UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | 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 | |
HECLA MINING COMPANY
(Exact name of registrant as specified in its Charter)
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| State or Other Jurisdiction of | I.R.S. Employer | |||
| Incorporation or Organization | Identification No. | |||
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| Address of Principal Executive Offices | Zip Code | |||
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| 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 |
| | | |
| | | |
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.
| 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
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 August 1, 2022 | |
| Common stock, par value $0.25 per share |
Hecla Mining Company and Subsidiaries
Form 10-Q
For the Quarter Ended June 30, 2022
INDEX*
*Items 2, 3 and 5 of Part II are omitted as they are not applicable.
Part I - Financial Information
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)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, 2022 |
June 30, 2021 |
June 30, 2022 |
June 30, 2021 |
|||||||||||||
| Sales |
$ | $ | $ | $ | ||||||||||||
| Cost of sales and other direct production costs |
||||||||||||||||
| 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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| Care and maintenance costs |
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| Provision for closed operations and environmental matters |
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| Other operating expense |
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| Total other operating expenses |
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| Income from operations |
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| Other income (expense): |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Fair value adjustments, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net foreign exchange gain (loss) |
( |
) | ( |
) | ||||||||||||
| Other income (expense) |
( |
) | ( |
) | ||||||||||||
| Total other expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| (Loss) income before income and mining taxes |
( |
) | ( |
) | ( |
) | ||||||||||
| Income and mining tax (provision) benefit |
( |
) | ( |
) | ( |
) | ||||||||||
| Net (loss) income |
( |
) | ( |
) | ||||||||||||
| Preferred stock dividends |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| (Loss) income applicable to common shareholders |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Comprehensive income (loss): |
||||||||||||||||
| Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Change in fair value of derivative contracts designated as hedge transactions |
||||||||||||||||
| Comprehensive income |
$ | $ | $ | $ | ||||||||||||
| Basic (loss) income per common share after preferred dividends |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Diluted (loss) income per common share after preferred dividends |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Weighted average number of common shares outstanding - basic |
||||||||||||||||
| Weighted average number of common shares outstanding - diluted |
||||||||||||||||
| Cash dividends declared per common share |
$ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
Hecla Mining Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
| Six Months Ended |
||||||||
| June 30, 2022 |
June 30, 2021 |
|||||||
| Operating activities: |
||||||||
| Net (loss) income |
$ | ( |
) | $ | ||||
| Non-cash elements included in net (loss) income: |
||||||||
| Depreciation, depletion and amortization |
||||||||
| Write-down of inventory |
||||||||
| Fair value adjustments, net |
( |
) | ||||||
| Provision for reclamation and closure costs |
||||||||
| Stock compensation |
||||||||
| Deferred income taxes |
( |
) | ( |
) | ||||
| Foreign exchange loss |
( |
) | ||||||
| Other non-cash items, net |
||||||||
| Change in assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ||||||
| Inventories |
( |
) | ||||||
| Other current and non-current assets |
( |
) | ||||||
| Accounts payable and accrued liabilities |
( |
) | ||||||
| Accrued payroll and related benefits |
( |
) | ||||||
| Accrued taxes |
( |
) | ( |
) | ||||
| Accrued reclamation and closure costs and other non-current liabilities |
||||||||
| Cash provided by operating activities |
||||||||
| Investing activities: |
||||||||
| Additions to properties, plants, equipment and mineral interests |
( |
) | ( |
) | ||||
| Proceeds from disposition of properties, plants and equipment |
||||||||
| Purchases of investments |
( |
) | ||||||
| Proceeds from sale of investments |
||||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Financing activities: |
||||||||
| Acquisition of treasury shares |
( |
) | ( |
) | ||||
| Dividends paid to common and preferred stockholders |
( |
) | ( |
) | ||||
| Credit facility fees paid |
( |
) | ( |
) | ||||
| Repayments of finance leases |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Effect of exchange rates on cash |
( |
) | ( |
) | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents |
( |
) | ||||||
| Cash, cash equivalents and restricted cash and cash equivalents at beginning of period |
||||||||
| Cash, cash equivalents and restricted cash and cash equivalents at end of period |
$ | $ | ||||||
| Supplemental disclosure of cash flow information: |
||||||||
| Cash paid for interest |
$ | $ | ||||||
| Cash paid for income and mining taxes |
$ | $ | ||||||
| Significant non-cash investing and financing activities: |
||||||||
| Addition of finance lease obligations and right-of-use assets |
$ | $ | ||||||
| Accounts receivable for proceeds on exchange of investments |
$ | $ | ||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
Hecla Mining Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares)
| June 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable: | ||||||||
