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YTD-2022 |
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LUCKY FRIDAY |
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Tons of ore processed |
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94,043 |
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95,303 |
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90,935 |
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90,749 |
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97,497 |
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189,346 |
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175,222 |
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Total production cost per ton |
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$ |
248.65 |
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$ |
210.72 |
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$ |
232.73 |
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$ |
207.10 |
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$ |
211.45 |
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$ |
229.56 |
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$ |
227.30 |
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Ore grade milled – Silver (oz./ton) |
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14.3 |
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13.8 |
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14.0 |
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12.5 |
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13.2 |
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14.1 |
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12.7 |
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Ore grade milled – Lead (%) |
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9.1 |
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8.8 |
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9.1 |
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8.5 |
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8.8 |
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9.0 |
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8.5 |
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Ore grade milled – Zinc (%) |
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4.2 |
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4.1 |
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4.1 |
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4.2 |
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3.9 |
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4.2 |
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3.8 |
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Silver produced (oz.) |
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1,286,666 |
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1,262,464 |
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1,224,199 |
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1,074,230 |
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1,226,477 |
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2,549,130 |
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2,114,335 |
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Lead produced (tons) |
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8,180 |
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8,034 |
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7,934 |
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7,172 |
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8,147 |
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16,214 |
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14,127 |
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Zinc produced (tons) |
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3,338 |
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3,313 |
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3,335 |
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3,279 |
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3,370 |
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6,651 |
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5,822 |
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Sales |
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$ |
42,648 |
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$ |
49,110 |
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$ |
45,434 |
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$ |
28,460 |
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$ |
35,880 |
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$ |
91,758 |
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$ |
73,920 |
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Total cost of sales |
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$ |
(32,190 |
) |
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$ |
(34,534 |
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$ |
(32,819 |
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$ |
(24,166 |
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$ |
(30,348 |
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$ |
(66,724 |
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$ |
(59,613 |
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Gross profit |
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$ |
10,458 |
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$ |
14,576 |
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$ |
12,615 |
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$ |
4,294 |
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$ |
5,532 |
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$ |
25,034 |
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$ |
14,307 |
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Cash flow from operations |
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$ |
18,893 |
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$ |
46,132 |
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$ |
(7,437 |
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$ |
11,624 |
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$ |
21,861 |
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$ |
65,025 |
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$ |
33,626 |
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Capital additions |
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$ |
(16,317 |
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$ |
(14,707 |
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$ |
(13,714 |
) |
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$ |
(16,125 |
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$ |
(11,501 |
) |
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$ |
(31,024 |
) |
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$ |
(21,153 |
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Free cash flow 2 |
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$ |
2,576 |
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$ |
31,425 |
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$ |
(21,151 |
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$ |
(4,501 |
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$ |
10,360 |
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$ |
34,001 |
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$ |
12,473 |
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Cash cost per ounce, after by-product credits 3 |
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$ |
6.96 |
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$ |
4.30 |
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$ |
5.82 |
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$ |
5.23 |
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$ |
3.07 |
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$ |
5.64 |
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$ |
4.54 |
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AISC per ounce, after by-product credits 4 |
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$ |
14.24 |
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$ |
10.69 |
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$ |
12.88 |
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$ |
15.98 |
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$ |
9.91 |
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$ |
12.48 |
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$ |
11.27 |
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Lucky Friday produced 1.3 million ounces of silver, an increase of 2% over the prior quarter due to higher grades partially offset by lower throughput due to the local utility’s unplanned replacement of the main electrical transformer. Second quarter silver production was the highest since the first quarter of 2000, marking the fifth consecutive quarter of silver production exceeding one million ounces. Throughput for the quarter was 1,033 tpd and is expected to increase to an annual rate of 425,000 tons by year end.
Sales in the second quarter were $42.6 million, a decrease of 13% over the prior quarter, attributable to a combination of lower payable metals sold and lower realized base metals prices, partially offset by higher realized silver prices. Lower payable metals sold was due to an increase in silver concentrate inventory (impact of approximately $3 million) as maintenance activities impacted a smelter’s ability to take delivery of certain shipments at quarter end, with the sales deferred to the third quarter. Total cost of sales were $32.2 million, a decrease of 7% over the prior quarter primarily due to lower concentrate volumes sold. Production costs at the mine increased over the prior quarter due to higher labor costs related to the new Collective Bargaining Agreement («CBA») signed in the first quarter of 2023 (CBA related costs are expected to be $2.5 million for the year), and higher consumables costs partially offset by lower fuel costs. Cash costs and AISC per silver ounce, each after by-product credits, were $6.96 and $14.24 respectively, with the increase primarily attributable to higher production costs, lower zinc by-product credits due to lower realized prices, partially offset by higher silver production.3,4 AISC per silver ounce was further unfavorably impacted by higher sustaining capital spend reflecting accelerated project completion.3,4
Cash flow from operations was $18.9 million, a decrease of $27.2 million over the prior quarter. The decrease was attributable to lower sales, higher production costs, unfavorable working capital changes and the prior quarter’s favorable impact of $6.7 million receipt related to payment for a silver concentrate shipment shipped in the fourth quarter of 2022. Capital expenditures for the quarter totaled $16.3 million (net of $2.0 million in finance leases), comprised of approximately $9.2 million each in sustaining and growth capital, which included the coarse ore bunker and the service hoist projects. The service hoist project was completed in early August, and the coarse ore bunker project which will decouple the mill from the mine, is expected to be completed in the fourth quarter. Free cash flow was $2.6 million, a decrease of $28.8 million over the prior quarter primarily due to the decrease in cash flow from operations and higher capital spend during the quarter.2 Lucky Friday generated $34.0 million in free cash flow during the first half of 2023.2
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Casa Berardi – Quebec |
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Dollars are in thousands except cost per ton |
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2Q-2023 |
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1Q-2023 |
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4Q-2022 |
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3Q-2022 |
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2Q-2022 |
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YTD-2023 |
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YTD-2022 |
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CASA BERARDI |
