10-Q 1 d514140d10q.htm 10-Q 10-Q
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-Q
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
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 1-8491
 
 
HECLA MINING COMPANY
(Exact name of registrant as specified in its Charter)
 
 
 
Delaware
 
77-0664171
State or Other Jurisdiction of
Incorporation or Organization
 
I.R.S. Employer
Identification No.
6500 Mineral Drive, Suite 200
Coeur d’Alene, Idaho
 
83815-9408
Address of Principal Executive Offices
 
Zip Code
208-769-4100
Registrant’s Telephone Number, Including Area Code
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock, par value $0.25 per share
 
HL
 
New York Stock Exchange
Series B Cumulative Convertible Preferred Stock, par value $0.25 per share
 
HL-PB
 
New York Stock Exchange
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.    Yes  ☒    No  ☐
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).    Yes  ☒    No  ☐
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.
 
Large accelerated filer      Accelerated filer  
Non-accelerated
filer
     Smaller reporting company  
Emerging growth company       
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
 
Shares Outstanding November 4, 2022
Common stock, par value
$0.25 per share
 
606,270,618
 
 
 

Hecla Mining Company and Subsidiaries
Form 10 – Q
For the Quarter Ended September 30, 2022
INDEX
*
 
     Page  
  
  
     4  
     5  
     6  
     7  
     9  
     23  
     60  
     61  
  
     61  
     61  
     62  
     62  
     64  
 
*
Items 2, 3 and 5 of Part II are omitted as they are not applicable.
 
2

Part I – Financial Information
Item 1. Financial Statements
 
3

Hecla Mining Company and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)
(Dollars and shares in thousands, except for
per-share
amounts)
 
     Three Months Ended     Nine Months Ended  
     September 30,
2022
    September 30,
2021
    September 30,
2022
    September 30,
2021
 
Sales
   $  146,339     $  193,560     $  524,080     $  622,395  
    
 
 
   
 
 
   
 
 
   
 
 
 
Cost of sales and other direct production costs
     104,900       112,542       326,579       318,917  
Depreciation, depletion and amortization
     32,992       45,790       106,362       138,918  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total cost of sales
     137,892       158,332       432,941       457,835  
    
 
 
   
 
 
   
 
 
   
 
 
 
Gross profit
     8,447       35,228       91,139       164,560  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other operating expenses:
                                
General and administrative
     11,003       8,874       28,989       27,985  
Exploration and
pre-development
     15,128       17,108       39,136       35,039  
Care and maintenance costs
     5,092       6,910       16,539       17,014  
Provision for closed operations and environmental matters
     1,781       7,564       4,154       12,297  
Other operating expense
     902       3,344       5,310       10,626  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other operating expenses
     33,906       43,800       94,128       102,961  
    
 
 
   
 
 
   
 
 
   
 
 
 
(Loss) income from operations
     (25,459     (8,572     (2,989     61,599  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other income (expense):
                                
Interest expense
     (10,874     (10,469     (31,785     (31,484
Fair value adjustments, net
     (4,240     9,287       (14,703     (10,651
Net foreign exchange gain
     5,667       3,995       8,111       24  
Other income (expense)
     1,853       247       4,828       (192
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other (expense) income

     (7,594     3,060       (33,549     (42,303
    
 
 
   
 
 
   
 
 
   
 
 
 
(Loss) income before income and mining taxes
     (33,053     (5,512     (36,538     19,296  
Income and mining tax benefit
     9,527       4,533       3,642       3,924  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net (loss) income
     (23,526     (979     (32,896     23,220  
Preferred stock dividends
     (138     (138     (414     (414
    
 
 
   
 
 
   
 
 
   
 
 
 
(Loss) income applicable to common stockholders

   $  (23,664   $ (1,117   $  (33,310   $ 22,806  
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive income (loss):
                                
Net (loss) income
   $  (23,526   $ (979   $  (32,896   $ 23,220  
Change in fair value of derivative contracts designated as hedge transactions
     (12,692     (6,267     19,491       (2,815
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive (loss) income
   $  (36,218   $ (7,246   $  (13,405   $ 20,405  
    
