Hecla Reports Third Quarter 2016 Results

Hecla Mining Company ( NYSE:HL) today announced third quarter financial and operating results.

THIRD QUARTER HIGHLIGHTS AND SIGNIFICANT ITEMS (compared to Q3 2015)
  • Net income applicable to common shareholders of $25.7 million, or $0.07 per share.
  • Sales of $179.4 million, up 71%, a record.
  • Adjusted EBITDA of $75.2 million, up 323%. 1
  • Cash provided by operating activities of $87.0 million, up 225%. Includes $16 million of insurance proceeds for the Troy Mine reclamation.
  • Free cash flow of $27.7 million, up $38 million. 2
  • Total silver production of 4.3 million ounces, up 67%.
  • Gold production of 52,126 ounces, up 19%.
  • Silver equivalent production of 10.3 million ounces, up 17%. 3
  • Last 12 months net loss of $13.7 million and adjusted EBITDA of $234 million. 1
  • Net debt/adjusted EBITDA (last 12 months) of 1.4x, a 49% decline. 1,4
  • Cash and cash equivalents and short-term investments of $192.4 million at September 30, 2016, up $33 million over the second quarter.
  • Completed the acquisition of the Montanore project, located near the Rock Creek project.
  • Reduced estimate for 2016 cash cost, after by-product credits, per silver ounce to $4.00 and increased estimate for 2016 cash cost, after by-product credits, per gold ounce to $750. 5

"Hecla's quarterly production growth, record sales, cash provided by operating activities of $87 million and free cash flow of $28 million reflect how our commitment to invest when prices were lower allows us to now reap the benefits of having more production at higher prices," said Phillips S. Baker, Jr., Hecla's President and CEO. "This quarter was just another step towards establishing new 125-year records in 2016. Our free cash flow and strengthening balance sheet allow us to immediately invest in more innovation, exploration and high-return projects. And with the acquisition of our second large undeveloped silver project, Montanore, we expect to generate additional value in the future."

FINANCIAL OVERVIEW
 
  Third Quarter Ended   Nine Months Ended
HIGHLIGHTS  

September 30, 2016
 

September 30,2015
 

September 30, 2016
 

September 30,2015
FINANCIAL DATA                
Sales (000) $ 179,393   $ 104,941 $ 481,712   $ 328,230
Gross profit (000) $ 58,685 ($2,561 ) $ 147,958 $ 26,776
Income (loss) applicable to common shareholders (000) $ 25,651 ($10,028 ) $ 48,871 ($24,419 )

Basic and diluted income (loss) per common share
$ 0.07 ($0.03 ) $ 0.13 ($0.07 )
Net income (loss) (000) $ 25,789 ($9,890 ) $ 49,285 ($24,005 )
Cash provided by operating activities (000) $ 86,976 $ 26,795 $ 173,114 $ 78,968
 

Net income applicable to common shareholders for the third quarter was $25.7 million, or $0.07 per share, compared to a net loss applicable to common shareholders of $10.0 million, or $0.03 per share, for the same period a year ago, the result mainly due to the following items:
  • Sales were 71% higher than the third quarter of 2015, mainly due to 67% increase in silver production and 19% increase in gold production, as well as higher silver and gold prices.
  • Cost of sales and other direct production costs and depreciation, depletion and amortization ("cost of sales") of $120.7 million was higher by 12% mainly due to San Sebastian being in commercial production.
  • Cash cost, after by-product credits, per silver ounce decreased to $3.68 from $7.52, or 51% over the prior year period, mainly due to the addition of silver production at San Sebastian and higher silver production at Greens Creek and Lucky Friday. 6
  • Cash cost, after by-product credits, per gold ounce increased to $915 from $793, or 15% over the prior year period principally due to the expensing of stripping costs, which were previously capitalized, for the new East Mine Crown Pillar ("EMCP") pit. 6
  • A $2.4 million foreign exchange gain compared to a $9.1 million foreign exchange gain in the prior year period due primarily to strengthening of the Canadian dollar on deferred tax assets.
  • Income tax provision of $9.5 million versus a benefit of $5.5 million in the prior year due to higher taxable income this quarter and the recording of a valuation allowance against the future benefit of U.S. net operating losses in the prior year.

Higher production and metals prices resulted in cash provided by operating activities of $87.0 million, $60.2 million higher compared to the third quarter of 2015.

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