Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 20222023

or

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

Commission File Number: 1-8491

HECLA MINING COMPANY

(Exact nameName of registrantRegistrant as specifiedSpecified in its Charter)

Delaware

77-0664171

Delaware

77-0664171

(State or Other Jurisdictionother jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

Incorporation or Organization

Identification No.

6500 Mineral Drive, Suite 200

Coeur d’Alene, Idaho

Coeur d'Alene, Idaho

83815-9408

Address of Principal Executive Offices

Zip Code

208-769-4100

Registrant's Telephone Number, Including Area Code(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (208) 769-4100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.25 per share

HL

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: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 __

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 __

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 August 1, 20223, 2023

Common stock, par value

$0.25 par value per share

541,599,504

617,339,547

Table of Contents

Hecla Mining Company and Subsidiaries

Form 10-Q

For the Quarter Ended June 30, 20222023

INDEX*

Page

PART I - Financial Information 

PART I.

FINANCIAL INFORMATION

3

Item 1.

Item 1 – Condensed Consolidated Financial Statements (Unaudited)

3

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - Three Months Ended and Six Months Ended – June 30, 20222023 and 20220221

3

Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 20222023 and 20212022

4

Condensed Consolidated Balance Sheets - June 30, 20222023 and December 31, 20212022

5

Condensed Consolidated Statements of Changes in Stockholders' Equity -– Three Months Ended and Six Months Ended – June 30, 20222023 and 20212022

6

Notes to Condensed Consolidated Financial Statements (Unaudited)(unaudited)

8

Item 2.

Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations

2319

Overview

19

Consolidated Results of Operations

20

Reconciliation of Total Cost of Sales to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)

34

Financial Liquidity and Capital Resources

41

Contractual Obligations, Contingent Liabilities and Commitments

44

Critical Accounting Estimates

44

Off-Balance Sheet Arrangements

44

Guarantor Subsidiaries

45

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

6248

Item 4.

Item 4. Controls and Procedures

6349

PART II - Other InformationII.

Item 1 – Legal ProceedingsOTHER INFORMATION

6449

Item 1.

Item 1A – Risk FactorsLegal Proceedings

6449

Item 1A.

Risk Factors

49

Item 4.

Item 4 – Mine Safety Disclosures

6649

Item 5.

Item 6 – ExhibitsOther Information

6749

Item 6.

SignaturesExhibits

50

68Signatures

51

*Items 2, 3 and 5 of Part II are omitted as they are not applicable.

2

*Items 2, 3 and 5 of Part II are omitted as they are not applicable.

2
Table of Contents

Part I - Financial Information

Item 1. Financial Statements

Hecla Mining Company and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Loss) (Unaudited)

(Dollars and shares in thousands, except for per-share amounts)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Sales

 

$

178,131

 

 

$

191,242

 

 

$

377,631

 

 

$

377,741

 

Cost of sales and other direct production costs

 

 

107,754

 

 

 

115,907

 

 

 

233,304

 

 

 

221,679

 

Depreciation, depletion and amortization

 

 

32,718

 

 

 

38,072

 

 

 

71,720

 

 

 

73,370

 

Total cost of sales

 

 

140,472

 

 

 

153,979

 

 

 

305,024

 

 

 

295,049

 

Gross profit

 

 

37,659

 

 

 

37,263

 

 

 

72,607

 

 

 

82,692

 

Other operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

10,783

 

 

 

9,692

 

 

 

22,853

 

 

 

17,986

 

Exploration and pre-development

 

 

6,893

 

 

 

11,200

 

 

 

11,860

 

 

 

24,008

 

Ramp-up and suspension costs

 

 

16,323

 

 

 

5,242

 

 

 

27,659

 

 

 

11,447

 

Provision for closed operations and environmental matters

 

 

3,111

 

 

 

1,472

 

 

 

4,155

 

 

 

2,373

 

Other operating (income) expense, net

 

 

(4,262

)

 

 

1,945

 

 

 

(4,284

)

 

 

4,408

 

Total other operating expenses

 

 

32,848

 

 

 

29,551

 

 

 

62,243

 

 

 

60,222

 

Income from operations

 

 

4,811

 

 

 

7,712

 

 

 

10,364

 

 

 

22,470

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(10,311

)

 

 

(10,505

)

 

 

(20,476

)

 

 

(20,911

)

Fair value adjustments, net

 

 

(2,558

)

 

 

(16,428

)

 

 

623

 

 

 

(10,463

)

Net foreign exchange gain (loss)

 

 

(3,850

)

 

 

4,482

 

 

 

(3,742

)

 

 

2,444

 

Other income

 

 

1,376

 

 

 

1,470

 

 

 

2,768

 

 

 

2,975

 

Total other expense

 

 

(15,343

)

 

 

(20,981

)

 

 

(20,827

)

 

 

(25,955

)

Income before income and mining taxes

 

 

(10,532

)

 

 

(13,269

)

 

 

(10,463

)

 

 

(3,485

)

Income and mining tax expense

 

 

(5,162

)

 

 

(254

)

 

 

(8,404

)

 

 

(5,885

)

Net loss

 

 

(15,694

)

 

 

(13,523

)

 

 

(18,867

)

 

 

(9,370

)

Preferred stock dividends

 

 

(138

)

 

 

(138

)

 

 

(276

)

 

 

(276

)

Net loss applicable to common stockholders

 

$

(15,832

)

 

$

(13,661

)

 

$

(19,143

)

 

$

(9,646

)

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(15,694

)

 

$

(13,523

)

 

$

(18,867

)

 

$

(9,370

)

Change in fair value of derivative contracts designated as hedge transactions

 

 

5,232

 

 

 

65,348

 

 

 

11,748

 

 

 

32,183

 

Comprehensive income (loss)

 

$

(10,462

)

 

$

51,825

 

 

$

(7,119

)

 

$

22,813

 

Basic loss per common share after preferred dividends

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.02

)

Diluted loss per common share after preferred dividends

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.02

)

Weighted average number of common shares outstanding - basic

 

 

604,088

 

 

 

539,401

 

 

 

602,077

 

 

 

538,943

 

Weighted average number of common shares outstanding - diluted

 

 

604,088

 

 

 

539,401

 

 

 

602,077

 

 

 

538,943

 

Cash dividends declared per common share

 

$

0.00625

 

 

$

0.00625

 

 

$

0.0125

 

 

$

0.0125

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30, 2022

  

June 30, 2021

  

June 30, 2022

  

June 30, 2021

 

Sales

 $191,242  $217,983  $377,741  $428,835 

Cost of sales and other direct production costs

  115,907   110,320   221,679   207,029 

Depreciation, depletion and amortization

  38,072   45,732   73,370   92,474 

Total cost of sales

  153,979   156,052   295,049   299,503 

Gross profit

  37,263   61,931   82,692   129,332 

Other operating expenses:

                

General and administrative

  9,692   11,104   17,986   19,111 

Exploration and pre-development

  11,200   11,241   24,008   17,931 

Care and maintenance costs

  5,242   5,786   11,447   10,104 

Provision for closed operations and environmental matters

  1,472   1,024   2,373   4,733 

Other operating expense

  1,945   3,634   4,408   7,282 

Total other operating expenses

  29,551   32,789   60,222   59,161 

Income from operations

  7,712   29,142   22,470   70,171 

Other income (expense):

                

Interest expense

  (10,505)  (10,271)  (20,911)  (21,015)

Fair value adjustments, net

  (16,428)  (18,063)  (10,463)  (19,938)

Net foreign exchange gain (loss)

  4,482   (1,907)  2,444   (3,971)

Other income (expense)

  1,470   (287)  2,975   (439)

Total other expense

  (20,981)  (30,528)  (25,955)  (45,363)

(Loss) income before income and mining taxes

  (13,269)  (1,386)  (3,485)  24,808 

Income and mining tax (provision) benefit

  (254)  4,134   (5,885)  (609)

Net (loss) income

  (13,523)  2,748   (9,370)  24,199 

Preferred stock dividends

  (138)  (138)  (276)  (276)

(Loss) income applicable to common shareholders

 $(13,661) $2,610  $(9,646) $23,923 

Comprehensive income (loss):

                

Net (loss) income

 $(13,523) $2,748  $(9,370) $24,199 

Change in fair value of derivative contracts designated as hedge transactions

  65,348   1,620   32,183   3,452 

Comprehensive income

 $51,825  $4,368  $22,813  $27,651 

Basic (loss) income per common share after preferred dividends

 $(0.03) $0.01  $(0.02) $0.04 

Diluted (loss) income per common share after preferred dividends

 $(0.03) $0.01  $(0.02) $0.04 

Weighted average number of common shares outstanding - basic

  539,401   535,531   538,943   534,819 

Weighted average number of common shares outstanding - diluted

  539,401   542,262   538,943   541,468 

Cash dividends declared per common share

 $0.00625  $0.01  $0.01225  $0.02 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

3
Table of Contents

3

Hecla Mining Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(18,867

)

 

$

(9,370

)

Non-cash elements included in net loss:

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

74,610

 

 

 

73,656

 

Adjustments of inventory to net realizable value

 

 

7,518

 

 

 

754

 

Fair value adjustments, net

 

 

(623

)

 

 

(14,185

)

Provision for reclamation and closure costs

 

 

5,328

 

 

 

3,271

 

Stock-based compensation

 

 

2,688

 

 

 

2,525

 

Deferred income taxes

 

 

4,585

 

 

 

(1,290

)

Foreign exchange loss (gain)

 

 

3,807

 

 

 

(3,442

)

Other non-cash items, net

 

 

1,574

 

 

 

982

 

Change in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

28,564

 

 

 

19,199

 

Inventories

 

 

(18,121

)

 

 

(8,352

)

Other current and non-current assets

 

 

(15,063

)

 

 

(894

)

Accounts payable, accrued and other current liabilities

 

 

143

 

 

 

17,119

 

Accrued payroll and related benefits

 

 

(9,543

)

 

 

278

 

Accrued taxes

 

 

(85

)

 

 

(5,683

)

Accrued reclamation and closure costs and other non-current liabilities

 

 

(2,135

)

 

 

3,524

 

Cash provided by operating activities

 

 

64,380

 

 

 

78,092

 

Investing activities:

 

 

 

 

 

 

Additions to properties, plants, equipment and mineral interests

 

 

(105,911

)

 

 

(55,807

)

Proceeds from sale of investments

 

 

—

 

 

 

2,487

 

Proceeds from disposition of properties, plants and equipment

 

 

80

 

 

 

730

 

Purchases of investments

 

 

—

 

 

 

(21,899

)

Net cash used in investing activities

 

 

(105,831

)

 

 

(74,489

)

Financing activities:

 

 

 

 

 

 

Proceeds from sale of common stock, net

 

 

25,888

 

 

 

—

 

Acquisition of treasury stock

 

 

(2,036

)

 

 

(3,677

)

Borrowing of debt

 

 

56,000

 

 

 

—

 

Repayment of debt

 

 

(25,000

)

 

 

—

 

Dividends paid to common and preferred stockholders

 

 

(7,808

)

 

 

(7,027

)

Credit facility fees paid

 

 

—

 

 

 

(74

)

Repayments of finance leases

 

 

(4,765

)

 

 

(3,333

)

Net cash provided by (used in) financing activities

 

 

42,279

 

 

 

(14,111

)

Effect of exchange rates on cash

 

 

1,217

 

 

 

(1,321

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

2,045

 

 

 

(11,829

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

105,907

 

 

 

211,063

 

Cash, cash equivalents and restricted cash at end of period

 

$

107,952

 

 

$

199,234

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

18,812

 

 

$

18,749

 

Cash paid for income and mining taxes, net

 

$

6,152

 

 

$

11,888

 

Significant non-cash investing and financing activities:

 

 

 

 

 

 

Addition of finance lease obligations and right-of-use assets

 

$

16,092

 

 

$

5,051

 

  

Six Months Ended

 
  

June 30, 2022

  

June 30, 2021

 

Operating activities:

        

Net (loss) income

 $(9,370) $24,199 

Non-cash elements included in net (loss) income:

        

Depreciation, depletion and amortization

  73,656   92,861 

Write-down of inventory

  754   6,431 

Fair value adjustments, net

  (14,185)  5,214 

Provision for reclamation and closure costs

  3,271   6,183 

Stock compensation

  2,525   3,302 

Deferred income taxes

  (1,290)  (7,745)

Foreign exchange loss

  (3,442)  4,455 

Other non-cash items, net

  982   1,071 

Change in assets and liabilities:

        

Accounts receivable

  19,199   (9,432)

Inventories

  (8,352)  5,719 

Other current and non-current assets

  (894)  4,125 

Accounts payable and accrued liabilities

  17,119   (6,489)

Accrued payroll and related benefits

  278   (5,351)

Accrued taxes

  (5,683)  (999)

Accrued reclamation and closure costs and other non-current liabilities

  3,524   696 

Cash provided by operating activities

  78,092   124,240 

Investing activities:

        

Additions to properties, plants, equipment and mineral interests

  (55,807)  (53,311)

Proceeds from disposition of properties, plants and equipment

  730   131 

Purchases of investments

  (21,899)  0 

Proceeds from sale of investments

  2,487   0 

Net cash used in investing activities

  (74,489)  (53,180)

Financing activities:

        

Acquisition of treasury shares

  (3,677)  (4,525)

Dividends paid to common and preferred stockholders

  (7,027)  (10,991)

Credit facility fees paid

  (74)  (82)

Repayments of finance leases

  (3,333)  (3,770)

Net cash used in financing activities

  (14,111)  (19,368)

Effect of exchange rates on cash

  (1,321)  (28)

Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents

  (11,829)  51,664 

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period

  211,063   130,883 

Cash, cash equivalents and restricted cash and cash equivalents at end of period

 $199,234  $182,547 

Supplemental disclosure of cash flow information:

        

Cash paid for interest

 $18,749  $18,499 

Cash paid for income and mining taxes

 $11,888  $9,469 

Significant non-cash investing and financing activities:

        

Addition of finance lease obligations and right-of-use assets

 $5,051  $3,120 

Accounts receivable for proceeds on exchange of investments

 $0  $1,832 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

4

4
Table of Contents

Hecla Mining Company and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except shares)

 

 

June 30, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

106,786

 

 

$

104,743

 

Accounts receivable:

 

 

 

 

 

 

Trade

 

 

15,595

 

 

 

45,146

 

Other, net

 

 

15,121

 

 

 

10,695

 

Inventories:

 

 

 

 

 

 

Concentrates, doré, stockpiled ore, and metals in transit and in-process

 

 

34,624

 

 

 

37,303

 

Materials and supplies

 

 

59,989

 

 

 

53,369

 

Other current assets

 

 

27,040

 

 

 

16,471

 

Total current assets

 

 

259,155

 

 

 

267,727

 

Investments

 

 

20,778

 

 

 

24,018

 

Restricted cash

 

 

1,166

 

 

 

1,164

 

Properties, plants, equipment and mineral interests, net

 

 

2,615,747

 

 

 

2,569,790

 

Operating lease right-of-use assets

 

 

9,901

 

 

 

11,064

 

Deferred tax assets

 

 

2,703

 

 

 

21,105

 

Other non-current assets

 

 

36,009

 

 

 

32,304

 

Total assets

 

$

2,945,459

 

 

$

2,927,172

 

LIABILITIES

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

81,653

 

 

$

84,747

 

Accrued payroll and related benefits

 

 

25,993

 

 

 

37,579

 

Accrued taxes

 

 

4,036

 

 

 

4,030

 

Finance leases

 

 

11,213

 

 

 

9,483

 

Accrued reclamation and closure costs

 

 

9,693

 

 

 

8,591

 

Accrued interest

 

 

14,404

 

 

 

14,454

 

Other current liabilities

 

 

4,348

 

 

 

19,582

 

Total current liabilities

 

 

151,340

 

 

 

178,466

 

Accrued reclamation and closure costs

 

 

110,236

 

 

 

108,408

 

Long-term debt including finance leases

 

 

559,817

 

 

 

517,742

 

Deferred tax liability

 

 

118,611

 

 

 

125,846

 

Other non-current liabilities

 

 

12,619

 

 

 

17,743

 

Total liabilities

 

 

952,623

 

 

 

948,205

 

Commitments and contingencies (Notes 4, 7, 8, and 10)

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, 5,000,000 shares authorized:

 

 

 

 

 

 

Series B preferred stock, $0.25 par value, 157,776 shares issued and outstanding, liquidation preference — $7,889

 

 

39

 

 

 

39

 

Common stock, $0.25 par value, authorized 750,000,000 shares; issued June 30, 2023 — 613,682,159 shares and December 31, 2022 — 607,619,495 shares

 

 

153,334

 

 

 

151,819

 

Capital surplus

 

 

2,289,607

 

 

 

2,260,290

 

Accumulated deficit

 

 

(430,606

)

 

 

(403,931

)

Accumulated other comprehensive income, net

 

 

14,196

 

 

 

2,448

 

Less treasury stock, at cost; June 30, 2023 — 8,537,067 and December 31, 2022 — 8,132,553 shares issued and held in treasury

 

 

(33,734

)

 

 

(31,698

)

Total stockholders’ equity

 

 

1,992,836

 

 

 

1,978,967

 

Total liabilities and stockholders’ equity

 

$

2,945,459

 

 

$

2,927,172

 

  

June 30, 2022

  

December 31, 2021

 

ASSETS

 

Current assets:

        

Cash and cash equivalents

 $198,193  $210,010 

Accounts receivable:

        

Trade

  17,828   36,437 

Other, net

  7,696   8,149 

Inventories:

        

Concentrates, doré, and stockpiled ore

  30,167   25,906 

Materials and supplies

  45,200   41,859 

Derivatives assets

  9,923   2,709 

Other current assets

  13,389   16,557 

Total current assets

  322,396   341,627 

Investments

  23,931   10,844 

Restricted cash

  1,041   1,053 

Properties, plants, equipment and mineral interests, net

  2,295,962   2,310,810 

Operating lease right-of-use assets

  11,649   12,435 

Deferred income taxes

  45,562   45,562 

Derivatives assets

  12,897   2,503 

Other non-current assets

  3,665   3,974 

Total assets

 $2,717,103  $2,728,808 

LIABILITIES

 

Current liabilities:

        

Accounts payable and accrued liabilities

 $84,997  $68,100 

Accrued payroll and related benefits

  26,945   28,714 

Accrued taxes

  8,341   12,306 

Finance and operating leases

  8,580   8,098 

Accrued interest

  14,435   14,454 

Derivatives liabilities

  4,228   19,353 

Other current liabilities

  109   99 

Accrued reclamation and closure costs

  10,594   9,259 

Total current liabilities

  158,229   160,383 

Finance and operating leases

  18,154   17,726 

Accrued reclamation and closure costs

  103,747   103,972 

Long-term debt

  507,841   508,095 

Deferred tax liability

  143,213   149,706 

Derivatives liabilities

  522   18,528 

Other non-current liabilities

  2,515   9,611 

Total liabilities

  934,221   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, 157,816 shares issued and outstanding, liquidation preference — $7,891

  39   39 

Common stock, 25 cent par value, 750,000,000 authorized shares; issued June 30, 2022 — 548,037,253 shares and December 31, 2021 — 545,534,760 shares

  137,241   136,391 

Capital surplus

  2,043,621   2,034,485 

Accumulated deficit

  (370,048)  (353,651)

Accumulated other comprehensive income (loss)

  3,727   (28,456)

Less treasury stock, at cost; June 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

  1,782,882   1,760,787 

Total liabilities and stockholders’ equity

 $2,717,103  $2,728,808 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

5

5
Table of Contents

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, 2023

 

 

Series B
Preferred
Stock

 

Common
Stock

 

Capital Surplus

 

Accumulated
Deficit

 

Accumulated
Other
Comprehensive Income (Loss), net

 

Treasury
Stock

 

Total

Balances, April 1, 2023

 

$39

 

$152,536

 

$2,273,793

 

$(410,995)

 

$8,964

 

$(32,180)

 

$1,992,157

Net loss

 

—

 

—

 

—

 

(15,694)

 

—

 

—

 

(15,694)

Stock-based compensation expense

 

—

 

—

 

1,498

 

—

 

—

 

—

 

1,498

Incentive compensation units distributed (936,845 shares)

 

—

 

234

 

(234)

 

—

 

—

 

(1,554)

 

(1,554)

Common stock ($0.00625 per share) and Series B Preferred Stock ($0.875 per share) dividends declared

 

—

 

—

 

—

 

(3,917)

 

—

 

—

 

(3,917)

Common stock issued under ATM program (2,080,060 shares)

 

—

 

521

 

13,482

 

—

 

—

 

—

 

14,003

Common stock issued for 401(k) match (174,514 shares)

 

—

 

43

 

1,068

 

—

 

—

 

—

 

1,111

Other comprehensive income

 

—

 

—

 

—

 

—

 

5,232

 

—

 

5,232

Balances, June 30, 2023

 

$39

 

$153,334

 

$2,289,607

 

$(430,606)

 

$14,196

 

$(33,734)

 

$1,992,836

 

 

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

 

$39

 

$136,657

 

$2,036,417

 

$(353,007)

 

$(61,621)

 

$(29,942)

 

$1,728,543

Net loss

 

—

 

—

 

—

 

(13,523)

 

—

 

—

 

(13,523)

Stock-based compensation expense

 

—

 

—

 

837

 

—

 

—

 

—

 

837

Incentive compensation units distributed (901,215 shares)

 

—

 

225

 

(225)

 

—

 

—

 

(1,756)

 

(1,756)

Common stock ($0.00625 per share) and Series B Preferred Stock ($0.875 per share) dividends declared

 

—

 

—

 

—

 

(3,518)

 

—

 

—

 

(3,518)

Common stock issued for 401(k) match (143,200 shares)

 

—

 

36

 

928

 

—

 

—

 

—

 

964

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

Other comprehensive income

 

—

 

—

 

—

 

—

 

65,348

 

—

 

65,348

Balances, June 30, 2022

 

$39

 

$137,241

 

$2,043,621

 

$(370,048)

 

$3,727

 

$(31,698)

 

$1,782,882

 

 

Six Months Ended June 30, 2023

 

 

 

Series B
Preferred
Stock

 

 

Common
Stock

 

 

Capital Surplus

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive Income (Loss), net

 

 

Treasury
Stock

 

 

Total

 

Balances, January 1, 2023

 

$

39

 

 

$

151,819

 

 

$

2,260,290

 

 

$

(403,931

)

 

$

2,448

 

 

$

(31,698

)

 

$

1,978,967

 

Net loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(18,867

)

 

 

—

 

 

 

—

 

 

 

(18,867

)

Stock-based compensation expense

 

 

—

 

 

 

—

 

 

 

2,688

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,688

 

Incentive compensation units distributed (1,435,193 shares)

 

 

—

 

 

 

359

 

 

 

(359

)

 

 

—

 

 

 

—

 

 

 

(2,036

)

 

 

(2,036

)

Common stock ($0.0125 per share) and Series B Preferred Stock ($1.75 per share) dividends declared

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,808

)

 

 

—

 

 

 

—

 

 

 

(7,808

)

Common stock issued under ATM program (4,253,334 shares)

 

 

—

 

 

 

1,063

 

 

 

24,825

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25,888

 

Common stock issued for 401(k) match (374,137 shares)

 

 

—

 

 

 

93

 

 

 

2,163

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,256

 

Other comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,748

 

 

 

—

 

 

 

11,748

 

Balances, June 30, 2023

 

$

39

 

 

$

153,334

 

 

$

2,289,607

 

 

$

(430,606

)

 

$

14,196

 

 

$

(33,734

)

 

$

1,992,836

 

6

  

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

 $39  $136,657  $2,036,417  $(353,007) $(61,621) $(29,942) $1,728,543 

Net loss

  0   0   0   (13,523)  0   0   (13,523)

Restricted stock units granted

  0   0   837   0   0   0   837 

Restricted stock units distributed (901,215 shares)

  0   225   (225)  0   0   (1,756)  (1,756)

Common stock dividends declared (0.0625 cents per common share)

  0   0   0   (3,380)  0   0   (3,380)

Series B Preferred Stock dividends declared (87.5 cents per share)

  0   0   0   (138)  0   0   (138)

Common stock issued for 401(k) match (143,200 shares)

  0   36   928   0   0   0   964 

Common stock issued to directors (98,310 shares)

  0   25   392   0   0   0   417 

Common stock issued to pension plans (1,190,000 shares)

  0   298   5,272   0   0   0   5,570 

Other comprehensive income

  0   0   0   0   65,348   0   65,348 

Balances, June 30, 2022

 $39  $137,241  $2,043,621  $(370,048) $3,727  $(31,698) $1,782,882 

  

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

 $39  $135,546  $2,021,072  $(351,449) $(31,057) $(23,496) $1,750,655 

Net income

  0   0   0   2,748   0   0   2,748 

Restricted stock units granted

  0   0   959   0   0   0   959 

Restricted stock units distributed (1,653,000 shares)

  0   413   (413)  0   0   (4,525)  (4,525)

Common stock dividends declared (1.125 cents per common share)

  0   0   0   (6,027)  0   0   (6,027)

Series B Preferred Stock dividends declared (87.5 cents per share)

  0   0   0   (138)  0   0   (138)

Common stock issued for 401(k) match (217,000 shares)

  0   54   1,235   0   0   0   1,289 

Common stock issued to pension plans (3,500,000 shares)

  0   0   0   0   0   0   0 

Common stock issued to directors (207,000 shares)

  0   52   1,792   0   0   0   1,844 

Other comprehensive income

  0   0   0   0   1,620   0   1,620 

Balances, June 30, 2021

 $39  $136,065  $2,024,645  $(354,866) $(29,437) $(28,021) $1,748,425 

 

 

Six 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, January 1, 2022

 

$

39

 

 

$

136,391

 

 

$

2,034,485

 

 

$

(353,651

)

 

$

(28,456

)

 

$

(28,021

)

 

$

1,760,787

 

Net loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(9,370

)

 

 

—

 

 

 

—

 

 

 

(9,370

)

Stock-based compensation expense

 

 

—

 

 

 

—

 

 

 

2,108

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,108

 

Incentive compensation units distributed (1,789,042 shares)

 

 

—

 

 

 

447

 

 

 

(447

)

 

 

—

 

 

 

—

 

 

 

(3,677

)

 

 

(3,677

)

Common stock ($0.0125 per share) and Series B Preferred Stock ($1.75 per share) dividends declared

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,027

)

 

 

—

 

 

 

—

 

 

 

(7,027

)

Common stock issued for 401(k) match (321,110 shares)

 

 

—

 

 

 

80

 

 

 

1,811

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,891

 

Common stock issued to pension plans (1,190,000 shares)

 

 

—

 

 

 

298

 

 

 

5,272

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,570

 

Common stock issued to directors (98,310 shares)

 

 

—

 

 

 

25

 

 

 

392

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

417

 

Other comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

32,183

 

 

 

—

 

 

 

32,183

 

Balances, June 30, 2022

 

$

39

 

 

$

137,241

 

 

$

2,043,621

 

 

$

(370,048

)

 

$

3,727

 

 

$

(31,698

)

 

$

1,782,882

 

6
Table of Contents

  

Six 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, January 1, 2022

 $39  $136,391  $2,034,485  $(353,651) $(28,456) $(28,021) $1,760,787 

Net loss

  0   0   0   (9,370)  0   0   (9,370)

Restricted stock units granted

  0   0   2,108   0   0   0   2,108 

Restricted stock units and performance stock units distributed (1,789,042 shares)

  0   447   (447)  0   0   (3,677)  (3,677)

Common stock dividends declared (1.25 cents per common share)

  0   0   0   (6,751)  0   0   (6,751)

Series B Preferred Stock dividends declared ($1.75 per share)

  0   0   0   (276)  0   0   (276)

Common stock issued for 401(k) match (321,110 shares)

  0   80   1,811   0   0   0   1,891 

Common stock issued to pension plans (1,190,000 shares)

  0   298   5,272   0   0   0   5,570 

Common stock issued to directors (98,310 shares)

  0   25   392   0   0   0   417 

Other comprehensive loss

  0   0   0   0   32,183   0   32,183 

Balances, June 30, 2022

 $39  $137,241  $2,043,621  $(370,048) $3,727  $(31,698) $1,782,882 

  

Six 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, January 1, 2021

 $39  $134,629  $2,003,576  $(368,074) $(32,889) $(23,496) $1,713,785 

Net income

  0   0   0   24,199   0   0   24,199 

Restricted stock units granted

  0   0   1,459   0   0   0   1,459 

Restricted stock units distributed (1,653,000 shares)

  0   413   (413)  0   0   (4,525)  (4,525)

Common stock dividends declared (2 cents per common share)

  0   0   0   (10,715)  0   0   (10,715)

Series B Preferred Stock dividends declared ($1.75 per share)

  0   0   0   (276)  0   0   (276)

Common stock issued for 401(k) match (382,000 shares)

  0   96   2,306   0   0   0   2,402 

Common stock issued to pension plans (3,500,000 shares)

  0   875   15,925   0   0   0   16,800 

Common stock issued to directors (207,000 shares)

  0   52   1,792   0   0   0   1,844 

Other comprehensive loss

  0   0   0   0   3,452   0   3,452 

Balances, June 30, 2021

 $39  $136,065  $2,024,645  $(354,866) $(29,437) $(28,021) $1,748,425 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

7

7
Table of Contents

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-Q10-Q and do not include all information and disclosures required annually by accounting principles generally accepted accounting principles in the United States of America (“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-K10-K for the year ended December 31,2021 (“2021 2022 (“2022 Form 10-K”10-K”). The consolidated December 31,2021 2022 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-three- and six-monthsix-month periods ended June 30,2022 2023 are not necessarily indicative of the results that may be expected for the year ending December 31,2022. 2023.

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 $0.1 million and $0.4 million in COVID-19 mitigation costs during the three and six months ended June 30, 2022 compared to $1.4 million and $3.0 million during the three and six months ended June 30, 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.

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 fourfive segments: Greens Creek, Lucky Friday, Keno Hill, Casa Berardi and Nevada Operations.

General corporate activities not associated with operating mines and their various exploration activities, as well as discontinued operationsidle properties and idle properties,environmental remediation services in the Yukon, Canada, are presented as “other.” Interest expense, interestThe nature of the items that reconcile income and(loss) from operations to income before income and mining taxes are considered general corporate items, and are not allocated related to our reportable segments.