 
 
   
 
 
   
 
 
   
 
 
 
Basic (loss) income per common share after preferred dividends
   $ (0.04   $        $ (0.06   $ 0.04  
    
 
 
   
 
 
   
 
 
   
 
 
 
Diluted (loss) income per common share after preferred dividends
   $ (0.04   $        $ (0.06   $ 0.04  
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average number of common shares outstanding – basic
     554,531       536,966       544,000       535,542  
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average number of common shares outstanding – diluted
     554,531       536,966       544,000       541,769  
    
 
 
   
 
 
   
 
 
   
 
 
 
Cash dividends declared per common share
   $ 0.00625     $ 0.01     $ 0.0125     $ 0.02  
    
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
 
4

Hecla Mining Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
     Nine Months Ended  
     September 30,
2022
    September 30,
2021
 
Operating activities:
                
Net (loss) income
   $  (32,896   $ 23,220  
Non-cash
elements included in net (loss) income:
                
Depreciation, depletion and amortization
     106,743       139,800  
Write-down of inventory
     2,159       6,524  
Fair value adjustments, net
     3,486       (7,978
Provision for reclamation and closure costs
     4,789       7,821  
Stock compensation
     4,298       4,774  
Deferred income taxes
     (17,828     (17,886
Foreign exchange (gain) loss

     (8,353     615  
Other
non-cash
items, net
     2,454       1,167  
Change in assets and liabilities:
                
Accounts receivable
     34,788       (3,798
Inventories
     (19,472     22,372  
Other current and
non-current
assets
     (3,420     1,650  
Accounts payable, accrued and other current liabilities

     (21,708     (14,689
Accrued payroll and related benefits
     1,679       (1,829
Accrued taxes
     (2,652     2,730  
Accrued reclamation and closure costs and other
non-current
liabilities
     (297     2,489  
    
 
 
   
 
 
 
Cash provided by operating activities
     53,770       166,982  
Investing activities:
                
Additions to properties, plants, equipment and mineral interests
     (93,237 )     (80,210
Change in restricted cash
     2,011           
Proceeds from sale of investments
     9,375       1,811  
Proceeds from disposition of properties, plants and equipment
     748       562  
Purchases of investments
     (30,540         
Acquisitions, net
     8,952           
Pre-acquisition
advance to Alexco
     (25,000         
Purchase of carbon credits
              (200
    
 
 
   
 
 
 
Net cash used in investing activities
     (127,691     (78,037
Financing activities:
                
Proceeds from sale of common stock, net
     4,542           
Acquisition of treasury stock

     (3,677     (4,525
Dividends paid to common and preferred stockholders
     (10,549     (17,169
Credit facility fees paid
     (517     (108
Draw on revolving credit facility
  
 
25,000
 
 
 
 
 
 
Repayments of finance leases
     (5,222     (5,598
    
 
 
   
 
 
 
Net cash provided by (used in) financing activities
     9,577       (27,400
Effect of exchange rates on cash
     (804     (471
Net (decrease) increase in cash, cash equivalents and restricted cash 

     (65,148     61,074  
Cash, cash equivalents and restricted cash at beginning of period
     211,063       130,883  
    
 
 
   
 
 
 
Cash, cash equivalents and restricted cash at end of period
   $  145,915     $  191,957  
    
 
 
   
 
 
 
Supplemental disclosure of cash flow information:
                
Cash paid for interest
   $ 37,179     $ 37,173  
Cash paid for income and mining taxes, net

   $ 13,061     $ 10,299  
Significant
non-cash
investing and financing activities:
                
Addition of finance lease obligations and
right-of-use
assets
   $ 9,692     $ 4,006  
Common stock issued to Alexco Resource Corp. shareholders

   $ 68,733     $     
Common stock issued to settle acquired silver stream
   $ 135,000     $     
Common stock issued to pension plans
   $ 5,570     $ 22,250  
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
 
5

Hecla Mining Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares)
 
    
September 30,
2022
   
December 31,
2021
 
ASSETS
 
Current assets:
                
