Hecla Reports First Quarter 2025 Results

2025-05-01

TSX - Toronto Stock Exchange · Gold · Canada

Record revenues and Adjusted EBITDA, Keno Hill delivers first profitable quarter, and Lucky Friday sets new milling record

Hecla Mining Company ( NYSE:HL ) ("Hecla", "we", "our" or the "Company") today announced first quarter 2025 financial and operating results.

FIRST QUARTER HIGHLIGHTS

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Financial Achievements:

Generated record sales of $261.3 million, an increase of 5% over the prior quarter. Reported net income applicable to common stockholders of $28.7 million, or $0.05 per share. Achieved record Adjusted EBITDA of $90.8 million during the quarter, $357.1 million during the last 12 months resulting in an improved net leverage ratio* of 1.5x compared to 1.6x in the prior quarter. 5 Consolidated silver total cost of sales of $129.6 million; cash cost and all-in sustaining cost ("AISC") per silver ounce (each after by-product credits) of $1.29 and $11.91, respectively. 3,4 Keno Hill posted its first profitable quarter under Hecla ownership, delivering $1.0 million of gross profit, helped by the elevated silver price. The mine continues to advance work to achieve commercial production status. Gold total cost of sales of $50.7 million; cash cost and all-in sustaining cost ("AISC") per gold ounce of $2,195 and $2,303, respectively. 3,4

Operational Performance:

Produced 4.1 million ounces of silver and 34,232 ounces of gold. Established a new quarterly milling record at Lucky Friday of 108,745 tons, beating the prior record set in the fourth quarter 2024. Increased Keno Hill production to 772,430 ounces of silver, growing 23% over the fourth quarter of 2024.

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 in Nevada and Greens Creek, with drilling set to begin in May.

*Net leverage ratio is calculated as current debt, long-term debt and finance leases less cash divided by trailing twelve-month adjusted EBITDA.

STRATEGIC PRIORITIES FOR 2025

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Strengthen the balance sheet in 2025, targeting highest risk-adjusted return projects and increasing free cash flow generation. Advance Keno Hill's permitting and invest in critical infrastructure to attain sustained profitability. Optimize operating portfolio through continued strategic review of Casa Berardi to maximize value. Identify opportunities in our extensive exploration portfolio to create shareholder value. Implement standardized enterprise systems and advanced analytics to improve mine planning and cost management, driving sustained profitability and efficient capital allocation.

"This quarter demonstrates the strength and growth potential of our business, with record sales of $261.3 million representing a 5% increase over the prior quarter," said Rob Krcmarov, President & Chief Executive Officer. "With record Adjusted EBITDA of $90.8 million this quarter and $357.1 million over the past year, we have improved our net leverage ratio to 1.5x, reinforcing our solid financial foundation."

Krcmarov continued, "Our operational excellence continues to shine through, with Lucky Friday setting a new quarterly milling record and Keno Hill increasing silver production by 23% over the prior quarter. Looking ahead, we're focusing on four key strategic pillars: achieving operational excellence through standardized systems and continuous improvement; optimizing our portfolio through strategic reviews and focus capital allocation on high-return projects or those that enhance environmental or safety performance or reduce risk; intensifying our focus on financial discipline with a rigorous capital allocation framework; and leveraging our position as North America's largest silver producer to meet growing demand from green technology markets."

FINANCIAL AND OPERATIONAL OVERVIEW

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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; "prior quarter" refers to the fourth quarter of 2024.