8
Table of Contents

The following tables present information about our reportable segments sales for the three and six months ended June 30,2022 2023 and 20212022 (in thousands):

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net sales to unaffiliated customers:

 

 

 

 

 

 

 

 

 

 

 

 

Greens Creek

 

$

95,891

 

 

$

92,723

 

 

$

194,502

 

 

$

178,813

 

Lucky Friday

 

 

42,648

 

 

 

35,880

 

 

 

91,758

 

 

 

73,920

 

Keno Hill

 

 

1,581

 

 

 

—

 

 

 

1,581

 

 

 

—

 

Casa Berardi

 

 

36,946

 

 

 

62,639

 

 

 

87,944

 

 

 

124,740

 

Nevada Operations

 

 

687

 

 

 

—

 

 

 

959

 

 

 

268

 

Other

 

 

378

 

 

 

—

 

 

 

887

 

 

 

—

 

 

 

$

178,131

 

 

$

191,242

 

 

$

377,631

 

 

$

377,741

 

Income (loss) from operations:

 

 

 

 

 

 

 

 

 

 

 

 

Greens Creek

 

$

30,414

 

 

$

27,803

 

 

$

61,655

 

 

$

62,389

 

Lucky Friday

 

 

10,526

 

 

 

5,528

 

 

 

25,096

 

 

 

14,299

 

Keno Hill

 

 

(9,920

)

 

 

—

 

 

 

(16,683

)

 

 

—

 

Casa Berardi

 

 

(9,366

)

 

 

(572

)

 

 

(23,059

)

 

 

(3,271

)

Nevada Operations

 

 

(5,510

)

 

 

(9,728

)

 

 

(10,920

)

 

 

(21,963

)

Other

 

 

(11,333

)

 

 

(15,319

)

 

 

(25,725

)

 

 

(28,984

)

 

 

$

4,811

 

 

$

7,712

 

 

$

10,364

 

 

$

22,470

 

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Net sales to unaffiliated customers:

                

Greens Creek

 $92,723  $113,763  $178,813  $212,172 

Lucky Friday

  35,880   39,645   73,920   68,767 

Casa Berardi

  62,639   56,122   124,740   129,033 

Nevada Operations

  0   8,450   268   18,687 

Other

  0   3   0   176 
  $191,242  $217,983  $377,741  $428,835 

Income (loss) from operations:

                

Greens Creek

 $27,803  $56,433  $62,389  $101,033 

Lucky Friday

  5,528   11,737   14,299   18,060 

Casa Berardi

  (572)  (529)  (3,271)  11,177 

Nevada Operations

  (9,728)  (20,341)  (21,963)  (23,481)

Other

  (15,319)  (18,158)  (28,984)  (36,618)
  $7,712  $29,142  $22,470  $70,171 

The following table presents identifiabletotal assets by reportable segment as of June 30,2022 2023 and December 31,2021 2022 (in thousands):

 

 

June 30, 2023

 

 

December 31, 2022

 

Total assets:

 

 

 

 

 

 

Greens Creek

 

$

569,367

 

 

$

582,687

 

Lucky Friday

 

 

561,012

 

 

 

571,510

 

Keno Hill

 

 

326,796

 

 

 

276,096

 

Casa Berardi

 

 

710,027

 

 

 

681,631

 

Nevada Operations

 

 

463,520

 

 

 

466,722

 

Other

 

 

314,737

 

 

 

348,526

 

 

 

$

2,945,459

 

 

$

2,927,172

 

  

June 30, 2022

  

December 31, 2021

 

Identifiable assets:

        

Greens Creek

 $580,692  $589,944 

Lucky Friday

  524,734   516,545 

Casa Berardi

  699,134   701,868 

Nevada Operations

  468,901   468,985 

Other

  443,642   451,466 
  $2,717,103  $2,728,808 

8

Our sales for the three and six months ended June 30, 2023 are comprised of metal sales as described below, and $0.4 million and $0.9 million, respectively, of revenue from our environmental remediation services in the Yukon.

Sales by metal for the three- and six-month periods months ended June 30,2022 2023 and 20212022 were as follows (in thousands):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Silver

 

$

79,489

 

 

$

70,050

 

 

$

161,022

 

 

$

136,382

 

Gold

 

 

62,924

 

 

 

82,018

 

 

 

138,010

 

 

 

159,186

 

Lead

 

 

21,657

 

 

 

21,314

 

 

 

47,059

 

 

 

40,878

 

Zinc

 

 

25,903

 

 

 

31,176

 

 

 

58,846

 

 

 

66,814

 

Less: Smelter and refining charges

 

 

(12,220

)

 

 

(13,316

)

 

 

(28,193

)

 

 

(25,519

)

 

 

$

177,753

 

 

$

191,242

 

 

$

376,744

 

 

$

377,741

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2022

  

2021

  

2022

  

2021

 
                 

Silver

 $70,050  $92,765  $136,382  $170,525 

Gold

  82,018   86,078   159,186   187,487 

Lead

  21,314   22,223   40,878   38,116 

Zinc

  31,176   30,037   66,814   59,228 

Less: Smelter and refining charges

  (13,316)  (13,120)  (25,519)  (26,521)
  $191,242  $217,983  $377,741  $428,835 

Sales of metals for the three and six months ended June 30, 2023 included net gains of $11.3$8.2 million and $6.6$9.1 million, for the second quarter and first half of 2022, respectively, on financially-settled forward option contracts for silver, gold, lead and zinc contained in our sales.zinc. Sales of metals for the three and six months ended June 30, 2022 included net lossesgains of $3.3$11.3 million and $0.5$6.6 million, for the second quarter and first half of 2021, respectively, on such contracts. See Note 8 for more information.

9
Table of Contents

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 2023 and 20212022 are as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

$

(270

)

 

$

(446

)

 

$

(1,798

)

 

$

(2,549

)

Foreign

 

 

(847

)

 

 

(1,346

)

 

 

(2,021

)

 

 

(3,087

)

Total current income and mining tax provision

 

 

(1,117

)

 

 

(1,792

)

 

 

(3,819

)

 

 

(5,636

)

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

 

(8,582

)

 

 

(2,150

)

 

 

(13,923

)

 

 

(7,241

)

Foreign

 

 

4,537

 

 

 

3,688

 

 

 

9,338

 

 

 

6,992

 

Total deferred income and mining tax provision

 

 

(4,045

)

 

 

1,538

 

 

 

(4,585

)

 

 

(249

)

Total income and mining tax provision

 

$

(5,162

)

 

$

(254

)

 

$

(8,404

)

 

$

(5,885

)

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Current:

                

Domestic

 $(446) $(3,036) $(2,549) $(5,313)

Foreign

  (1,346)  (826)  (3,087)  (3,112)

Total current income and mining tax provision

  (1,792)  (3,862)  (5,636)  (8,425)
                 

Deferred:

                

Domestic

  (2,150)  4,117   (7,241)  4,436 

Foreign

  3,688   3,879   6,992   3,380 

Total deferred income and mining tax benefit

  1,538   7,996   (249)  7,816 

Total income and mining tax benefit (provision)

 $(254) $4,134  $(5,885) $(609)

The income and mining tax benefit (provision) for the three and six months ended June 30,2022 2023 and 20212022 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 months ended June 30, 2022, 2023, 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.provision. 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 causingincluding losses incurred by 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.acquired Alexco Resource Corp. ("Alexco") entities, which were acquired on September 7, 2022.

Note 4.Employee Benefit Plans

We sponsor three defined benefit pension plans, coveringtwo of which cover 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 2023 and 20212022 (in thousands):

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Service cost

 

$

949

 

 

$

1,566

 

 

$

1,898

 

 

$

3,131

 

Interest cost

 

 

1,993

 

 

 

1,369

 

 

 

3,986

 

 

 

2,738

 

Expected return on plan assets

 

 

(3,107

)

 

 

(3,363

)

 

 

(6,214

)

 

 

(6,726

)

Amortization of prior service cost

 

 

125

 

 

 

128

 

 

 

250

 

 

 

256

 

Amortization of net loss

 

 

(47

)

 

 

512

 

 

 

(94

)

 

 

1,024

 

Net periodic pension (benefit) cost

 

$

(87

)

 

$

212

 

 

$

(174

)

 

$

423

 

9

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Service cost

 $1,566  $1,455  $3,131  $2,910 

Interest cost

  1,369   1,248   2,738   2,496 

Expected return on plan assets

  (3,363)  (2,313)  (6,726)  (4,626)

Amortization of prior service cost

  128   99   256   198 

Amortization of net loss

  512   1,125   1,024   2,250 

Net periodic pension cost

 $212  $1,614  $423  $3,228 

For the three- and six-month periods months ended June 30,2022 2023 and 2021,2022, 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 expensebenefit related to all other components of net periodic pension cost of $1.4$1.0 million and $2.7 million, respectively, for the three- and six-month periods ended June 30,2022, and $0.2 million and $0.3$2.1 million for the three- and six-month periods months ended June 30,2021, 2023, respectively, and $1.4 million and $2.7 million for the three and six months ended June 30, 2022, respectively, is included in other (expense) income on our condensed consolidated statements of operations and comprehensive income (loss). income.

10
Table of Contents

During May 2022, we contributed $5.6 million in shares of our common stock to two of our defined benefit plans. In January 2021, we contributed $16.8 million in shares of our common stock to our supplemental executive retirement plan. 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 Loss Per Common Share

We calculate basic (loss) incomeloss 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) incomeloss per common share – basic and diluted (in thousands, except income (loss) per share):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(15,694

)

 

$

(13,523

)

 

$

(18,867

)

 

$

(9,370

)

Preferred stock dividends

 

 

(138

)

 

 

(138

)

 

 

(276

)

 

 

(276

)

Net loss applicable to common stockholders

 

$

(15,832

)

 

$

(13,661

)

 

$

(19,143

)

 

$

(9,646

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares

 

 

604,088

 

 

 

539,401

 

 

 

602,077

 

 

 

538,943

 

Dilutive restricted stock units, warrants and deferred shares

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Diluted weighted average common shares

 

 

604,088

 

 

 

539,401

 

 

 

602,077

 

 

 

538,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per common share

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.02

)

Diluted loss per common share

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.02

)

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Numerator

                

Net (loss) income

 $(13,523) $2,748  $(9,370) $24,199 

Preferred stock dividends

  (138)  (138)  (276)  (276)

Net (loss) income applicable to common shares

 $(13,661) $2,610  $(9,646) $23,923 
                 

Denominator

                

Basic weighted average common shares

  539,401   535,531   538,943   534,819 

Dilutive restricted stock units, warrants and deferred shares

  0   6,731   0   6,649 

Diluted weighted average common shares

  539,401   542,262   538,943   541,468 
                 

Basic (loss) income per common share

 $(0.03) $0.01  $(0.02) $0.04 

Diluted (loss) income per common share

 $(0.03) $0.01  $(0.02) $0.04 

For the three and six months ended June 30, 2023 and 2022, all outstanding unvested restricted stock units, deferred restricted stock units, warrants and deferred sharesconvertible preferred stock were excluded from the computation of diluted loss per share, as our reported net losses for those periodsloss would cause their conversion and exercise to have noan anti-dilutive effect on the calculation of diluted loss per share. For

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 our 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 June 30, 2023 we had sold 8,113,533 shares under the agreement for proceeds of $43.2 million, net of commissions and fees of $0.7million. During the three months ended June 30, 2021, 2023, we sold 2,080,060 shares under the calculationagreement for proceeds of diluted income per common share included (i) 2,960,950 restricted stock units, (ii) 1,635,675 warrants to purchase one share$14.0 million, net of common stockcommissions and (iii) 2,134,009 deferred sharesfees of common stock that were dilutive. For$0.2 million. During the six months ended June 30, 2021, 2023, we sold 4,253,334 shares under the calculationagreement for proceeds of diluted income per common share included (i) 2,923,515 restricted stock units, (ii) 1,591,935 warrants to purchase one share$25.9 million, net of common stockcommissions and (iii) 2,134,009 deferred shares that were dilutive.fees of $0.4 million.

11
Table of Contents

Note 6.Stockholders’ Equity

Stock-based Compensation Plans

The Company has stock incentive plans for executives, directors and eligible employees. Stock awards includeemployees, comprised of performance shares and restricted stock and stock options.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 $1.3$1.5 million and $2.5$2.7 million for the three and six months ended June 30,2022, 2023, respectively, and $2.8$1.3 million and $3.3$2.5 million for the three and six months ended June 30,2021, respectively. At June 30, 2022, respectively. At June 30, 2023, there was $9.1$9.5 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 2.4 1.7 years.

10

The following table summarizes the grants awarded during the six months ended June 30, 2022:2023:

Grant date

 

Award type

 

Number granted

 

Grant date fair value per share

June 21, 2023

 

Restricted stock

 

1,230,223

 

$5.05

June 21, 2023

 

Performance based

 

314,778

 

$3.54

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 

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 firstsix months of 2022ended June 30, 2023, we withheld 737,258404,514 shares valued at approximately $3.7 $2.0million, or approximately $4.99$5.03 per share. In the firstsix months of 2021 we withheld 574,251 shares valued at approximately $4.5 million, or approximately $7.88 per share.

Common Stock Dividends

On May 5, 2022, The following table summarizes the dividends our Board of Directors have declared aand we have paid during 2023 pursuant to our dividend policy:

Quarter

 

Prior Quarter Realized Silver Price

 

Silver-linked component

 

Minimum component

 

Total dividend per share

First

 

22.03

 

$0.0025

 

$0.00375

 

$0.00625

Second

 

22.62

 

$0.0025

 

$0.00375

 

$0.00625

Accumulated Other Comprehensive Income (Loss), Net

The following table lists the beginning balance, quarterly cash dividendactivity and ending balances, net of $0.00625 per shareincome and mining tax, of common stock, consisting of $0.00375 per share for the minimum dividendeach component of our common stock dividend policy and $0.0025 per share for the silver-linked dividend component of the policy, for a total dividend of $3.4 million paid in June 2022. The realized silver price of $24.68 in the first quarter of 2022 satisfied the criterion for the silver-linked dividend component of our common stock dividend policy.“Accumulated other comprehensive income (loss), net” (in thousands):

 

Changes in fair value of derivative contracts designated as hedge transactions

 

 

Adjustments
For Pension Plans

 

 

Total
Accumulated
Other
Comprehensive
Income (Loss), Net

 

Balance January 1, 2023

 

$

9,162

 

 

$

(6,714

)

 

 

2,448

 

Changes in fair value of derivative contracts

 

 

8,665

 

 

 

—

 

 

 

8,665

 

Gains and deferred gains transferred from accumulated other comprehensive income

 

 

(2,149

)

 

 

—

 

 

 

(2,149

)

Balance March 31, 2023

 

 

15,678

 

 

 

(6,714

)

 

 

8,964

 

Changes in fair value of derivative contracts

 

 

7,445

 

 

 

—

 

 

 

7,445

 

Gains and deferred gains transferred from accumulated other comprehensive income

 

 

(2,213

)

 

 

—

 

 

 

(2,213

)

Balance June 30, 2023

 

$

20,910

 

 

$

(6,714

)

 

$

14,196

 

 

Changes in fair value of derivative contracts designated as hedge transactions

 

 

Adjustments
For Pension Plans

 

 

Total
Accumulated
Other
Comprehensive
Income (Loss), Net

 

Balance January 1, 2022

 

$

(4,675

)

 

$

(23,781

)

 

 

(28,456

)

Changes in fair value of derivative contracts

 

 

(31,798

)

 

 

—

 

 

 

(31,798

)

Gains transferred from accumulated other comprehensive income

 

 

(1,367

)

 

 

—

 

 

 

(1,367

)

Balance March 31, 2022

 

 

(37,840

)

 

 

(23,781

)

 

 

(61,621

)

Changes in fair value of derivative contracts

 

 

61,939

 

 

 

—

 

 

 

61,939

 

Gains transferred from accumulated other comprehensive income

 

 

3,409

 

 

 

—

 

 

 

3,409

 

Balance June 30, 2022

 

$

27,508

 

 

$

(23,781

)

 

$

3,727

 

Note 7.Debt, Credit FacilityAgreement and Leases

Our debt as of June 30,2022 2023 and December 31,2021 2022 consisted of our 7.25%7.25% Senior Notes due February 15, 2028 (“(“Senior Notes”), our Series 2020-A Senior Notes due July 9, 2025 (the “IQ Notes”) and any drawn amounts on our Series 2020-A Senior Notes due July 9, 2025 (the “IQ Notes”).$150 million Credit Agreement, which is described separately below. The following tables summarize our long-term debt balances, excluding interest and borrowings under the Credit Agreement, as of June 30,2022 2023 and December 31,2021 2022 (in thousands):

11

  

June 30, 2022

 
  

Senior Notes

  

IQ Notes

  

Total

 

Principal

 $475,000  $37,433  $512,433 

Unamortized discount/premium and issuance costs

  (5,096)  504   (4,592)

Long-term debt balance

 $469,904  $37,937  $507,841 

12

 

 

June 30, 2023

 

 

 

Senior Notes

 

 

IQ Notes

 

 

Total

 

Principal

 

$

475,000

 

 

$

36,434

 

 

$

511,434

 

Unamortized discount/premium and issuance costs

 

 

(4,186

)

 

 

332

 

 

 

(3,854

)

Long-term debt balance

 

$

470,814

 

 

$

36,766

 

 

$

507,580

 

 

 

December 31, 2022

 

 

 

Senior Notes

 

 

IQ Notes

 

 

Total

 

Principal

 

$

475,000

 

 

$

35,614

 

 

$

510,614

 

Unamortized discount/premium and issuance costs

 

 

(4,640

)

 

 

392

 

 

 

(4,248

)

Long-term debt balance

 

$

470,360

 

 

$

36,006

 

 

$

506,366

 

Table of Contents
 
  

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)

Long-term debt balance

 $469,448  $38,647  $508,095 

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 2023 (in thousands). Operating leases are included in other current and non-current liabilities on our condensed consolidated balance sheets. 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. 2023.

Twelve-month period ending June 30,

 

Senior Notes

 

 

IQ Notes

 

 

Finance Leases

 

 

Operating Leases

 

2024

 

$

34,438

 

 

$

2,322

 

 

$

10,534

 

 

$

2,248

 

2025

 

 

34,438

 

 

 

38,604

 

 

 

9,532

 

 

 

1,283

 

2026

 

 

34,438

 

 

 

—

 

 

 

6,932

 

 

 

1,276

 

2027

 

 

34,438

 

 

 

—

 

 

 

4,772

 

 

 

1,229

 

2028

 

 

505,131

 

 

 

—

 

 

 

4,157

 

 

 

1,129

 

Thereafter

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,050

 

 

 

 

642,883

 

 

 

40,926

 

 

 

35,927

 

 

 

13,215

 

Less: effect of discounting

 

 

—

 

 

 

—

 

 

 

(3,476

)

 

 

(3,174

)

Total

 

$

642,883

 

 

$

40,926

 

 

$

32,451

 

 

$

10,041

 

Twelve-month
period ending
June 30,

 

Senior Notes

  

IQ Notes

  

Finance Leases

  

Operating Leases

 

2023

 $34,438  $2,441  $6,424  $3,011 

2024

  34,438   2,441   5,220   2,041 

2025

  34,438   2,441   3,070   1,072 

2026

  34,438   37,528   1,213   1,059 

2027

  34,438   0   0   1,010 

Thereafter

  496,521   0   0   6,043 

Total

 $668,711  $44,851  $15,927  $14,236 

Credit Agreement

Credit Facility

In On July 2018, 21, 2022, we entered into a $250revolving credit facility (the "Credit Agreement") with various financial institutions (the “Lenders”), Bank of Montreal and Bank of America, N.A. as letters of credit issuers, and Bank of America, N.A., as administrative agent for the Lenders and as swingline lender, to replace our prior credit agreement. The Credit Agreement is a $150 million senior secured revolving credit facility, which has a term ending on February 7, 2023. As of June 30,2022 and December 31,2021, 0 amounts were outstandingwith an option to be increased in an aggregate amount not to exceed $75 million. Any revolving loans under the facility.Credit Agreement have a maturity date of July 21, 2026. Proceeds of the revolving loans under the Credit Agreement may be used for general corporate purposes. The interest rate on the outstanding loans under the Credit Agreement is based on the Company’s net leverage ratio and is calculated at (i) Term Secured Overnight Financing Rate ("SOFR") plus 2% to 3.5% or (ii) Bank of America’s Base Rate plus 1% to 2.5% with Base Rate being the highest of (i) the Bank of America prime rate, (ii) the Federal Funds rate plus .50% or (iii) Term SOFR plus 1.00%. For each amount drawn, we elect whether we draw on a one, three or six month basis or annual basis for SOFR. If we elect to draw for greater than six months, we pay interest quarterly on the outstanding amount.

We are also able to obtain letters of credit under the facility, and for any such letters we are required to pay a participationcommitment fee of between 2.25%0.45% to 0.78750%, depending on our net leverage ratio. Letters of credit issued under the Credit Agreement bear a fee between 2.00% and 4.00% of the amount of the letters of credit3.50% based on our totalnet leverage ratio, as well as a fronting fee to each issuing bank of 0.20% annuallyat an agreed upon rate per annum on the average daily dollar amount of our letter of credit exposure.

Hecla Mining Company and certain of our subsidiaries are the borrowers under the Credit Agreement, while certain of our other subsidiaries are guarantors of the borrowers’ obligations under the Credit Agreement. As further security, the Credit Agreement is collateralized by a mortgage on the Greens Creek mine, the equity interests of subsidiaries that own the Greens Creek mine or are part of the Greens Creek Joint Venture and our subsidiary Hecla Admiralty Company (the “Greens Creek Group”), and by all of the Green Creek Group’s rights and interests in the Greens Creek Joint Venture Agreement, and in all assets of the joint venture and of any member of the Greens Creek Group.

At June 30, 2023, we had net draws of $31 million outstanding at an interest rate of 7.76%, and $6.8 million of outstanding letters of credit. There were $14.9 million in letters of credit outstanding as of June 30,2022. Letters of credit that are outstanding reduce availability under the revolving credit facility. See Note 12regarding the termination of this Credit Facility and entry into a new facility.Agreement.

We believe we were in compliance with all covenants under the credit agreementCredit Agreement as of June 30,2022. 2023.

Note 8.Derivative Instruments

General12

General

Our current risk management policy provides that up to 75%75% of five years years of our foreign currency, lead and zinc metals price and silver and gold price exposure may be covered under a derivatives program with certain other limitations. The silver and gold price program can only establish a floor (puts). We are currently do not have a silver and gold program. Our program also utilizes derivatives to manage price risk exposure created from when revenue is recognized from a shipment of concentrate until final settlement.

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 or currency exchange rate exceeds the contract price for quantities of our production and/or forecasted costs covered under contract positions.

13
Table of Contents

Foreign Currency

Our wholly-owned subsidiarysubsidiaries owning the Casa Berardi operation is aand Keno Hill operation are USD-functional entityentities which routinely incursincur 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 USD exchange rate between the USDfor these subsidiaries' future operating and CAD for this subsidiary's future operatingcapital costs denominated in CAD. The program utilizes forward contracts to buy CAD, and each contract issome of which are designated as a cash flow hedge.hedges. As of June 30,2022, 2023, we have 161 a total of 507forward contracts outstanding to buy a total of CAD $CAD$321.8527.2 million having a notional amount of USD$USD$247.9396.6 million. million for Casa Berardi, Keno Hill, and some corporate Canadian expenses. The CAD contracts that are related to forecasted cash operating costs at Casa Berardi to be incurred from 2021 through 20242023-2026 have a total notional value of CAD$353 million and have CAD-to-USD exchange rates ranging between 1.2702 1.2755and 1.3333.  1.37380. The CAD contracts that are related to forecasted capital expenditures at Casa Berardi from 2023-2026 have a total notional value of $62.3 million at an average CAD-to-USD exchange rate of 1.35. The CAD contracts that are related to forecasted costs and capital hedges at Keno Hill from 2023-2024 have a total notional value of $93.0 million at an average CAD-to-USD exchange rate of 1.36. The CAD contracts that are related to forecasted cash operating costs at Casa Berardi are designated as cash flow hedges.

As of June 30,2022 2023 and December 31,2021, 2022, we recorded the following balances for the fair value of the contracts (in millions):

 

 

June 30,

 

 

December 31,

 

Balance sheet line item:

 

2023

 

 

2022

 

Other current assets

 

$

3.4

 

 

$

1.1

 

Other non-current assets

 

$

2.0

 

 

$

0.4

 

Current derivative liabilities

 

$

1.4

 

 

$

4.0

 

Non-current derivative liabilities

 

$

0.8

 

 

$

3.6

 

  

June 30,

  

December 31,

 

 

 

2022

  

2021

 
Balance sheet line item:      

Current derivatives assets

 $1.1  $2.7 

Non-current derivatives assets

  1.3   2.5 

Current derivative liabilities

  0.3   0 

Non-current derivative liabilities

  0.2   0 

Net unrealized gainslosses of approximately $2.0$0.7 million related to the effective portion of the hedges wereare included in accumulated other comprehensive income (loss) as of June 30,2022. 2023. Unrealized gains and losses will be transferred from accumulated other comprehensive income (loss) to current earnings as the underlying operating expenses are recognized. We estimate approximately 0.8$0.9 million in net unrealized gainslosses included in accumulated other comprehensive income (loss) as of June 30,2022, 2023 will be reclassified to current earnings in the next twelve months. Net realized gainslosses of approximately $0.8$1.1 million and $1.8$2.0 million on contracts related to underlying expenses which have been recognized were transferred from accumulated other comprehensive income (loss) and included in cost of sales and other direct production costs for the three and six months ended June 30,2022, 2023, respectively. NaNNet gains of $2.4 million and $3.1 million for the three and six months ended June 30, 2023, respectively, related to contracts not designated as hedges and no net unrealized gains or losses related to ineffectiveness of the hedges were included in current earnings for the six months ended June 30,2022. Net gains of approximately $0.3 million and $0.7 million for the three and six months ended June 30, 2022, related to contracts not designated as hedges wereare included in fair value adjustments, net on our consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2022.2023, respectively.

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.

•
14changes in prices of silver, gold, zinc and lead contained in our concentrate shipments between the time of shipment and final settlement; and
•
Tablechanges in prices of Contentszinc 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 2023 and December 31,2021: 2022:

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

  1,729   3   6,504   3,638  $22.19  $1,836  $1.58  $0.90 

Contracts on forecasted sales

                                

2022 settlements

  0   0   38,030   34,778   N/A   N/A  $1.31  $0.98 

2023 settlements

  0   0   78,264   75,618   N/A   N/A  $1.30  $1.00 

2024 settlements

  0   0   78,760   31,526   N/A   N/A  $1.34  $1.01 

2025 settlements

  0   0   1,157   0   N/A   N/A  $1.37   N/A 

December 31, 2021

 

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

  1,814   6   13,371   4,575  $23.02  $1,812  $1.39  $0.96 

Contracts on forecasted sales

                                

2022 settlements

  0   0   57,706   59,194   N/A   N/A  $1.28  $0.98 

2023 settlements

  0   0   76,280   71,650   N/A   N/A  $1.29  $1.00 

Effective November 1, 2021, we designated the contracts for lead and zinc contained in our forecasted future shipments as hedges for accounting purposes, with gains and losses deferred to accumulated other comprehensive loss until the hedged product ships. Prior to November 1, 2021, these contracts had not been designated as hedges for hedge accounting and were therefore marked-to-market through earnings each period. The forward contracts for silver and gold contained in our concentrate shipments have not been designated as hedges and are marked-to-market through earnings each period. 13

June 30, 2023

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 settlements

 

 

1,845

 

 

 

7

 

 

 

1,709

 

 

 

8,433

 

 

$

24.35

 

 

$

1,946

 

 

$

1.31

 

 

$

1.00

 

Contracts on forecasted sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 settlements

 

 

1,845

 

 

 

7

 

 

 

441

 

 

 

29,377

 

 

$

24.35

 

 

$

1,946

 

 

$

1.51

 

 

$

0.99

 

2024 settlements

 

 

—

 

 

 

—

 

 

 

—

 

 

 

75,178

 

 

 

—

 

 

 

—

 

 

 

—

 

 

$

0.98

 

2025 settlements

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,897

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

0.96

 

December 31, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 settlements

 

 

3,124

 

 

 

8

 

 

 

18,629

 

 

 

11,960

 

 

$

21.55

 

 

$

1,795

 

 

$

1.38

 

 

$

0.98

 

Contracts on forecasted sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 settlements

 

 

—

 

 

 

—

 

 

 

37,533

 

 

 

75,618

 

 

N/A

 

 

N/A

 

 

$

1.34

 

 

$

1.00

 

2024 settlements

 

 

—

 

 

 

—

 

 

 

—

 

 

 

45,856

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

0.99

 

We recorded the following balances for the fair value of the forward contracts as of June 30,2022 2023 and forward and put option contracts as of December 31,2021 2022 (in millions):

 

 

June 30, 2023

 

 

December 31, 2022

 

Balance sheet line item:

 

Contracts in an asset position

 

 

Contracts in a liability position

 

 

Net asset (liability)

 

 

Contracts in an asset position

 

 

Contracts in a liability position

 

 

Net asset (liability)

 

Other current assets

 

$

7.3

 

 

$

—

 

 

$

7.3

 

 

$

1.2

 

 

$

—

 

 

$

1.2

 

Other non-current assets

 

$

1.4

 

 

$

—

 

 

$

1.4

 

 

$

0.1

 

 

$

—

 

 

$

0.1

 

Current derivative liabilities

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

(12.1

)

 

$

(12.1

)

Non-current derivative liabilities

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

(2.5

)

 

$

(2.5

)

  

June 30, 2022

  

December 31, 2021

 

 

 

Contracts in an
asset position

  

Contracts in
a liability
position

  

Net asset
(liability)

  

Contracts in
an asset
position

  

Contracts in a
liability
position

  

Net asset
(liability)

 
Balance sheet line item:                  

Current derivatives assets

 $8.8  $0  $8.8  $0  $0  $0 

Non-current derivative assets

 $11.6  $0   11.6  $0  $0  $0 

Current derivatives liabilities

  0   (3.9)  (3.9)  0.7   (20.1)  (19.4)

Non-current derivatives liabilities

  0   (0.4)  (0.4)  0.4   (18.9)  (18.5)

Net realized and unrealized gains of approximately $15.6$26.7 million related to the effective portion of the contracts designated as hedges were included in accumulated other comprehensive income (loss) as of June 30, 2022. 2023, and are net of related deferred taxes. Unrealized gains and losses will be transferred from accumulated other comprehensive income (loss) to current earnings as the underlying forecasted sales are recognized. We estimate approximately $6.0 $19.0million in net realized and unrealized gains included in accumulated other comprehensive income (loss) as of June 30, 2022 2023 would be reclassified to current earnings in the next twelve months. The realized gains arose due to cash settlement of zinc contracts prior to maturity in 2022 and during the second quarter of 2023 for net proceeds of $17.4 million and $7.6 million, respectively. We recognized a net gain of $11.3$8.2 million, including a $4.2$3.3 million lossgain transferred from accumulated other comprehensive income (loss), and a net gain of $11.3 million, during the three months ended June 30, 2022. For the six months ended June 30,2023 and 2022, werespectively. We recognized a net gain of $6.6$9.1 million, including a $3.8$6.3 million lossgain transferred from accumulated other comprehensive income (loss)., and a net gain of $6.6 million, during the six months ended June 30, 2023 and 2022, respectively. These gains and losses were recognized on the contracts utilized to manage exposure to prices of metals in our concentrate shipments, which isare included in sales. The net losses and gains recognized on the contracts offset gains and losses related to price adjustments on our provisional concentrate sales due to changes to silver, gold, lead and zinc prices between the time of sale and final settlement.