Cash and cash equivalents
   $ 144,669     $ 210,010  
Accounts receivable:
                
Trade
     12,477       36,437  
Other, net
     12,846       8,149  
Inventories:
                
Concentrates, doré, and stockpiled ore
     40,985       25,906  
Materials and supplies
     51,020       41,859  
Derivatives assets
     7,190       2,709  
Other current assets
     14,733       16,557  
    
 
 
   
 
 
 
Total current assets
     283,920       341,627  
Investments
     13,299       10,844  
Restricted cash
     1,246       1,053  
Properties, plants, equipment and mineral interests, net
     2,553,974       2,310,810  
Operating lease
right-of-use
assets
     11,632       12,435  
Deferred income taxes
     45,562       45,562  
Derivatives assets
     20,794       2,503  
Other
non-current
assets
     4,202       3,974  
    
 
 
   
 
 
 
Total assets
   $ 2,934,629     $ 2,728,808  
    
 
 
   
 
 
 
LIABILITIES
 
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 87,850     $ 68,100  
Accrued payroll and related benefits
     26,385       28,714  
Accrued taxes
     7,344       12,306  
Finance and operating leases
     12,489       8,098  
Accrued interest
  
 
5,184
 
 
 
14,454
 
Derivatives liabilities
     5,774       19,353  
Other current liabilities
     5,765       99  
Accrued reclamation and closure costs
     10,594       9,259  
    
 
 
   
 
 
 
Total current liabilities
     161,385       160,383  
Finance and operating leases
     20,242       17,726  
Accrued reclamation and closure costs
     105,717       103,972  
Long-term debt
     530,745       508,095  
Deferred tax liability
     154,225       149,706  
Derivatives liabilities
     5,560       18,528  
Other
non-current
liabilities
     1,987       9,611  
    
 
 
   
 
 
 
Total liabilities
     979,861       968,021  
    
 
 
   
 
 
 
Commitments and contingencies (
Notes 4
,
7
,
8,
and
10
)
           
STOCKHOLDERS’ EQUITY
 
Preferred stock, 5,000,000 shares authorized:
                
Series B preferred stock, 25 cent par value, 157,776 shares issued and outstanding, liquidation
preference – $7,891
     39       39  
Common stock, 25 cent par value, 750,000,000 authorized shares; issued September 30,
2022 – 603,702,910 shares and December 31, 2021 – 545,534,760 shares
     150,839       136,391  
Capital surplus
     2,241,649       2,034,485  
Accumulated deficit
     (397,096     (353,651
Accumulated other comprehensive income (loss)
     (8,965     (28,456
Less treasury stock, at cost; September 30, 2022 – 8,132,553 shares and December 31, 2021 – 7,395,295 shares issued and held in treasury
     (31,698     (28,021
    
 
 
   
 
 
 
Total stockholders’ equity
     1,954,768       1,760,787  
    
 
 
   
 
 
 
Total liabilities and stockholders’ equity
   $  2,934,629     $  2,728,808  
    
 
 
   
 
 
 
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
 
6

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)
 
 
  
Three Months Ended September 30, 2022
 
 
  
Series B
Preferred
Stock
 
  
Common
Stock
 
  
Capital
Surplus
 
  
Accumulated
Deficit
 
 
Accumulated
Other
Comprehensive
Income (Loss),
net
 
 
Treasury
Stock
 
 
Total
 
Balances, July 1, 2022
   $ 39      $ 137,241      $ 2,043,621      $ (370,048   $ 3,727     $ (31,698   $ 1,782,882  
Net loss
                                   (23,526                       (23,526
Common stock issued to Alexco Resource Corp. shareholders
 (17,992,875 shares)
               4,498        64,235                                   68,733  
Common stock issued to settle the acquired silver
stream (34,800,990 shares)
               8,700        126,300                                   135,000  
Common stock issued for 401(k) match (422,860

shares)
            106        1,472                          1,578  
Common stock issued under ATM program, net 
(1,176,861 shares)
               294        4,248                          4,542  
Common stock dividends declared (0.0625 cents per
common share)
                                   (3,384                       (3,384
Series B Preferred Stock dividends declared (87.5 cents
per share)
                          (138                 (138
Restricted stock units granted
                     1,773                          1,773  
Other comprehensive loss
                                            (12,692              (12,692
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
Balances, September 30, 2022
   $ 39      $ 150,839      $ 2,241,649      $ (397,096   $ (8,965   $ (31,698   $ 1,954,768  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
 