| Trade | ||||||||
| Other, net | ||||||||
| Inventories: | ||||||||
| Concentrates, doré, and stockpiled ore | ||||||||
| Materials and supplies | ||||||||
| Derivatives assets | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Investments | ||||||||
| Restricted cash | ||||||||
| Properties, plants, equipment and mineral interests, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred income taxes | ||||||||
| Derivatives assets | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued payroll and related benefits | ||||||||
| Accrued taxes | ||||||||
| Finance and operating leases | ||||||||
| Accrued interest | ||||||||
| Derivatives liabilities | ||||||||
| Other current liabilities | ||||||||
| Accrued reclamation and closure costs | ||||||||
| Total current liabilities | ||||||||
| Finance and operating leases | ||||||||
| Accrued reclamation and closure costs | ||||||||
| Long-term debt | ||||||||
| Deferred tax liability | ||||||||
| Derivatives liabilities | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Notes 4, 7, 8, and 10) | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock, shares authorized: | ||||||||
| Series B preferred stock, cent par value, shares issued and outstanding, liquidation preference — $ | ||||||||
| Common stock, cent par value, authorized shares; issued June 30, 2022 — shares and December 31, 2021 — shares | ||||||||
| Capital surplus | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Less treasury stock, at cost; June 30, 2022 — shares and December 31, 2021 — shares issued and held in treasury | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
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 June 30, 2022 | ||||||||||||||||||||||||||||
| Series B Preferred Stock | Common Stock | Capital Surplus | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss), net | Treasury Stock | Total | ||||||||||||||||||||||
| Balances, April 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Restricted stock units granted | ||||||||||||||||||||||||||||
| Restricted stock units distributed ( shares) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock dividends declared ( cents per common share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Series B Preferred Stock dividends declared ( cents per share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Common stock issued for 401(k) match ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to directors ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to pension plans ( shares) | ||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||
| Balances, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||
| Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||||
| Series B Preferred Stock | Common Stock | Capital Surplus | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss), net | Treasury Stock | Total | ||||||||||||||||||||||
| Balances, April 1, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Restricted stock units granted | ||||||||||||||||||||||||||||
| Restricted stock units distributed ( shares) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock dividends declared ( cents per common share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Series B Preferred Stock dividends declared ( cents per share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Common stock issued for 401(k) match ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to pension plans ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to directors ( shares) | ||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||
| Balances, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||
| Series B Preferred Stock | Common Stock | Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss), net | Treasury Stock | Total | ||||||||||||||||||||||
| Balances, January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Restricted stock units granted | ||||||||||||||||||||||||||||
| Restricted stock units and performance stock units distributed ( shares) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock dividends declared ( cents per common share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Series B Preferred Stock dividends declared ($ per share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Common stock issued for 401(k) match ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to pension plans ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to directors ( shares) | ||||||||||||||||||||||||||||
| Other comprehensive loss | ||||||||||||||||||||||||||||
| Balances, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||
| Series B Preferred Stock | Common Stock | Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss), net | Treasury Stock | Total | ||||||||||||||||||||||
| Balances, January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Restricted stock units granted | ||||||||||||||||||||||||||||
| Restricted stock units distributed ( shares) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock dividends declared ( cents per common share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Series B Preferred Stock dividends declared ($ per share) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Common stock issued for 401(k) match ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to pension plans ( shares) | ||||||||||||||||||||||||||||
| Common stock issued to directors ( shares) | ||||||||||||||||||||||||||||
| Other comprehensive loss | ||||||||||||||||||||||||||||
| Balances, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
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 six-month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
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 $
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 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 six months ended June 30, 2022 and 2021 (in thousands):