| In Thousands unless stated otherwise | | 1Q-2025 | | 4Q-2024 | | 3Q-2024 | | 2Q-2024 | | 1Q-2024 | | FY-2024 | | | | | | | | | | | | | | Financial Highlights | | | | | | | | | | | | | | | | | | | | | | | | | | Sales | | $ | 261,339 | | | $ | 249,655 | | | $ | 245,085 | | | $ | 245,657 | | | $ | 189,528 | | | $ | 929,925 | | | Total cost of sales | | $ | 187,335 | | | $ | 181,321 | | | $ | 185,799 | | | $ | 194,227 | | | $ | 170,368 | | | $ | 731,715 | | | Gross profit | | $ | 74,004 | | | $ | 68,334 | | | $ | 59,286 | | | $ | 51,430 | | | $ | 19,160 | | | $ | 198,210 | | | Net income (loss) applicable to common stockholders | | $ | 28,734 | | | $ | 11,786 | | | $ | 1,623 | | | $ | 27,732 | | | $ | (5,891 | ) | | $ | 35,250 | | | Basic income (loss) per common share (in dollars) | | $ | 0.05 | | | $ | 0.02 | | | $ | 0.00 | | | $ | 0.04 | | | $ | (0.01 | ) | | $ | 0.06 | | | Adjusted EBITDA 1 | | $ | 90,788 | | | $ | 86,558 | | | $ | 88,859 | | | $ | 90,895 | | | $ | 71,597 | | | $ | 337,909 | | | Total Debt | | $ | 568,653 | | | | | | | | | | | $ | 550,713 | | | | | | | | | | | Net Debt to Adjusted EBITDA 1 | | | 1.5 | | | | | | | | | | | | 1.6 | | | | | | | | | | | Cash provided by operating activities | | $ | 35,738 | | | $ | 67,470 | | | $ | 55,009 | | | $ | 78,718 | | | $ | 17,080 | | | $ | 218,277 | | | Capital Investment | | $ | (54,095 | ) | | $ | (60,784 | ) | | $ | (55,699 | ) | | $ | (50,420 | ) | | $ | (47,589 | ) | | $ | (214,492 | ) | | Free Cash Flow 2 | | $ | (18,357 | ) | | $ | 6,686 | | | $ | (690 | ) | | $ | 28,298 | | | $ | (30,509 | ) | | $ | 3,785 | | | Production Summary | | | | | | | | | | | | | | | | | | | | | | | | | | Silver ounces produced | | | 4,112,394 | | | | 3,874,344 | | | | 3,645,004 | | | | 4,458,484 | | | | 4,192,098 | | | | 16,169,930 | | | Silver payable ounces sold | | | 3,517,970 | | | | 3,488,207 | | | | 3,729,782 | | | | 3,785,285 | | | | 3,481,884 | | | | 14,485,158 | | | Gold ounces produced | | | 34,232 | | | | 35,727 | | | | 32,280 | | | | 37,324 | | | | 36,592 | | | | 141,923 | | | Gold payable ounces sold | | | 29,655 | | | | 33,563 | | | | 31,414 | | | | 35,276 | | | | 32,189 | | | | 132,442 | | | Cash Costs and AISC, each after by-product credits | | | | | | | | | | | | | | | | | | | | | | | | | | Silver cash costs per ounce 3 | | $ | 1.29 | | | $ | (0.27 | ) | | $ | 4.46 | | | $ | 2.08 | | | $ | 4.78 | | | $ | 2.72 | | | Silver AISC per ounce 4 | | $ | 11.91 | | | $ | 11.51 | | | $ | 15.29 | | | $ | 12.54 | | | $ | 13.10 | | | $ | 13.06 | | | Gold cash costs per ounce 3 | | $ | 2,195 | | | $ | 1,936 | | | $ | 1,754 | | | $ | 1,701 | | | $ | 1,669 | | | $ | 1,762 | | | Gold AISC per ounce 4 | | $ | 2,303 | | | $ | 2,203 | | | $ | 2,059 | | | $ | 1,825 | | | $ | 1,899 | | | $ | 1,990 | | | Realized Prices | | | | | | | | | | | | | | | | | | | | | | | | | | Silver, $/ounce | | $ | 33.59 | | | $ | 30.19 | | | $ | 29.43 | | | $ | 29.77 | | | $ | 24.77 | | | $ | 28.58 | | | Gold, $/ounce | | $ | 2,940 | | | $ | 2,656 | | | $ | 2,522 | | | $ | 2,338 | | | $ | 2,094 | | | $ | 2,403 | | | Lead, $/pound | | $ | 0.92 | | | $ | 0.94 | | | $ | 0.93 | | | $ | 1.06 | | | $ | 0.97 | | | $ | 0.97 | | | Zinc, $/pound | | $ | 1.29 | | | $ | 1.53 | | | $ | 1.36 | | | $ | 1.51 | | | $ | 1.10 | | | $ | 1.37 | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Sales increased to $261.3 million, a new quarterly record, or 5% over the prior quarter, reflecting higher realized prices for precious metals, which were partially offset by lower silver, gold and zinc sales volumes. Lead sales volumes increased primarily due to a strong operational quarter at Lucky Friday.