     Three Months Ended September 3
0
, 2021
 
     Series B
Preferred
Stock
     Common
Stock
     Capital
Surplus
     Accumulated
Deficit
    Accumulated
Other
Comprehensive
Income (Loss),
net
    Treasury
Stock
    Total  
Balances, July 1, 2021
   $ 39      $ 136,065      $ 2,024,645      $ (354,866   $ (29,437   $ (28,021   $ 1,748,425  
Net loss
                                   (979                       (979
Restricted stock units granted
                         1,472                                   1,472  
Common stock dividends declared (1.125 cents per common share)
                                   (6,040                       (6,040
Series B Preferred Stock dividends declared (87.5 cents per share)
                                   (138                       (138
Common stock issued for 401(k) match (141,000 shares)
               35        1,017                                   1,052  
Common stock issued to pension plans (1,000,000 shares)
               250        5,200                                   5,450  
Other comprehensive loss
                                            (6,267              (6,267
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
Balances, September 30, 2021
   $ 39      $ 136,350      $ 2,032,334      $ (362,023   $ (35,704   $ (28,021   $ 1,742,975  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
 
7

 
  
Nine Months Ended September 30, 2022
 
 
  
Series B
Preferred
Stock
 
  
Common
Stock
 
  
Capital
Surplus
 
 
Accumulated
Deficit
 
 
Accumulated
Other
Comprehensive
Income (Loss),
net
 
 
Treasury
Stock
 
 
Total
 
Balances, January 1, 2022
   $ 39      $ 136,391      $ 2,034,485     $ (353,651   $ (28,456   $ (28,021   $ 1,760,787  
Net loss
                                  (32,896                       (32,896
Restricted stock units granted
                         3,881                                  3,881  
Restricted stock units and performance stock units distributed (1,789,042 shares)
               447        (447                       (3,677     (3,677
Common stock issued for 401(k) match (321,110
shares)
               186        3,283                                  3,469  
Common stock issued to directors (98,310 shares)
               25        392                                  417  
Common stock issued to pension plans (1,190,000 shares)
               298        5,272                                  5,570  
Common stock issued to Alexco Resource Corp. shareholders (17,992,875 shares)
               4,498        64,235                                  68,733  
Common stock issued to settle the acquired silver
stream (34,800,990)
               8,700        126,300                                  135,000  
Common stock issued under ATM program, net

(1,176,861 shares)
      ——
       294        4,248      
     
     
      4,542  
Common stock dividends declared (1.25 cents per common share)
                                  (10,135                       (10,135
Series B Preferred Stock dividends declared ($2.625
per share)
                                  (414                       (414
Other comprehensive income
                                           19,491                19,491  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balances, September 30, 2022
   $ 39      $ 150,839      $ 2,241,649     $ (397,096   $ (8,965   $ (31,698   $ 1,954,768  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
     Nine Months Ended September 30, 2021  
     Series B
Preferred
Stock
     Common
Stock
     Capital
Surplus
    Accumulated
Deficit
    Accumulated
Other
Comprehensive
Income (Loss),
net
    Treasury
Stock
    Total  
Balances, January 1, 2021
   $ 39      $ 134,629      $ 2,003,576     $ (368,074   $ (32,889   $ (23,496   $ 1,713,785  
Net income
                                  23,220                         23,220  
Restricted stock units granted
                         2,930                                  2,930  
Restricted stock units distributed (1,653,000 shares)
               413        (413                       (4,525     (4,525
Common stock dividends declared (3.125 cents per common share)
                                  (16,755                       (16,755
Series B Preferred Stock dividends declared ($2.625
per share)
                                  (414                       (414
Common stock issued for 401(k) match (524,000
shares)
               131        3,324                                  3,455  
Common stock issued to pension plans (4,500,000 shares)
               1,125        21,125                                  22,250  
Common stock issued to directors (207,000 shares)
               52        1,792                                  1,844  
Other comprehensive loss
                                           (2,815              (2,815
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balances, September 30, 2021
   $ 39      $ 136,350      $ 2,032,334     $ (362,023   $ (35,704   $ (28,021   $ 1,742,975  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
 