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Tons of ore processed – underground |
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94,124 |
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110,245 |
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160,150 |
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162,215 |
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176,576 |
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204,369 |
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338,185 |
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Tons of ore processed – surface pit |
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224,580 |
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318,909 |
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250,883 |
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227,726 |
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225,042 |
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543,489 |
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449,586 |
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Tons of ore processed – total |
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318,704 |
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429,154 |
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411,033 |
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389,941 |
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401,618 |
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747,858 |
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787,771 |
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Surface tons mined – ore and waste |
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2,461,196 |
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2,136,993 |
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2,657,638 |
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2,822,906 |
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2,149,412 |
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4,598,189 |
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4,041,751 |
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Total production cost per ton |
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$ |
97.69 |
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$ |
107.95 |
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$ |
125.75 |
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$ |
114.52 |
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$ |
113.07 |
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$ |
103.58 |
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$ |
115.46 |
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Ore grade milled – Gold (oz./ton) – underground |
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0.14 |
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0.13 |
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0.15 |
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0.15 |
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0.19 |
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0.13 |
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0.17 |
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Ore grade milled – Gold (oz./ton) – surface pit |
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0.04 |
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0.05 |
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0.05 |
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0.06 |
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0.05 |
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0.05 |
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0.05 |
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Ore grade milled – Gold (oz./ton) – combined |
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0.07 |
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0.07 |
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0.09 |
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0.10 |
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0.10 |
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0.07 |
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0.09 |
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Gold produced (oz.) – underground |
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10,226 |
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11,788 |
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20,365 |
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22,181 |
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22,866 |
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22,014 |
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42,240 |
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Gold produced (oz.) – surface pit |
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8,675 |
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12,898 |
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10,344 |
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11,154 |
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10,440 |
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21,573 |
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21,306 |
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Gold produced (oz.) – total |
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18,901 |
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24,686 |
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30,709 |
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33,335 |
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33,306 |
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43,587 |
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63,546 |
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Silver produced (oz.) – total |
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5,956 |
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5,645 |
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5,960 |
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6,882 |
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8,379 |
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11,601 |
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15,447 |
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Sales |
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$ |
36,946 |
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$ |
50,998 |
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$ |
53,458 |
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$ |
56,939 |
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$ |
62,639 |
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$ |
87,944 |
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$ |
124,740 |
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Total cost of sales |
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$ |
(42,576 |
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$ |
(62,998 |
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$ |
(65,328 |
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$ |
(59,532 |
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$ |
(61,870 |
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$ |
(105,574 |
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$ |
(124,038 |
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Gross (loss) profit |
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$ |
(5,630 |
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$ |
(12,000 |
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$ |
(11,870 |
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$ |
(2,593 |
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$ |
769 |
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$ |
(17,630 |
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$ |
702 |
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Cash flow from operations |
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$ |
(8,148 |
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$ |
(684 |
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$ |
10,188 |
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$ |
8,721 |
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$ |
7,417 |
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$ |
(8,832 |
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$ |
15,506 |
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Exploration |
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$ |
1,107 |
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$ |
1,054 |
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$ |
1,637 |
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$ |
2,624 |
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$ |
1,341 |
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$ |
2,161 |
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$ |
3,976 |
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Capital additions |
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$ |
(20,816 |
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$ |
(17,086 |
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$ |
(12,995 |
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$ |
(10,771 |
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$ |
(8,093 |
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$ |
(37,902 |
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$ |
(15,901 |
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Free cash flow 2 |
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$ |
(27,857 |
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$ |
(16,716 |
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$ |
(1,170 |
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$ |
574 |
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$ |
665 |
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$ |
(44,573 |
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$ |
3,581 |
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Cash cost per ounce, after by-product credits 3 |
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$ |
1,658 |
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$ |
1,775 |
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$ |
1,696 |
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$ |
1,349 |
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$ |
1,371 |
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$ |
1,725 |
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$ |
1,440 |
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AISC per ounce, after by-product credits 4 |
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$ |
2,147 |
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$ |
2,392 |
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$ |
2,075 |
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$ |
1,669 |
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$ |
1,605 |
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$ |
2,286 |
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$ |
1,680 |
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Casa Berardi produced 18,901 ounces of gold in the second quarter, a decrease of 23% over the prior quarter, primarily due to lower tons mined and milled because of wildfires-related suspension in June. The mill operated at an average of 4,600 tpd during the first two months of the quarter.
Lower production during the quarter led to lower sales of $36.9 million, a 28% decrease over the prior quarter, and lower total cost of sales of $42.6 million, 32% lower compared to the prior quarter. Cash costs and AISC per gold ounce, each after by-product credits, were $1,658 and $2,147 respectively and decreased over the prior quarter due to lower production costs which offset the decline in gold production. AISC was further favorably impacted by lower sustaining capital spend as capital allocated to growth increased during the quarter.
Contacts
Anvita M. Patil
Vice President – Investor Relations and Treasurer
Cheryl Turner
Communications Coordinator
800-HECLA91 (800-432-5291)
Investor Relations
Email: [email protected]
Website: http://www.hecla.com