Gross profit was $74.0 million, an increase of 8% over the prior quarter. The increase is attributable to (i) Greens Creek gross profit increasing by $4.4 million due to higher realized prices for precious metals, partially offset by lower sales volumes of all metals except zinc, (ii) Lucky Friday gross profit increased by $1.6 million due to higher realized silver prices and volumes partially offset by higher production costs, and (iii) Keno Hill gross profit of $1 million (first profitable quarter under Hecla's ownership), reflecting the benefit of higher realized silver prices on 2% lower sales volumes over the prior quarter. At Casa Berardi, the gross profit decreased by $2.1 million as the benefit of higher realized gold prices was offset by lower gold sales volumes and higher production costs.

Net income applicable to common stockholders was $28.7 million compared to $11.8 million in the prior quarter. The improvement was primarily related to:

Positive fair value adjustments, net of $3.6 million, due to an increase in the fair value of our marketable securities portfolio. Ramp-up and suspension costs decreased by $6.3 million, reflecting the impact of Keno Hill generating gross profit during the quarter and not contributing any costs to ramp-up and suspension costs in the first quarter.

Partly offset by:

An increase in income and mining tax provision of $8.1 million, reflecting higher taxable income realized by our US tax group while unable to recognize losses in Canada. An increase in general and administrative costs of $3.0 million reflecting a combination of headcount additions and higher incentive compensation accruals. A foreign exchange loss of $0.4 million versus a gain of $4.1 million, reflecting the impact of the U.S. dollar depreciation compared to the Canadian dollar.

Consolidated silver total cost of sales was $129.6 million, an increase of $6.2 million or 5% from the prior quarter, primarily due to higher production costs at Lucky Friday of $3.9 million reflecting higher mining, contractor, maintenance and profit sharing costs, and consumables usage, and $2 million at Greens Creek reflecting higher labor and fuel purchase costs.

Cash costs and AISC per silver ounce, each after by-product credits , were $1.29 and $11.91, respectively, higher versus the prior quarter, primarily due to higher production costs, partially offset by lower treatment charges, higher by-product credits (due to higher realized gold prices) and higher silver production. AISC was higher due to additional corporate general and administrative expenses, partially offset by lower sustaining capital. 3,4

Gold total cost of sales for Casa Berardi decreased by $1 million due to lower sales volumes.

Cash costs and AISC per gold ounce, each after by-product credits , were $2,195 and $2,303 respectively, an increase over the prior quarter as lower production costs and sustaining capital spend was partially offset by lower gold production. 3,4 Casa Berardi costs are anticipated to improve late in the third quarter of the year as the strip ratio of the 160 pit is expected to decline.

Adjusted EBITDA was $90.8 million, a 5% increase over the prior quarter. The ratio of net debt to adjusted EBITDA (net leverage ratio) improved to 1.5x from 1.6x in the prior quarter due to strong EBITDA generation during the last 12 months, which offset the $21.1 million increase in net debt. 1 Cash and cash equivalents at March 31, 2025 were $23.7 million and included $43 million drawn on the revolving credit facility.

Cash provided by operating activities was $35.7 million, a decrease of $31.7 million, primarily attributable to unfavorable working capital changes of $48.2 million, including an increase of accounts receivable reflecting the higher price environment and timing of sales, inventory builds at Casa Berardi and Keno Hill, the semi-annual interest payment on our notes and the timing of accounts payable vendor payments and annual incentive compensation payments.

Capital investment was $54.1 million, compared to $60.8 million in the prior quarter, primarily due to lower capital investment at Greens Creek of $5.0 million and Keno Hill of $5.1 million reflecting the fact that the first quarter is historically a low capital investment quarter, due to the winter weather.