15
Table of Contents

We recognized net losses of  $17.3 million and $16.8 million during the second quarter and first half of  2021, respectively, on the contracts utilized to manage exposure to prices for forecasted future sales, which were not designated as hedges. The net losses on these contracts are included as a separate line item under other income (expense), as they relate to forecasted future sales, as opposed to sales that have already taken place but are subject to final pricing as discussed in the preceding paragraph. 

Credit-risk-related Contingent Features

Certain of our derivative contracts contain cross default provisions which provide that a default under our revolving credit agreementCredit Agreement would cause a default under the derivative contract. As of June 30,2022, 2023, we have not posted any collateral related to these contracts. The fair value of derivatives in a net liability position related to these agreements was $12.2$2.3 million as of June 30,2022, 2023, which includes accrued interest but excludes any adjustment for nonperformance risk. If we were in breach of any of these provisions at June 30,2022, 2023, we could have been required to settle our obligations under the agreements at their termination value of $12.2$2.3 million.

Note 9.Fair Value Measurement

Fair value adjustments, net is comprised of the following:following (in thousands):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Gain (loss) on derivative contracts

 

$

3,022

 

 

$

(689

)

 

$

4,008

 

 

$

(893

)

Unrealized loss on equity securities investments

 

 

(5,579

)

 

 

(15,739

)

 

 

(3,385

)

 

 

(9,639

)

Gain on disposition or exchange of investments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

69

 

Total fair value adjustments, net

 

$

(2,557

)

 

$

(16,428

)

 

$

623

 

 

$

(10,463

)

14

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2022

  

2021

  

2022

  

2021

 

(Loss) gain on derivative contracts

 $(689) $(17,313) $(893) $(16,840)

Unrealized gain (loss) on investments in equity securities

  (15,739)  (750)  (9,639)  (4,256)

Gain on disposition or exchange of investments

  0   0   69   1,158 

Total fair value adjustments, net

 $(16,428) $(18,063) $(10,463) $(19,938)

Accounting guidance has established a hierarchy for inputs used to measure assets and liabilities at fair value on a recurring basis. The three levels included in the hierarchy are:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: significant other observable inputs; and

Level 3: significant unobservable inputs.

16
Table of Contents

The table below sets forth our assets and liabilities that were accounted for at fair value on a recurring basis and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category (in thousands).

Description

 

Balance at
June 30,
2023

 

 

Balance at
December 31,
2022

 

 

Input
Hierarchy Level

Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

Money market funds and other bank deposits

 

$

106,786

 

 

$

104,743

 

 

Level 1

Current and non-current investments:

 

 

 

 

 

 

 

 

Equity securities - mining industry

 

 

20,778

 

 

 

24,018

 

 

Level 1

Trade accounts receivable:

 

 

 

 

 

 

 

 

Receivables from provisional concentrate sales

 

 

15,595

 

 

 

45,146

 

 

Level 2

Restricted cash balances:

 

 

 

 

 

 

 

 

Certificates of deposit and other deposits

 

 

1,166

 

 

 

1,164

 

 

Level 1

Derivative contracts - current and non-current derivatives assets:

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

5,404

 

 

 

1,518

 

 

Level 2

Metal forward contracts

 

 

8,675

 

 

 

1,309

 

 

Level 2

Total assets

 

$

158,404

 

 

$

177,898

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Derivative contracts - current derivatives liabilities and other non-current
liabilities:

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

2,198

 

 

$

7,548

 

 

Level 2

Metal forward contracts

 

 

—

 

 

 

14,643

 

 

Level 2

Total liabilities

 

$

2,198

 

 

$

22,191

 

 

 

Description

 

Balance at

June 30, 2022

  

Balance at

December 31, 2021

 

Input

Hierarchy Level

Assets:

         

Cash and cash equivalents:

         

Money market funds and other bank deposits

 $198,193  $210,010 

Level 1

Current and non-current investments

         

Equity securities

  23,931   14,470 

Level 1

Trade accounts receivable:

         

Receivables from provisional concentrate sales

  17,828   36,437 

Level 2

Restricted cash balances:

         

Certificates of deposit and other deposits

  1,041   1,053 

Level 1

Derivative contracts - current and non-current derivatives assets:

         

Foreign exchange contracts

  2,414   5,207 

Level 2

Metal forward and put option contracts

  20,406   0 

Level 2

Total assets

 $263,813  $267,177  
          

Liabilities:

         

Derivative contracts - current derivatives liabilities and other non-current liabilities:

         

Foreign exchange contracts

 $529  $8 

Level 2

Metal forward and put option contracts

  4,221   37,873 

Level 2

Total liabilities

 $4,750  $37,881  

Cash and cash equivalents consist primarily of money market funds and are valued at cost, which approximates fair value, and a small portion consists of municipal bonds having maturities of less than 90 days, which are recorded at fair value.

Current and non-current restricted cash balances consist primarily of certificates of deposit, U.S. Treasury securities, and other deposits and are valued at cost, which approximates fair value.

Our non-current available for sale securitiesinvestments consist of marketable equity securities of companies in the mining industry which are valued using quoted market prices for each security.

Trade accounts receivable from provisional concentrate sales are subject to final pricing and valued using quoted prices based on forward curves for the particular metals.  The embedded derivative contained in our concentrate sales is adjusted to fair market value through earnings each period prior to final settlement.

We use financially-settled forward contracts to manage exposure to changes in the exchange rate between USD and CAD, and the impact on CAD-denominated operating and capital costs incurred at our Casa Berardi unitoperation and the Keno Hill operation (see Note 8 for more information). The fair value of each contract represents the present value of the difference between the forward exchange rate for the contract settlement period as of the measurement date and the contract settlement exchange rate.

We use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our concentrate shipments that have not reached final settlement. We also use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our forecasted future sales (see Note 8 for more information). The fair value of each forward contract represents the present value of the difference between the forward metal price for the contract settlement period as of the measurement date and the contract settlement metal price.

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At June 30,2022, 2023, our Senior Notes and IQ Notes were recorded at their carrying value of $469.9 $470.8million and $37.9 $36.8million, respectively, net of unamortized initial purchaser discount/premium and issuance costs. The estimated fair values of our Senior Notes and IQ Notes were $453.3$470.0 million and $35.8 $35.8million, respectively, at June 30, 2022. 2023. Quoted market prices, which we consider to be Level 1 inputs, are utilized to estimate fair values of the Senior Notes. Unobservable inputs which we consider to be Level 3, including an assumed current annual yield of 8.2%7.6%, are utilized to estimate the fair value of the IQ Notes. See Note 7 for more information.

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Note 10.Commitments, Contingencies and Obligations

General

We follow GAAP guidance in determining our accruals and disclosures with respect to loss contingencies, and evaluate such accruals and contingencies for each reporting period. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.

Johnny M Mine Area near San Mateo, McKinley County and San Mateo Creek Basin, New Mexico

In August 2012, Hecla Limited and the EPAU.S. Environmental Protection Agency (the “EPA”) entered into a Settlement Agreement and Administrative Order on Consent for Removal Action (“Consent Order”) regarding the Johnny M Mine Area near San Mateo, McKinley County, New Mexico. Mining at the Johnny M Mine was conducted for a limited period of time by a predecessor of Hecla Limited, and the EPA had previously asserted that Hecla Limited may be responsible under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) for environmental remediation and past costs incurred by the EPA at the site. Under the Consent Order, Hecla Limited agreed to pay (i) $1.1$1.1 million to the EPA for its past response costs at the site and (ii) any future response costs at the site under the Consent Order, in exchange for a covenant not to sue by the EPA. In December 2014, Hecla Limited submitted to the EPA the Engineering Evaluation and Cost Analysis (“EE/CA”) for the site which recommended on-site disposal of mine-related material. In January 2021, the parties began negotiating a new consent order to design and implement the on-site disposal response action recommended in the EE/CA. Based on the foregoing, we believe it is probable that Hecla Limited will incur a liability for the CERCLA removal action and we increased our accrual by $2.9have accrued $10.1 million, to $9.0 million in the first quarter of 2021, primarily representing estimated current costs to begin design and implementationimplement the remedy, which are subject to change as fieldwork is performed. During the three months ended June 30, 2023, the accrual was increased by $1.1 million to $10.1 million reflecting scope of the remedy.work refinement and updated cost estimates. It is possible that Hecla Limited’s liability will be more than $9.0$10.1 million, and any increase in liability could have a material adverse effect on Hecla Limited’s or our results of operations or financial position.

The Johnny M Mine is in an area known as the San Mateo Creek Basin (“SMCB”), which is an approximately 321 square mile area in New Mexico that contains numerous legacy uranium mines and mills. In addition to Johnny M, Hecla Limited’s predecessor was involved at other mining sites within the SMCB. The EPA appears to have deferred consideration of listing the SMCB site on CERCLA’s National Priorities List (“Superfund”) by removing the site from its emphasis list, and is working with various potentially responsible parties (“PRPs”) at the site in order to study and potentially address perceived groundwater issues within the SMCB. The EE/CA discussed above relates primarily to contaminated rock and soil at the Johnny M site, not groundwater and not elsewhere within the SMCB site. It is possible that Hecla Limited’s liability at the Johnny M Site, and for any other mine site within the SMCB at which Hecla Limited’s predecessor may have operated, will be greater than our current accrual of $9.010.1 million due to the increased scope of required remediation.

In July 2018, the EPA informed Hecla Limited that it and several other PRPs may be liable for cleanup of the SMCB site or for costs incurred by the EPA in cleaning up the site. The EPA stated it has incurred approximately $9.6$9.6 million in response costs to date. On May 2, 2022, Hecla Limited received a letter from an attorney representing a PRP notifying Hecla Limited that three PRPs will seek cost recovery and contribution from Hecla Limited under CERCLA for certain investigatory work performed by the PRPs at the SMCB site. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by the various PRPs.

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Carpenter Snow Creek and Barker-Hughesville Sites in Montana

In July 2010, the EPA made a formal request to Hecla for information regarding the Carpenter Snow Creek Superfund site located in Cascade County, Montana. The Carpenter Snow Creek site is located in a historichistorical mining district, and in the early 1980s Hecla Limited leased 6 mining claims and performed limited exploration activities at the site. Hecla Limited terminated the mining lease in 1988.

In June 2011, the EPA informed Hecla Limited that it believes Hecla Limited, and several other PRPs, may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA stated in the letter that it has incurred approximately $4.5$4.5 million in response costs and estimated that total remediation costs may exceed $100$100 million. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by various other PRPs.

In February 2017, the EPA made a formal request to Hecla for information regarding the Barker-Hughesville Mining District Superfund site located in Judith Basin and Cascade Counties, Montana. Hecla Limited submitted a response in April 2017. The

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Barker-Hughesville site is located in a historic mining district, and between approximately June and December 1983, Hecla Limited was party to an agreement with another mining company under which limited exploration activities occurred at or near the site.

In August 2018, the EPA informed Hecla Limited that it and several other PRPs may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA did not include an amount of its alleged response costs to date. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning past or anticipated future costs at the site and the relative contributions of contamination by various other PRPs.

Greens Creek and Lucky Friday Environmental Issues

On June 30, 2022, May 24, 2023, our Greens Creek mine receivedsubsidiary resolved a previously issued Notice of Violation ( “NOV”("NOV") from the EPA alleging that the mine treated, stored, and disposed of certain hazardous waste without a permit in violationviolations of the Resource Conservation and Recovery Act (“RCRA”), relating to the alleged presenceAct. Terms of lead outside the concentrate storage building and the alleged improper reuse/recyclingsettlement included paying a fine of certain materials produced from the on-site laboratories. The NOV contained two other less significant alleged violations. We disagree with several of EPA’s allegations on a factual and legal basis.$0.1 million.

Currently, the EPA has not initiated any formal enforcement proceeding against our Greens Creek subsidiary. In civil judicial cases, EPA can seek statutory penalties up to $81,540 per day per violation and, in administrative settlements, EPA can seek administrative penalties up to $47,423 per day per violation plus the economic benefit of noncompliance. EPA typically pursues administrative penalties and assesses lower penalties on a per day basis. At this time, we cannot reasonably assess the amount of penalties EPA may seek, or predict the terms of any potential settlement with the EPA.

On July 12, 2022, our Lucky Friday mine received a NOV from the EPA alleging violations of the Clean Water Act (“CWA”) between 2018 and 2021 relating primarily to concentration levels of zinc and lead in the mine’s permitted water discharges. Currently, the EPA has not initiated any formal enforcement proceeding against our Lucky Friday subsidiary. In civil judicial cases, the EPA can seek statutory penalties up to $59,973$59,973 per day per violation and, in administrative actions, the EPA can seek administrative penalties up to $23,989$23,989 per day per violation with a maximum administrative penalty of $299,989$299,989 for all alleged violations. The EPA typically pursues administrative penalties. At this time, we cannot reasonably assess the amount of penalties the EPA may seek, or predict the terms of any potential settlement with the EPA.

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Litigation Related to Klondex Acquisition

On May 24, 2019, a purported Hecla stockholder filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York against Hecla and certain of our executive officers, one of whom is also a director. The complaint, purportedly brought on behalf of all purchasers of Hecla common stock from March 19, 2018 through and including May 8, 2019, asserts claims under Sections 10(b)10(b) and 20(a)20(a) of the Securities Exchange Act of 1934 and Rule 10b-510b-5 promulgated thereunder and seeks, among other things, damages and costs and expenses. Specifically, the complaint alleges that Hecla, under the authority and control of the individual defendants, made certain material false and misleading statements and omitted certain material information regarding Hecla’s Nevada Operations. The complaint alleges that these misstatements and omissions artificially inflated the market price of Hecla common stock during the class period, thus purportedly harming investors. Filings with the court regardingThe Court granted our motionMotion to dismissDismiss the lawsuit, were completedwithout prejudice, in February 2023, and the first quarter of 2021.plaintiffs filed an amended complaint in March 2023 which repeats the same claims. We have filed a Motion to Dismiss the amended complaint. We cannot predict the outcome of this lawsuit or estimate damages if plaintiffs were to prevail. We believe that these claims are without merit and intend to defend them vigorously.

Related to this class action lawsuit, Hecla has been named as a nominal defendant in a shareholder derivative lawsuit which also names as defendants certain current and past (i) members of Hecla’s board of directors and (ii) officers of Hecla. The case was filed on May 4, 2022 in the Delaware Chancery Court. In general terms, the suit alleges breaches of fiduciary duties by the individual defendants, waste of corporate assets and unjust enrichment, and seeks damages, purportedly on behalf of Hecla.

Debt

See Note 7 for information on the commitments related to our debt arrangements as of June 30,2022. 2023.

Other Commitments

Our contractual obligations as of June 30, 2022 2023 included open purchase orders and commitments of approximately $8.1$16.5 million, $19.1 $20.8million, $1.3$10.5 million, $3.5 million and $3.4$2.3 million for various capital and non-capital items at Greens Creek, Lucky Friday, Keno Hill, Casa Berardi and Nevada Operations, respectively. We also have total commitments of approximately $15.9$35.9 million relating to scheduled payments on finance leases, including interest, primarily for equipment at our Greens Creek, Lucky Friday, Casa Berardi, and Nevada OperationsKeno Hill units, and total commitments of approximately $14.2$13.2 million relating to payments on operating leases (see Note 7 for more information). As part of our ongoing business and operations, we are required to provide surety bonds, bank letters of credit, and restricted deposits for various purposes, including financial support for environmental reclamation obligations and workers compensation programs. As of June 30,2022, 2023, we had surety bonds totaling $181.8$193.2 million and letters of credit totaling $14.9$6.8 million in place as financial support for future reclamation and closure costs, self-insurance, and employee benefit plans. The obligations associated with these instruments are generally related to performance requirements that we address through ongoing operations. As the requirements are met, the beneficiary of the associated instruments cancels or returns the instrument to the issuing

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entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure of the sites. We believe we are in compliance with all applicable bonding requirements and will be able to satisfy future bonding requirements as they arise.

Other Contingencies

We also have certain other contingencies resulting from litigation, claims, EPA investigations, and other commitments and are subject to a variety of environmental and safety laws and regulations incident to the ordinary course of business. We currently have no basis to conclude that any or all of such contingencies will materially affect our financial position, results of operations or cash flows. However, in the future, there may be changes to these contingencies, or additional contingencies may occur, any of which might result in an accrual or a change in current accruals recorded by us, and there can be no assurance that their ultimate disposition will not have a material adverse effect on our financial position, results of operations or cash flows.

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Note 11.Developments in Accounting Pronouncements

Accounting Standards Updates Adopted

In AugustMarch 2020, ASU No. 2020-04 was issued which provides optional guidance for a limited period of time to ease the Financial Accounting Standards Board (“FASB")potential burden on accounting for contract modifications caused by reference rate reform. In January 2021, ASU No. 2021-01 was issued which broadened the scope of ASU No.2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. 2020-04 to include certain derivative instruments. In December 2022, ASU No. 2022-06 was issued which deferred the sunset date of ASU No. 2020-04. The update is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles to certain financial instruments with characteristics of liabilities and equity. The updateguidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years and with early adoption permitted. We adopted the updateall entities as of January 1, 2022, which did not have a material impact on our consolidated financial statements or disclosures.

In October 2021, the FASB issued ASU 2021-08,Business Combinations (Topic 805): Accounting for Contract AssetsMarch 12, 2020 through December 31, 2024. The guidance may be adopted over time as reference rate reform activities occur and ContractLiabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired ina business combination in accordance with ASC 2014-09,Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The update is effectiveshould be applied on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. We adopted the new standard effective January 1, 2022, which did not have a material impact onbasis. Certain of our consolidated financial statements or disclosures.

Accounting Standards Updates to Become Effective in Future Periods

In 2017, the United Kingdom’s Financial Conduct Authority ("FCA") announced that after 2021 it would no longer compel banks to submit the rates required to calculate thederivative instruments reference London Interbank Offered Rate ("LIBOR"), which based rates and have been widely used as reference rates for various securities and financial contracts, including loans, debt and derivatives. This announcement indicated thatamended to eliminate the continuation of LIBOR on the current basis would not be guaranteed after 2021. Subsequently in March 2021, the FCA announced some USD LIBOR tenors (overnight, 1 month, 3 month, 6 month and 12 month) will continueLIBOR-based rate references prior to be published until June 30,July 1, 2023. Regulators in the U.S. and other jurisdictions have been working to replace these rates with alternative reference interest rates that are supported by transactions in liquid and observable markets, such as the Secured Overnight Financing Rate ("SOFR"). Currently, our credit facility and certain of our derivative instruments reference LIBOR-based rates. Our credit facility contains provisions specifying alternative interest rate calculations to be employed when LIBOR ceases to be available as a benchmark and we have adhered to the ISDA 2020 IBOR Fallbacks Protocol, which will govern our derivatives upon the final cessation of USD LIBOR. ASU 2020-04,Reference Rate Reform (Topic 848): Facilitation of the Effects ofReference Rate Reform on Financial Reporting, as amended, helps limit the accounting impact from contract modifications, includinghedging relationships, due to the transition from LIBOR to alternative reference rates that are completed by December 31, 2022. We do not expect a significant impact to our financial results, financial position or cash flows from the transition from LIBOR to alternative reference interest rates, but we will continue to monitor the impact of this transition until it is completed.

Note 12.Subsequent Events

On July 5, 2022, 10, 2023, we and Alexco Resource Corp.completed the acquisition of ATAC Resources Ltd. ("Alexco"ATAC"), a Canadian publicly traded company, announced a definitive agreement for onetotal consideration of our subsidiaries to acquire allapproximately $18.8 million through the issuance of the outstanding common3,676,904 shares of Alexco that Hecla does not already own. Each outstanding common share of Alexco will be exchanged for 0.116 of a share of our common stock implying considerationto ATAC shareholders based on the share exchange ratio of US$0.470.0166 per Alexco Hecla share for each ATAC common share. In addition, we will (i) provide interim financing to provide working capital and support the continued advancement of the development and exploration at Alexco's, Keno Hill mine, of which $20 million was advanced on July 19, 2022 and (ii) subscribe for additional common shares bringing Hecla's ownership stake to 9.9%, which also closed on July 19, 2022.

The Company has also entered into an agreement with Wheaton Precious Metals Corporation to terminate its silver streaming interest at Alexco’s Keno Hill property in exchange for US$135 million of Company common stock, conditional upon the completion of the Alexco acquisition.

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On July 21, 2022, we entered into a Credit Agreement (“New Credit Agreement”) with the various financial institutions (the “Lenders”), Bank of Montreal and Bank of America, N.A. as letters of credit issuers, and Bank of America, N.A., as administrative agent for the Lenders and as swingline lender, to replace our Prior Credit Agreement, see Note 7for additional information on this credit agreement. The New Credit Agreement is a $150 million senior secured revolving facility, with an option to be increased in an aggregate amount not to exceed $75 million. The revolving loans under the New Credit Agreement will have a maturity date of July 21, 2026. Proceeds of the revolving loans under the New Credit Agreement may be used to refinance the Prior Credit Agreement and for general corporate purposes. The interest rate on outstanding loans under the New Credit Agreement is, at the option of the Borrowers, one month, three months or six months Term SOFR plus (x) 0.10% for an interest period of one-month’s duration, (y) 0.15% for an interest period of 3-month’s duration and (z) 0.25% for an interest period of six-month’s duration plus the Applicable Margin or Base Rate (which is the highest of (i) the Bank of America prime rate, (ii) the Federal Funds rate plus .50% and (iii) Term SOFR plus 1.00%, subject to the interest rate floors) plus the Applicable Margin. The “Applicable Margin” means (a) for the first fiscal quarter ending after the closing date, in the case of Term SOFR loans, 2.25% per annum, and, in the case of Base Rate loans, 1.25% per annum, and (b) thereafter, between 2.00% and 3.50% for Term SOFR loans or between 1.00% and 2.50% for Base Rate loans depending on our total leverage ratio. We are also required to pay quarterly in arrears a commitment fee of between 0.45000% to 0.78750%, depending on our total leverage ratio, of the actual daily amount by which the Aggregate Revolving Commitments exceed the sum of the Outstanding Amount of Revolving Loan and the Outstanding Amount of L/C Obligations. We are also required to pay a participation fee for letters of credit issued under the New Credit Agreement in an amount between 2.00% and 3.50% based on our total leverage ratio, as well as a fronting fee to each issuing bank at an agreed upon rate per annum on the average daily dollar amount of our letter of credit exposure.

Hecla Mining Company and certain of its subsidiaries are the borrowers under the New Credit Agreement, while certain of its other subsidiaries are guarantors of the borrowers’ obligations under the New Credit Agreement. As further security, the credit facility is collateralized by a mortgage on the Greens Creek mine, the equity interests of subsidiaries that own the Greens Creek mine or are part of the Greens Creek Joint Ventureacquisition, we also acquired 5,502,956 units consisting of (i) shares of Cascadia Minerals Ltd. (“Cascadia”) representing a 19.9% stake, and our subsidiary Hecla Admiralty Company (the “Greens Creek Group”), and(ii) full warrants with a five-year term for a C$2 million cash investment in Cascadia. Cascadia will be managed by allthe former management of the Green Creek Group’s rights and interestsATAC, who will explore specific properties in the Greens Creek Joint Venture Agreement,Yukon and in all assets ofBritish Columbia. We have the joint venture and of any member of the Greens Creek Group.right to appoint two directors to Cascadia’s board.

In connection with entry into the New Credit Agreement, the Company’s Prior credit agreement was terminated on July 21, 2022.

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Forward-Looking Statements

Certain statements contained in this Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, are intended to be covered by the safe harbor provided for under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Our forward-looking statements include our current expectations and projections about future results, performance, results of litigation, prospects and opportunities, including reserves and other mineralization. We have tried to identify these forward-looking statements by using words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,” “plan,” “estimate,” “project,” “forecast” and similar expressions. These forward-looking statements are based on information currently available to us and are expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

These risks, uncertainties and other factors include, but are not limited to, those set forth under Part I, Item 1A. – Risk Factors in our 20212022 Form 10-K and in Part II, Item 1.A. - Risk Factors in this Form 10-Q.10-K. Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to Hecla Mining Company or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), “Hecla,” “the Company,” “we,” “us” and “our” refer to Hecla Mining Company and its consolidated subsidiaries, except where the context requires otherwise. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our 20212022 Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Forward-Looking Statements” above for further discussion). References to “Notes” are Notes included in our Notes to Condensed Consolidated Financial Statements (Unaudited). Throughout MD&A, all references to losses or income per share are on a diluted basis.

Overview

Established in 1891, we believe we are the oldest operating precious metals mining company in the United States. We are the largest silver producer in the United States, producing over 40%45% of the United StatesU.S. silver production at our Greens Creek and Lucky Friday operations. We produce gold at our Casa Berardi operation in Quebec, Canada, and Greens Creek,Creek. In addition, we are developing the Keno Hill mine in the Yukon, Canada which we acquired on September 7, 2022. We began ramp-up of the Keno Hill mill during the second quarter of 2023 and produced goldexpect to operate at our Nevada Operations segment priorfull production levels by year-end and to suspensionreach2.5 million ounces of operations during 2021.silver in 2023. Based upon our operational footprint,jurisdictions in which we operate, we believe we have low political and economic risk compared to other mining companies whose mines are located in other parts of the world. Our exploration interests are located in the United States, Canada and Mexico. Our operating and strategic framework is based on expanding our production and locating and developing new resource potential in a safe and responsible manner.

Second Quarter 20222023 Highlights

Operational:

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Produced 3.6 million ounces of silver and 45,719 ounces of gold. See Consolidated Results of Operations below for information on total cost of sales and cash costs and AISC, after by-product credits, per silver and gold ounce for the three-month periods ended June 30, 2022 and 2021.

•

Continued mitigation of the impacts of COVID-19 through refinement of our operational plans and procedures to protect our workforce, operations and communities while maintaining liquidity.

Financial:

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Reported sales of $191.2 million.

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Generated $40.2 million in net cash provided by operating activities. See the Financial Liquidity and Capital Resources section below for further discussion.

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Made capital expenditures (excluding lease additions and other non-cash items) of approximately $34.7 million, including $14.7 million at Greens Creek, $11.5 million at Lucky Friday, $8.1 million at Casa Berardi and $0.3 million at the Nevada Operations.

•
23Produced 3.8 million ounces of silver and 35,251 ounces of gold. See Consolidated Results of Operations below for information on total cost of sales, as well as cash costs and all in sustaining costs ("AISC"), each after by-product credits, per silver and gold ounce for the three-month periods ended June 30, 2023 and 2022.
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Lucky Friday silver production increased 5% compared to the second quarter 2022.
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TableKeno Hill produced 0.2 million ounces of Contentssilver as ramp-up of the mill began during the quarter, with initial processing of lower grade stockpiled material.
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Advanced the underground development at Keno Hill mine by 819 meters.

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Generated $5.9 million in free cash flow. A reconciliation of the non-GAAP measure free cash flow to net cash provided by operating activities, the nearest GAAP measure, is included in the Reconciliation of Cash Flows From Operating Activities (GAAP) to Free Cash Flow (Non-GAAP) section below.

•

Returned $3.5 million, or 60% of free cash flows, to our shareholders through payment of dividends.

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Spent $11.2 million on exploration and pre-development activities.

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During April made an $11.0 million strategic investment in Alexco. Subsequent to June 30, 2022, we increased our investment in Alexco. See Note 12, of Notes to Condensed Consolidated Financial Statements (unaudited) regarding our proposed acquisition of Alexco.

Year to date 2022 HighlightsFinancial:

Operational:

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Produced 7.0 million ounces of silver and 87,361 ounces of gold. See Consolidated Results of Operations below for information on total cost of sales and cash costs and AISC, after by-product credits, per silver and gold ounce for the six-month periods ended June 30, 2022 and 2021.

•

Continued our trend of strong safety performance, as our All Injury Frequency Rate (“AIFR”) for the year to date was 1.59, 24% below the U.S. national average for MSHA's “metal and nonmetal” category and within 10% of our AIFR of 1.45 for the full year of 2021.

•

Continued mitigation of the impacts of COVID-19 through refinement of our operational plans and procedures to protect our workforce, operations and communities while maintaining liquidity.

Financial:

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Reported sales of $377.7 million.

•

Generated $78.1 million in net cash provided by operating activities. See the Financial Liquidity and Capital Resources section below for further discussion.

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Made capital expenditures (excluding lease additions and other non-cash items) of approximately $55.8 million, including $17.8 million at Greens Creek, $21.2 million at Lucky Friday, $15.9 million at Casa Berardi and $1.2 million at the Nevada Operations.

•

Generated $22.3 million in free cash flow. A reconciliation of the non-GAAP measure free cash flow to net cash provided by operating activities, the nearest GAAP measure, is included in the Reconciliation of Cash Flows From Operating Activities (GAAP) to Free Cash Flow (Non-GAAP) section below.

•

Returned $7.0 million, or 31% of free cash flows, to our shareholders through payment of dividends.

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Spent $24.0 million on exploration and pre-development activities.

•

•
Generated sales of $178.1 million.
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Invested $21.9 million in junior mining companies, including an $11.0 investment in Alexco. See Note 12, of Notes to Condensed Consolidated Financial Statements (unaudited) regarding our proposed acquisition of Alexco.

Our current business strategy is to focus our financial and human resources in the following areas:

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executing value enhancing transactions, such as with the proposed Alexco acquisition;

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rapidly responding to the threats from the COVID-19 pandemic to protect our workforce, operations and communities while maintaining liquidity;

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operating our properties safely, in an environmentally responsible and cost-effective manner;

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maintaining and investing in exploration and pre-development projects in the vicinities of eleven mining districts and projects we believe to be under-explored and under-invested: Greens Creek on Alaska's Admiralty Island located near Juneau; North Idaho's Silver Valley in the historic Coeur d'Alene Mining District; the silver-producing district near Durango, Mexico; in the vicinity of our Casa Berardi mine and the Heva-Hosco project in the Abitibi region of northwestern Quebec, Canada; our projects located in two districts in Nevada; our projects in northwestern Montana; the Creede district of southwestern Colorado; the Kinskuch project in British Columbia, Canada; and the Republic mining district in Washington state;

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improving operations at each of our mines, which includes incurring costs for new technologies and equipment;

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expanding our proven and probable reserves, mineral resources and production capacity at our properties;

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conducting our business with financial stewardship to preserve our financial position in varying metals price and operational environments;

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advancing permitting of one or both of our Montana projects; and

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continuing to seek opportunities to acquire and invest in mining and exploration properties and companies.