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Net sales to unaffiliated customers: |
||||||||||||||||
| Greens Creek |
$ | $ | $ | $ | ||||||||||||
| Lucky Friday |
||||||||||||||||
| Casa Berardi |
||||||||||||||||
| Nevada Operations |
||||||||||||||||
| Other |
||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Income (loss) from operations: |
||||||||||||||||
| Greens Creek |
$ | $ | $ | $ | ||||||||||||
| Lucky Friday |
||||||||||||||||
| Casa Berardi |
( |
) | ( |
) | ( |
) | ||||||||||
| Nevada Operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| $ | $ | $ | $ | |||||||||||||
The following table presents identifiable assets by reportable segment as of June 30, 2022 and December 31, 2021 (in thousands):
| June 30, 2022 |
December 31, 2021 |
|||||||
| Identifiable assets: |
||||||||
| Greens Creek |
$ | $ | ||||||
| Lucky Friday |
||||||||
| Casa Berardi |
||||||||
| Nevada Operations |
||||||||
| Other |
||||||||
| $ | $ | |||||||
Sales by metal for the three- and six-month periods ended June 30, 2022 and 2021 were as follows (in thousands):
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Silver |
$ | $ | $ | $ | ||||||||||||
| Gold |
||||||||||||||||
| Lead |
||||||||||||||||
| Zinc |
||||||||||||||||
| Less: Smelter and refining charges |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| $ | $ | $ | $ | |||||||||||||
Sales included net gains of $
Note 3. Income and Mining Taxes
Major components of our income and mining tax benefit (provision) for the three and six months ended June 30, 2022 and 2021 are as follows (in thousands):
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Current: |
||||||||||||||||
| Domestic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Foreign |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total current income and mining tax provision |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Deferred: |
||||||||||||||||
| Domestic |
( |
) | ( |
) | ||||||||||||
| Foreign |
||||||||||||||||
| Total deferred income and mining tax benefit |
( |
) | ||||||||||||||
| Total income and mining tax benefit (provision) |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
The income and mining tax benefit (provision) for the three and six months ended June 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 six-month periods ended June 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 six-month periods ended June 30, 2021, due to reversal of 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 six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021.
Note 4. Employee Benefit Plans
We sponsor 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 six months ended June 30, 2022 and 2021 (in thousands):
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Service cost |
$ | $ | $ | $ | ||||||||||||
| Interest cost |
||||||||||||||||
| Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Amortization of prior service cost |
||||||||||||||||
| Amortization of net loss |
||||||||||||||||
| Net periodic pension cost |
$ | $ | $ | $ | ||||||||||||
For the three- and six-month periods ended June 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 expense related to all other components of net periodic pension cost of $
During May 2022, we contributed $
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, 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 June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Numerator |
||||||||||||||||
| Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Preferred stock dividends |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net (loss) income applicable to common shares |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Denominator |
||||||||||||||||
| Basic weighted average common shares |
||||||||||||||||
| Dilutive restricted stock units, warrants and deferred shares |
||||||||||||||||
| Diluted weighted average common shares |
||||||||||||||||
| Basic (loss) income per common share |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Diluted (loss) income per common share |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
For the three and six months ended June 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 three months ended June 30, 2021, the calculation of diluted income per common share included (i)
Note 6. Stockholders’ Equity
Stock-based Compensation Plans
The Company has stock incentive plans for executives, directors and eligible employees. Stock awards include performance shares, restricted stock and stock options. 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 $
The following table summarizes the grants awarded during the six months ended June 30, 2022:
| Grant date | Award type | Number granted | Grant date fair value | ||||||
| June 21, 2022 | Restricted stock | $ | |||||||
| June 21, 2022 | Performance based | $ | |||||||
| June 28, 2022 | Directors retainer | $ | |||||||
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 six months of 2022 we withheld
Common Stock Dividends
On , our Board of Directors declared a quarterly cash dividend of $
Note 7. Debt, Credit Facility and Leases
Our debt as of June 30, 2022 and December 31, 2021 consisted of our
| June 30, 2022 | ||||||||||||
| Senior Notes | IQ Notes | Total | ||||||||||
| Principal | $ | $ | $ | |||||||||
| Unamortized discount/premium and issuance costs | ( | ) | ( | ) | ||||||||
| Long-term debt balance | $ | $ | $ | |||||||||
| December 31, 2021 | ||||||||||||
| Senior Notes | IQ Notes | Total | ||||||||||
| Principal | $ | $ | $ | |||||||||
| Unamortized discount/premium and issuance costs | ( | ) | ( | ) | ||||||||
| Long-term debt balance | $ | $ | $ | |||||||||
The following table summarizes the scheduled annual future payments, including interest, for our Senior Notes, IQ Notes, and finance and operating leases as of June 30, 2022 (in thousands). The amounts for the IQ Notes are stated in U.S. dollars (“USD”) based on the USD/Canadian dollar (“CAD”) exchange rate as of June 30, 2022.