Free cash flow was negative $18.4 million, compared to positive $6.7 million in the prior quarter, with the decrease primarily due to lower cash flow from operations, reflecting negative working capital adjustments ($48.2 million), some of which are expected to reverse in the second quarter. 2

Hedging Update: 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 March 31, 2025, the Company had contracts covering approximately 20% and 29% of the forecasted payable zinc and lead production for 2025 - 2026 at an average price of $1.39 and $1.02 per pound, respectively.

The Company also manages Canadian dollar ("CAD") exposure through forward contracts. At March 31, 2025, the Company had hedged approximately 37% of forecasted Casa Berardi and Keno Hill CAD denominated direct production costs through 2026 at an average CAD/USD rate of 1.35. The Company has also hedged approximately 24% of Casa Berardi and Keno Hill CAD denominated total capital expenditures through 2026 at 1.39.

OPERATIONS OVERVIEW

| | | | | | | | | | | | | | | | | | | | | | | | | | | Greens Creek Mine - Alaska | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dollars are in thousands except cost per ton | | 1Q-2025 | | 4Q-2024 | | 3Q-2024 | | 2Q-2024 | | 1Q-2024 | | FY-2024 | | | | | | | | | | | | | | GREENS CREEK | | | | | | | | | | | | | | | | | | | | | | | | | | Operating Highlights | | | | | | | | | | | | | | | | | | | | | | | | | | Tons of ore processed | | | 212,899 | | | | 224,521 | | | | 212,863 | | | | 225,746 | | | | 232,188 | | | | 895,318 | | | Total production cost per ton | | $ | 240.00 | | | $ | 211.64 | | | $ | 222.39 | | | $ | 218.09 | | | $ | 212.92 | | | $ | 216.15 | | | Ore grade milled - Silver (oz./ton) | | | 11.75 | | | | 10.72 | | | | 11.22 | | | | 12.60 | | | | 13.30 | | | | 11.99 | | | Ore grade milled - Gold (oz./ton) | | | 0.09 | | | | 0.09 | | | | 0.08 | | | | 0.09 | | | | 0.09 | | | | 0.09 | | | Ore grade milled - Lead (%) | | | 2.58 | | | | 2.61 | | | | 2.44 | | | | 2.50 | | | | 2.60 | | | | 2.52 | | | Ore grade milled - Zinc (%) | | | 6.77 | | | | 6.59 | | | | 6.60 | | | | 6.20 | | | | 6.30 | | | | 6.41 | | | Ore grade milled - Copper (%) | | | 0.25 | | | | 0.25 | | | | 0.31 | | | | 0.27 | | | | 0.28 | | | | 0.27 | | | Silver produced (oz.) | | | 2,002,560 | | | | 1,901,418 | | | | 1,857,314 | | | | 2,243,551 | | | | 2,478,594 | | | | 8,480,877 | | | Gold produced (oz.) | | | 13,759 | | | | 14,804 | | | | 11,746 | | | | 14,137 | | | | 14,588 | | | | 55,275 | | | Lead produced (tons) | | | 4,496 | | | | 4,808 | | | | 4,165 | | | | 4,513 | | | | 4,834 | | | | 18,320 | | | Zinc produced (tons) | | | 12,835 | | | | 13,241 | | | | 12,585 | | | | 12,400 | | | | 13,062 | | | | 51,288 | | | Copper produced (tons) | | | 411 | | | | 427 | | | | 490 | | | | 462 | | | | 495 | | | | 1,874 | | | Financial Highlights | | | | | | | | | | | | | | | | | | | | | | | | | | Sales | | $ | 118,143 | | | $ | 112,037 | | | $ | 116,568 | | | $ | 95,659 | | | $ | 97,310 | | | $ | 421,574 | | | Total cost of sales | | $ | (69,638 | ) | | $ | (67,887 | ) | | $ | (73,597 | ) | | $ | (56,786 | ) | | $ | (69,857 | ) | | $ | (268,127 | ) | | Gross profit | | $ | 48,505 | | | $ | 44,150 | | | $ | 42,971 | | | $ | 38,873 | | | $ | 27,453 | | | $ | 153,447 | | | Cash flow from operations | | $ | 43,858 | | | $ | 60,442 | | | $ | 54,076 | | | $ | 43,276 | | | $ | 28,706 | | | $ | 186,500 | | | Exploration | | $ | 343 | | | $ | 1,129 | | | $ | 4,325 | | | $ | 2,011 | | | $ | 551 | | | $ | 8,016 | | | Capital additions | | $ | (10,759 | ) | | $ | (15,798 | ) | | $ | (11,466 | ) | | $ | (11,704 | ) | | $ | (8,827 | ) | | $ | (47,795 | ) | | Free cash flow 2 | | $ | 33,442 | | | $ | 45,773 | | | $ | 46,935 | | | $ | 33,583 | | | $ | 20,430 | | | $ | 146,721 | | | Cash Costs and AISC, each after by-product credits | | | | | | | | | | | | | | | | | | | | | | | | | | Cash cost per ounce, after by-product credits 3 | | $ | (4.08 | ) | | $ | (5.86 | ) | | $ | 0.93 | | | $ | 0.19 | | | $ | 3.45 | | | $ | (0.05 | ) | | AISC per ounce, after by-product credits 4 | | $ | (0.03 | ) | | $ | 2.62 | | | $ | 7.04 | | | $ | 5.40 | | | $ | 7.16 | | | $ | 5.65 | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Operational Review