We strive to achieve excellent mine safety and health performance. We seek to implement this goal by: training employees in safe work practices; establishing, following and improving safety standards; investigating accidents, incidents and losses to avoid recurrence; involving employees in the establishment of safety standards; and participating in the National Mining Association’s CORESafety program. We seek to implement reasonable best practices with respect to mine safety and emergency preparedness. We respond to issues outlined in investigations and inspections by MSHA, the Commission of Labor Standards, Pay Equity and Occupational Health and Safety in Quebec, and the Mexico Ministry of Economy and Mining and continue to evaluate our safety practices. There can be no assurance that our practices will mitigate or eliminate all safety risks. Achieving and maintaining compliance with regulations will be challenging and may increase our operating costs. See Item 1A. Risk Factors - We face substantial governmental regulation, including the Mine Safety and Health Act, various environmental laws and regulations and the 1872 Mining Law in our 2021 Form 10-K.

Since its outbreak in 2020, the COVID-19 pandemic continues to impact our operational practices and we continue to incur incremental costs and modify our operational plans to keep our workforce safe. In 2020, the pandemic adversely impacted our expected productionoperations by making capital expenditures of goldapproximately $51.5 million, including $8.8 million at Greens Creek, $16.3 million at Lucky Friday, $20.8 million at Casa Berardi and $3.5 million at Keno Hill.

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Returned $3.9 million to our stockholders through dividend payments.
•
Spent $6.9 million on exploration drillingand pre-development activities.

Year to date 2023 Highlights

Operational:

•
Achieved an All Injury Frequency Rate ("AIFR") of 1.18, below our 2022 record of 1.22.
•
Produced 7.9 million ounces of silver and 74,822 ounces of gold. See Consolidated Results of Operations below for information on total cost of sales and cash costs and AISC", each after by-product credits, per silver and gold ounce for the six-month periods ended June 30 , 2023 and 2022.
•
Greens Creek and Lucky Friday increased silver production by 6% and 21%, respectively, compared to the first half of 2022.
•
Advanced the underground development at Keno Hill mine by 1,384 meters.

Financial:

•
Generated sales of $377.6 million.
•
Invested in our operations by making capital expenditures of approximately $105.9 million, including $15.5 million at Greens Creek.Creek, $31.1 million at Lucky Friday, $37.9 million at Casa Berardi and $20.6 million at Keno Hill.
•
Returned $7.8 million to our stockholders through dividend payments.
•
Spent $11.9 million on exploration and pre-development activities.

19

Outlook

Our financial results vary as a result of fluctuations in market prices primarily for silver and gold and, to a lesser extent, zinc and lead. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Beginning in 2020, with the onset of the COVID-19 pandemic, and continuing in 2023 because of a series of macro-economic factors, there has been significant volatility in the financial and commodities markets, including the precious metals market. We incurred $0.1 millionbelieve the outlook for precious metals fundamentals in the medium- and $0.4 millionlong-term are favorable. Refer to “Markets” and see Item 1A. “Risk Factors” contained in COVID-19 mitigationPart I of our annual report on Form 10-K for the year ended December 31, 2022 ("2022 Form 10-K"), for further discussion. Because we cannot control the price of our products, the key measures that management focuses on in operating our business are production volumes, payable sales volumes, Cash Cost, After By-product Credits, per Ounce (non-GAAP) and All-In Sustaining Cost, After By-product Credits, per Ounce (“AISC”) (non-GAAP), operating cash flows, capital expenditures, free cash flow and adjusted EBITDA. The average realized prices for all metals sold by us continued to experience significant volatility period over period. We have also experienced significant cost inflation across our operations, principally associated with higher energy prices, increased costs duringfor other consumables such as reagents, explosives and steel, and labor and contractor costs.

Consolidated Results of Operations

Sales by metal for the three and six months ended June 30, 2023 and 2022 compared to $1.4 million and $3.0 million duringwere as follows:

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

(in thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Silver

 

$

79,489

 

 

$

70,050

 

 

$

161,022

 

 

$

136,382

 

Gold

 

 

62,924

 

 

 

82,018

 

 

 

138,010

 

 

 

159,186

 

Lead

 

 

21,657

 

 

 

21,314

 

 

 

47,059

 

 

 

40,878

 

Zinc

 

 

25,903

 

 

 

31,176

 

 

 

58,846

 

 

 

66,814

 

Less: smelter charges

 

 

(12,220

)

 

 

(13,316

)

 

 

(28,193

)

 

 

(25,519

)

Sales of products

 

$

177,753

 

 

$

191,242

 

 

$

376,744

 

 

$

377,741

 

Sales by metal for the three and six months ended June 30, 2021, respectively. To mitigate the impact of COVID-19, we have taken precautionary measures, including implementing operational plans2023 and practices and increasing our cash reserves. As long as they are required, the operational practices implemented could continue to have an adverse impact on our operating results due to additional costs or deferred production and revenues. There is uncertainty related to the potential additional impacts COVID-19 and any subsequent variants could have on our operations and financial results for the rest of 2022. In our 2021 Form 10-K, see Item IA. Risk Factors - Natural disasters, public health crises (including COVID-19), political crises, and other catastrophic events or other events outside of our control may materially and adversely affect our business or financial results and COVID-19 virus pandemic may heighten other risks for information on how restrictions related to COVID-19 have recently affected some of our operations.

A number of key factors may impact the execution of our strategy, including regulatory issues and metals prices. Metals prices can be very volatile and are influenced by a number of factors beyond our control (except on a limited basis through the use of derivative contracts). See Item 7.Critical Accounting Estimates in our 2021 Form 10-K and above in Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited). The average realized prices of gold and zinc were higher, with the average realized price for silver and lead lower, in the second three months of 2022, than in the comparable period last year, as illustrated by the table in Results of Operations below. While we believe longer-term global economic and industrial trends could result in continued demand for the metals we produce, prices have been volatile and there can be no assurance that current prices will continue.

Volatility in global financial markets and other factors can pose a significant challenge to our ability to access credit and equity markets, should we need to do so, and to predict sales prices for our products. To help mitigate this challenge, we utilize forward contracts to manage exposure to declines in the prices of (i) silver, gold, zinc and lead contained in our concentrates that have been shipped but have not yet settled, and (ii) zinc and lead that we forecast for future concentrate shipments. In addition, we have in place a $250 million revolving credit agreement, of which $14.9 million was used as of June 30, 2022 for letters of credit, leaving approximately $235.1 million available for borrowing.

Another challenge for us is the risk associated with environmental litigation and ongoing reclamation activities. As described in Item 1A. Risk Factors in our 2021 Form 10-K and above in Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited), it is possible that our estimate of these liabilities (and our ability to estimate liabilities in general) may change in the future, affecting our strategic plans. We are involved in various environmental legal matters and the estimate of our environmental liabilities and liquidity needs, as well as our strategic plans, may be significantly impacted as a result of these matters or new matters that may arise. We strive to ensure that our activities are conducted in compliance with applicable laws and regulations and attempt to resolve environmental litigation on terms as favorable to us as possible.

25
Table of Contents

Consolidated Results of Operations

Sales by metal for the three- and six-month periods ended June 30, 2022 and 2021 were as follows:

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 

(in thousands)

 

2022

  

2021

  

2022

  

2021

 

Silver

 $70,050  $92,765  $136,382  $170,525 

Gold

  82,018   86,078   159,186   187,487 

Lead

  21,314   22,223   40,878   38,116 

Zinc

  31,176   30,037   66,814   59,228 

Less: smelter charges

  (13,316)  (13,120)  (25,519)  (26,521)

Sales of products

 $191,242  $217,983  $377,741  $428,835 

Sales by metal for the three- and six-month periods ended June 30, 2022 and 2021, and the approximate variances attributed to differences in metals prices, sales volumes and smelter terms, were as follows:

(in thousands)

 

Silver

 

 

Gold

 

 

Base metals

 

 

Less: smelter and refining charges

 

 

Total sales of products

 

Three months ended June 30, 2022

 

$

70,050

 

 

$

82,018

 

 

$

52,490

 

 

$

(13,316

)

 

$

191,242

 

Variances - 2023 versus 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price

 

 

10,012

 

 

 

3,827

 

 

 

(5,213

)

 

 

1,128

 

 

 

9,754

 

Volume

 

 

(574

)

 

 

(23,608

)

 

 

283

 

 

 

(337

)

 

 

(24,236

)

Smelter terms

 

 

1

 

 

 

687

 

 

 

—

 

 

 

305

 

 

 

993

 

Three months ended June 30, 2023

 

$

79,489

 

 

$

62,924

 

 

$

47,560

 

 

$

(12,220

)

 

$

177,753

 

(in thousands)

 

Silver

 

 

Gold

 

 

Base metals

 

 

Less: smelter and refining charges

 

 

Total sales of products

 

Six months ended June 30, 2022

 

$

136,382

 

 

$

159,186

 

 

$

107,692

 

 

$

(25,519

)

 

$

377,741

 

Variances - 2023 versus 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price

 

 

4,935

 

 

 

4,737

 

 

 

(15,068

)

 

 

(1,708

)

 

 

(7,104

)

Volume

 

 

19,704

 

 

 

(25,913

)

 

 

13,280

 

 

 

(3,251

)

 

 

3,820

 

Smelter terms

 

 

1

 

 

 

—

 

 

 

1

 

 

 

2,285

 

 

 

2,287

 

Six months ended June 30, 2023

 

$

161,022

 

 

$

138,010

 

 

$

105,905

 

 

$

(28,193

)

 

$

376,744

 

(in thousands)

 

Silver

  

Gold

  

Base metals

  

Less: smelter
and refining
charges

  

Total sales
of products

 

Three months ended June 30, 2021

 $92,765  $86,078  $52,260  $(13,120) $217,983 

Variances - 2022 versus 2021:

                    

Price

  (21,990)  1,107   (1,052)  1,360   (20,575)

Volume

  (688)  (5,167)  1,282   100   (4,473)

Smelter terms

  (37)  —   —   (1,656)  (1,693)

Three months ended June 30, 2022

 $70,050  $82,018  $52,490  $(13,316) $191,242 

(in thousands)

 

Silver

  

Gold

  

Base metals

  

Less: smelter
and refining
charges

  

Total sales
of products

 

Six months ended June 30, 2021

 $170,525  $187,487  $97,344  $(26,521) $428,835 

Variances - 2022 versus 2021:

                    

Price

  (24,348)  5,708   11,404   (16)  (7,252)

Volume

  (9,703)  (33,924)  (1,056)  1,428   (43,255)

Smelter terms

  (92)  (85)  —   (410)  (587)

Six months ended June 30, 2022

 $136,382  $159,186  $107,692  $(25,519) $377,741 

The fluctuations in sales for the second quarterthree and first six months of 2022ended June 30, 2023 compared to the same periods of 2021in 2022 were primarily due to the following two reasons:

•

Lower

•
Higher average realized prices for silver, gold and lead partially offset by lower average realized prices for zinc during the three months ended June 30, 2023 and lower average realized prices for lead and zinc partially offset by higher realized prices for silver in the second quarter and first half of 2022, lower realized lead prices in the three months ended June 30, 2022, partially offset by higher realized gold and zinc prices in the second quarter and first half of 2022 and higher realized lead prices for the first half of 2022, all compared to the same periods of 2021. These price variances are illustrated in the following table:

26
Table of Contents

20

   

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
   

2022

  

2021

  

2022

  

2021

 

Silver –

London PM Fix ($/ounce)

 $22.64  $26.69  $23.30  $26.49 
 

Realized price per ounce

 $20.68  $27.14  $22.45  $26.45 

Gold –

London PM Fix ($/ounce)

 $1,872  $1,816  $1,873  $1,807 
 

Realized price per ounce

 $1,855  $1,825  $1,867  $1,795 

Lead –

LME Final Cash Buyer ($/pound)

 $1.00  $0.96  $1.03  $0.94 
 

Realized price per pound

 $0.97  $1.04  $1.02  $0.99 

Zinc –

LME Final Cash Buyer ($/pound)

 $1.78  $1.32  $1.74  $1.29 
 

Realized price per pound

 $1.44  $1.35  $1.61  $1.34 

silver and gold during the six months ended June 30, 2023, compared to the same periods in 2022.The table below summarizes spot prices and our realized prices for the commodities we sell:

 

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Silver –

 

 London PM Fix ($/ounce)

 

$

24.19

 

 

$

22.64

 

 

$

23.37

 

 

$

23.30

 

 

 

 Realized price per ounce

 

$

23.67

 

 

$

20.68

 

 

$

23.12

 

 

$

22.45

 

Gold –

 

 London PM Fix ($/ounce)

 

$

1,978

 

 

$

1,872

 

 

$

1,933

 

 

$

1,873

 

 

 

 Realized price per ounce

 

$

1,969

 

 

$

1,855

 

 

$

1,928

 

 

$

1,867

 

Lead –

 

 LME Final Cash Buyer ($/pound)

 

$

0.96

 

 

$

1.00

 

 

$

0.97

 

 

$

1.03

 

 

 

 Realized price per pound

 

$

0.99

 

 

$

0.97

 

 

$

1.00

 

 

$

1.02

 

Zinc –

 

 LME Final Cash Buyer ($/pound)

 

$

1.15

 

 

$

1.78

 

 

$

1.29

 

 

$

1.74

 

 

 

 Realized price per pound

 

$

1.13

 

 

$

1.44

 

 

$

1.26

 

 

$

1.61

 

Average realized prices typically differ from average market prices primarily because concentrate sales are generally recorded as revenues at the time of shipment at forward prices for the estimated month of settlement, which differ from average market prices. Due to the time elapsed between shipment of concentrates and final settlement with the customers, we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices each period through final settlement.  ForWe recorded net positive price adjustments to provisional settlements of $2.1 million and $4.2 million for the second quarterthree and first six months of 2022, we recordedended June 30, 2023, respectively, and net negative price adjustments to provisional settlements of $15.7 million and $14.8 million respectively, compared to net positive price adjustments to provisional settlements of $3.1 millionfor the three and 3.6 million, respectively, in the second quarter and first six months of 2021.ended June 30, 2022, respectively. The price adjustments related to silver, gold, zinc and lead contained in our concentrate shipments were partially offset by gains and losses on forward contracts for those metals. See Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information. The gains and losses on these contracts are included in revenues and impact the realized prices for silver, gold, lead and zinc. Realized prices are calculated by dividing gross revenues for each metal (which include the price adjustments and gains and losses on the forward contracts discussed above) by the payable quantities of each metal included in concentrate, doré and carbon material shipped during the period.

•

Higher quantities of lead sold as a result of higher production at Lucky Friday was offset by lower silver, gold and zinc sales volumes, in the second quarter and first half of 2022 compared to 2021. See The Greens Creek Segment,The Lucky Friday Segment, The Casa Berardi Segment and The Nevada Operations Segment sections below for more information on metal production and sales volumes at each of our operating segments. Total metals production and sales volumes for each period are shown in the following table:

•
Lower quantities of silver, gold and lead sold during the three months ended June 30, 2023 and higher quantities of silver, lead and zinc sold partially offset by lower quantities of gold sold during the six months ended June 30, 2023 compared to the same periods in 2022. This was primarily due to lower gold production and related sales at Casa Berardi, partially offset by higher gold sales at Greens Creek. See The Greens Creek Segment,The Lucky Friday Segment, The Keno Hill Segment, Casa Berardi Segment and The Nevada Operations Segment sections below for more information on metal production and sales volumes at each of our operating segments. Total metals production and sales volumes for each period are shown in the following table:

 

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Silver -

 

 Ounces produced

 

 

3,832,559

 

 

 

3,645,454

 

 

 

7,873,528

 

 

 

6,970,162

 

 

 

 Payable ounces sold

 

 

3,360,694

 

 

 

3,387,909

 

 

 

6,965,188

 

 

 

6,075,170

 

Gold -

 

 Ounces produced

 

 

35,251

 

 

 

45,719

 

 

 

74,822

 

 

 

87,361

 

 

 

 Payable ounces sold

 

 

31,961

 

 

 

44,225

 

 

 

71,580

 

 

 

85,278

 

Lead -

 

 Tons produced

 

 

13,323

 

 

 

13,331

 

 

 

26,559

 

 

 

24,194

 

 

 

 Payable tons sold

 

 

10,895

 

 

 

11,685

 

 

 

23,408

 

 

 

20,739

 

Zinc -

 

 Tons produced

 

 

17,284

 

 

 

16,766

 

 

 

33,079

 

 

 

31,712

 

 

 

 Payable tons sold

 

 

11,474

 

 

 

10,858

 

 

 

23,333

 

 

 

20,805

 

   

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
   

2022

  

2021

  

2022

  

2021

 

Silver -

Ounces produced

  3,645,454   3,524,783   6,970,162   6,984,229 
 

Payable ounces sold

  3,387,909   3,415,464   6,075,170   6,445,490 

Gold -

Ounces produced

  45,719   59,139   87,361   111,143 
 

Payable ounces sold

  44,225   47,168   85,278   104,454 

Lead -

Tons produced

  13,331   11,540   24,194   22,244 
 

Payable tons sold

  11,685   10,663   20,739   19,331 

Zinc -

Tons produced

  16,766   17,211   31,712   33,318 
 

Payable tons sold

  10,858   11,143   20,805   22,170 

The difference between what we report as “ounces/tons produced” and “payable ounces/tons sold” is attributable to the difference between the quantities of metals contained in the concentrates we produce versus the portion of those metals actually paid for by our customers according to the terms of our sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades which impact the amount of metals contained in concentrates produced and sold.

27
Table of Contents

21

Sales, total cost of sales, gross profit (loss), Cash Cost, After By-product Credits, per Ounce (“Cash Cost”) (non-GAAP) and All-In Sustaining Cost, After By-product Credits, per Ounce (“AISC”)AISC (non-GAAP) at our operating units for the three-three and six-monthssix months ended June 30, 20222023 and 20212022 were as follows (in thousands, except for Cash Cost and AISC):

 

 

Silver

 

 

Gold

 

 

 

Greens Creek

 

 

Lucky Friday

 

 

Keno Hill

 

 

Total Silver (2)

 

 

Casa Berardi

 

 

Nevada Operations and Other (3)

 

 

Total Gold

 

Three Months Ended June 30, 2023:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

95,891

 

 

$

42,648

 

 

$

1,581

 

 

$

140,120

 

 

$

36,946

 

 

$

1,065

 

 

$

38,011

 

Total cost of sales

 

 

(63,054

)

 

 

(32,190

)

 

 

(1,581

)

 

 

(96,825

)

 

 

(42,576

)

 

 

(1,071

)

 

 

(43,647

)

Gross profit (loss)

 

$

32,837

 

 

$

10,458

 

 

$

—

 

 

$

43,295

 

 

$

(5,630

)

 

$

(6

)

 

$

(5,636

)

Cash Cost (1)

 

$

1.33

 

 

$

6.96

 

 

$

—

 

 

$

3.32

 

 

$

1,658

 

 

$

—

 

 

$

1,658

 

AISC (1)

 

$

5.34

 

 

$

14.24

 

 

$

—

 

 

$

11.63

 

 

$

2,147

 

 

$

—

 

 

$

2,147

 

Three Months Ended June 30, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

92,723

 

 

$

35,880

 

 

$

—

 

 

$

128,603

 

 

$

62,639

 

 

$

—

 

 

$

62,639

 

Total cost of sales

 

 

(60,506

)

 

 

(30,348

)

 

 

—

 

 

 

(90,854

)

 

 

(61,870

)

 

 

(1,255

)

 

 

(63,125

)

Gross profit (loss)

 

$

32,217

 

 

$

5,532

 

 

$

—

 

 

$

37,749

 

 

$

769

 

 

$

(1,255

)

 

$

(486

)

Cash Cost (1)

 

$

(3.29

)

 

$

3.07

 

 

$

—

 

 

$

(1.14

)

 

$

1,371

 

 

$

—

 

 

$

1,371

 

AISC (1)

 

$

3.10

 

 

$

9.91

 

 

$

—

 

 

$

8.08

 

 

$

1,605

 

 

$

—

 

 

$

1,605

 

  

Silver

  

Gold

 
  

Greens

Creek

  

Lucky

Friday

  

Other

  

Total

Silver (2)

  

Casa

Berardi

  

Nevada Operations

  

Total

Gold

 

Three Months Ended June 30, 2022:

                            

Sales

 $92,723  $35,880  $—  $128,603  $62,639  $—  $62,639 

Total cost of sales

  (60,506)  (30,348)  —   (90,854)  (61,870)  (1,255)  (63,125)

Gross profit (loss)

 $32,217  $5,532      $37,749  $769  $(1,255) $(486)

Cash Cost per silver or gold ounce (1)

 $(3.29) $3.07  $—  $(1.14) $1,371   —  $1,371 

AISC per silver or gold ounce (1)

 $3.48  $9.91  $—  $8.55  $1,641  $—  $1,641 

Three Months Ended June 30, 2021:

                            

Sales

 $113,763  $39,645  $3  $153,411  $56,122  $8,450  $64,572 

Total cost of sales

  (55,488)  (27,901)  (1)  (83,390)  (54,669)  (17,993)  (72,662)

Gross profit (loss)

 $58,275  $11,744  $2  $70,021  $1,453  $(9,543) $(8,090)

Cash Cost per silver or gold ounce (1)

 $(2.64) $8.07  $—  $0.18  $1,199  $1,369  $1,254 

AISC per silver or gold ounce (1)

 $0.68  $14.10  $—  $7.54  $1,434  $1,386  $1,419 

 

 

Silver

 

 

Gold

 

 

 

Greens Creek

 

 

Lucky Friday

 

 

Keno Hill

 

 

Total Silver (2)

 

 

Casa Berardi

 

 

Nevada Operations and Other (3)

 

 

Total Gold

 

Six Months Ended June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

194,502

 

 

$

91,758

 

 

$

1,581

 

 

$

287,841

 

 

$

87,944

 

 

$

1,846

 

 

$

89,790

 

Total cost of sales

 

 

(129,342

)

 

 

(66,724

)

 

 

(1,581

)

 

 

(197,647

)

 

 

(105,574

)

 

 

(1,803

)

 

 

(107,377

)

Gross profit

 

$

65,160

 

 

$

25,034

 

 

$

—

 

 

$

90,194

 

 

$

(17,630

)

 

$

43

 

 

$

(17,587

)

Cash Cost (1)

 

$

1.23

 

 

$

5.64

 

 

$

—

 

 

$

2.70

 

 

$

1,725

 

 

$

—

 

 

$

1,725

 

AISC (1)

 

$

4.51

 

 

$

12.48

 

 

$

—

 

 

$

10.21

 

 

$

2,286

 

 

$

—

 

 

$

2,286

 

Six Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

178,813

 

 

$

73,920

 

 

$

—

 

 

$

252,733

 

 

$

124,740

 

 

$

268

 

 

 

125,008

 

Total cost of sales

 

 

(110,143

)

 

 

(59,613

)

 

 

—

 

 

 

(169,756

)

 

 

(124,038

)

 

 

(1,255

)

 

 

(125,293

)

Gross profit

 

$

68,670

 

 

$

14,307

 

 

$

—

 

 

$

82,977

 

 

$

702

 

 

$

(987

)

 

$

(285

)

Cash Cost (1)

 

$

(2.09

)

 

$

4.54

 

 

$

—

 

 

$

(0.07

)

 

$

1,440

 

 

$

—

 

 

$

1,440

 

AISC (1)

 

$

2.47

 

 

$

11.27

 

 

$

—

 

 

$

7.75

 

 

$

1,680

 

 

$

—

 

 

$

1,680

 

  

Silver

  

Gold

 
  

Greens

Creek

  

Lucky

Friday

  

Other

  

Total

Silver (2)

  

Casa

Berardi

  

Nevada

Operations

  

Total

Gold

 

Six Months Ended June 30, 2022:

                            

Sales

 $178,813  $73,920  $—  $252,733  $124,740  $268  $125,008 

Total cost of sales

  (110,143)  (59,613)  —   (169,756)  (124,038)  (1,255)  (125,293)

Gross profit

 $68,670  $14,307  $—  $82,977  $702  $(987) $(285)

Cash Cost per silver or gold ounce (1)

 $(2.09) $4.54  $—  $(0.07) $1,440  $—  $1,440 

AISC per silver or gold ounce (1)

 $2.69  $11.27  $—  $8.12  $1,721  $—  $1,721 

Six Months Ended June 30, 2021:

                            

Sales

 $212,172  $68,767  $176  $281,115  $129,033  $18,687  $147,720 

Total cost of sales

  (108,668)  (50,696)  (95)  (159,459)  (114,596)  (25,448)  (140,044)

Gross profit

 $103,504  $18,071  $81  $121,656  $14,437  $(6,761) $7,676 

Cash Cost per silver or gold ounce (1)

 $(1.65) $7.85  $—  $0.79  $1,106  $1,371  $1,161 

AISC per silver or gold ounce (1)

 $1.14  $14.17  $—  $7.38  $1,347  $1,393  $1,357 

(1)

A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

(2)

The calculation of AISC, After By-product Credits, Per Ounce for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining exploration and capital costs.

(1)
28
TableA reconciliation of Contents
these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

(2)
The calculation of AISC for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining capital.

(3)
For the three and six months ended June 30, 2023, Other includes $378,000 and $887,000, respectively, of sales and $354,000 and $786,000, respectively, of cost of sales, for the environmental services business acquired as part of the Alexco acquisition.

While revenue from zinc, lead and gold by-products is significant, we believe that identification of silver as the primary product of Greens Creek, Lucky Friday and Keno Hill is appropriate because:

•
silver has historically accounted for a higher proportion of revenue than any other metal and is expected to do so in the future;
•
we have historically presented the Greens Creek and Lucky Friday units as primary silver producers, based on the original analysis that justified putting the project into production, and the same analysis applies to the Keno Hill unit, and further we believe that consistency in disclosure is appropriate because:important to our investors regardless of the relationships of metals prices and production from year to year;
•
metallurgical treatment maximizes silver recovery;

22

•
the Greens Creek, Lucky Friday and Keno Hill deposits are massive sulfide deposits containing an unusually high proportion of silver; and
•
in most of their working areas, Greens Creek, Lucky Friday and Keno Hill utilize selective mining methods in which silver is the metal targeted for highest recovery.

•

silver has historically accounted for a higher proportion of revenue than any other metal and is expected to do so in the future;

•

we have historically presented these units as a primary silver producer, based on the original analysis that justified putting the project into production, and believe that consistency in disclosure is important to our investors regardless of the relationships of metals prices and production from year to year;

•

metallurgical treatment maximizes silver recovery;

•

the Greens Creek and Lucky Friday deposits are massive sulfide deposits containing an unusually high proportion of silver; and in most of their working areas, Greens Creek and Lucky Friday utilize selective mining methods in which silver is the metal targeted for highest recovery.

Accordingly, we believe the identification of gold, lead and zinc as by-product credits at Greens Creek, and Lucky Friday and Keno Hill is appropriate because of their lower economic value compared to silver and due to the fact that silver is the primary product we intend to produce. In addition, we have not consistently received sufficient revenue from any single by-product metal to warrant classification of such as a co-product.

We periodically review our revenues to ensure that reporting of primary products and by-products is appropriate. Because for Greens Creek, Lucky Friday and San SebastianKeno Hill we consider zinc, lead and gold to be by-products of our silver production, the values of these metals offset operating costs within our calculations of Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce.

We believe the identification of silver as a by-product credit is appropriate at Casa Berardi and Nevada Operations because of its lower economic value compared to gold and due to the fact that gold is the primary product we intend to produce there. In addition, we do not receive sufficient revenue from silver at the Casa Berardi or Nevada Operations to warrant classification of such as a co-product. Because we consider silver to be a by-product of our gold production at Casa Berardi and Nevada Operations, the value of silver offsets operating costs within our calculations of Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce.

For the second quarter we recordedWe reported a net loss applicable to common shareholdersstockholders of $15.8 million for the three months ended June 30, 2023, compared to a net loss applicable to common stockholders of $13.7 million (($0.03) per basic common share) compared to incomein the comparable period in 2022. The following were the significant drivers of changes in net loss applicable to common shareholdersstockholders compared to 2022:

•
Consolidated gross profit increased by $0.4 million at our operating units. See The Greens Creek Segment,The Lucky Friday Segment, The Keno Hill Segment, The Casa Berardi Segment and The Nevada Operations Segment sections below for a discussion on the key drivers by operating unit.
•
Exploration and pre-development decreased by $4.3 million primarily due to lower expenditures across our exploration portfolio.
•
Ramp-up and suspension costs increased by $11.1 million primarily due to $9.4 million of $2.6Keno Hill ramp-up activities following the Alexco acquisition and $2.2 million (($0.01) per basic common share)related to the temporary suspension of operations at Casa Berardi for 20 days following the directives of Quebec's Ministry of Natural Resources and Forests to close certain forest lands and access roads in responses to the Quebec forest fires, partially offset by a reduction of suspension costs at Nevada Operations.
•
Other operating income of $4.3 million in 2023 compared to other operating expense of $1.9 million in 2022, primarily due to the receipt of $5.9 million in insurance proceeds in May related to a coverage lawsuit.
•
Fair value adjustments, net losses decreased by $13.9 million primarily due to lower unrealized losses on our marketable equity securities portfolio than in the second quartercomparable period in 2022.
•
Net foreign exchange loss of 2021.$3.9 million in 2023 compared to a gain of $4.5 million in 2022 due to the strengthening of the Canadian dollar impact on the revaluation of our Canadian monetary assets and liabilities.

We reported a net loss applicable to common stockholders of $19.1 million for the six months ended June 30, 2023, compared to a net loss applicable to common stockholders of $9.6 million in the comparable period in 2022. The variancesfollowing were the significant drivers of changes in net loss applicable to common stockholders compared to 2022:

•
Consolidated gross profit decreased by $10.1 million at our operating units. See The Greens Creek Segment,The Lucky Friday Segment, The Keno Hill Segment, The Casa Berardi Segment and The Nevada Operations Segment sections below for a discussion on the key drivers by operating unit.
•
General and administrative costs increased by $4.9 million, reflecting personnel that joined the Company as a result of the September 7, 2022 Alexco acquisition, and compensation adjustments effective July 1, 2022.
•
Exploration and pre-development decreased by $12.1 million primarily due to lower expenditures across our exploration portfolio.
•
Ramp-up and suspension costs increased by $16.2 million primarily due to $15.3 million of Keno Hill ramp-up activities following the Alexco acquisition and $2.2 million related to the temporary suspension of operations at Casa Berardi for 20 days following the directives of Quebec's Ministry of Natural Resources and Forests to close certain forest lands and access roads in responses to the Quebec forest fires, partially offset by a reduction of suspension costs at Nevada Operations.
•
Other operating income of $4.3 million in 2023 compared to other operating expense of $4.4 million in 2022, primarily due to the receipt of $5.9 million in insurance proceeds in May related to a coverage lawsuit.

