UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Stock, par value $0.25 per share |
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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.
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).
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.
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☑ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
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Emerging growth company |
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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.
Class |
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Shares Outstanding August 2, 2024 |
Common stock, par value $0.25 par value per share |
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Hecla Mining Company and Subsidiaries
Form 10-Q
For the Quarter Ended June 30, 2024
INDEX*
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Page |
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PART I. |
3 |
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Item 1. |
3 |
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3 |
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Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2024 and 2023 |
4 |
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Condensed Consolidated Balance Sheets - June 30, 2024 and December 31, 2023 |
5 |
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6 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
8 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
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21 |
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22 |
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36 |
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45 |
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Contractual Obligations, Contingent Liabilities and Commitments |
48 |
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48 |
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48 |
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49 |
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Item 3. |
52 |
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Item 4. |
53 |
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PART II. |
54 |
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Item 1. |
54 |
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Item 1A. |
54 |
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Item 4. |
54 |
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Item 5. |
54 |
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Item 6. |
55 |
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56 |
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*Items 2 and 3 of Part II are omitted as they are not applicable. |
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2
Part I - Financial Information
Item 1. Financial Statements
Hecla Mining Company and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(Dollars and shares in thousands, except for per-share amounts)
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Three Months Ended |
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Six Months Ended |
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June 30, 2024 |
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June 30, 2023 |
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June 30, 2024 |
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June 30, 2023 |
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Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales and other direct production costs |
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Depreciation, depletion and amortization |
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Total cost of sales |
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Gross profit |
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Other operating expenses: |
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General and administrative |
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Exploration and pre-development |
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Ramp-up and suspension costs |
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Provision for closed operations and environmental matters |
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Other operating income, net |
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( |
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( |
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( |
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( |
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Total other operating expenses |
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Income from operations |
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Other expense: |
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Interest expense |
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( |
) |
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( |
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( |
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( |
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Fair value adjustments, net |
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( |
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Net foreign exchange gain (loss) |
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( |
) |
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( |
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Other income |
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Total other expense |
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( |
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( |
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( |
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( |
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Income (loss) before income and mining taxes |
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( |
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( |
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Income and mining tax provision |
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( |
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( |
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( |
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( |
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Net income (loss) |
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( |
) |
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( |
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Preferred stock dividends |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income (loss) applicable to common stockholders |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Comprehensive income (loss): |
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Net income (loss) |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Change in fair value of derivative contracts designated as hedge transactions |
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( |
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( |
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Comprehensive income (loss) |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Basic income (loss) per common share after preferred dividends |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Diluted income (loss) per common share after preferred dividends |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Weighted average number of common shares outstanding - basic |
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Weighted average number of common shares outstanding - diluted |
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The accompanying notes are an integral part of the interim condensed consolidated financial statements.
3
Hecla Mining Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
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Six Months Ended |
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June 30, 2024 |
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June 30, 2023 |
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Operating activities: |
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Net income (loss) |
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$ |
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$ |
( |
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Non-cash elements included in net income (loss): |
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Depreciation, depletion and amortization |
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Inventory adjustments |
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Fair value adjustments, net |
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( |
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( |
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Provision for reclamation and closure costs |
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Stock-based compensation |
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Deferred income taxes |
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Foreign exchange (gain) loss |
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( |
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Other non-cash items, net |
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( |
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Change in assets and liabilities: |
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Accounts receivable |
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( |
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Inventories |
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( |
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( |
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Other current and non-current assets |
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( |
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Accounts payable, accrued and other current liabilities |
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( |
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Accrued payroll and related benefits |
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( |
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Accrued taxes |
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( |
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( |
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Accrued reclamation and closure costs and other non-current liabilities |
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( |
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( |
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Cash provided by operating activities |
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Investing activities: |
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Additions to property, plant and mine development |
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( |
) |
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( |
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Proceeds from disposition of assets |
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Purchases of investments |
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( |
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Net cash used in investing activities |
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( |
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( |
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Financing activities: |
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Proceeds from sale of common stock, net |
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Acquisition of treasury stock |
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( |
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( |
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Borrowing of debt |
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Repayment of debt |
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( |
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( |
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Dividends paid to common and preferred stockholders |
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( |
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( |
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Repayments of finance leases |
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( |
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( |
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Net cash (used in) provided by financing activities |
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( |
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Effect of exchange rates on cash |
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( |
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Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents |
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( |
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Cash, cash equivalents and restricted cash and cash equivalents at beginning of period |
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Cash, cash equivalents and restricted cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income and mining taxes, net |
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$ |
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$ |
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Significant non-cash investing and financing activities: |
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Addition of finance lease obligations and right-of-use assets |
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$ |
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$ |
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Common stock issued as incentive compensation |
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$ |
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$ |
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Common stock issued for 401-K match |
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$ |
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$ |
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The accompanying notes are an integral part of the interim condensed consolidated financial statements.
4
Hecla Mining Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares)
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June 30, 2024 |
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December 31, 2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable: |
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Trade |
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Other, net |
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Inventories: |
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Product inventories |
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Materials and supplies |
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Other current assets |
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Total current assets |
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Investments |
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Restricted cash and cash equivalents |
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Property, plant and mine development, net |
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Operating lease right-of-use assets |
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Deferred tax assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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Accrued payroll and related benefits |
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Accrued taxes |
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Finance leases |
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Accrued reclamation and closure costs |
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Accrued interest |
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Other current liabilities |
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Total current liabilities |
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Accrued reclamation and closure costs |
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Long-term debt including finance leases |
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Deferred tax liability |
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Other non-current liabilities |
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Total liabilities |
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STOCKHOLDERS’ EQUITY |
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Preferred stock, |
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Series B preferred stock, $ |
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Common stock, $ |
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Capital surplus |
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Accumulated deficit |
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( |
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( |
) |
Accumulated other comprehensive income (loss), net |
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( |
) |
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Less treasury stock, at cost; June 30, 2024 — |
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( |
) |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of the interim condensed consolidated financial statements.