Greens Creek produced 2.0 million ounces of silver and 13,759 ounces of gold. Silver production increased 5% over the prior quarter due to a 10% increase in silver grade milled, partially offset by lower tons milled. Zinc and lead production declined 3% and 6% respectively, primarily due to lower mill throughput.

The silver grade milled averaged higher month-over-month throughout the quarter, averaging nearly 13 ounce per ton ("opt") in March. Backfill and development activities also continued to improve throughout the quarter.

First Quarter Financial Review

Sales were $118.1 million, an increase of 5% over the prior quarter, benefiting from higher realized precious metals prices which were partially offset by lower lead and zinc prices, as well as lower concentrate sales due to timing of sales.

Total cost of sales was $69.6 million, an increase of 3% over the prior quarter, primarily due to higher labor and fuel volumes for elevated power generation requirements. Cash cost per silver ounce, after by-product credits, was negative $4.08, and increased over the prior quarter due to higher labor and fuel costs. AISC per silver ounce, after by-product credits, was negative $0.03 and decreased over the prior quarter due to lower capital investment. 3,4

Cash flow from operations was $43.9 million, a decrease of 27% over the prior quarter due to unfavorable working capital changes tied to timing of sales and higher vendor payments. Capital investment was $10.8 million, a decrease of 32% over the prior quarter.

Free cash flow was $33.4 million, a decrease of 27% from the prior quarter as lower capital investment did not fully offset the decrease in cash flow from operations.

Outlook Revised

Production guidance for 2025 at Greens Creek is maintained at 8.1-8.8 million ounces of silver, 44.0-48.0 thousand ounces of gold, or 18.0-19.5 million silver equivalent ounces when factoring in all metals (silver, gold, lead, zinc and copper). Greens Creek's cost outlook has been lowered, maintaining cost of sales guidance at $289 million (includes depreciation) but lowering cash cost guidance to $0.25-$0.75 from the prior $2.00-$2.50 (after by-product credits), per silver ounce, and AISC to $6.50-$7.25 from $8.75-$9.50 (after by-product credits), per silver ounce. 3,4 Capital investment guidance is unchanged at $48-$51 million in sustaining capital and $10-$12 million in growth capital. Capital investment at Greens Creek is expected to increase in the second and third quarters (relative to the first quarter) due to the seasonal construction period. The Company expects the Greens Creek operation to have 3-6 days of planned maintenance in the second quarter, which is the historical norm for quarterly maintenance downtime at Greens Creek. In approximately mid-June, the mine expects to shift to self-generated power while Alaska Electric Light and Power, the utility company supplying power to Greens Creek, goes offline for a planned 8-week maintenance shutdown, which will add costs to the operation of Greens Creek during this period as self-generated power is more costly than purchased power from the utility.