23

•
Fair value adjustments, net was a gain of $0.6 million in 2023 compared to a loss of $10.5 million in 2022 due to a combination of lower unrealized losses on our marketable equity securities portfolio and unrealized gains on our undesignated derivative book than in the comparable period in 2022.
•
Net foreign exchange loss of $3.7 million in 2023 compared to a gain of $2.4 million in 2022 due to the strengthening of the Canadian dollar impact on the revaluation of our Canadian monetary assets and liabilities.

24

Greens Creek

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Sales

 

$

95,891

 

 

$

92,723

 

 

$

194,502

 

 

$

178,813

 

Cost of sales and other direct production costs

 

 

(49,976

)

 

 

(46,877

)

 

 

(101,800

)

 

 

(85,094

)

Depreciation, depletion and amortization

 

 

(13,078

)

 

 

(13,629

)

 

 

(27,542

)

 

 

(25,049

)

Total cost of sales

 

 

(63,054

)

 

 

(60,506

)

 

 

(129,342

)

 

 

(110,143

)

Gross profit

 

$

32,837

 

 

$

32,217

 

 

$

65,160

 

 

$

68,670

 

Tons of ore milled

 

 

232,465

 

 

 

209,558

 

 

 

465,632

 

 

 

421,245

 

Production:

 

 

 

 

 

 

 

 

 

 

 

 

Silver (ounces)

 

 

2,355,674

 

 

 

2,410,598

 

 

 

5,128,533

 

 

 

4,840,380

 

Gold (ounces)

 

 

16,351

 

 

 

12,413

 

 

 

31,235

 

 

 

23,815

 

Zinc (tons)

 

 

13,255

 

 

 

13,396

 

 

 

25,737

 

 

 

25,890

 

Lead (tons)

 

 

4,726

 

 

 

5,184

 

 

 

9,928

 

 

 

10,067

 

Payable metal quantities sold:

 

 

 

 

 

 

 

 

 

 

 

 

Silver (ounces)

 

 

2,155,419

 

 

 

2,266,001

 

 

 

4,447,454

 

 

 

4,038,392

 

Gold (ounces)

 

 

13,008

 

 

 

10,552

 

 

 

25,654

 

 

 

18,474

 

Zinc (tons)

 

 

8,960

 

 

 

8,495

 

 

 

18,204

 

 

 

16,587

 

Lead (tons)

 

 

3,750

 

 

 

4,251

 

 

 

7,906

 

 

 

7,314

 

Ore grades:

 

 

 

 

 

 

 

 

 

 

 

 

Silver ounces per ton

 

 

12.8

 

 

 

14.0

 

 

 

13.6

 

 

 

13.9

 

Gold ounces per ton

 

 

0.10

 

 

 

0.08

 

 

 

0.09

 

 

 

0.08

 

Zinc percent

 

 

6.5

%

 

 

7.2

%

 

 

6.2

%

 

 

6.9

%

Lead percent

 

 

2.5

%

 

 

3.0

%

 

 

2.6

%

 

 

2.9

%

Total production cost per ton

 

$

194.94

 

 

$

197.84

 

 

$

196.77

 

 

$

194.98

 

Cash Cost, After By-product Credits, per Silver Ounce (1)

 

$

1.33

 

 

$

(3.29

)

 

$

1.23

 

 

$

(2.09

)

AISC, After By-Product Credits, per Silver Ounce (1)

 

$

5.34

 

 

$

3.10

 

 

$

4.51

 

 

$

2.47

 

Capital additions

 

$

8,828

 

 

$

14,668

 

 

$

15,486

 

 

$

17,760

 

(1)
A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

The $0.6 million increase in gross profit (loss) at our operating units as illustrated in the table above contributed to the results for the second quarter of 2022three months ended June 30, 2023 compared to the same period in 2021. See 2022 was primarily due to higher realized prices for all metals except zinc in addition to higher gold production as a result of higher gold grades, partially offset by higher cost of sales and other direct production costs reflecting more ore mined and processed.

The Greens Creek Segment,The Lucky Friday Segment, The Casa Berardi Segment and The Nevada Operations Segment sections below.

The impact of the lower$3.5 million decrease in gross profit infor the period was partially offset by:

•

General and administrative expense decreased by $1.4 million primarily due to the lower value of the annual directors share grant reflecting a lower issuance date share price and lower number of shares issued following the retirement of two directors in May 2022.

•

Other operating expense decreased by $1.7 million primarily due to the receipt of $1.7 million in insurance proceeds related to a coverage lawsuit received during June 2022.

•

Net foreign exchange gains of $4.5 million versus a net loss of $1.9 million reflecting the depreciation of the CAD against the USD in 2022 versus an appreciation in 2021. The variances are primarily related to the impact of changes in the CAD-to-USD exchange rate on the remeasurement of our net monetary liabilities in Quebec.

•

Fair value adjustments, net were $1.6 million less than in the comparable quarter (see Note 9 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information).

29
Table of Contents

For the first six months of 2022, we recorded loss applicable to common shareholders of $9.6 million ($0.02 per basic common share) compared to income applicable to common shareholders of $23.9 million ($0.04 per basic common share) in the first six months of 2021. The following factors contributed to the results for the first six months of 2022ended June 30, 2023 compared to the same period in 2021:2022 was primarily due to higher cost of sales and other direct production costs reflecting more ore mined and processed and cost increases in consumables, labor, maintenance and contractor costs, which were partially offset by higher realized prices for silver and gold and higher gold production as a result of higher gold grades.

•

Variances in gross profit (loss) at our operating units as illustrated in the table above. See The Greens Creek Segment,The Lucky Friday Segment, The Casa Berardi Segment, and The Nevada Operations Segment sections below.

•

Exploration and pre-development expense increased by $6.1 million reflecting increased exploration spending across the Company's exploration portfolio primarily at San Sebastian, Casa Berardi, Greens Creek and the Nevada Operations. Pre-development expense was for the development of a decline to the Hatter Graben area at the Hollister mine in Nevada.

•

Care and maintenance costs increased by $1.3 million due to the suspension of production at the Nevada Operations.

The impact of these factorsCapital additions decreased by $5.8 million and $2.3 million in the period was partially offset by:

•

Generalthree and administrative expense decreased by $1.1 million primarily due to the lower value of the annual directors share grant reflecting a lower issuance date share price and lower number of shares issued following the retirement of two directors in May 2022.

•

Other operating expense decreased by $2.9 million primarily due to the receipt of $1.7 million in insurance proceeds related to a coverage lawsuit received during June 2022 and completion of projects to identify and implement potential operational improvements at Casa Berardi and Lucky Friday in 2021. A similar project is being undertaken at Greens Creek in 2022.

•

Net foreign exchange gains of $2.4 million in the first half of 2022 versus a net loss of $4.0 million, in the first half of 2021, reflecting the depreciation of the CAD against the USD in 2022 versus an appreciation in 2021. The variances are primarily related to the impact of changes in the CAD-to-USD exchange rate on the remeasurement of our net monetary liabilities in Quebec.

•

Provision for closed operations and environmental matters decreased by $2.4 million in the first half of 2022 compared to the first half of 2021 primarily due to a $2.9 million increase in the accrual for estimated costs at the Johnny M site in New Mexico in the first quarter of 2021 (see Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information).

30
Table of Contents

The Greens Creek Segment

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Sales

 $92,723  $113,763  $178,813  $212,172 

Cost of sales and other direct production costs

  (46,877)  (40,996)  (85,094)  (79,355)

Depreciation, depletion and amortization

  (13,629)  (14,492)  (25,049)  (29,313)

Total cost of sales

  (60,506)  (55,488)  (110,143)  (108,668)

Gross profit

 $32,217  $58,275  $68,670  $103,504 

Tons of ore milled

  209,558   214,931   421,245   409,011 

Production:

                

Silver (ounces)

  2,410,598   2,558,447   4,840,380   5,143,317 

Gold (ounces)

  12,413   12,859   23,815   26,125 

Zinc (tons)

  13,396   14,610   25,890   27,964 

Lead (tons)

  5,184   5,627   10,067   10,551 

Payable metal quantities sold:

                

Silver (ounces)

  2,266,001   2,471,833   4,038,392   4,719,107 

Gold (ounces)

  10,552   11,820   18,474   22,367 

Zinc (tons)

  8,495   9,215   16,587   18,311 

Lead (tons)

  4,251   4,619   7,314   8,264 

Ore grades:

                

Silver ounces per ton

  14.02   14.52   13.93   15.23 

Gold ounces per ton

  0.08   0.08   0.08   0.09 

Zinc percent

  7.2%  7.6%  6.9%  7.6%

Lead percent

  3.0%  3.1%  2.9%  3.1%

Total production cost per ton

 $197.84  $171.13  $194.98  $176.58 

Cash Cost, After By-product Credits, Per Silver Ounce (1)

 $(3.29) $(2.64) $(2.09) $(1.65)

AISC, After By-Product Credits, per Silver Ounce (1)

 $3.48  $0.68  $2.69  $1.14 

Capital additions

 $14,668  $6,339   17,760   11,231 

(1)

A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

The $26.1 million and $34.8 million decreases in gross profit for the second quarter and first six months of 2022,ended June 30, 2023, respectively, primarily due to less mine development and drilling expenditure in 2023 compared to the same periods of 2021 were primarily due to: (i) lower payable metals sold for all metals produced reflecting lower grade material mined and processed, (ii) lower realized prices for silver and lead, partially offset by higher gold and zinc realized prices, and (iii) higher production costs reflecting the impact of more lower grade material processed and inflationary cost increases in consumables, labor and contractor costs.2022.

31
Table of Contents

The charts below illustrate the factors contributing to the variances in Cash Cost, After By-product Credits, Per Silver Ounce for the second quarter and first six months of 20222023 compared to the same periods of 2021.period in 2022.

a1.jpg

a2.jpg

32
Table of Contents

25

The following table summarizeschart below illustrates the components offactors contributing to Cash Cost, After By-product Credits, per Silver Ounce:

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Cash Cost, Before By-product Credits, per Silver Ounce

 $22.21  $19.08  $22.01  $19.03 

By-product credits

  (25.50)  (21.72)  (24.10)  (20.68)

Cash Cost, After By-product Credits, per Silver Ounce

 $(3.29) $(2.64) $(2.09) $(1.65)

The following table summarizes the components of AISC, After By-product Credits, per Silver Ounce:img155802379_0.jpg 

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

AISC, Before By-product Credits, per Silver Ounce

 $28.98  $22.40  $26.79  $21.82 

By-product credits

  (25.50)  (21.72)  (24.10)  (20.68)

AISC, After By-product Credits, per Silver Ounce

 $3.48  $0.68  $2.69  $1.14 

img155802379_1.jpg 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cash Cost, Before By-product Credits, per Silver Ounce

 

$

25.20

 

 

$

22.21

 

 

$

23.36

 

 

$

22.01

 

By-product credits

 

 

(23.87

)

 

 

(25.50

)

 

 

(22.13

)

 

 

(24.10

)

Cash Cost, After By-product Credits, per Silver Ounce

 

$

1.33

 

 

$

(3.29

)

 

$

1.23

 

 

$

(2.09

)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

AISC, Before By-product Credits, per Silver Ounce

 

$

29.21

 

 

$

28.60

 

 

$

26.64

 

 

$

26.57

 

By-product credits

 

 

(23.87

)

 

 

(25.50

)

 

 

(22.13

)

 

 

(24.10

)

AISC, After By-product Credits, per Silver Ounce

 

$

5.34

 

 

$

3.10

 

 

$

4.51

 

 

$

2.47

 

26

The decreaseincrease in Cash Cost, After By-product Credits, per Silver Ounce for the second quarter and first six months of 2022 compared to 2021 was primarily due to higher by-product credits.

The increase in AISC, After By-product Credits, per Silver Ounce for the second quarter and first six months of 2022 compared to 2021 was primarily due to higher sustaining capital of $14.7 million and $20.6 million for the second quarter and first six months of 2022, respectively,  compared to $6.3 million and $11.2 million in 2021, reflecting the costs being incurred on camp construction and higher definition and development drilling during 2022 compared to 2021.

33
Table of Contents

The Lucky Friday Segment

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Sales

 $35,880  $39,645  $73,920  $68,767 

Cost of sales and other direct production costs

  (21,486)  (20,499)  (42,719)  (36,958)

Depreciation, depletion and amortization

  (8,862)  (7,402)  (16,894)  (13,738)

Total cost of sales

  (30,348)  (27,901)  (59,613)  (50,696)

Gross profit

 $5,532  $11,744  $14,307  $18,071 

Tons of ore milled

  97,497   82,442   175,222   163,513 

Production:

                

Silver (ounces)

  1,226,477   913,294   2,114,335   1,777,195 

Lead (tons)

  8,147   5,913   14,127   11,693 

Zinc (tons)

  3,370   2,601   5,822   5,354 

Payable metal quantities sold:

                

Silver (ounces)

  1,121,712   934,258   2,021,166   1,698,081 

Lead (tons)

  7,434   6,045   13,425   11,067 

Zinc (tons)

  2,362   1,929   4,217   3,859 

Ore grades:

                

Silver ounces per ton

  13.17   11.60   12.67   11.39 

Lead percent

  8.81%  7.55%  8.52%  7.53%

Zinc percent

  3.90%  3.44%  3.77%  3.57%

Total production cost per ton

 $211.45  $199.48  $227.30  $188.30 

Cash Cost, After By-product Credits, per Silver Ounce (1)

 $3.07  $8.07  $4.54  $7.85 

AISC, After By-product Credits, per Silver Ounce (1)

 $9.91  $14.10  $11.27  $14.17 

Capital additions

 $11,501  $5,731  $21,153  $11,643 

(1)

A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

Gross profit for the three months ended June 30, 2022 decreased by $6.2 million compared to the comparable period in 2021, as the impact of increased sales from mining and processing more high grade material and volumes thereof did not offset the combination of lower realized silver and lead prices compared to 2021, and increased production costs from more ore mined and processed and inflationary cost increases in consumables and contractor maintenance costs. Gross profit for the six month period June 30, 2022 decreased by $3.8 million compared to the comparable period in 2021, as increased sales from a combination of mining and processing more high grade material and higher volumes did not offset the impact of lower silver and lead realized prices and higher production costs.     

34
Table of Contents

The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, Per Silver Ounce for the second quarter and first six months of 2022 compared to the same periods of 2021.

a3.jpg
a4.jpg

35
Table of Contents

The following table summarizes the components of Cash Cost, After By-product Credits, per Silver Ounce:

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Cash Cost, Before By-product Credits, per Silver Ounce

 $21.65  $25.49  $23.74  $24.97 

By-product credits

  (18.58)  (17.42)  (19.20)  (17.12)

Cash Cost, After By-product Credits, per Silver Ounce

 $3.07  $8.07  $4.54  $7.85 

The following table summarizes the components of AISC, After By-product Credits, per Silver Ounce:

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

AISC, Before By-product Credits, per Silver Ounce

 $28.49  $31.52  $30.47  $31.29 

By-product credits

  (18.58)  (17.42)  (19.20)  (17.12)

AISC, After By-product Credits, per Silver Ounce

 $9.91  $14.10   11.27  $14.17 

The decrease in Cash Cost and AISC, After By-product Credits, per Silver Ounce for the three and six month periods ended June 30, 20222023 compared to the same period in 2022 was primarily due to lower by-product credits in 2023.

27

Lucky Friday

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Sales

 

$

42,648

 

 

$

35,880

 

 

$

91,758

 

 

$

73,920

 

Cost of sales and other direct production costs

 

 

(23,211

)

 

 

(21,486

)

 

 

(47,289

)

 

 

(42,719

)

Depreciation, depletion and amortization

 

 

(8,979

)

 

 

(8,862

)

 

 

(19,435

)

 

 

(16,894

)

Total cost of sales

 

 

(32,190

)

 

 

(30,348

)

 

 

(66,724

)

 

 

(59,613

)

Gross profit

 

$

10,458

 

 

$

5,532

 

 

$

25,034

 

 

$

14,307

 

Tons of ore milled

 

 

94,043

 

 

 

97,497

 

 

 

189,346

 

 

 

175,222

 

Production:

 

 

 

 

 

 

 

 

 

 

 

 

Silver (ounces)

 

 

1,286,666

 

 

 

1,226,477

 

 

 

2,549,130

 

 

 

2,114,335

 

Lead (tons)

 

 

8,180

 

 

 

8,147

 

 

 

16,214

 

 

 

14,127

 

Zinc (tons)

 

 

3,338

 

 

 

3,370

 

 

 

6,651

 

 

 

5,822

 

Payable metal quantities sold:

 

 

 

 

 

 

 

 

 

 

 

 

Silver (ounces)

 

 

1,134,640

 

 

 

1,121,712

 

 

 

2,440,652

 

 

 

2,021,166

 

Lead (tons)

 

 

7,121

 

 

 

7,434

 

 

 

15,479

 

 

 

13,425

 

Zinc (tons)

 

 

2,466

 

 

 

2,362

 

 

 

5,080

 

 

 

4,217

 

Ore grades:

 

 

 

 

 

 

 

 

 

 

 

 

Silver ounces per ton

 

 

14.3

 

 

 

13.2

 

 

 

14.1

 

 

 

12.7

 

Lead percent

 

 

9.1

%

 

 

8.8

%

 

 

9.0

%

 

 

8.5

%

Zinc percent

 

 

4.2

%

 

 

3.9

%

 

 

4.2

%

 

 

3.8

%

Total production cost per ton

 

$

248.65

 

 

$

211.45

 

 

$

229.56

 

 

$

227.30

 

Cash Cost, After By-product Credits, per Silver Ounce (1)

 

$

6.96

 

 

$

3.07

 

 

$

5.64

 

 

$

4.54

 

AISC, After By-product Credits, per Silver Ounce (1)

 

$

14.24

 

 

$

9.91

 

 

$

12.48

 

 

$

11.27

 

Capital additions

 

$

16,317

 

 

$

11,501

 

 

$

31,024

 

 

$

21,153

 

(1)
A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

Gross profit increased by $4.9 million and $10.7 million for the three and six month periods ended June 30, 20212023, respectively, compared to the same periods in 2022, due to higher realized prices for silver and the impact of mining and processing more high grade material, partially offset by higher total cost of sales attributable to higher labor costs reflecting the new collective bargaining agreement entered into in January 2023, higher consumables and maintenance costs and higher depreciation, depletion and amortization reflecting higher sales volumes.

Capital additions increased by $4.8 million and $9.9 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022, primarily due to expenditures on key projects including the installation of a new service hoist and coarse ore bunker, increased development, and pre-production drilling to achieve a sustained ore production rate for the annual throughput goal of 425,000 tons, which is expected to start in the fourth quarter of 2023.

28

The chart below illustrates the factors contributing to Cash Cost, After By-product Credits, Per Silver Ounce:

img155802379_2.jpg 

img155802379_3.jpg 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cash Cost, Before By-product Credits, per Silver Ounce

 

$

22.30

 

 

$

21.65

 

 

$

21.67

 

 

$

23.74

 

By-product credits

 

 

(15.34

)

 

 

(18.58

)

 

 

(16.03

)

 

 

(19.20

)

Cash Cost, After By-product Credits, per Silver Ounce

 

$

6.96

 

 

$

3.07

 

 

$

5.64

 

 

$

4.54

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

AISC, Before By-product Credits, per Silver Ounce

 

$

29.58

 

 

$

28.49

 

 

$

28.51

 

 

$

30.47

 

By-product credits

 

 

(15.34

)

 

 

(18.58

)

 

 

(16.03

)

 

 

(19.20

)

AISC, After By-product Credits, per Silver Ounce

 

$

14.24

 

 

$

9.91

 

 

$

12.48

 

 

$

11.27

 

29

The increase in Cash Cost, After By-product Credits, per Silver Ounce for the three month and six month periods ended June 30, 2023 compared to the same periods in 2022 was due to higher silver production resulting from increased grades and volumes processed, higher by-product credits due to higher realized zinc prices, and concentrate quality improvement resultingoperating costs. The increase in higher lead and zinc production, with AISC, After By-product Credits, per Silver Ounce partially offset byfor the three month and six month periods ended June 30, 2023 compared to the same periods in 2022 was due to higher operating costs and higher sustaining capital spending. additions. Both Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the three and six month periods ended June 30, 2023 compared to the same periods in 2022 were further compounded by lower by-product credits reflecting lower lead prices during the six months ended June 30, 2023 and lower zinc prices during the three and six months ended June 30, 2023.

The Casa Berardi SegmentKeno Hill

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Sales

 $62,639  $56,122  $124,740  $129,033 

Cost of sales and other direct production costs

  (46,411)  (36,430)  (92,733)  (73,405)

Depreciation, depletion and amortization

  (15,459)  (18,239)  (31,305)  (41,191)

Total cost of sales

  (61,870)  (54,669)  (124,038)  (114,596)

Gross profit

 $769  $1,453  $702  $14,437 

Tons of ore milled

  401,618   374,683   787,771   743,086 

Production:

                

Gold (ounces)

  33,306   31,333   63,546   67,523 

Silver (ounces)

  8,379   7,917   15,447   18,592 

Payable metal quantities sold:

                

Gold (ounces)

  33,672   30,615   66,738   71,484 

Silver (ounces)

  196   8,059   9,250   16,774 

Ore grades:

                

Gold ounces per ton

  0.10   0.10   0.09   0.11 

Silver ounces per ton

  0.02   0.03   0.02   0.03 

Total production cost per ton

 $113.07  $99.36  $115.46  $99.52 

Cash Cost, After By-product Credits, per Gold Ounce (1)

 $1,371  $1,199  $1,440  $1,106 

AISC, After By-product Credits, per Gold Ounce (1)

 $1,641  $1,434  $1,721  $1,347 

Capital additions

 $8,093  $12,153  $15,901  $26,000 

(1)

A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

36
TableWe acquired our Keno Hill operations as part of Contents

Gross profit decreased by $0.7 millionthe Alexco acquisition on September 7, 2022, and $13.7 million forhave focused on development activities to prepare the mine to go into production during the third quarter of 2023. We began ramp-up of the mill during the second quarter and first halfprioritized processing of 2022,lower grade stockpiled material during the ramp-up phase. During the three and six months ended June 30, 2023, Keno Hill recorded $1.6 million in sales and total cost of sales, respectively, related to the concentrate produced and sold. During the three and six months ended June 30, 2023, $9.4million and $15.3 million, respectively, of site specific ramp up costs were included in the line item "Ramp-up and suspension costs" and $1.0 million and $1.5 million, respectively, of site specific exploration costs were included in the line item "Exploration and pre-development" on our condensed consolidated statement of operations and comprehensive (loss) income. During the three and six months ended June 30, 2023, Keno Hill recorded capital additions of $3.5 million and $20.6 million, respectively.

Dollars are in thousands (except per ounce and per ton amounts)

 

Three and Six Months Ended
June 30,

 

 

2023

 

 

Sales

 

$

1,581

 

 

Cost of sales and other direct production costs

 

 

(1,320

)

 

Depreciation, depletion and amortization

 

 

(261

)

 

Total cost of sales

 

 

(1,581

)

 

Gross profit

 

$

—

 

 

Tons of ore milled

 

 

12,064

 

 

Production:

 

 

 

 

Silver (ounces)

 

 

184,264

 

 

Zinc (tons)

 

 

691

 

 

Lead (tons)

 

 

417

 

 

Payable metal quantities sold:

 

 

 

 

Silver (ounces)

 

 

65,627

 

 

Zinc (tons)

 

 

48

 

 

Lead (tons)

 

 

24

 

 

Ore grades:

 

 

 

 

Silver ounces per ton

 

 

20.2

 

 

Zinc percent

 

 

4.1

%

 

Lead percent

 

 

2.5

%

 

30

Casa Berardi

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Sales

 

$

36,946

 

 

$

62,639

 

 

$

87,944

 

 

$

124,740

 

Cost of sales and other direct production costs

 

 

(32,304

)

 

 

(46,411

)

 

 

(81,266

)

 

 

(92,733

)

Depreciation, depletion and amortization

 

 

(10,272

)

 

 

(15,459

)

 

 

(24,308

)

 

 

(31,305

)

Total cost of sales

 

 

(42,576

)

 

 

(61,870

)

 

 

(105,574

)

 

 

(124,038

)

Gross loss

 

$

(5,630

)

 

$

769

 

 

$

(17,630

)

 

$

702

 

Tons of ore milled

 

 

318,704

 

 

 

401,618

 

 

 

747,858

 

 

 

787,771

 

Production:

 

 

 

 

 

 

 

 

 

 

 

 

Gold (ounces)

 

 

18,901

 

 

 

33,306

 

 

 

43,587

 

 

 

63,546

 

Silver (ounces)

 

 

5,956

 

 

 

8,379

 

 

 

11,601

 

 

 

15,447

 

Payable metal quantities sold:

 

 

 

 

 

 

 

 

 

 

 

 

Gold (ounces)

 

 

18,555

 

 

 

33,672

 

 

 

45,381

 

 

 

66,738

 

Silver (ounces)

 

 

4,899

 

 

 

196

 

 

 

11,345

 

 

 

9,250

 

Ore grades:

 

 

 

 

 

 

 

 

 

 

 

 

Gold ounces per ton

 

 

0.07

 

 

 

0.10

 

 

 

0.07

 

 

 

0.09

 

Silver ounces per ton

 

 

0.02

 

 

 

0.02

 

 

 

0.02

 

 

 

0.02

 

Total production cost per ton

 

$

97.69

 

 

$

113.07

 

 

$

103.58

 

 

$

115.46

 

Cash Cost, After By-product Credits, per Gold Ounce (1)

 

$

1,658

 

 

$

1,371

 

 

$

1,725

 

 

$

1,440

 

AISC, After By-product Credits, per Gold Ounce (1)

 

$

2,147

 

 

$

1,605

 

 

$

2,286

 

 

$

1,680

 

Capital additions

 

$

20,816

 

 

$

8,093

 

 

$

37,902

 

 

$

15,901

 

(1)
A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

Casa Berardi's operations were suspended for 20 days in June 2023, due to wildfires in Quebec which resulted in the Quebec Ministry of Natural Resources and Forests closing certain forest lands and access roads. No production or sales took place during the suspension period. Gross loss increased by $6.4 million and $18.3 million for the three and six month periods ended June 30, 2023, respectively, compared to the same periods of 2021. The decrease for the second quarter and first half of 2022in 2022. This increase was due to processing higher costvolumes of sales resulting from increased production costs due to: (i) higherlower grade ore tonnage (ii) mill contractorfrom both the underground and surface operations, higher costs related to mill maintenance and optimization activities, (iii) higher underground maintenance costs resulting from repairs and replacements of major components for the production fleet, and (iv) higher fuel and other consumables costs, which have been negatively impacted by current inflationary pressures. The impact of higher costs of sales was partially offset by increased sales due to higher average realized gold prices and volume in the second quarter of 2022. Lower sales volume in the first half of 2022 compared to 2021 duethe same periods in 2022. Suspension costs amounted to lower grades mined$2.2 million for the three and processed meant gross profit was not favorably impacted by higher realized prices in the period.six month periods ended June 30, 2023.

Total capital additions decreasedincreased by $4.1$12.7 million and $10.1$22.0 million infor the second quarter of 2022three and first half of 2022six months ended June 30, 2023, respectively, compared to the same periodsperiod in 2022, primarily due purchases of 2021, reflecting lower development costs following commissioning ofnew surface fleet equipment as the new 160 zonemine transitions from an underground to an open pit mineoperation and the construction of tailings storage facilities. Underground mining is expected to stop in mid-2024 at which point Casa Berardi is expected to produce gold only from the fourth quarter of 2021.160 open pit, and at lower levels than historic production. We expect production from the 160 pit to halt in 2027. We expect a gap in production from 2028 to 2030 when no ore is mined and our focus will be on investing in infrastructure and equipment, stripping and permitting the two expected new open pits, Principal and West Mine Crown Pillar. From 2028 to 2030 there is not expected to be any cash flow from Casa Berardi to offset its operating and capital expenses, and instead our liquidity and capital resources are expected to come from our other operating units. We expect to resume mining at Casa Berardi in 2030, and significant free cash flow is expected after 2030.

31

The chartschart below illustrateillustrates the factors contributing to Cash Cost, After By-product Credits, Per Gold Ounce for the second quarter and first half of 2022 and 2021:Ounce:

pic5.jpg

37
Table of Contents

pic6.jpg

The following table summarizes the components of Cash Cost, After By-product Credits, per Gold Ounce:img155802379_4.jpg 

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Cash Cost, Before By-product Credits, per Gold Ounce

 $1,377  $1,206  $1,446  $1,113 

By-product credits

  (6)  (7)  (6)  (7)

Cash Cost, After By-product Credits, per Gold Ounce

 $1,371  $1,199  $1,440  $1,106 

The following table summarizes the components of AISC, After By-product Credits, per Gold Ounce:img155802379_5.jpg 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2022

  

2021

  

2022

  

2021

 

AISC, Before By-product Credits, per Gold Ounce

 $1,647  $1,441  $1,727  $1,354 

By-product credits

  (6)  (7)  (6)  (7)

AISC, After By-product Credits, per Gold Ounce

 $1,641  $1,434  $1,721  $1,347 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cash Cost, Before By-product Credits, per Gold Ounce

 

$

1,666

 

 

$

1,377

 

 

$

1,731

 

 

$

1,446

 

By-product credits

 

 

(8

)

 

 

(6

)

 

 

(6

)

 

 

(6

)

Cash Cost, After By-product Credits, per Gold Ounce

 

$

1,658

 

 

$

1,371

 

 

$

1,725

 

 

$

1,440

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

AISC, Before By-product Credits, per Gold Ounce

 

$

2,155

 

 

$

1,611

 

 

$

2,292

 

 

$

1,686

 

By-product credits

 

 

(8

)

 

 

(6

)

 

 

(6

)

 

 

(6

)

AISC, After By-product Credits, per Gold Ounce

 

$

2,147

 

 

$

1,605

 

 

$

2,286

 

 

$

1,680

 

32

The increase in Cash Cost After By-product Credits, per Gold Ounce, for the second quarterthree and first half of 2022six month periods ended June 30, 2023 compared to the same periods in 2021for 2022 was primarily due to a combination of higher production costs as discussed above, partially offset by higherand lower gold production in the second quarter of 2022 compared with the same period in 2021.production. The lower production in 2022for the three and six month periods ended June 30, 2023 combined with increased sustaining capital also negatively impactedimpacting AISC, After By-product Credits, per Gold Ounce, however this was partially offset by lower sustaining capital spent in 2022 compared to 2021.Ounce.