8

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 generally accepted accounting principles in the United States (“GAAP”). Therefore, this information should be read in conjunction with Hecla Mining Company’s consolidated financial statements and notes contained in our annual report on Form
10-K
for the year ended December 31, 2021 (“2021 Form
10-K”).
The consolidated December 31, 2021 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 nine-month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
On September 7, 2022, the Company completed the acquisition of the remaining 90.1%
of Alexco Resource Corp. (“Alexco”) for non-cash consideration of
 
17,992,875
shares of Company common stock valued at $
68.7
 million.
Total consideration for the acquisition, deemed to be an asset acquisition under GAAP, was
 $
81.5
 
million of which $76.4 million was non cash including the fair value of the Company’s common stock issued and the fair value of the
 
9.9
%
Alexco investment held by the Company prior to the completion of the acquisition and previously accounted for as marketable equity securities of $7.7 million. Acquisition costs also included transaction costs of $5.1 million. The total consideration was allocated to the acquired assets and assumed liabilities based on their estimated fair values on the acquisition date, which primarily consisted of mineral interests of
 

$
236.6
 
million, a related deferred tax liability of
 
$
12.9
million, net liabilities of $7.2 million, and a silver stream liability
 of
 
$
135
 
million. Immediately following the closure of the acquisition, we settled the silver stream liability with the stream holder for
 
34,800,990
shares of Company common stock.
The 2019 novel strain of coronavirus
(“COVID-19”)
was characterized as a global pandemic by the World Health Organization on March 11, 2020. We continue to take precautionary measures to mitigate the impact of
COVID-19,
including implementing operational plans and practices. As long as they are required, the operational practices implemented could continue to have an adverse impact on our operating results due to deferred production and revenues or additional costs. We incurred $0.4 million and $3.1 million in
COVID-19
mitigation costs during the nine months ended September 30, 2022 and 2021, respectively. We continue to monitor the rapidly evolving situation and guidance from federal, state, local and foreign governments and public health authorities and may take additional actions based on their recommendations. The extent of the impact of
COVID-19
on our business and financial results will also depend on future developments, including the duration and spread of the outbreak and the success of the current vaccination programs and the related impact on prices, demand, creditworthiness and other market conditions and governmental reactions, all of which are highly
uncertain.
During the three months ended September 30, 2022, the Company recorded an out-of-period adjustment to correct an immaterial error related to the period ended June 30, 2022. This adjustment increased income taxes related to other comprehensive loss
by $12,649 for the three months ended September 30, 2022 to correct the previously recorded tax effect of changes in the fair value of derivative contracts designated as hedge transactions. This adjustment is non-cash, had no impact on net loss applicable to common shareholders and increased accumulated other comprehensive loss for the three months ended September 30, 2022 by $12,649.
 
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 four segments: Greens Creek, Lucky Friday, Casa Berardi and Nevada Operations.
General corporate activities not associated with operating mines and their various exploration activities, as well as discontinued operations, exploration and development projects and idle properties, are presented as “other.” Interest expense, interest income and income and mining taxes are considered general corporate items, and are not allocated to our segments.
The following tables present information about our reportable segments for the three and nine months ended September 30, 2022 and 2021 (in thousands):
 
9

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2022      2021      2022      2021  
Net sales to unaffiliated customers:
                                   
Greens Creek
   $ 60,875      $ 84,806      $ 239,688      $ 296,978  
Lucky Friday
     28,460        29,783        102,380        98,550  
Casa Berardi
     56,939        56,065        181,679        185,098  
Nevada Operations
            22,906        268        41,593  
Other
     65               65        176  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 146,339      $ 193,560      $ 524,080      $ 622,395  
    
