. Minimal disruption to operations and solid liquidity position Hecla for a strong second half of 2020
COEUR D'ALENE, Idaho--(BUSINESS WIRE)-- Hecla Mining Company (NYSE:HL) (Hecla or the Company) today announced first quarter financial and operating results.

COVID-19 UPDATE
• Responding quickly to COVID-19 mitigated the impact.
• Four out of five mines operating, representing 95% of Hecla's production.
•Casa Berardi restarted operations on April 16 after government-mandated industry-wide shutdown on March 23.
• No known cases of COVID-19 at any of Hecla's sites.
• Annual guidance updated.

"Our rapid and early response to COVID-19 protected our workers, operations, and the communities in which we operate," said Phillips S. Baker, Jr., Hecla's President and CEO. "With our key mines operational, we expect the second half of the year to be strong as Casa Berardi resumes normal operations, Lucky Friday ramps-up to full production and Greens Creek continues to deliver. Our Nevada operations have performed well and have taken a step forward with a third-party processing agreement for a bulk sample of refractory ore and positive results from the hydrological study which could result in continuing production through the end of the year and beyond."

“While our financial position is strong, with over $200 million in cash at quarter end, no near-term debt maturities and no large capital projects planned for the next several years, we are reducing 2020 capital and exploration expenditures by 25%. We also continue to protect our revenues with put options for silver and gold that set a floor price but don't limit upside participation, and forward sales of our lead and zinc production," said Baker.

“Finally, we are able to re-establish production and cost guidance. Our silver production guidance is largely unchanged with AISC, after byproduct credits, about 10% higher due primarily to benchmark smelter costs and lower byproduct credits from lower zinc production and prices. Our gold production guidance is about 10% lower, but AISC, after byproduct credits, is relatively unchanged due to lower capital costs,” said Baker.

HIGHLIGHTS
• Silver production of 3.2 million ounces (2.6 million ounces sold) and gold production of 58,792 ounces.
• Sales of $136.9 million and cash provided by operating activities of $5 million.
• A gain of $7.9 million on metals derivatives contracts.
• Net loss for the quarter of $17.2 million, or $0.03 per basic share.
• Cost of sales and other direct production costs and depreciation, depletion and amortization ("cost of sales") of $125.6 million.
• Gross profit of $11.4 million and adjusted EBITDA of $37.8 million; net debt/adjusted EBITDA (last 12 months) of 2.5x.1,2
• Financial results impacted by lower provisional prices for a Greens Creek shipment, higher treatment charges, higher product inventory and COVID-19 related shutdown of Casa Berardi.
• Bulk sample processing agreement in Nevada and hydrology study shows existing water infrastructure may be sufficient to support a refractory ore mining plan.
• Have put option contracts for gold and silver to establish a floor price of $16 for silver in the second quarter and $1,450, $1,650 and $1,600 for gold in the second through fourth quarters, for much of the expected production but with full upside available other than cost of the contracts.
• Cash and cash equivalents and short-term investments of $215.7 million, including a precautionary $210 million drawn on the revolving credit facility.
• Issued $475 million of senior notes due in 2028 replacing $506.5 million senior notes due in 2021, reducing long term debt and extending its maturity.
• Maintaining common and preferred share dividend.

FINANCIAL OVERVIEW
First Quarter Ended
HIGHLIGHTS
March 31, 2020 March 31, 2019
FINANCIAL DATA
Sales (000) $ 136,925 $ 152,617
Gross profit (000) $ 11,372 $ 3,444
Loss applicable to common stockholders (000) $(17,323) $ (25,671)
Basic and diluted loss per common share $(0.03) $ (0.05)
Net loss (000) $(17,185) $ (25,533)
Cash provided by operating activities (000) $ 4,927 $ 20,030
Net loss for the first quarter of $17.2 million, compared to a net loss of $25.5 million in the first quarter of 2019, impacted by the following factors:
• Revenue declined due to lower provisional prices for a Greens Creek shipment, higher treatment charges and COVID-19 related loss of production at Casa Berardi.
• Gross profit increased primarily due to higher prices and higher gold grades in the Nevada operations, partially offset by lower gross profit at Greens Creek.
• A net foreign exchange gain of $6.6 million versus a net loss of $3.1 million in the first quarter of 2019, with the variance primarily related to the impact of a weaker CAD relative to the USD.
• A $7.9 million gain on metals derivatives contracts versus a loss of $1.8 million in the first quarter of 2019, with the variance due to declining base metal prices and lower prices for silver at the end of the quarter.
• Ramp-up and suspension-related costs increased by $10.2 million due to 1) lower production at Lucky Friday as capital investments were prioritized and the ramp-up after the strike ended in January 2020, 2) suspension of production at the Midas and Hollister mines and the Aurora mill in Nevada, and 3) a temporary suspension of production at Casa Berardi to comply with the shut-down order issued to the mining industry by the Government of Quebec as part of the fight against the spread of COVID-19.
• Higher interest expense by $5.6 million primarily as a result of one-time costs related to refinancing of Senior Notes, including one month of having both the 2021 and 2028 notes outstanding.
• Lower income tax benefit by $6.2 million due to reduced losses at Nevada and Casa Berardi.


Operating cash flow of $4.9 million decreased 75% compared to the first quarter of 2019, primarily due to the higher ramp-up and suspension costs and interest expense.

Adjusted EBITDA of $37.8 million increased 35% compared to the first quarter of 2019, primarily due to lower exploration expense and higher margins at Nevada and Casa Berardi, partially offset by lower margins at Greens Creek as a result of the majority of shipments in the quarter occurring in March at lower than average silver, lead and zinc prices, as well as higher treatment charges.1

Capital expenditures totaled $20.0 million for the first quarter of 2020 compared to $36.4 million in the first quarter of 2019, with the decrease primarily due to reduced spending at Nevada operations. Capital expenditures during the first quarter 2020 at Casa Berardi, Greens Creek, Lucky Friday, Nevada, and San Sebastian operations were $8.5 million, $5.5 million, $4.3 million, $0.9 million, and $0.8 million, respectively.

Metals Prices

The average realized silver price in the first quarter of 2020 was $14.48 per ounce, 8% lower than the $15.70 price realized in the first quarter of 2019. Realized gold prices were higher by 21% while lead and zinc prices were lower by 16%, and 32%, respectively. The lower realized silver price relative to the average market price of $16.94 for the first quarter was the result of a large portion of our silver sales occurring through concentrate shipments in March, when the price hit a quarterly low. Final settlement of the March sales is pending, and the Company anticipates recognizing a gain upon settlement of the sales in the second quarter as a result of either an increase in the silver price or exercise of put contracts in place.

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