38
Table of Contents

The Nevada Operations Segment

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Sales

 

$

688

 

 

$

—

 

 

$

960

 

 

$

268

 

Cost of sales and other direct production costs

 

 

(590

)

 

 

(1,133

)

 

 

(843

)

 

 

(1,133

)

Depreciation, depletion and amortization

 

 

(127

)

 

 

(122

)

 

 

(174

)

 

 

(122

)

Total cost of sales

 

 

(717

)

 

 

(1,255

)

 

 

(1,017

)

 

 

(1,255

)

Gross (loss) profit

 

$

(29

)

 

$

(1,255

)

 

$

(57

)

 

$

(987

)

Payable metal quantities sold:

 

 

 

 

 

 

 

 

 

 

 

 

Gold (ounces)

 

 

398

 

 

 

—

 

 

 

544

 

 

 

65

 

Silver (ounces)

 

 

110

 

 

 

—

 

 

 

110

 

 

 

6,363

 

Dollars are in thousands (except per ounce and per ton amounts)

 

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Sales

 $—  $8,450  $268  $18,687 

Cost of sales and other direct production costs

  (1,133)  (12,394)  (1,133)  (17,216)

Depreciation, depletion and amortization

  (122)  (5,599)  (122)  (8,232)

Total cost of sales

  (1,255)  (17,993)  (1,255)  (25,448)

Gross (loss)

 $(1,255) $(9,543) $(987) $(6,761)

Tons of ore milled

  —   38,947   —   55,406 

Production:

                

Gold (ounces)

  —   14,947   —   17,495 

Silver (ounces)

  —   45,125       45,125 

Payable metal quantities sold:

                

Gold (ounces)

  —   4,732   65   10,555 

Silver (ounces)

  —   1,214   6,363   8,035 

Ore grades:

                

Gold ounces per ton

  —   0.410   0.343   0.343 

Silver ounces per ton

  —   1.24   0.88   0.88 

Production cost per ton

 $—  $161.5  $220.68  $220.68 

Cash Cost, After By-product Credits, per Gold Ounce (1)

     $1,369  $—  $1,371 

AISC, After By-product Credits, per Gold Ounce (1)

 $—  $1,386  $—  $1,393 

Capital additions

 $297  $77  $1,173  $166 

(1)

A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

The decreases in gross loss of $29 thousand and $57 thousand for the three and six months ended June 30, 2023, respectively, was attributable to write downs of stockpiled material to net realizable value reflecting a lower gold price received for the processing and sale of refractory ore at a third party facility.

Exploration and pre-development activities continued in the three and six months ended June 30, 2023 and were focused on target generation through detailed modeling and analysis of geological mapping and sampling. Exploration core drilling also began during the second quarter and first half of 2022 compared to the same periods of 2021 were primarily the result of lower sales volumes and lower write-downs of ore stockpiled to estimated net realizable value. Development ceased at Fire Creek in the second quarter of 2019 when the decision was made to limit near-term production to areas of the mine where development was already completed. Mining of non-refractory ore at Fire Creek in areas where development had already been performed was completed in the fourth quarter of 2020. During 2021, production and revenue were generated from processing of the stockpiled non-refractory ore at the Midas mill and third-party processing of refractory ore in a roaster and autoclave facility, respectively. Fire Creek was placed on care-and-maintenance in the second quarter of 2021 after processing of the remaining non-refractory ore stockpile.our Aurora Project.

Exploration activities and pre-development activities related to the Hatter Graben area at Hollister are ongoing. Care and maintenance costs are reported in a separate line item on our consolidated statements of operations and excluded from the calculations of cost of sales and other direct production costs and depreciation, depletion and amortization, total production costs per ton and Cash Cost and AISC, After By-product Credits, per Gold Ounce.

39
Table of Contents

See Item 1A. Risk Factors - Operation, Development, Exploration and Acquisition Risks in our 20212022 Form 10-K for a discussion of certain risks relating to our recent and ongoing analysis of the carrying value of the Nevada assets.

33

Corporate Matters

Employee Benefit PlansIncome Taxes

Our defined benefit pension plans provide a significant benefit to our employees, but represent a significant liability to us. The liability recorded forDuring the underfunded status of our plans was $4.7 millionthree and $6.0 million as ofsix months ended June 30, 2022 and December 31, 2021, respectively. During May 2022, we contributed $5.6 million in shares of our common stock to two of our defined benefit plans. We do not expect to make additional contributions to our defined benefit pension plans in 2022, but may choose to do so. While the economic variables which will determine future funding requirements are uncertain, we expect contributions to continue to be required in future years under current plan provisions, and we periodically examine the plans for affordability and competitiveness. See Note 6 of Notes to Consolidated Financial Statements in our 2021 Form 10-K for more information.

Income Taxes

During the second quarter and first six months of 2022,2023, an income and mining tax provision of approximately $0.3$5.2 million and $5.9$8.4 million, respectively, resulted in an effective tax rate of 1.9%-49.0% and 168.9% for the respective  periods.-80.3%, respectively. This compares to an income and mining tax benefitprovision of $4.1$0.3 million and provision of $0.6$5.9 million forduring the second quarterthree and first six months of 2021, orended June 30, 2022, which resulted in an effective tax rate of 298.3%-1.9% and 2.5%-168.9%, for the respective periods.respectively. The comparability of our income and mining tax (provision) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) foreign exchange rates including non-recognition of foreign exchange gains and losses; (v) percentage depletion; and (vi) the non-recognition of tax assets. The effective tax rate will fluctuate, sometimes significantly, period to period. ForThe change in the periodeffective tax rate during the three and six months ended June 30, 2023 compared to the comparable periods in 2022 is primarily related to the reported consolidated loss as well as the incurred losses at the consolidated Alexco subsidiaries, which were acquired September 7, 2022, and the Nevada operations, for which no tax benefit is recognized due to uncertainty surrounding our ability to utilize these future tax benefits. Beginning with the three months ended March 31, 2022, we used the annual effective tax rate method to calculate the quarterly tax provision, a change from the discrete method used for the period ended March 31, 2021, due to reversal of valuation allowance in the fourth quarter of 2021. provision.

Each reporting period we assess our deferred tax balances based on a review of long-range forecasts and quarterly activity. A valuation allowance is provided for deferred tax assets for which it is more likely than not the related tax benefits will not be realized. We analyze our deferred tax assets and, if it is determined that we will not realize all or a portion of our deferred tax assets, we will record or increase a valuation allowance. Conversely, if it is determined we will ultimately more likely than not be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact our ability to realize our deferred tax assets. Valuation allowances are provided on deferred tax assets in our Nevada, Mexico, and certain Canadian jurisdictions. For additional information, please see risk factors Our accounting and other estimates may be imprecise and Our ability to recognize the benefits of deferred tax assets related to net operating loss carryforwards and other items is dependent on future cash flows and taxable income in Item 1A - Risk Factors in our 20212022 Form 10-K.

Reconciliation of Total Cost of Sales to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)

The tables below present reconciliations between the most comparable GAAP measure of total cost of sales to the non-GAAP measures of (i) Cash Cost, Before By-product Credits, (ii) Cash Cost, After By-product Credits, (iii) AISC, Before By-product Credits and (iv) AISC, After By-product Credits for our operations and for the Company for the three-three and six-monthsix month periods ended June 30, 20222023 and 2021.2022.

Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce are measures developed by precious metals companies (including the Silver Institute and the World Gold Council) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that these non-GAAP measures as we report them are the same as those reported by other mining companies.

40
Table of Contents

Cash Cost, After By-product Credits, per Ounce is an important operating statistic that we utilize to measure each mine's operating performance. We use AISC, After By-product Credits, per Ounce as a measure of our mines' net cash flow after costs for exploration, pre-development, reclamation and sustaining capital. This is similar to the Cash Cost, After By-product Credits, per Ounce non-GAAP measure we report, but also includes on-site exploration, reclamation and sustaining capital costs. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce also allow us to benchmark the performance of each of our mines versus those of our competitors. As a silver and gold mining company, we also use these statistics on an aggregate basis - aggregating the Greens Creek and Lucky Friday mines to compare our performance with that of other silver mining companies, and aggregating Casa Berardi and Nevada Operations for comparison with other gold mining companies. Similarly, these statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.

Cash Cost, Before By-product Credits and AISC, Before By-product Credits include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. AISC, Before By-product Credits for each mine also includes on-site exploration, reclamation and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense and sustaining exploration and capital costs. By-product credits include revenues earned

34

from all metals other than the primary metal produced at each unit. As depicted in the tables below, by-product credits comprise an essential element of our silver unit cost structure, distinguishing our silver operations due to the polymetallic nature of their orebodies.

In addition to the uses described above, Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce provide management and investors an indication of operating cash flow, after consideration of the average price received from production. We also use these measurements for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective.

The Casa Berardi and Nevada Operations and combined gold properties information below reports Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce for the production of gold, their primary product, and by-product revenues earned from silver, which is a by-product at Casa Berardi and Nevada Operations. Only costs and ounces produced relating to units with the same primary product are combined to represent Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce. Thus, the gold produced at our Casa Berardi and Nevada Operations units is not included as a by-product credit when calculating CashCost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the total of Greens Creek and Lucky Friday, our combined silver properties. Similarly, the silver produced at our other two units is not included as a by-product credit when calculating the gold metrics for Casa Berardi and Nevada Operations.

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2023

 

 

 

Greens Creek

 

 

Lucky Friday

 

 

Keno Hill (6)

 

 

Corporate (2)

 

 

Total Silver

 

Total cost of sales

 

$

63,054

 

 

$

32,190

 

 

$

1,581

 

 

$

—

 

 

$

96,825

 

Depreciation, depletion and amortization

 

 

(13,078

)

 

 

(8,979

)

 

 

(261

)

 

 

—

 

 

 

(22,318

)

Treatment costs

 

 

10,376

 

 

 

4,187

 

 

 

113

 

 

 

—

 

 

 

14,676

 

Change in product inventory

 

 

(1,242

)

 

 

1,546

 

 

 

—

 

 

 

—

 

 

 

304

 

Reclamation and other costs

 

 

263

 

 

 

(250

)

 

 

—

 

 

 

—

 

 

 

13

 

Exclusion of Keno Hill cash costs

 

 

—

 

 

 

—

 

 

 

(1,433

)

 

 

—

 

 

 

(1,433

)

Cash Cost, Before By-product Credits (1)

 

 

59,373

 

 

 

28,694

 

 

 

—

 

 

 

—

 

 

 

88,067

 

Reclamation and other costs

 

 

722

 

 

 

285

 

 

 

—

 

 

 

—

 

 

 

1,007

 

Sustaining capital

 

 

8,714

 

 

 

9,081

 

 

 

—

 

 

 

688

 

 

 

18,483

 

General and administrative

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10,783

 

 

 

10,783

 

AISC, Before By-product Credits (1)

 

 

68,809

 

 

 

38,060

 

 

 

—

 

 

 

11,471

 

 

 

118,340

 

By-product credits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zinc

 

 

(20,923

)

 

 

(5,448

)

 

 

—

 

 

 

—

 

 

 

(26,371

)

Gold

 

 

(28,458

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(28,458

)

Lead

 

 

(6,860

)

 

 

(14,287

)

 

 

—

 

 

 

—

 

 

 

(21,147

)

Total By-product credits

 

 

(56,241

)

 

 

(19,735

)

 

 

—

 

 

 

—

 

 

 

(75,976

)

Cash Cost, After By-product Credits

 

$

3,132

 

 

$

8,959

 

 

$

—

 

 

$

—

 

 

$

12,091

 

AISC, After By-product Credits

 

$

12,568

 

 

$

18,325

 

 

$

—

 

 

$

11,471

 

 

$

42,364

 

Divided by ounces produced

 

 

2,356

 

 

 

1,287

 

 

 

 

 

 

 

 

 

3,642

 

Cash Cost, Before By-product Credits, per Ounce

 

$

25.20

 

 

$

22.30

 

 

 

 

 

 

 

 

$

24.18

 

By-product credits per ounce

 

 

(23.87

)

 

 

(15.34

)

 

 

 

 

 

 

 

 

(20.86

)

Cash Cost, After By-product Credits, per Ounce

 

$

1.33

 

 

$

6.96

 

 

 

 

 

 

 

 

$

3.32

 

AISC, Before By-product Credits, per Ounce

 

$

29.21

 

 

$

29.58

 

 

 

 

 

 

 

 

$

32.49

 

By-product credits per ounce

 

 

(23.87

)

 

 

(15.34

)

 

 

 

 

 

 

 

 

(20.86

)

AISC, After By-product Credits, per Ounce

 

$

5.34

 

 

$

14.24

 

 

 

 

 

 

 

 

$

11.63

 

35

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2023

 

 

 

Casa Berardi

 

 

Nevada Operations and Other (4)

 

 

Total Gold

 

Total cost of sales

 

$

42,576

 

 

$

1,071

 

 

$

43,647

 

Depreciation, depletion and amortization

 

 

(10,272

)

 

 

(127

)

 

 

(10,399

)

Treatment costs

 

 

351

 

 

 

—

 

 

 

351

 

Change in product inventory

 

 

(951

)

 

 

—

 

 

 

(951

)

Reclamation and other costs

 

 

(219

)

 

 

—

 

 

 

(219

)

Exclusion of Nevada Operations and Other costs

 

 

—

 

 

 

(944

)

 

 

(944

)

Cash Cost, Before By-product Credits (1)

 

 

31,485

 

 

 

—

 

 

 

31,485

 

Reclamation and other costs

 

 

219

 

 

 

—

 

 

 

219

 

Sustaining capital

 

 

9,025

 

 

 

—

 

 

 

9,025

 

AISC, Before By-product Credits (1)

 

 

40,729

 

 

 

—

 

 

 

40,729

 

By-product credits:

 

 

 

 

 

 

 

 

 

Silver

 

 

(144

)

 

 

—

 

 

 

(144

)

Total By-product credits

 

 

(144

)

 

 

—

 

 

 

(144

)

Cash Cost, After By-product Credits

 

$

31,341

 

 

$

—

 

 

$

31,341

 

AISC, After By-product Credits

 

$

40,585

 

 

$

—

 

 

$

40,585

 

Divided by ounces produced

 

 

19

 

 

 

—

 

 

 

19

 

Cash Cost, Before By-product Credits, per Ounce

 

$

1,666

 

 

$

—

 

 

$

1,666

 

By-product credits per ounce

 

 

(8

)

 

 

—

 

 

 

(8

)

Cash Cost, After By-product Credits, per Ounce

 

$

1,658

 

 

$

—

 

 

$

1,658

 

AISC, Before By-product Credits, per Ounce

 

$

2,155

 

 

$

—

 

 

$

2,155

 

By-product credits per ounce

 

 

(8

)

 

 

—

 

 

 

(8

)

AISC, After By-product Credits, per Ounce

 

$

2,147

 

 

$

—

 

 

$

2,147

 

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2023

 

 

 

Total Silver

 

 

Total Gold

 

 

Total

 

Total cost of sales

 

$

96,825

 

 

$

43,647

 

 

$

140,472

 

Depreciation, depletion and amortization

 

 

(22,318

)

 

 

(10,399

)

 

 

(32,717

)

Treatment costs

 

 

14,676

 

 

 

351

 

 

 

15,027

 

Change in product inventory

 

 

304

 

 

 

(951

)

 

 

(647

)

Reclamation and other costs

 

 

13

 

 

 

(219

)

 

 

(206

)

Exclusion of Keno Hill cash costs

 

 

(1,433

)

 

 

—

 

 

 

(1,433

)

Exclusion of Nevada Operations and Other costs

 

 

—

 

 

 

(944

)

 

 

(944

)

Cash Cost, Before By-product Credits (1)

 

 

88,067

 

 

 

31,485

 

 

 

119,552

 

Reclamation and other costs

 

 

1,007

 

 

 

219

 

 

 

1,226

 

Sustaining capital

 

 

18,483

 

 

 

9,025

 

 

 

27,508

 

General and administrative

 

 

10,783

 

 

 

—

 

 

 

10,783

 

AISC, Before By-product Credits (1)

 

 

118,340

 

 

 

40,729

 

 

 

159,069

 

By-product credits:

 

 

 

 

 

 

 

 

 

Zinc

 

 

(26,371

)

 

 

—

 

 

 

(26,371

)

Gold

 

 

(28,458

)

 

 

—

 

 

 

(28,458

)

Lead

 

 

(21,147

)

 

 

—

 

 

 

(21,147

)

Silver

 

 

—

 

 

 

(144

)

 

 

(144

)

Total By-product credits

 

 

(75,976

)

 

 

(144

)

 

 

(76,120

)

Cash Cost, After By-product Credits

 

$

12,091

 

 

$

31,341

 

 

$

43,432

 

AISC, After By-product Credits

 

$

42,364

 

 

$

40,585

 

 

$

82,949

 

Divided by ounces produced

 

 

3,642

 

 

 

19

 

 

 

 

Cash Cost, Before By-product Credits, per Ounce

 

$

24.18

 

 

$

1,666

 

 

 

 

By-product credits per ounce

 

 

(20.86

)

 

 

(8

)

 

 

 

Cash Cost, After By-product Credits, per Ounce

 

$

3.32

 

 

$

1,658

 

 

 

 

AISC, Before By-product Credits, per Ounce

 

$

32.49

 

 

$

2,155

 

 

 

 

By-product credits per ounce

 

 

(20.86

)

 

 

(8

)

 

 

 

AISC, After By-product Credits, per Ounce

 

$

11.63

 

 

$

2,147

 

 

 

 

36

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2022 (5)

 

 

 

Greens Creek

 

 

Lucky Friday

 

 

Corporate (2)

 

 

Total Silver

 

Total cost of sales

 

$

60,506

 

 

$

30,348

 

 

$

—

 

 

$

90,854

 

Depreciation, depletion and amortization

 

 

(13,629

)

 

 

(8,862

)

 

 

—

 

 

 

(22,491

)

Treatment costs

 

 

8,778

 

 

 

4,803

 

 

 

—

 

 

 

13,581

 

Change in product inventory

 

 

(1,102

)

 

 

503

 

 

 

—

 

 

 

(599

)

Reclamation and other costs

 

 

(1,005

)

 

 

(256

)

 

 

—

 

 

 

(1,261

)

Cash Cost, Before By-product Credits (1)

 

 

53,548

 

 

 

26,536

 

 

 

—

 

 

 

80,084

 

Reclamation and other costs

 

 

705

 

 

 

282

 

 

 

—

 

 

 

987

 

Sustaining capital

 

 

14,668

 

 

 

8,110

 

 

 

99

 

 

 

22,877

 

General and administrative

 

 

—

 

 

 

—

 

 

 

9,692

 

 

 

9,692

 

AISC, Before By-product Credits (1)

 

 

68,921

 

 

 

34,928

 

 

 

9,791

 

 

 

113,640

 

By-product credits:

 

 

 

 

 

 

 

 

 

 

 

 

Zinc

 

 

(32,828

)

 

 

(8,227

)

 

 

—

 

 

 

(41,055

)

Gold

 

 

(20,364

)

 

 

—

 

 

 

—

 

 

 

(20,364

)

Lead

 

 

(8,271

)

 

 

(14,543

)

 

 

—

 

 

 

(22,814

)

Total By-product credits

 

 

(61,463

)

 

 

(22,770

)

 

 

—

 

 

 

(84,233

)

Cash Cost, After By-product Credits

 

$

(7,915

)

 

$

3,766

 

 

$

—

 

 

$

(4,149

)

AISC, After By-product Credits

 

$

7,458

 

 

$

12,158

 

 

$

9,791

 

 

$

29,407

 

Divided by ounces produced

 

 

2,410

 

 

 

1,226

 

 

 

 

 

 

3,636

 

Cash Cost, Before By-product Credits, per Ounce

 

$

22.21

 

 

$

21.65

 

 

 

 

 

$

22.03

 

By-product credits per ounce

 

 

(25.50

)

 

 

(18.58

)

 

 

 

 

 

(23.17

)

Cash Cost, After By-product Credits, per Ounce

 

$

(3.29

)

 

$

3.07

 

 

 

 

 

$

(1.14

)

AISC, Before By-product Credits, per Ounce

 

$

28.60

 

 

$

28.49

 

 

 

 

 

$

31.25

 

By-product credits per ounce

 

 

(25.50

)

 

 

(18.58

)

 

 

 

 

 

(23.17

)

AISC, After By-product Credits, per Ounce

 

$

3.10

 

 

$

9.91

 

 

 

 

 

$

8.08

 

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2022 (5)

 

 

 

Casa Berardi

 

 

Total Gold

 

Total cost of sales

 

$

61,870

 

 

$

61,870

 

Depreciation, depletion and amortization

 

 

(15,459

)

 

 

(15,459

)

Treatment costs

 

 

457

 

 

 

457

 

Change in product inventory

 

 

(793

)

 

 

(793

)

Reclamation and other costs

 

 

(209

)

 

 

(209

)

Cash Cost, Before By-product Credits (1)

 

 

45,866

 

 

 

45,866

 

Reclamation and other costs

 

 

209

 

 

 

209

 

Sustaining capital

 

 

7,597

 

 

 

7,597

 

AISC, Before By-product Credits (1)

 

 

53,672

 

 

 

53,672

 

By-product credits:

 

 

 

 

 

 

Silver

 

 

(188

)

 

 

(188

)

Total By-product credits

 

 

(188

)

 

 

(188

)

Cash Cost, After By-product Credits

 

$

45,678

 

 

$

45,678

 

AISC, After By-product Credits

 

$

53,484

 

 

$

53,484

 

Divided by ounces produced

 

 

33

 

 

 

33

 

Cash Cost, Before By-product Credits, per Ounce

 

$

1,377

 

 

$

1,377

 

By-product credits per ounce

 

 

(6

)

 

 

(6

)

Cash Cost, After By-product Credits, per Ounce

 

$

1,371

 

 

$

1,371

 

AISC, Before By-product Credits, per Ounce

 

$

1,611

 

 

$

1,611

 

By-product credits per ounce

 

 

(6

)

 

 

(6

)

AISC, After By-product Credits, per Ounce

 

$

1,605

 

 

$

1,605

 

37

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2022 (5)

 

 

 

Total Silver

 

 

Total Gold

 

 

Total

 

Total cost of sales

 

$

90,854

 

 

$

61,870

 

 

$

152,724

 

Depreciation, depletion and amortization

 

 

(22,491

)

 

 

(15,459

)

 

 

(37,950

)

Treatment costs

 

 

13,581

 

 

 

457

 

 

 

14,038

 

Change in product inventory

 

 

(599

)

 

 

(793

)

 

 

(1,392

)

Reclamation and other costs

 

 

(1,261

)

 

 

(209

)

 

 

(1,470

)

Cash Cost, Before By-product Credits (1)

 

 

80,084

 

 

 

45,866

 

 

 

125,950

 

Reclamation and other costs

 

 

987

 

 

 

209

 

 

 

1,196

 

Sustaining capital

 

 

22,877

 

 

 

7,597

 

 

 

30,474

 

General and administrative

 

 

9,692

 

 

 

—

 

 

 

9,692

 

AISC, Before By-product Credits (1)

 

 

113,640

 

 

 

53,672

 

 

 

167,312

 

By-product credits:

 

 

 

 

 

 

 

 

 

Zinc

 

 

(41,055

)

 

 

—

 

 

 

(41,055

)

Gold

 

 

(20,364

)

 

 

—

 

 

 

(20,364

)

Lead

 

 

(22,814

)

 

 

—

 

 

 

(22,814

)

Silver

 

 

—

 

 

 

(188

)

 

 

(188

)

Total By-product credits

 

 

(84,233

)

 

 

(188

)

 

 

(84,421

)

Cash Cost, After By-product Credits

 

$

(4,149

)

 

$

45,678

 

 

$

41,529

 

AISC, After By-product Credits

 

$

29,407

 

 

$

53,484

 

 

$

82,891

 

Divided by ounces produced

 

 

3,636

 

 

 

33

 

 

 

 

Cash Cost, Before By-product Credits, per Ounce

 

$

22.03

 

 

$

1,377

 

 

 

 

By-product credits per ounce

 

 

(23.17

)

 

 

(6

)

 

 

 

Cash Cost, After By-product Credits, per Ounce

 

$

(1.14

)

 

$

1,371

 

 

 

 

AISC, Before By-product Credits, per Ounce

 

$

31.25

 

 

$

1,611

 

 

 

 

By-product credits per ounce

 

 

(23.17

)

 

 

(6

)

 

 

 

AISC, After By-product Credits, per Ounce

 

$

8.08

 

 

$

1,605

 

 

 

 

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2023

 

 

 

Greens Creek

 

 

Lucky Friday

 

 

Keno Hill (6)

 

 

Corporate (2)

 

 

Total Silver

 

Total cost of sales

 

$

129,342

 

 

$

66,724

 

 

$

1,581

 

 

$

—

 

 

$

197,647

 

Depreciation, depletion and amortization

 

 

(27,542

)

 

 

(19,435

)

 

 

(261

)

 

 

—

 

 

 

(47,238

)

Treatment costs

 

 

20,745

 

 

 

9,464

 

 

 

113

 

 

 

—

 

 

 

30,322

 

Change in product inventory

 

 

(2,856

)

 

 

(863

)

 

 

—

 

 

 

—

 

 

 

(3,719

)

Reclamation and other costs

 

 

134

 

 

 

(658

)

 

 

—

 

 

 

—

 

 

 

(524

)

Exclusion of Keno Hill cash costs

 

 

—

 

 

 

—

 

 

 

(1,433

)

 

 

—

 

 

 

(1,433

)

Cash Cost, Before By-product Credits (1)

 

 

119,823

 

 

 

55,232

 

 

 

—

 

 

 

—

 

 

 

175,055

 

Reclamation and other costs

 

 

1,444

 

 

 

570

 

 

 

—

 

 

 

—

 

 

 

2,014

 

Sustaining capital

 

 

15,355

 

 

 

16,865

 

 

 

—

 

 

 

594

 

 

 

32,814

 

General and administrative

 

 

—

 

 

 

—

 

 

 

—

 

 

 

22,853

 

 

 

22,853

 

AISC, Before By-product Credits (1)

 

 

136,622

 

 

 

72,667

 

 

 

—

 

 

 

23,447

 

 

 

232,736

 

By-product credits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zinc

 

 

(44,928

)

 

 

(12,264

)

 

 

—

 

 

 

—

 

 

 

(57,192

)

Gold

 

 

(53,744

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(53,744

)

Lead

 

 

(14,802

)

 

 

(28,586

)

 

 

—

 

 

 

—

 

 

 

(43,388

)

Total By-product credits

 

 

(113,474

)

 

 

(40,850

)

 

 

—

 

 

 

—

 

 

 

(154,324

)

Cash Cost, After By-product Credits

 

$

6,349

 

 

$

14,382

 

 

$

—

 

 

$

—

 

 

$

20,731

 

AISC, After By-product Credits

 

$

23,148

 

 

$

31,817

 

 

$

—

 

 

$

23,447

 

 

$

78,412

 

Divided by ounces produced

 

 

5,129

 

 

 

2,549

 

 

 

 

 

 

 

 

 

7,678

 

Cash Cost, Before By-product Credits, per Ounce

 

$

23.36

 

 

$

21.67

 

 

 

 

 

 

 

 

$

22.80

 

By-product credits per ounce

 

 

(22.13

)

 

 

(16.03

)

 

 

 

 

 

 

 

 

(20.10

)

Cash Cost, After By-product Credits, per Ounce

 

$

1.23

 

 

$

5.64

 

 

 

 

 

 

 

 

$

2.70

 

AISC, Before By-product Credits, per Ounce

 

$

26.64

 

 

$

28.51

 

 

 

 

 

 

 

 

$

30.31

 

By-product credits per ounce

 

 

(22.13

)

 

 

(16.03

)

 

 

 

 

 

 

 

 

(20.10

)

AISC, After By-product Credits, per Ounce

 

$

4.51

 

 

$

12.48

 

 

 

 

 

 

 

 

$

10.21

 

38

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2023

 

 

 

Casa Berardi

 

 

Nevada Operations and Other (4)

 

 

Total Gold

 

Total cost of sales

 

$

105,574

 

 

$

1,803

 

 

$

107,377

 

Depreciation, depletion and amortization

 

 

(24,308

)

 

 

(174

)

 

 

(24,482

)

Treatment costs

 

 

818

 

 

 

—

 

 

 

818

 

Change in product inventory

 

 

(3,368

)

 

 

—

 

 

 

(3,368

)

Reclamation and other costs

 

 

(436

)

 

 

—

 

 

 

(436

)

Exclusion of Casa Berardi cash costs (3)

 

 

(2,851

)

 

 

—

 

 

 

(2,851

)

Exclusion of Nevada Operations and Other costs

 

 

—

 

 

 

(1,629

)

 

 

(1,629

)

Cash Cost, Before By-product Credits (1)

 

 

75,429

 

 

 

—

 

 

 

75,429

 

Reclamation and other costs

 

 

436

 

 

 

—

 

 

 

436

 

Sustaining capital

 

 

24,041

 

 

 

—

 

 

 

24,041

 

AISC, Before By-product Credits (1)

 

 

99,906

 

 

 

—

 

 

 

99,906

 

By-product credits:

 

 

 

 

 

 

 

 

 

Silver

 

 

(271

)

 

 

—

 

 

 

(271

)

Total By-product credits

 

 

(271

)

 

 

—

 

 

 

(271

)

Cash Cost, After By-product Credits

 

$

75,158

 

 

$

—

 

 

$

75,158

 

AISC, After By-product Credits

 

$

99,635

 

 

$

—

 

 

$

99,635

 

Divided by ounces produced

 

 

44

 

 

 

—

 

 

 

44

 

Cash Cost, Before By-product Credits, per Ounce

 

$

1,731

 

 

$

—

 

 

$

1,731

 

By-product credits per ounce

 

 

(6

)

 

 

—

 

 

 

(6

)

Cash Cost, After By-product Credits, per Ounce

 

$

1,725

 

 

$

—

 

 

$

1,725

 

AISC, Before By-product Credits, per Ounce

 

$

2,292

 

 

$

—

 

 

$

2,292

 

By-product credits per ounce

 

 

(6

)

 

 

—

 

 

 

(6

)

AISC, After By-product Credits, per Ounce

 

$

2,286

 

 

$

—

 

 

$

2,286

 

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2023

 

 

 

Total Silver

 

 

Total Gold

 

 

Total

 

Total cost of sales

 

$

197,647

 

 

$

107,377

 

 

$

305,024

 

Depreciation, depletion and amortization

 

 

(47,238

)

 

 

(24,482

)

 

 

(71,720

)

Treatment costs

 

 

30,322

 

 

 

818

 

 

 