 
 
    
 
 
    
 
 
    
 
 
 
Income (loss) from operations:
                                   
Greens Creek
   $ 1,378      $ 26,572      $ 63,768      $ 127,605  
Lucky Friday
     4,269        6,187        18,568        24,247  
Casa Berardi
     (5,226      (6,233      (8,497      4,944  
Nevada Operations
     (8,917      (12,077      (30,879      (35,558
Other
     (16,963      (23,021      (45,949      (59,639
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ (25,459    $ (8,572    $ (2,989    $ 61,599  
    
 
 
    
 
 
    
 
 
    
 
 
 
The following table presents identifiable assets by reportable segment as of September 30, 2022 and December 31, 2021 (in thousands):
 
     September 30,
2022
     December 31,
2021
 
Identifiable assets:
                 
Greens Creek
   $ 594,811      $ 589,944  
Lucky Friday
     534,114        516,545  
Casa Berardi
     692,833        701,868  
Nevada Operations
     467,532        468,985  
Other
     645,339        451,466  
    
 
 
    
 
 
 
     $ 2,934,629      $ 2,728,808  
    
 
 
    
 
 
 
Following the acquisition of Alexco (see
Note 1
), our sales for the three and nine month periods ended September 30, 2022 are comprised of metal sales as described below and $65,000 of environmental services revenue.
Sales by metal for the three- and nine-month periods ended September 30, 2022 and 2021 were as follows (in thousands):
 
     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2022      2021      2022      2021  
Silver
   $ 45,924      $ 61,890      $ 182,306      $ 232,414  
Gold
     69,289        94,984        228,475        282,471  
Lead
     16,033        18,082        56,912        56,198  
Zinc
     28,051        30,273        94,865        89,501  
Less: Smelter and refining charges
     (13,023      (11,669      (38,543      (38,189
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 146,274      $ 193,560      $ 524,015      $ 622,395  
    
 
 
    
 
 
    
 
 
    
 
 
 
Sales included net gains of $1.6 million and $8.1 million for the
three-and
nine-month periods ended September 30, 2022, respectively, on financially-settled forward contracts for silver, gold, lead and zinc contained in our sales. Sales included net gains of $5.0 million and $4.5 million for the
three-and
nine-month periods ended September 30, 2021, respectively, on such contracts. See
Note 8
for more information.
 
10

Note 3.
Income and Mining Taxes
Major components of our income and mining tax benefit (provision) for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands):
 

 
  
Three Months Ended
September 30,
 
  
Nine Months Ended
September 30,
 
 
  
2022
 
  
2021
 
  
2022
 
  
2021
 
Current:                                    
Domestic
   $ 253      $ (2,176    $ (2,296    $ (7,489
Foreign
     (1,085 )      (1,578      (4,172 )      (4,690
    
 
 
    
 
 
    
 
 
    
 
 
 
Total current income and mining tax provision
     (832      (3,754      (6,468 )      (12,179
Deferred:                                    
Domestic
     8,156        3,213        915        8,226  
Foreign
     2,203        5,074        9,195        7,877  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total deferred income and mining tax benefit
     10,359        8,287        10,110        16,103  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total income and mining tax benefit (provision)
   $ 9,527      $ 4,533      $ 3,642      $ 3,924  
    
 
 
    
 
 
    
 
 
    
 
 
 
The income and mining tax benefit (provision) for the three and nine months ended September 30, 2022 and 2021 varies from the amounts that would have resulted from applying the statutory tax rates to
pre-tax
income due primarily to the impact of taxation in foreign jurisdictions and
non-recognition
of net operating losses and foreign exchange gains and losses in certain jurisdictions.
For the three-month and nine-month periods ended September 30, 2022, we used the annual effective tax rate method to calculate the tax provision, a change from the discrete method used for the three- and nine-month periods ended September 30, 2021, due to reversal of a valuation allowance in the fourth quarter of 2021. Valuation allowances on Nevada, Mexico and certain Canadian net operating losses were treated as discrete adjustments to the annual effective tax rate method calculation, partially causing the increase in the income tax rate for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021.
 