Please refer to guidance section of the release for production, cost, and capital guidance for 2025.

| | | | | | | | | | | | | | | | | | | | | | | | | | | Lucky Friday Mine - Idaho | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dollars are in thousands except cost per ton | | 1Q-2025 | | 4Q-2024 | | 3Q-2024 | | 2Q-2024 | | 1Q-2024 | | FY-2024 | | | | | | | | | | | | | | LUCKY FRIDAY | | | | | | | | | | | | | | | | | | | | | | | | | | Operating Highlights | | | | | | | | | | | | | | | | | | | | | | | | | | Tons of ore processed | | | 108,745 | | | | 108,585 | | | | 104,281 | | | | 107,441 | | | | 86,234 | | | | 406,541 | | | Total production cost per ton | | $ | 258.59 | | | $ | 250.71 | | | $ | 260.99 | | | $ | 233.99 | | | $ | 233.10 | | | $ | 245.19 | | | Ore grade milled - Silver (oz./ton) | | | 13.0 | | | | 13.0 | | | | 12.1 | | | | 12.9 | | | | 12.9 | | | | 12.7 | | | Ore grade milled - Lead (%) | | | 8.2 | | | | 8.5 | | | | 7.9 | | | | 8.1 | | | | 8.2 | | | | 8.2 | | | Ore grade milled - Zinc (%) | | | 4.0 | | | | 4.2 | | | | 3.9 | | | | 3.6 | | | | 3.9 | | | | 3.9 | | | Silver produced (oz.) | | | 1,332,252 | | | | 1,336,910 | | | | 1,184,819 | | | | 1,308,155 | | | | 1,061,065 | | | | 4,890,949 | | | Lead produced (tons) | | | 8,480 | | | | 8,685 | | | | 7,662 | | | | 8,229 | | | | 6,689 | | | | 31,265 | | | Zinc produced (tons) | | | 3,681 | | | | 3,814 | | | | 3,528 | | | | 3,320 | | | | 2,851 | | | | 13,513 | | | Financial Highlights | | | | | | | | | | | | | | | | | | | | | | | | | | Sales | | $ | 63,194 | | | $ | 57,671 | | | $ | 51,072 | | | $ | 59,071 | | | $ | 35,340 | | | $ | 203,154 | | | Total cost of sales | | $ | (44,049 | ) | | $ | (40,157 | ) | | $ | (39,286 | ) | | $ | (37,523 | ) | | $ | (27,519 | ) | | $ | (144,485 | ) | | Gross profit | | $ | 19,145 | | | $ | 17,514 | | | $ | 11,786 | | | $ | 21,548 | | | $ | 7,821 | | | $ | 58,669 | | | Cash flow from operations | | $ | 23,805 | | | $ | 25,329 | | | $ | 34,374 | | | $ | 44,546 | | | $ | 27,112 | | | $ | 131,361 | | | Capital additions | | $ | (15,446 | ) | | $ | (12,608 | ) | | $ | (11,178 | ) | | $ | (10,818 | ) | | $ | (14,988 | ) | | | (49,592 | ) | | Free cash flow 2 | | $ | 8,359 | | | $ | 12,721 | | | $ | 23,196 | | | $ | 33,728 | | | $ | 12,124 | | | $ | 81,769 | | | Cash Costs and AISC, each after by-product credits | | | | | | | | | | | | | | | | | | | | | | | | | | Cash cost per ounce, after by-product credits 3 | | $ | 9.37 | | | $ | 7.68 | | | $ | 9.98 | | | $ | 5.32 | | | $ | 8.85 | | | $ | 7.80 | | | AISC per ounce, after by-product credits 4 | | $ | 20.08 | | | $ | 17.12 | | | $ | 19.40 | | | $ | 12.74 | | | $ | 17.36 | | | $ | 16.50 | | | | | | | | | | | | | | | | | | | | | | | | | | | |