5
Hecla Mining Company and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(Dollars are in thousands, except for share and per share amounts)
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Three Months Ended June 30, 2024 |
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Series B |
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Common |
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Capital Surplus |
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Accumulated |
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Accumulated |
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Treasury |
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Total |
Balances, April 1, 2024 |
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$ |
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$ |
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$ |
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$( |
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$ |
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$( |
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$ |
Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Incentive compensation units distributed ( |
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— |
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( |
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— |
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— |
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— |
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— |
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Common stock issued as compensation to interim CEO ( |
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— |
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— |
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— |
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Common stock issued to directors ( |
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— |
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— |
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— |
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— |
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Common stock ($0. |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
Common stock issued for 401(k) match ( |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
Balances, June 30, 2024 |
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$ |
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$ |
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$ |
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$( |
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$( |
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$( |
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$ |
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Three Months Ended June 30, 2023 |
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Series B |
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Common |
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Capital Surplus |
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Accumulated |
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Accumulated |
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Treasury |
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Total |
Balances, April 1, 2023 |
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$ |
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$ |
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$ |
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$( |
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$ |
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$( |
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$ |
Net loss |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Common stock ($ |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
Common stock issued for 401(k) match ( |
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— |
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— |
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— |
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— |
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Common stock issued as incentive compensation ( |
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— |
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( |
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— |
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— |
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( |
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( |
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Common stock issued under ATM Program ( |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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Balances, June 30, 2023 |
|
$ |
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$ |
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$ |
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$( |
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$ |
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$( |
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$ |
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Six Months Ended June 30, 2024 |
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Series B |
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Common |
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Capital Surplus |
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Accumulated |
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Accumulated |
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Treasury |
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Total |
Balances, January 1, 2024 |
|
$ |
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$ |
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$ |
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$( |
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$ |
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$( |
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$ |
Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Incentive compensation units distributed ( |
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— |
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— |
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— |
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( |
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|||
Common stock issued as compensation to interim CEO ( |
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— |
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— |
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— |
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Common stock issued to directors ( |
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— |
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— |
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— |
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— |
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|||
Common stock ($ |
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— |
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— |
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— |
|
( |
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— |
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— |
|
( |
Common stock issued under ATM program ( |
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— |
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— |
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— |
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— |
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|||
Common stock issued for 401(k) match ( |
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— |
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— |
|
— |
|
— |
|
|||
Other comprehensive loss |
|
— |
|
— |
|
— |
|
— |
|
( |
|
— |
|
( |
Balances, June 30, 2024 |
|
$ |
|
$ |
|
$ |
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$( |
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$( |
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$( |
|
$ |
6
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Six Months Ended June 30, 2023 |
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Series B |
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Common |
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Capital Surplus |
|
Accumulated |
|
Accumulated |
|
Treasury |
|
Total |
Balances, January 1, 2023 |
|
$ |
|
$ |
|
$ |
|
$( |
|
$ |
|
$( |
|
$ |
Net loss |
|
— |
|
— |
|
— |
|
( |
|
— |
|
— |
|
( |
Stock-based compensation expense |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
||
Incentive compensation units distributed ( |
|
— |
|
|
( |
|
— |
|
— |
|
( |
|
( |
|
Common stock ($ |
|
— |
|
— |
|
— |
|
( |
|
— |
|
— |
|
( |
Common stock issued under ATM program ( |
|
— |
|
|
|
— |
|
— |
|
— |
|
|||
Common stock issued for 401(k) match ( |
|
— |
|
|
|
— |
|
— |
|
— |
|
|||
Other comprehensive income |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
||
Balances, June 30, 2023 |
|
$ |
|
$ |
|
$ |
|
$( |
|
$ |
|
$( |
|
$ |
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
7
Note 1. Basis 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 for the year ended December 31, 2023, which were revised to conform with current year financial statement changes as described in Note 2 "Business Segments and Sales of Products", and are included in Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 20, 2024. The consolidated December 31, 2023 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 a fair statement 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 and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
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 and zinc, (ii) carbon material containing silver and gold, and (iii) doré containing silver and gold. We are currently organized and managed in
Effective January 2024 we revised our internal reporting provided to our Chief Operating Decision Maker to no longer include any financial performance information for our Nevada Operations, reflecting the current status of the Nevada Operations being on care and maintenance. 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, and the previously separately reported Nevada Operations are presented as “Other.” The presentation of the prior period information disclosed below has been revised to reflect this change.
The following tables present information about our reportable segments sales for the three and six months ended June 30, 2024 and 2023 (in thousands):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Total sales to external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Greens Creek |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Lucky Friday |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Keno Hill |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Casa Berardi |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Greens Creek |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Lucky Friday |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Keno Hill |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Casa Berardi |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Reconciliation of income from operations to income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from operations: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Adjustments all attributable to the Other segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Fair value adjustments, net |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Net foreign exchange gain (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income and mining taxes |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
8
Other sales for the three and six months ended June 30, 2024 and 2023 is comprised of revenue from our environmental remediation services subsidiary in the Yukon for both years presented and Nevada Operations metal sales in 2023. During the three and six months ended June 30, 2024, Keno Hill sold $
Lucky Friday's income from operations for the three and six months ended June 30, 2024 includes $
Sales by metal for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|