Note 4.
Employee Benefit Plans
We sponsor three defined benefit pension plans covering substantially all U.S. employees. Net periodic pension cost for the plans consisted of the following for the three and nine months ended September 30, 2022 and 2021 (in thousands):
 
     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2022      2021      2022      2021  
Service cost
   $ 1,566      $ 1,455      $ 4,697      $ 4,365  
Interest cost
     1,369        1,248        4,107        3,744  
Expected return on plan assets
     (3,363      (2,313      (10,089      (6,939
Amortization of prior service cost
     128        99        384        297  
Amortization of net loss
     512        1,125        1,537        3,375  
    
 
 
    
 
 
    
 
 
    
 
 
 
Net periodic pension cost
   $ 212      $ 1,614      $ 636      $ 4,842  
    
 
 
    
 
 
    
 
 
    
 
 
 
For the three- and nine-month periods ended September 30, 2022 and 2021, the service cost component of net periodic pension cost is included in the same line items of our condensed consolidated financial statements as other employee compensation costs. The net benefit related to all other components of net periodic pension cost of $1.4 million and $4.1 million, respectively, for the three- and nine-month periods ended September 30, 2022, and net expense of $0.2 million and $0.5 million for the three- and nine-month periods ended September 30, 2021, respectively, is included in other (expense) income on our condensed consolidated statements of operations and comprehensive income (loss).
 
11

In May 2022 and October 2022, we contributed $5.6 million and $4.2 
million, respectively, in shares of our common stock to two of our defined benefit plans. In January 2021 and September 2021, we contributed
$16.8 
million and $5.4 million, respectively, in shares of our common stock to three of our defined benefit plans. We do not expect to be required to make additional contributions to our defined benefit pension plans in 2022, but may elect to do so.
 
Note 5.
(Loss) Income Per Common Share
We calculate basic (loss) income per common share on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted income per share is calculated using the weighted average number of shares of common stock outstanding during the period plus the effect of potential dilutive common shares during the period using the treasury stock and
if-converted
methods.
Potential dilutive shares of common stock include outstanding unvested restricted stock awards, deferred restricted stock units, warrants and convertible preferred stock for periods in which we have reported net income. For periods in which we report net losses, potential dilutive shares of common stock are excluded, as their conversion and exercise would be anti-dilutive.
The following table represents net (loss) income per common share – basic and diluted (in thousands, except income (loss) per share):
 
    
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
 
    
2022
    
2021
    
2022
    
2021
 
Numerator
                                   
Net (loss) income
   $ (23,526    $ (979    $ (32,896    $ 23,220  
Preferred stock dividends
     (138      (138      (414      (414
    
 
 
    
 
 
    
 
 
    
 
 
 
Net (loss) income applicable to common shares
   $ (23,664    $ (1,117    $ (33,310    $ 22,806  
    
 
 
    
 
 
    
 
 
    
 
 
 
Denominator
                                   
Basic weighted average common shares
     554,531        536,966        544,000        535,542  
Dilutive restricted stock units, warrants and deferred shares
                                   6,227  
    
 
 
    
 
 
    
 
 
    
 
 
 
Diluted weighted average common shares
     554,531        536,966        544,000        541,769  
    
 
 
    
 
 
    
 
 
    
 
 
 
Basic (loss) income per common share
  
$
(0.04
  
$
  
 
  
$
(0.06
  
$
0.04
 
Diluted (loss) income per common share
  
$
(0.04
  
$
  
 
  
$
(0.06
  
$
0.04
 
For the three month periods ended September 30, 2022 and 2021, respectively, and the nine month period ended September 30, 2022, all outstanding restricted stock units, warrants and deferred shares were excluded from the computation of diluted loss per share, as our reported net losses for those periods would cause their conversion and exercise to have no effect on the calculation of loss per share. For the nine months ended September 30, 2021, the calculation of diluted income per common share included (i) 2,496,622 restricted stock units, (ii) 1,578,293 warrants to purchase one share of common stock and (iii) 2,152,578 deferred compensation stock units that were dilutive.
 