31,140

 

Change in product inventory

 

 

(3,719

)

 

 

(3,368

)

 

 

(7,087

)

Reclamation and other costs

 

 

(524

)

 

 

(436

)

 

 

(960

)

Exclusion of Keno Hill cash costs

 

 

(1,433

)

 

 

—

 

 

 

(1,433

)

Exclusion of Casa Berardi cash costs (3)

 

 

—

 

 

 

(2,851

)

 

 

(2,851

)

Exclusion of Nevada Operations and Other costs

 

 

—

 

 

 

(1,629

)

 

 

(1,629

)

Cash Cost, Before By-product Credits (1)

 

 

175,055

 

 

 

75,429

 

 

 

250,484

 

Reclamation and other costs

 

 

2,014

 

 

 

436

 

 

 

2,450

 

Sustaining capital

 

 

32,814

 

 

 

24,041

 

 

 

56,855

 

General and administrative

 

 

22,853

 

 

 

—

 

 

 

22,853

 

AISC, Before By-product Credits (1)

 

 

232,736

 

 

 

99,906

 

 

 

332,642

 

By-product credits:

 

 

 

 

 

 

 

 

 

Zinc

 

 

(57,192

)

 

 

—

 

 

 

(57,192

)

Gold

 

 

(53,744

)

 

 

—

 

 

 

(53,744

)

Lead

 

 

(43,388

)

 

 

—

 

 

 

(43,388

)

Silver

 

 

—

 

 

 

(271

)

 

 

(271

)

Total By-product credits

 

 

(154,324

)

 

 

(271

)

 

 

(154,595

)

Cash Cost, After By-product Credits

 

$

20,731

 

 

$

75,158

 

 

$

95,889

 

AISC, After By-product Credits

 

$

78,412

 

 

$

99,635

 

 

$

178,047

 

Divided by ounces produced

 

 

7,678

 

 

 

44

 

 

 

 

Cash Cost, Before By-product Credits, per Ounce

 

$

22.80

 

 

$

1,731

 

 

 

 

By-product credits per ounce

 

 

(20.10

)

 

 

(6

)

 

 

 

Cash Cost, After By-product Credits, per Ounce

 

$

2.70

 

 

$

1,725

 

 

 

 

AISC, Before By-product Credits, per Ounce

 

$

30.31

 

 

$

2,292

 

 

 

 

By-product credits per ounce

 

 

(20.10

)

 

 

(6

)

 

 

 

AISC, After By-product Credits, per Ounce

 

$

10.21

 

 

$

2,286

 

 

 

 

39

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2022 (5)

 

 

 

Greens Creek

 

 

Lucky Friday

 

 

Corporate and other(2)

 

 

Total Silver

 

Total cost of sales

 

$

110,143

 

 

$

59,613

 

 

$

—

 

 

$

169,756

 

Depreciation, depletion and amortization

 

 

(25,049

)

 

 

(16,894

)

 

 

—

 

 

 

(41,943

)

Treatment costs

 

 

17,892

 

 

 

8,480

 

 

 

—

 

 

 

26,372

 

Change in product inventory

 

 

5,436

 

 

 

(402

)

 

 

—

 

 

 

5,034

 

Reclamation and other costs

 

 

(1,872

)

 

 

(619

)

 

 

—

 

 

 

(2,491

)

Cash Cost, Before By-product Credits (1)

 

 

106,550

 

 

 

50,178

 

 

 

 

 

 

156,728

 

Reclamation and other costs

 

 

1,410

 

 

 

564

 

 

 

 

 

 

1,974

 

Sustaining capital

 

 

20,624

 

 

 

13,671

 

 

 

147

 

 

 

34,442

 

General and administrative

 

 

—

 

 

 

—

 

 

 

17,986

 

 

 

17,986

 

AISC, Before By-product Credits (1)

 

 

128,584

 

 

 

64,413

 

 

 

18,133

 

 

 

211,130

 

By-product credits:

 

 

 

 

 

 

 

 

 

 

 

 

Zinc

 

 

(61,479

)

 

 

(14,204

)

 

 

—

 

 

 

(75,683

)

Gold

 

 

(38,947

)

 

 

—

 

 

 

—

 

 

 

(38,947

)

Lead

 

 

(16,237

)

 

 

(26,379

)

 

 

—

 

 

 

(42,616

)

Total By-product credits

 

 

(116,663

)

 

 

(40,583

)

 

 

—

 

 

 

(157,246

)

Cash Cost, After By-product Credits

 

$

(10,113

)

 

$

9,595

 

 

$

—

 

 

$

(518

)

AISC, After By-product Credits

 

$

11,921

 

 

$

23,830

 

 

$

18,133

 

 

$

53,884

 

Divided by ounces produced

 

 

4,840

 

 

 

2,114

 

 

 

 

 

 

6,954

 

Cash Cost, Before By-product Credits, per Ounce

 

$

22.01

 

 

$

23.74

 

 

 

 

 

$

22.54

 

By-product credits per ounce

 

 

(24.10

)

 

 

(19.20

)

 

 

 

 

 

(22.61

)

Cash Cost, After By-product Credits, per Ounce

 

$

(2.09

)

 

$

4.54

 

 

 

 

 

$

(0.07

)

AISC, Before By-product Credits, per Ounce

 

$

26.57

 

 

$

30.47

 

 

 

 

 

$

30.36

 

By-product credits per ounce

 

 

(24.10

)

 

 

(19.20

)

 

 

 

 

 

(22.61

)

AISC, After By-product Credits, per Ounce

 

$

2.47

 

 

$

11.27

 

 

 

 

 

$

7.75

 

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2022 (5)

 

 

 

Casa Berardi

 

 

Total Gold

 

Total cost of sales

 

$

124,038

 

 

$

124,038

 

Depreciation, depletion and amortization

 

 

(31,305

)

 

 

(31,305

)

Treatment costs

 

 

915

 

 

 

915

 

Change in product inventory

 

 

(1,356

)

 

 

(1,356

)

Reclamation and other costs

 

 

(419

)

 

 

(419

)

Cash Cost, Before By-product Credits (1)

 

 

91,873

 

 

 

91,873

 

Reclamation and other costs

 

 

419

 

 

 

419

 

Sustaining capital

 

 

14,878

 

 

 

14,878

 

AISC, Before By-product Credits (1)

 

 

107,170

 

 

 

107,170

 

By-product credits:

 

 

 

 

 

 

Silver

 

 

(354

)

 

 

(354

)

Total By-product credits

 

 

(354

)

 

 

(354

)

Cash Cost, After By-product Credits

 

$

91,519

 

 

$

91,519

 

AISC, After By-product Credits

 

$

106,816

 

 

$

106,816

 

Divided by ounces produced

 

 

64

 

 

 

64

 

Cash Cost, Before By-product Credits, per Ounce

 

$

1,446

 

 

$

1,446

 

By-product credits per ounce

 

 

(6

)

 

 

(6

)

Cash Cost, After By-product Credits, per Ounce

 

$

1,440

 

 

$

1,440

 

AISC, Before By-product Credits, per Ounce

 

$

1,686

 

 

$

1,686

 

By-product credits per ounce

 

 

(6

)

 

 

(6

)

AISC, After By-product Credits, per Ounce

 

$

1,680

 

 

$

1,680

 

40

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2022 (5)

 

 

 

Total Silver

 

 

Total Gold

 

 

Total

 

Total cost of sales

 

$

169,756

 

 

$

124,038

 

 

$

293,794

 

Depreciation, depletion and amortization

 

 

(41,943

)

 

 

(31,305

)

 

 

(73,248

)

Treatment costs

 

 

26,372

 

 

 

915

 

 

 

27,287

 

Change in product inventory

 

 

5,034

 

 

 

(1,356

)

 

 

3,678

 

Reclamation and other costs

 

 

(2,491

)

 

 

(419

)

 

 

(2,910

)

Cash Cost, Before By-product Credits (1)

 

 

156,728

 

 

 

91,873

 

 

 

248,601

 

Reclamation and other costs

 

 

1,974

 

 

 

419

 

 

 

2,393

 

Sustaining capital

 

 

34,442

 

 

 

14,878

 

 

 

49,320

 

General and administrative

 

 

17,986

 

 

 

—

 

 

 

17,986

 

AISC, Before By-product Credits (1)

 

 

211,130

 

 

 

107,170

 

 

 

318,300

 

By-product credits:

 

 

 

 

 

 

 

 

 

Zinc

 

 

(75,683

)

 

 

—

 

 

 

(75,683

)

Gold

 

 

(38,947

)

 

 

—

 

 

 

(38,947

)

Lead

 

 

(42,616

)

 

 

—

 

 

 

(42,616

)

Silver

 

 

—

 

 

 

(354

)

 

 

(354

)

Total By-product credits

 

 

(157,246

)

 

 

(354

)

 

 

(157,600

)

Cash Cost, After By-product Credits

 

$

(518

)

 

$

91,519

 

 

$

91,001

 

AISC, After By-product Credits

 

$

53,884

 

 

$

106,816

 

 

$

160,700

 

Divided by ounces produced

 

 

6,954

 

 

 

64

 

 

 

 

Cash Cost, Before By-product Credits, per Ounce

 

$

22.54

 

 

$

1,446

 

 

 

 

By-product credits per ounce

 

 

(22.61

)

 

 

(6

)

 

 

 

Cash Cost, After By-product Credits, per Ounce

 

$

(0.07

)

 

$

1,440

 

 

 

 

AISC, Before By-product Credits, per Ounce

 

$

30.36

 

 

$

1,686

 

 

 

 

By-product credits per ounce

 

 

(22.61

)

 

 

(6

)

 

 

 

AISC, After By-product Credits, per Ounce

 

$

7.75

 

 

$

1,680

 

 

 

 

(1)
41
TableIncludes all direct and indirect operating costs related to the physical activities of Contents
producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs and royalties, before by-product revenues earned from all metals other than the primary metal produced at each operation. AISC, Before By-product Credits also includes reclamation and sustaining capital costs.

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2022

 
  

Greens

Creek

  

Lucky

Friday

  

Corporate(2)

  

Total

Silver

 

Total cost of sales

 $60,506  $30,348  $—  $90,854 

Depreciation, depletion and amortization

  (13,629)  (8,862)  —   (22,491)

Treatment costs

  8,778   4,803   —   13,581 

Change in product inventory

  (1,102)  503   —   (599)

Reclamation and other costs

  (1,005)  (256)  —   (1,261)

Cash Cost, Before By-product Credits (1)

  53,548   26,536       80,084 

Reclamation and other costs

  705   282   —   987 

Sustaining exploration

  929   —   769   1,698 

Sustaining capital

  14,668   8,110   99   22,877 

General and administrative

          9,692   9,692 

AISC, Before By-product Credits (1)

  69,850   34,928   10,560   115,338 

By-product credits:

                

Zinc

  (32,828)  (8,227)  —   (41,055)

Gold

  (20,364)  —   —   (20,364)

Lead

  (8,271)  (14,543)  —   (22,814)

Total By-product credits

  (61,463)  (22,770)  —   (84,233)

Cash Cost, After By-product Credits

 $(7,915) $3,766  $—  $(4,149)

AISC, After By-product Credits

 $8,387  $12,158  $10,560  $31,105 

Divided by ounces produced

  2,410   1,226       3,636 

Cash Cost, Before By-product Credits, per Ounce

 $22.21  $21.65      $22.03 

By-product credits per ounce

  (25.50)  (18.58)      (23.17)

Cash Cost, After By-product Credits, per Ounce

 $(3.29) $3.07      $(1.14)

AISC, Before By-product Credits, per Ounce

 $28.98  $28.49      $31.85 

By-product credits per ounce

  (25.50)  (18.58)      (23.17)

AISC, After By-product Credits, per Ounce

 $3.48  $9.91      $8.68 

(2)
42
Table of Contents
AISC, Before By-product Credits for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining capital.

In thousands (except per ounce amounts)

 

Three months ended

June 30, 2022

 
  

Casa

Berardi

  

Total

Gold

 

Total cost of sales

 $61,870  $61,870 

Depreciation, depletion and amortization

  (15,459)  (15,459)

Treatment costs

  457   457 

Change in product inventory

  (793)  (793)

Reclamation and other costs

  (209)  (209)

Cash Cost, Before By-product Credits (1)

  45,866   45,866 

Reclamation and other costs

  209   209 

Sustaining exploration

  1,178   1,178 

Sustaining capital

  7,597   7,597 

AISC, Before By-product Credits (1)

  54,850   54,850 

By-product credits:

        

Silver

  (188)  (188)

Total By-product credits

  (188)  (188)

Cash Cost, After By-product Credits

 $45,678  $45,678 

AISC, After By-product Credits

 $54,662  $54,662 

Divided by ounces produced

  33   33 

Cash Cost, Before By-product Credits, per Ounce

 $1,377  $1,377 

By-product credits per ounce

  (6)  (6)

Cash Cost, After By-product Credits, per Ounce

 $1,371  $1,371 

AISC, Before By-product Credits, per Ounce

 $1,647  $1,647 

By-product credits per ounce

  (6)  (6)

AISC, After By-product Credits, per Ounce

 $1,641  $1,641 

(3)
43
TableDuring the three months ended March 31, 2023, the Company completed the necessary studies to conclude usage of Contents
the F-160 pit as a tailings storage facility after mining is complete. As a result, a portion of the mining costs have been excluded from Cash Cost, Before By-product Credits and AISC, Before By-product Credits.

In thousands (except per ounce amounts)

 

Three months ended June 30, 2022

 
  

Total Silver

  

Total Gold

  

Total

 

Total cost of sales

 $90,854  $61,870  $152,724 

Depreciation, depletion and amortization

  (22,491)  (15,459)  (37,950)

Treatment costs

  13,581   457   14,038 

Change in product inventory

  (599)  (793)  (1,392)

Reclamation and other costs

  (1,261)  (209)  (1,470)

Cash Cost, Before By-product Credits (1)

  80,084   45,866   125,950 

Reclamation and other costs

  987   209   1,196 

Sustaining exploration

  1,698   1,178   2,876 

Sustaining capital

  22,877   7,597   30,474 

General and administrative

  9,692   —   9,692 

AISC, Before By-product Credits (1)

  115,338   54,850   170,188 

By-product credits:

            

Zinc

  (41,055)  —   (41,055)

Gold

  (20,364)  —   (20,364)

Lead

  (22,814)  —   (22,814)

Silver

  —   (188)  (188)

Total By-product credits

  (84,233)  (188)  (84,421)

Cash Cost, After By-product Credits

 $(4,149) $45,678  $41,529 

AISC, After By-product Credits

 $31,105  $54,662  $85,767 

Divided by ounces produced

  3,636   33     

Cash Cost, Before By-product Credits, per Ounce

 $22.03  $1,377     

By-product credits per ounce

  (23.17)  (6)    

Cash Cost, After By-product Credits, per Ounce

 $(1.14) $1,371     

AISC, Before By-product Credits, per Ounce

 $31.72  $1,647     

By-product credits per ounce

  (23.17)  (6)    

AISC, After By-product Credits, per Ounce

 $8.55  $1,641     

(4)
44
TableOther includes $354,000 and $786,000 of Contents
total cost of sales for the three months and six months ended June 30, 2023, respectively, related to the environmental services business acquired as part of the Alexco acquisition.

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2021

 
  

Greens

Creek

  

Lucky

Friday

  

Corporate

and other( 2)

  

Total

Silver

 

Total cost of sales

 $55,488  $27,901  $1  $83,390 

Depreciation, depletion and amortization

  (14,492)  (7,402)  —   (21,894)

Treatment costs

  8,924   4,686   —   13,610 

Change in product inventory

  (435)  (1,596)  —   (2,031)

Reclamation and other costs

  (672)  (325)  (1)  (998)

Cash Cost, Before By-product Credits (1)

  48,813   23,264   —   72,077 

Reclamation and other costs

  847   264   —   1,111 

Sustaining exploration

  1,300   —   450   1,750 

Sustaining capital

  6,339   5,244   —   11,583 

General and administrative

          11,104   11,104 

AISC, Before By-product Credits (1)

  57,299   28,772   11,554   97,625 

By-product credits:

                

Zinc

  (26,510)  (5,093)  —   (31,603)

Gold

  (20,438)  —   —   (20,438)

Lead

  (8,605)  (10,799)  —   (19,404)

Total By-product credits

  (55,553)  (15,892)  —   (71,445)

Cash Cost, After By-product Credits

 $(6,740) $7,372   —  $632 

AISC, After By-product Credits

 $1,746  $12,880   11,554  $26,180 

Divided by ounces produced

  2,558   913       3,471 

Cash Cost, Before By-product Credits, per Ounce

 $19.08  $25.49      $20.76 

By-product credits per ounce

  (21.72)  (17.42)      (20.58)

Cash Cost, After By-product Credits, per Ounce

 $(2.64) $8.07      $0.18 

AISC, Before By-product Credits, per Ounce

 $22.40  $31.52      $28.12 

By-product credits per ounce

  (21.72)  (17.42)      (20.58)

AISC, After By-product Credits, per Ounce

 $0.68  $14.10      $7.54 

(5)
45
TablePrior year presentation has been adjusted to conform with current year presentation to eliminate exploration costs from the calculation of Contents
AISC, Before By-product Credits as exploration is an activity directed at the Corporate level to find new mineral reserve and resource deposits, and therefore we believe it is inappropriate to include exploration costs in the calculation of AISC, Before By-product Credits for a specific mining operation.

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2021

 
  

Casa

Berardi

  

Nevada

Operations

  

Total

Gold

 

Total cost of sales

 $54,669  $17,993  $72,662 

Depreciation, depletion and amortization

  (18,239)  (5,599)  (23,838)

Treatment costs

  535   1,719   2,254 

Change in product inventory

  1,015   12,583   13,598 

Reclamation and other costs

  (215)  (218)  (433)

Exclusion of Nevada Operations costs

  —   (4,914)  (4,914)

Cash Cost, Before By-product Credits (1)

  37,765   21,564   59,329 

Reclamation and other costs

  215   218   433 

Sustaining exploration

  1,103   —   1,103 

Sustaining capital

  6,064   44   6,108 

AISC, Before By-product Credits (1)

  45,147   21,826   66,973 

By-product credits:

            

Silver

  (209)  (1,103)  (1,312)

Total By-product credits

  (209)  (1,103)  (1,312)

Cash Cost, After By-product Credits

 $37,556  $20,461  $58,017 

AISC, After By-product Credits

 $44,938  $20,723  $65,661 

Divided by ounces produced

  31   15   46 

Cash Cost, Before By-product Credits, per Ounce

 $1,206  $1,443  $1,282 

By-product credits per ounce

  (7)  (74)  (28)

Cash Cost, After By-product Credits, per Ounce

 $1,199  $1,369  $1,254 

AISC, Before By-product Credits, per Ounce

 $1,441  $1,460  $1,447 

By-product credits per ounce

  (7)  (74)  (28)

AISC, After By-product Credits, per Ounce

 $1,434  $1,386  $1,419 

(6)
46
TableKeno Hill is in the ramp-up phase of Contents
production and as such costs associated with ramp up at this operation which amounted to $9.4 million and $15.3 million for the three and six months ended June 30, 2023 are excluded from the calculation of total cost of sales, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

In thousands (except per ounce amounts)

 

Three Months Ended June 30, 2021

 
  

Total

Silver

  

Total

Gold

  

Total

 

Total cost of sales

 $83,390  $72,662  $156,052 

Depreciation, depletion and amortization

  (21,894)  (23,838)  (45,732)

Treatment costs

  13,610   2,254   15,864 

Change in product inventory

  (2,031)  13,598   11,567 

Reclamation and other costs

  (998)  (433)  (1,431)

Exclusion of Nevada Operations costs

  —   (4,914)  (4,914)

Cash Cost, Before By-product Credits (1)

  72,077   59,329   131,406 

Reclamation and other costs

  1,111   433   1,544 

Sustaining exploration

  1,750   1,103   2,853 

Sustaining capital

  11,583   6,108   17,691 

General and administrative

  11,104   —   11,104 

AISC, Before By-product Credits (1)

  97,625   66,973   164,598 

By-product credits:

            

Zinc

  (31,603)  —   (31,603)

Gold

  (20,438)  —   (20,438)

Lead

  (19,404)  —   (19,404)

Silver

  —   (1,312)  (1,312)

Total By-product credits

  (71,445)  (1,312)  (72,757)

Cash Cost, After By-product Credits

 $632  $58,017  $58,649 

AISC, After By-product Credits

 $26,180  $65,661  $91,841 

Divided by ounces produced

  3,471   46     

Cash Cost, Before By-product Credits, per Ounce

 $20.76  $1,282     

By-product credits per ounce

  (20.58)  (28)    

Cash Cost, After By-product Credits, per Ounce

 $0.18  $1,254     

AISC, Before By-product Credits, per Ounce

 $28.12  $1,447     

By-product credits per ounce

  (20.58)  (28)    

AISC, After By-product Credits, per Ounce

 $7.54  $1,419     

(7)
47
TableCasa Berardi operations were suspended in June 2023 in response to the directive of Contents
the Quebec Ministry of Natural Resources and Forests. Suspension costs amounted to $2.2 million for the three and six month periods ended June 30, 2023 and are excluded from the calculation of total cost of sales, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2022

 
  

Greens

Creek

  

Lucky

Friday

  

Corporate(1)

  

Total

Silver

 

Total cost of sales

 $110,143  $59,613  $—  $169,756 

Depreciation, depletion and amortization

  (25,049)  (16,894)  —   (41,943)

Treatment costs

  17,892   8,480   —   26,372 

Change in product inventory

  5,436   (402)  —   5,034 

Reclamation and other costs

  (1,872)  (619)  —   (2,491)

Cash Cost, Before By-product Credits (1)

  106,550   50,178   —   156,728 

Reclamation and other costs

  1,410   564   —   1,974 

Sustaining exploration

  1,094   —   1,485   2,579 

Sustaining capital

  20,624   13,671   147   34,442 

General and administrative

          17,986   17,986 

AISC, Before By-product Credits (1)

  129,678   64,413   19,618   213,709 

By-product credits:

                

Zinc

  (61,479)  (14,204)  —   (75,683)

Gold

  (38,947)  —   —   (38,947)

Lead

  (16,237)  (26,379)  —   (42,616)

Total By-product credits

  (116,663)  (40,583)  —   (157,246)

Cash Cost, After By-product Credits

 $(10,113) $9,595   —  $(518)

AISC, After By-product Credits

 $13,015  $23,830  $19,618  $56,463 

Divided by ounces produced

  4,840   2,114       6,954 

Cash Cost, Before By-product Credits, per Ounce

 $22.01  $23.74      $22.54 

By-product credits per ounce

  (24.10)  (19.20)      (22.61)

Cash Cost, After By-product Credits, per Ounce

 $(2.09) $4.54      $(0.07)

AISC, Before By-product Credits, per Ounce

 $26.79  $30.47      $30.73 

By-product credits per ounce

  (24.10)  (19.20)      (22.61)

AISC, After By-product Credits, per Ounce

 $2.69  $11.27      $8.12 

48
Table of Contents

In thousands (except per ounce amounts)

 

Six Months Ended

June 30, 2022

 
  

Casa

Berardi

  

Total

Gold

 

Total cost of sales

 $124,038  $124,038 

Depreciation, depletion and amortization

  (31,305)  (31,305)

Treatment costs

  915   915 

Change in product inventory

  (1,356)  (1,356)

Reclamation and other costs

  (419)  (419)

Cash Cost, Before By-product Credits (1)

  91,873   91,873 

Reclamation and other costs

  419   419 

Sustaining exploration

  2,572   2,572 

Sustaining capital

  14,878   14,878 

AISC, Before By-product Credits (1)

  109,742   109,742 

By-product credits:

        

Silver

  (354)  (354)

Total By-product credits

  (354)  (354)

Cash Cost, After By-product Credits

 $91,519  $91,519 

AISC, After By-product Credits

 $109,388  $109,388 

Divided by ounces produced

  64   64 

Cash Cost, Before By-product Credits, per Ounce

 $1,446  $1,446 

By-product credits per ounce

  (6)  (6)

Cash Cost, After By-product Credits, per Ounce

 $1,440  $1,440 

AISC, Before By-product Credits, per Ounce

 $1,727  $1,727 

By-product credits per ounce

  (6)  (6)

AISC, After By-product Credits, per Ounce

 $1,721  $1,721 

49
Table of Contents

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2022

 
  

Total Silver

  

Total Gold

  

Total

 

Total cost of sales

 $169,756  $124,038  $293,794 

Depreciation, depletion and amortization

  (41,943)  (31,305)  (73,248)

Treatment costs

  26,372   915   27,287 

Change in product inventory

  5,034   (1,356)  3,678 

Reclamation and other costs

  (2,491)  (419)  (2,910)

Cash Cost, Before By-product Credits (1)

  156,728   91,873   248,601 

Reclamation and other costs

  1,974   419   2,393 

Sustaining exploration

  2,579   2,572   5,151 

Sustaining capital

  34,442   14,878   49,320 

General and administrative

  17,986   —   17,986 

AISC, Before By-product Credits (1)

  213,709   109,742   323,451 

By-product credits:

            

Zinc

  (75,683)  —   (75,683)

Gold

  (38,947)  —   (38,947)

Lead

  (42,616)  —   (42,616)

Silver

  —   (354)  (354)

Total By-product credits

  (157,246)  (354)  (157,600)

Cash Cost, After By-product Credits

 $(518) $91,519  $91,001 

AISC, After By-product Credits

 $56,463  $109,388  $165,851 

Divided by ounces produced

  6,954   64     

Cash Cost, Before By-product Credits, per Ounce

 $22.54  $1,446     

By-product credits per ounce

  (22.61)  (6)    

Cash Cost, After By-product Credits, per Ounce

 $(0.07) $1,440     

AISC, Before By-product Credits, per Ounce

 $30.73  $1,727     

By-product credits per ounce

  (22.61)  (6)    

AISC, After By-product Credits, per Ounce

 $8.12  $1,721     

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Table of Contents

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2021

 
  

Greens

Creek

  

Lucky

Friday

  

Corporate

and other(2)

  

Total

Silver

 

Total cost of sales

 $108,668  $50,696  $95  $159,459 

Depreciation, depletion and amortization

  (29,313)  (13,738)  —   (43,051)

Treatment costs

  19,465   9,664   —   29,129 

Change in product inventory

  (34)  (1,689)  —   (1,723)

Reclamation and other costs

  (932)  (559)  (95)  (1,586)

Cash Cost, Before By-product Credits (1)

  97,854   44,374       142,228 

Reclamation and other costs

  1,695   528       2,223 

Sustaining exploration

  1,423   —   885   2,308 

Sustaining capital

  11,231   10,698   —   21,929 

General and administrative

  —   —   19,111   19,111 

AISC, Before By-product Credits (1)

  112,203   55,600  $19,996   187,799 

By-product credits:

                

Zinc

  (49,277)  (9,846)  —   (59,123)

Gold

  (41,434)  —       (41,434)

Lead

  (15,625)  (20,574)  —   (36,199)

Total By-product credits

  (106,336)  (30,420)  —   (136,756)

Cash Cost, After By-product Credits

 $(8,482) $13,954  $—  $5,472 

AISC, After By-product Credits

 $5,867  $25,180  $19,996  $51,043 

Divided by ounces produced

  5,143   1,777       6,920 

Cash Cost, Before By-product Credits, per Ounce

 $19.03  $24.97      $20.55 

By-product credits per ounce

  (20.68)  (17.12)      (19.76)

Cash Cost, After By-product Credits, per Ounce

 $(1.65) $7.85      $0.79 

AISC, Before By-product Credits, per Ounce

 $21.82  $31.29      $27.14 

By-product credits per ounce

  (20.68)  (17.12)      (19.76)

AISC, After By-product Credits, per Ounce

 $1.14  $14.17      $7.38 

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Table of Contents

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2021

 
  

Casa

Berardi

  

Nevada

Operations

  

Total

Gold

 

Total cost of sales

 $114,596  $25,448  $140,044 

Depreciation, depletion and amortization

  (41,191)  (8,232)  (49,423)

Treatment costs

  1,249   1,730   2,979 

Change in product inventory

  968   11,499   12,467 

Reclamation and other costs

  (423)  (245)  (668)

Exclusion of Nevada Operations costs

  —   (5,103)  (5,103)

Cash Cost, Before By-product Credits (1)

  75,199   25,097   100,296 

Reclamation and other costs

  423   245   668 

Sustaining exploration

  2,010   —   2,010 

Sustaining capital

  13,822   133   13,955 

AISC, Before By-product Credits (1)

  91,454   25,475   116,929 

By-product credits:

            

Silver

  (487)  (1,103)  (1,590)

Total By-product credits

  (487)  (1,103)  (1,590)

Cash Cost, After By-product Credits

 $74,712  $23,994  $98,706 

AISC, After By-product Credits

 $90,967  $24,372  $115,339 

Divided by ounces produced

  68   17   85 

Cash Cost, Before By-product Credits, per Ounce

 $1,113  $1,434  $1,180 

By-product credits per ounce

  (7)  (63)  (19)

Cash Cost, After By-product Credits, per Ounce

 $1,106  $1,371  $1,161 

AISC, Before By-product Credits, per Ounce

 $1,354  $1,456  $1,376 

By-product credits per ounce

  (7)  (63)  (19)

AISC, After By-product Credits, per Ounce

 $1,347  $1,393  $1,357 

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Table of Contents

In thousands (except per ounce amounts)

 

Six Months Ended June 30, 2021

 
  

Total

Silver

  

Total

Gold

  

Total

 

Total cost of sales

 $159,459  $140,044   299,503 

Depreciation, depletion and amortization

  (43,051)  (49,423)  (92,474)

Treatment costs

  29,129   2,979   32,108 

Change in product inventory

  (1,723)  12,467   10,744 

Reclamation and other costs

  (1,586)  (668)  (2,254)

Suspension of Nevada Operations costs

  —   (5,103)  (5,103)

Cash Cost, Before By-product Credits (1)

  142,228   100,296   242,524 

Reclamation and other costs

  2,223   668   2,891 

Sustaining exploration

  2,308   2,010   4,318 

Sustaining capital

  21,929   13,955   35,884 

General and administrative

  19,111   —   19,111 

AISC, Before By-product Credits (1)

  187,799   116,929   304,728 

By-product credits:

            

Zinc

  (59,123)  —   (59,123)

Gold

  (41,434)  —   (41,434)

Lead

  (36,199)  —   (36,199)

Silver

  —   (1,590)  (1,590)

Total By-product credits

  (136,756)  (1,590)  (138,346)

Cash Cost, After By-product Credits

 $5,472  $98,706  $104,178 

AISC, After By-product Credits

 $51,043  $115,339  $166,382 

Divided by ounces produced

  6,920   85     

Cash Cost, Before By-product Credits, per Ounce

 $20.55  $1,180     

By-product credits per ounce

  (19.76)  (19)    

Cash Cost, After By-product Credits, per Ounce

 $0.79  $1,161     

AISC, Before By-product Credits, per Ounce

 $27.14  $1,376     

By-product credits per ounce

  (19.76)  (19)    

AISC, After By-product Credits, per Ounce

 $7.38  $1,357     

(1)

Includes all direct and indirect operating costs related to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs and royalties, before by-product revenues earned from all metals other than the primary metal produced at each operation. AISC, Before By-product Credits also includes on-site exploration, reclamation, and sustaining capital costs.