| Twelve-month | Senior Notes | IQ Notes | Finance Leases | Operating Leases | ||||||||||||
| 2023 | $ | $ | $ | $ | ||||||||||||
| 2024 | ||||||||||||||||
| 2025 | ||||||||||||||||
| 2026 | ||||||||||||||||
| 2027 | ||||||||||||||||
| Thereafter | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Credit Facility
In July 2018, we entered into a $
We are also able to obtain letters of credit under the facility, and for any such letters we are required to pay a participation fee of between
We believe we were in compliance with all covenants under the credit agreement as of June 30, 2022.
Note 8. Derivative Instruments
General
Our current risk management policy provides that up to
These instruments expose us to (i) credit risk in the form of non-performance by counterparties for contracts in which the contract price exceeds the spot price of the hedged commodity or foreign currency and (ii) price risk to the extent that the spot price exceeds the contract price for quantities of our production and/or forecasted costs covered under contract positions.
Foreign Currency
Our wholly-owned subsidiary owning the Casa Berardi operation is a USD-functional entity which routinely incurs expenses denominated in CAD. Such expenses expose us to exchange rate fluctuations between the USD and CAD. We have a program to manage our exposure to fluctuations in the exchange rate between the USD and CAD for this subsidiary's future operating costs denominated in CAD. The program utilizes forward contracts to buy CAD, and each contract is designated as a cash flow hedge. As of June 30, 2022, we have
As of June 30, 2022 and December 31, 2021, we recorded the following balances for the fair value of the contracts (in millions):
| June 30, |
December 31, |
|||||||
|
|
2022 |
2021 |
||||||
| Balance sheet line item: | ||||||||
| Current derivatives assets |
$ | $ | ||||||
| Non-current derivatives assets |
||||||||
| Current derivative liabilities |
||||||||
| Non-current derivative liabilities |
||||||||
Net unrealized gains of approximately $
Metals Prices
We are currently using financially-settled forward contracts to manage the exposure to:
| • |
changes in prices of silver, gold, zinc and lead contained in our concentrate shipments between the time of shipment and final settlement; and |
| • |
changes in prices of zinc and lead (but not silver and gold) contained in our forecasted future concentrate shipments. |
The following tables summarize the quantities of metals committed under forward sales contracts at June 30, 2022 and December 31, 2021:
| June 30, 2022 |
Ounces/pounds under contract (in 000's) |
Average price per ounce/pound |
||||||||||||||||||||||||||||||
| Silver |
Gold |
Zinc |
Lead |
Silver |
Gold |
Zinc |
Lead |
|||||||||||||||||||||||||
| (ounces) |
(ounces) |
(pounds) |
(pounds) |
(ounces) |
(ounces) |
(pounds) |
(pounds) |
|||||||||||||||||||||||||
| Contracts on provisional sales |
||||||||||||||||||||||||||||||||
| 2022 settlements |
$ | $ | $ | $ | ||||||||||||||||||||||||||||
| Contracts on forecasted sales |
||||||||||||||||||||||||||||||||
| 2022 settlements |
N/A | N/A | $ | $ | ||||||||||||||||||||||||||||
| 2023 settlements |
N/A | N/A | $ | $ | ||||||||||||||||||||||||||||
| 2024 settlements |
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