Note 6.
Stockholders’ Equity
At-The-Market
Equity Distribution Agreement
Pursuant to an equity distribution agreement dated February 18, 2021, we may offer and sell up to 60 million shares of our common stock from time to time to or through sales agents. Sales of the shares, if any, will be made by means of ordinary brokers transactions or as otherwise agreed between the Company and the agents as principals. Whether or not we engage in sales from time to time may depend on a variety of factors, including share price, our cash resources, customary
black-out
restrictions, and whether we have any material inside information. The agreement can be terminated by us at any time. Any sales of shares under the equity distribution agreement are registered under the Securities Act of 1933, as amended, pursuant to a shelf registration statement on Form
S-3.
As of September 30, 2022 we had sold 1,176,861 shares under the agreement for proceeds of $4.5 million, net of commissions and fees of approximately $0.1 million. All of the sales occurred during September 2022.
 
12

Stock-based Compensation Plans
The Company has stock incentive plans for executives, directors and eligible employees, comprised of performance shares and restricted stock. Stock-based compensation expense for restricted stock unit and performance-based grants (collectively “incentive compensation”) to employees and shares issued to
non-employee
directors totaled $1.8 million and $4.3 million for the three and nine months ended September 30, 2022, respectively, and $1.5 million and $4.8 million for the three and nine months ended September 30, 2021, respectively. At September 30, 2022, there was $8.4 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.8 years.
The following table summarizes the grants awarded during the nine months ended September 30, 2022:
 
Grant date   Award type   Number granted   Grant date fair value
June 21, 2022   Restricted stock   1,103,801   $ 4.43
June 21, 2022   Performance based   322,799   $ 3.78
June 28, 2022   Directors retainer   98,310   $ 4.24
September 30, 2022   Restricted stock   121,826   $ 3.94
In connection with the vesting of incentive compensation, employees have in the past, at their election and when permitted by us, chosen to satisfy their minimum tax withholding obligations through net share settlement, pursuant to which the Company withholds the number of shares necessary to satisfy such withholding obligations and pays the obligations in cash. As a result, in the first nine months of 2022, we withheld 737,258 shares valued at approximately $3.7 million, or approximately $4.99 per share. In the first nine months of 2021, we withheld 574,251 shares valued at approximately $4.5 million, or approximately $7.88 per share.
Common Stock Dividends
The following table summarizes the dividends our Board of Directors have declared and we have paid during 2022 pursuant to our dividend policy:
 
Quarter   Realized Silver Price  
Silver-linked component
  Minimum component   Total dividend per share
First
  $24.68   $0.0025   $0.00375   $0.00625
Second
  $20.68   $0.0025   $0.00375   $0.00625
 
Note 7.
Debt, Credit Facility and Leases
Our debt as of September 30, 2022 and December 31, 2021 consisted of our 7.25% Senior Notes due February 15, 2028 (“Senior Notes”) and our Series
2020-A
Senior Notes due July 9, 2025 (the “IQ Notes”) and any drawn amounts on the New Credit Agreement, which is described separately below. The following tables summarize our long-term debt balances, excluding interest and borrowings under the New Credit Agreement, as of September 30, 2022 and December 31, 2021 (in thousands):
 
    
September 30, 2022
 
    
Senior Notes
    
IQ Notes
    
Total
 
Principal
   $ 475,000      $ 35,194      $ 510,194  
Unamortized discount/premium and issuance costs
     (4,868      419        (4,449
    
 
 
    
 
 
    
 
 
 
Long-term debt balance
   $ 470,132      $ 35,613      $ 505,745  
    
 
 
    
 
 
    
 
 
 
 
13

    
December 31, 2021
 
    
Senior Notes
    
IQ Notes
    
Total
 
Principal
   $ 475,000      $ 38,051      $ 513,051  
Unamortized discount/premium and issuance costs
     (5,552      596        (4,956