(2)

AISC, Before By-product Credits for our consolidated silver properties includes corporate costs for general and administrative expense, exploration and sustaining capital.

(3)

Production was suspended at the Hollister mine in the third quarter of 2019 and at the Midas mine and Aurora mill in late 2019, and at the Midas mill and Fire Creek mine in mid-2021. Care and maintenance costs at Nevada Operations totaling $4.7 million and $5.2 million for the second quarter of 2022 and 2021, respectively, are reported in a separate line item on our consolidated statements of operations and excluded from the calculations of total cost of sales, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

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Table of Contents

Reconciliation of Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)

The non-GAAP measure of free cash flow is calculated as net cash provided by operating activities (GAAP) less additions to properties, plants, equipment and mineral interests (GAAP). Management believes that, when presented in conjunction with comparable GAAP measures, free cash flow is useful to investors in evaluating our operating performance. The following table reconciles net cash provided by operating activities to free cash flow:

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  

2022

  

2021

  

2022

  

2021

 

Net cash provided by operating activities (GAAP)

 $40,183  $86,304  $78,092  $124,240 

Less: Additions to properties, plants, equipment and mineral interests (GAAP)

  (34,329)  (31,898)  (55,807)  (53,311)

Free cash flow

 $5,854  $54,406  $22,285  $70,929 

Financial Liquidity and Capital Resources

We have a disciplined cash management strategy of maintaining financial flexibility to execute our capital priorities and provide long-term value to our shareholders.stockholders. Consistent with that strategy, we aim to maintain an acceptable level of net debt and sufficient liquidity to fund debt service costs, operations, capital developmentexpenditures, exploration and explorationpre-development projects, while returning cash to stockholders through dividends and potential share repurchases.

41

At June 30, 2022,2023, we had $198.2$106.8 million in cash and cash equivalents, of which $23.8$17.6 million was held in foreign subsidiaries' local currency that we anticipate utilizing for near-term operating, exploration or capital costs by those foreign subsidiaries. We also have USD cash and cash equivalent balances held by our foreign subsidiaries that, if repatriated, may be subject to withholding taxes. We expect that there would be no additional tax burden upon repatriation after considering the cash cost associated with the withholding taxes. We believe that our liquidity and capital resources from our U.S. operations are adequate to fund our U.S. operations and corporate activities.

As discussed in Overview above, we continue to address the COVID-19 outbreak and face uncertainty related to the potential additional impacts it could have on our operations. The impacts of COVID-19 and increasing or prolonged restrictions, if required, on our operations could require access to additional sources of liquidity, which may not be available to us.

Pursuant to our common stock dividend policy described in Note 1211 of Notes to Consolidated Financial Statements in our 20212022 Form 10-K, our board of directors declared and paid dividends on our common stock totaling $3.4$3.8 million in each of the first and second quarters of 20222023 and $4.7$3.4 million and $6.0 million in each of the first and second quarters of 2021, respectively.2022. Our dividend policy has a silver-linked component which ties the amount of declared common stock dividends to our realized silver price for the preceding quarter. Another component of our common stock dividend policy anticipates paying an annual minimum dividend.

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Table of Contents

For illustrative purposes only, the table below summarizes potential dividend amounts under our dividend policy.

Quarterly Average Realized Silver Price ($ per ounce)

 

 

Quarterly Silver-Linked Dividend ($ per share)

 

Annualized Silver-Linked Dividend ($ per share)

 

Annualized Minimum Dividend ($ per share)

 

Annualized Dividends per Share: Silver-Linked and Minimum ($ per share)

Less than $20

 

 

$—

 

$—

 

$0.015

 

$0.015

$

20

 

 

$0.0025

 

$0.01

 

$0.015

 

$0.025

$

25

 

 

$0.010

 

$0.04

 

$0.015

 

$0.055

$

30

 

 

$0.015

 

$0.06

 

$0.015

 

$0.075

$

35

 

 

$0.025

 

$0.10

 

$0.015

 

$0.115

$

40

 

 

$0.035

 

$0.14

 

$0.015

 

$0.155

$

45

 

 

$0.045

 

$0.18

 

$0.015

 

$0.195

$

50

 

 

$0.055

 

$0.22

 

$0.015

 

$0.235

Quarterly

Average Realized

Silver Price ($ per

ounce)

  

Quarterly Silver-

Linked Dividend ($

per share)

  

Annualized

Silver-Linked

Dividend ($ per

share)

  

Annualized

Minimum

Dividend ($

per share)

  

Annualized

Dividends per

Share: Silver-

Linked and

Minimum ($

per share)

 
$20  $0.0025  $0.01  $0.015  $0.025 
$25  $0.0100  $0.04  $0.015  $0.055 
$30  $0.0150  $0.06  $0.015  $0.075 
$35  $0.0250  $0.10  $0.015  $0.115 
$40  $0.0350  $0.14  $0.015  $0.155 
$45  $0.0450  $0.18  $0.015  $0.195 
$50  $0.0550  $0.22  $0.015  $0.235 

The declaration and payment of dividends on our common stock is at the sole discretion of our board of directors, and there can be no assurance that we will continue to declare and pay common stock dividends in the future.

Pursuant to our stock repurchase program described in Note 1211 of Notes to Consolidated Financial Statements in our 20212022 Form 10-K, we are authorized to repurchase up to 20 million shares of our outstanding common stock from time to time in open market or privately negotiated transactions, depending on prevailing market conditions and other factors. The repurchase program may be modified, suspended or discontinued by us at any time. Whether or not we engage in repurchases from time to time may depend on a variety of factors, including not only price and cash resources, but customary black-out restrictions, whether we have any material inside information, limitations on share repurchases or cash usage that may be imposed by our credit agreement or in connection with issuances of securities, alternative uses for cash, applicable law, and other investment opportunities from time to time. As of June 30, 20222023 and December 31, 2021,2022, 934,100 shares had been purchased in prior periods at an average price of $3.99 per share, leaving 19.1 million shares that may yet be purchased under the program. We have not repurchased any shares since June 2014. The closing price of our common stock at August 1, 2022, was $4.49 per share.

PursuantAs discussed in Note 6 of Notes to Condensed Consolidated Financial Statements (Unaudited) 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 in “at-the-market” (ATM) offerings. 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 equity distribution agreement can be terminated by us at any time. Any sales of shares issued under the equity distributionthat agreement are registered under the Securities Act of 1933, as amended, pursuant to a shelf registration statement on Form S-3. NoDuring the three months ended June 30, 2023, we sold 2,080,060 shares have been sold under the agreement asfor proceeds of $14.0 million, net of commissions and fees of $0.2 million. During the six months ended June 30, 2022.2023, we sold 4,253,334 shares under the agreement for proceeds of $25.9 million, net of commissions and fees of $0.4 million.

As a result of our current cash balances, the performance of our current and expected operations, current metals prices, proceeds from potential at-the-market sales of common stock, and availability under our revolving credit facility,Credit Agreement, we believe we will be able to meet our obligations and other potential cash requirements during the next 12 months from the date of this report.and beyond. Our obligations and other uses of cash may include, but are not limited to: debt service obligations related to the Senior Notes and IQ Notes; principal and interest payments under our revolving credit facility;Credit Agreement; deferral of revenues, care-and-maintenance and other costs related to addressing the impacts of COVID-19 on our operations; capital expenditures at our operations; potential acquisitions of other mining companies or properties; regulatory matters; litigation; potential repurchases of our common stock under the program described above; and payment of dividends on common stock, if declared by our board of directors.

42

We currently estimate a range of approximately $150 $225to 160  $235million will be spent in 20222023 on capital expenditures, primarily for equipment, infrastructure, and development at our mines, including $60.9$105.9 million already incurred as of June 30, 2022,2023, before any lease financing. We also estimate exploration and pre-development expenditures will total approximately $45.0$33.0 million in 2022,2023, including $24.0$11.9 million already incurred as of June 30, 2022.2023. Our expenditures for these items and our related plans for 20222023 may change based upon our financial position, metals prices, and other considerations. Our ability to fund the activities described above will depend on our operating performance, metals prices, our ability to estimate revenues and costs, sources of liquidity available to us, including the revolving credit facility, and other factors. A sustained downturn in metals prices, significant increase in operational or capital costs or other uses of cash, our inability to access the credit facility or the sources of liquidity discussed above, or other factors beyond our control could impact our plans.

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Table of Contents

We may defer some capital investment and/or exploration and pre-development activities, engage in asset sales or secure additional capital if necessary to maintain liquidity. We also may pursue additional acquisition opportunities, which could require additional equity issuances or other forms of financing. There can be no assurance that such financing will be available to us.

Our liquid assets include (in millions):

 

 

June 30, 2023

 

 

December 31, 2022

 

Cash and cash equivalents held in U.S. dollars

 

$

89.2

 

 

$

86.8

 

Cash and cash equivalents held in foreign currency

 

 

17.6

 

 

 

17.9

 

Total cash and cash equivalents

 

 

106.8

 

 

 

104.7

 

Marketable equity securities - non-current

 

 

20.8

 

 

 

24.0

 

Total cash, cash equivalents and investments

 

$

127.6

 

 

$

128.7

 

  

June 30, 2022

  

December 31, 2021

 

Cash and cash equivalents held in U.S. dollars

 $174.4  $196.2 

Cash and cash equivalents held in foreign currency

  23.8   13.8 

Total cash and cash equivalents

  198.2   210.0 

Marketable equity securities - non-current

  23.9   14.4 

Total cash, cash equivalents and investments

 $222.1  $224.4 

Cash and cash equivalents decreasedincreased by $11.8$2.1 million in the first six months of 2022.2023. Cash held in foreign currencies represents balances in Canadian dollars and Mexican Pesos (“MXN”), with the $10.0 million increase in the first half of 2022 resulting from increases in CAD and MXN held.Pesos. The value of non-current marketable equity securities increaseddecreased by $9.5$3.2 million.

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

Cash provided by operating activities (in millions)

 

$

64.4

 

 

$

78.1

 

  

Six Months Ended

 
  

June 30, 2022

  

June 30, 2021

 

Cash provided by operating activities (in millions)

 $78.1  $124.2 

Cash provided by operating activities infor the first halfsix months ended June 30, 2023 of 2022 of $78.1$64.4 million represented a $46.1$13.7 million decreasecompared to the $124.2$78.1 million provided by operating activities incompared to the first halfsame period for 2022. The decrease was due to a net working capital outflow of 2021. The variance was$16.2 million for the result of lower net income, as adjusted for non-cash items, a reduction in accounts receivable of $14.6six months ended June 30, 2023 reflecting higher vendor and an increase in accounts payable of $17.1 million,2022 incentive compensation payments, partially offset by an increasehigher income adjusted for non cash items in inventory of $8.4 millionthe six months ended June 30, 2023 compared to the same period for 2022, reflecting higher realized prices and smaller decreases to accrued taxes and accrued reclamation and other non-current liabilities.higher production costs.

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

Cash used in investing activities (in millions)

 

$

(105.8

)

 

$

(74.5

)

  

Six Months Ended

 
  

June 30, 2022

  

June 30, 2021

 

Cash used in investing activities (in millions)

 $(74.5) $(53.2)

During the first half of 2022,six months ended June 30, 2023, we invested $55.8$105.9 million in capital expenditures, excluding $5.1 million in non-cash finance lease additions, an increase of $2.5$50.1 million compared to the same period in 2021.2022. The variance was primarily due to $20.6 million invested at Keno Hill during the six months ended June 30, 2023 and increased spending at Lucky Friday and Greens Creek partially offset by lower Casa Berardi spend.and Lucky Friday. During the first half ofsame period in 2022, we acquired investmentsinvested $21.9 million in othermarketable securities of mining companies for a totaland generated proceeds of $21.9$2.5 million and disposedupon disposal of an investment generating proceeds of $2.5 million.  .

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

Cash provided by (used in) financing activities (in millions)

 

$

42.3

 

 

$

(14.1

)

  

Six Months Ended

 
  

June 30, 2022

  

June 30, 2021

 

Cash used in financing activities (in millions)

 $(14.1) $(19.4)

During the first six months ended June 30, 2023, we had net draws on our revolving credit facility of 2022$31 million outstanding at an interest rate of 7.76%. During the six months ended June 30, 2023 and 2021,2022, we paid cash dividends on our common and preferred stock totaling $7.8million and $7.0 million, and $11.0respectively. We issued stock under our ATM program described above for net proceeds of $25.9 million respectively. Due to lower realized silver prices during 2022 to date, the dividends paid on our common stock were $4 million lower than in the prior year, reflecting our dividend policy discussed above.six months ended June 30, 2023. We made repayments on our finance leases of $3.3$4.8 million and $3.8$3.3 million in the six-month periodssix months ended June 30, 2023 and 2022, and 2021, respectively. We acquired treasury shares for $3.7 million and $4.5 million in the first half of 2022 and 2021, respectively, as a result of employees' elections to utilize net share settlement to satisfy their tax withholding obligations related to incentive compensation paid in stock.

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Table of Contents

The effect of changes in foreign exchange rates resulted in a $1.3 million decrease in cash and cash equivalents in the first half of 2022 compared to a decrease of $28 thousand in the first half of 2021, with the variance due to depreciation of the CAD and MXN relative to the USD in the 2022 period.43

Contractual Obligations, Contingent Liabilities and Commitments

The table below presents our fixed, non-cancelable contractual obligations and commitments primarily related to our Senior Notes, IQ Notes, credit facility, outstanding purchase orders, certain capital expenditures and lease arrangements as of June 30, 20222023 (in thousands):

 

 

Payments Due By Period

 

 

 

Less than 1 year

 

 

1-3 years

 

 

4-5 years

 

 

More than
5 years

 

 

Total

 

Purchase obligations (1)

 

$

53,551

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

53,551

 

Credit facility(2)

 

 

31,842

 

 

 

1,684

 

 

 

1,095

 

 

 

—

 

 

 

34,621

 

Finance lease commitments (3)

 

 

10,534

 

 

 

16,464

 

 

 

8,929

 

 

 

—

 

 

 

35,927

 

Operating lease commitments (4)

 

 

2,248

 

 

 

2,559

 

 

 

2,358

 

 

 

6,050

 

 

 

13,215

 

Senior Notes (5)

 

 

34,438

 

 

 

68,876

 

 

 

539,569

 

 

 

—

 

 

 

642,883

 

IQ Notes (6)

 

 

2,322

 

 

 

38,604

 

 

 

—

 

 

 

—

 

 

 

40,926

 

Total contractual cash obligations

 

$

134,935

 

 

$

128,187

 

 

$

551,951

 

 

$

6,050

 

 

$

821,123

 

  

Payments Due By Period

 
  

Less than 1

year

  

1-3 years

  

4-5 years

  

More than

5 years

  

Total

 

Purchase obligations (1)

 $31,918  $—  $—  $—  $31,918 

Credit facility(2)

  1,072   —   —   —   1,072 

Finance lease commitments (3)

  6,423   8,291   1,213   —   15,927 

Operating lease commitments (4)

  3,011   3,113   2,069   6,043   14,236 

Senior Notes (5)

  34,438   68,875   68,875   496,523   668,711 

IQ Notes (6)

  2,441   4,882   37,528   —   44,851 

Total contractual cash obligations

 $79,303  $85,161  $109,685  $502,566  $776,715 

(1)

Consists of open purchase orders and commitments of approximately $8.1 million at the Greens Creek unit, $1.3 million at the Casa Berardi unit, $19.1 million at the Lucky Friday unit and $3.4 million at the Nevada Operations unit. 

(2)

We have a $250 million revolving credit agreement which is currently undrawn. We had $14.9 million in letters of credit outstanding as of June 30, 2022. The amounts in the table above assume no additional amounts will be drawn in future periods, and include only the standby fee on the current undrawn balance. For more information on our credit facility, see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited).

(3)

Includes scheduled finance lease payments of $12.2 million, $2.2 million, $1.5 million and $0.1 million (including interest), respectively, for equipment at our Greens Creek, Lucky Friday, Casa Berardi and Nevada Operations units.  

(4)

We enter into operating leases in the normal course of business.  Substantially all lease agreements have fixed payment terms based on the passage of time.  Some lease agreements provide us with the option to renew the lease or purchase the leased property.  Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional operating lease arrangements.

(5)

On February 19, 2020, we completed an offering of $475 million in aggregate principal amount of our Senior Notes due February 15, 2028. The Senior Notes bear interest at a rate of 7.25% per year, with interest payable on February 15 and August 15 of each year. See Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information.

(6)

On July 9, 2020, we entered into a note purchase agreement pursuant to which we issued our IQ Notes for CAD$50 million (approximately USD$36.8 million at the time of the transaction) in aggregate principal amount. The IQ Notes bear interest on amounts outstanding at a rate of 6.515% per year, payable on January 9 and July 9 of each year. See Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information.

(1)
57
TableConsists of Contents
open purchase orders and commitments of approximately $16.5 million, $20.8million, $10.5 million, $3.5 million and $2.3 million for various capital and non-capital items at Greens Creek, Lucky Friday, Keno Hill, Casa Berardi and Nevada Operations, respectively.

(2)
The Credit Agreement provides for a $150 million revolving credit facility. We had net draws of $31 million and $6.8 million in letters of credit outstanding as of June 30, 2023. The amounts in the table above assume no additional amounts will be drawn in future periods, and include only the standby fee on the current undrawn balance and accrued interest. For more information on our credit facility, see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited).

(3)
Includes scheduled finance lease payments of $10.3 million, $7.3 million, $8.8 million, and $9.5 million, respectively, for equipment at our Greens Creek, Lucky Friday, Casa Berardi, and Keno Hill.

(4)
We enter into operating leases in the normal course of business. Substantially all lease agreements have fixed payment terms based on the passage of time. Some lease agreements provide us with the option to renew the lease or purchase the leased property. Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional operating lease arrangements.

(5)
On February 19, 2020, we completed an offering of $475 million in aggregate principal amount of our Senior Notes due February 15, 2028. The Senior Notes bear interest at a rate of 7.25% per year, with interest payable on February 15 and August 15 of each year. See Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information.

(6)
On July 9, 2020, we entered into a note purchase agreement pursuant to which we issued our IQ Notes for CAD$50 million (approximately USD$36.8 million at the time of the transaction) in aggregate principal amount. The IQ Notes bear interest on amounts outstanding at a rate of 6.515% per year, payable on January 9 and July 9 of each year. See Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information.

We record liabilities for costs associated with mine closure, reclamation of land and other environmental matters. At June 30, 2022,2023, our liabilities for these matters totaled $114.3$119.9 million. Future expenditures related to closure, reclamation and environmental expenditures at our sites are difficult to estimate, although we anticipate we will incur expenditures relating to these obligations over the next 30 years. For additional information relating to our environmental obligations, see Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited).

Critical Accounting Estimates

There have been no significant changes to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 20212022 Form 10-K.

Off-Balance Sheet Arrangements

At June 30, 2022,2023, we had no existing off-balance sheet arrangements, as defined under SEC regulations, that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

44

Guarantor Subsidiaries

Presented below are Hecla’s unaudited interim condensed consolidating financial statements as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended, resulting from the guarantees by certain of Hecla's subsidiaries of the Senior Notes and IQ Notes (see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information). The Guarantors consist of the following of Hecla's 100%-owned subsidiaries: Hecla Limited; Silver Hunter Mining Company; Rio Grande Silver, Inc.; Hecla MC Subsidiary, LLC; Hecla Silver Valley, Inc.; Burke Trading, Inc.; Hecla Montana, Inc.; Revett Silver Company; RC Resources, Inc.; Troy Mine Inc.; Revett Exploration, Inc.; Revett Holdings, Inc.; Mines Management, Inc.; Newhi, Inc.; Montanore Minerals Corp.; Hecla Alaska LLC; Hecla Greens Creek Mining Company; Hecla Admiralty Company; Hecla Juneau Mining Company; Klondex Holdings Inc.; Klondex Gold & Silver Mining Co.; Klondex Midas Holdings Limited; Klondex Aurora Mine Inc.; Klondex Hollister Mine Inc; andInc.; Hecla Quebec, Inc.; and Alexco Resource Corp. We completed the offering of the Senior Notes on February 19, 2020 under our shelf registration statement previously filed with the SEC. We issued the IQ Notes in four equal tranches between July and October 2020.

The unaudited interim condensed consolidating financial statements below have been prepared from our financial information on the same basis of accounting as the unaudited interim condensed consolidated financial statements set forth elsewhere in this report. Investments in the subsidiaries are accounted for under the equity method. Accordingly, the entries necessary to consolidate Hecla, the Guarantors, and our non-guarantor subsidiaries are reflected in the intercompany eliminations column. In the course of preparing consolidated financial statements, we eliminate the effects of various transactions conducted between Hecla and its subsidiaries and among the subsidiaries. While valid at an individual subsidiary level, such activities are eliminated in consolidation because, when taken as a whole, they do not represent business activity with third-party customers, vendors, and other parties. Examples of such eliminations include the following:

•

Investments in subsidiaries. The acquisition of a company results in an investment in debt or equity capital on the records of the parent company and a contribution to debt or equity capital on the records of the subsidiary. Such investments and capital contributions are eliminated in consolidation.

•

Capital contributions. Certain of Hecla's subsidiaries do not generate cash flow, either at all or that is sufficient to meet their capital needs, and their cash requirements are routinely met with inter-company advances from their parent companies. Generally on an annual basis, when not otherwise intended as debt, the boards of directors of such parent companies declare contributions of capital to their subsidiary companies, which increase the parents' investment and the subsidiaries' additional paid-in capital. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.

•
58Investments in subsidiaries. The acquisition of a company results in an investment in debt or equity capital on the records of the parent company and a contribution to debt or equity capital on the records of the subsidiary. Such investments and capital contributions are eliminated in consolidation.
•
TableCapital contributions. Certain of ContentsHecla's subsidiaries do not generate cash flow, either at all or that is sufficient to meet their capital needs, and their cash requirements are routinely met with inter-company advances from their parent companies. Generally on an annual basis, when not otherwise intended as debt, the boards of directors of such parent companies declare contributions of capital to their subsidiary companies, which increase the parents' investment and the subsidiaries' additional paid-in capital. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.
•
Debt. At times, inter-company debt agreements have been established between certain of Hecla's subsidiaries and their parents. The related debt liability and receivable balances, accrued interest expense (if any) and income activity (if any), and payments of principal and accrued interest amounts (if any) by the subsidiary companies to their parents are eliminated in consolidation.
•
Dividends. Certain of Hecla's subsidiaries which generate cash flow routinely provide cash to their parent companies through inter-company transfers. On at least an annual basis, the boards of directors of such subsidiary companies declare dividends to their parent companies, which reduces the subsidiaries' retained earnings and increases the parents' dividend income. In consolidation, such activity is eliminated.
•
Deferred taxes. Our ability to realize deferred tax assets and liabilities is considered for two consolidated tax groups of subsidiaries within the United States: The Nevada U.S. Group and the Hecla U.S. Group. Within each tax group, all subsidiaries' estimated future taxable income contributes to the ability of their tax group to realize all such assets and liabilities. However, when Hecla's subsidiaries are viewed independently, we use the separate return method to assess the realizability of each subsidiary's deferred tax assets and whether a valuation allowance is required against such deferred tax assets. In some instances, a parent company or subsidiary may possess deferred tax assets whose realization depends on the future taxable incomes of other subsidiaries on a consolidated-return basis, but would not be considered realizable if such parent or subsidiary filed on a separate stand-alone basis. In such a situation, a valuation allowance is assessed on that subsidiary's deferred tax assets, with the resulting adjustment reported in the eliminations column of the guarantor and parent's financial statements, as is the case in the unaudited interim financial statements set forth below. The separate return method can result in significant eliminations of deferred tax assets and liabilities and related income tax provisions and benefits. Non-current deferred tax asset balances are included in other non-current assets on the consolidating balance sheets and make up a large portion of that item, particularly for the guarantor balances.

•

Debt.  At times, inter-company debt agreements have been established between certain of Hecla's subsidiaries and their parents. The related debt liability and receivable balances, accrued interest expense (if any) and income activity (if any), and payments of principal and accrued interest amounts (if any) by the subsidiary companies to their parents are eliminated in consolidation.

•

Dividends.  Certain of Hecla's subsidiaries which generate cash flow routinely provide cash to their parent companies through inter-company transfers. On at least an annual basis, the boards of directors of such subsidiary companies declare dividends to their parent companies, which reduces the subsidiaries' retained earnings and increases the parents' dividend income. In consolidation, such activity is eliminated.

•

Deferred taxes. Our ability to realize deferred tax assets and liabilities is considered for two consolidated tax groups of subsidiaries within the United States: The Nevada U.S. Group and the Hecla U.S. Group. Within each tax group, all subsidiaries' estimated future taxable income contributes to the ability of their tax group to realize all such assets and liabilities. However, when Hecla's subsidiaries are viewed independently, we use the separate return method to assess the realizability of each subsidiary's deferred tax assets and whether a valuation allowance is required against such deferred tax assets. In some instances, a parent company or subsidiary may possess deferred tax assets whose realization depends on the future taxable incomes of other subsidiaries on a consolidated-return basis, but would not be considered realizable if such parent or subsidiary filed on a separate stand-alone basis. In such a situation, a valuation allowance is assessed on that subsidiary's deferred tax assets, with the resulting adjustment reported in the eliminations column of the guarantor and parent's financial statements, as is the case in the unaudited interim financial statements set forth below. The separate return method can result in significant eliminations of deferred tax assets and liabilities and related income tax provisions and benefits. Non-current deferred tax asset balances are included in other non-current assets on the consolidating balance sheets and make up a large portion of that item, particularly for the guarantor balances.

Separate financial statements of the Guarantors are not presented because the guarantees by the Guarantors are joint and several and full and unconditional, except for certain customary release provisions, including: (1) the sale or disposal of all or substantially all of the assets of the Guarantor; (2) the sale or other disposition of the capital stock of the Guarantor; (3) the Guarantor is designated as an unrestricted entity in accordance with the applicable provisions of the indenture; (4) Hecla ceases to be a borrower as defined in the indenture; and (5) upon legal or covenant defeasance or satisfaction and discharge of the indenture.

59
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45

Unaudited Interim Condensed Consolidating Balance Sheets

  

As of June 30, 2022

 
  

Parent

  

Guarantors

  

Non-Guarantors

  

Eliminations

  

Consolidated

 
  

(in thousands)

 

Assets

                    

Cash and cash equivalents

 $151,846  $30,923  $15,424  $—  $198,193 

Other current assets

  11,861   111,008   1,334   —   124,203 

Properties, plants, equipment and mineral interests, net

  1,913   2,285,819   8,230   —   2,295,962 

Intercompany receivable (payable)

  (226,858)  (208,167)  217,705   217,320   — 

Investments in subsidiaries

  1,415,938   —   —   (1,415,938)  — 

Other non-current assets

  359,373   28,272   (116,425)  (172,475)  98,745 

Total assets

 $1,714,073  $2,247,855  $126,268  $(1,371,093) $2,717,103 

Liabilities and Stockholders' Equity

                    

Current liabilities

 $(590,549) $250,516  $(1,940) $500,202  $158,229 

Long-term debt

  507,841   172,397   (522)  (153,721)  525,995 

Non-current portion of accrued reclamation

  —   101,001   2,746   —   103,747 

Non-current deferred tax liability

  13,980   430,867   —   (301,634)  143,213 

Other non-current liabilities

  (81)  2,422   696   —   3,037 

Stockholders' equity

  1,782,882   1,290,652   125,288   (1,415,940)  1,782,882 

Total liabilities and stockholders' equity

 $1,714,073  $2,247,855  $126,268  $(1,371,093) $2,717,103 

 

As of December 31, 2022

 

 

Parent

 

 

Guarantors

 

 

Non-Guarantors

 

 

Eliminations

 

 

Consolidated

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

69,889

 

 

$

20,152

 

 

$

14,702

 

 

$

—

 

 

$

104,743

 

Other current assets

 

 

4,959

 

 

 

147,103

 

 

 

10,922

 

 

 

—

 

 

$

162,984

 

Properties, plants, equipment and mineral interests - net

 

 

1,913

 

 

 

2,288,199

 

 

 

279,678

 

 

 

—

 

 

$

2,569,790

 

Intercompany receivable (payable)

 

 

(159,442

)

 

 

(598,248

)

 

 

303,433

 

 

 

454,257

 

 

$

—

 

Investments in subsidiaries

 

 

2,128,366

 

 

 

—

 

 

 

—

 

 

 

(2,128,366

)

 

$

—

 

Other non-current assets

 

 

355,631

 

 

 

20,870

 

 

 

43,241

 

 

 

(330,087

)

 

$

89,655

 

Total assets

 

$

2,401,316

 

 

$

1,878,076

 

 

$

651,976

 

 

$

(2,004,196

)

 

$

2,927,172

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

$

(93,660

)

 

$

134,016

 

 

$

13,939

 

 

$

124,171

 

 

$

178,466

 

Long-term debt

 

 

506,364

 

 

 

11,378

 

 

 

0

 

 

 

—

 

 

$

517,742

 

Non-current portion of accrued reclamation

 

 

—

 

 

 

101,900

 

 

 

6,508

 

 

 

—

 

 

$

108,408

 

Non-current deferred tax liability

 

 

—

 

 

 

113,876

 

 

 

11,970

 

 

 

—

 

 

$

125,846

 

Other non-current liabilities

 

 

9,645

 

 

 

6,720

 

 

 

1,378

 

 

 

—

 

 

$

17,743

 

Stockholders' equity

 

 

1,978,967

 

 

 

1,510,186

 

 

 

618,181

 

 

 

(2,128,367

)

 

$

1,978,967

 

Total liabilities and stockholders' equity

 

$

2,401,316

 

 

$

1,878,076

 

 

$

651,976

 

 

$

(2,004,196

)

 

$

2,927,172

 

 

 

As of June 30, 2023

 

 

 

Parent

 

 

Guarantors

 

 

Non-Guarantors

 

 

Eliminations

 

 

Consolidated

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

68,684

 

 

$

37,128

 

 

$

974

 

 

$

—

 

 

$

106,786

 

Other current assets

 

 

19,169

 

 

 

127,939

 

 

 

5,261

 

 

 

—

 

 

 

152,369

 

Properties, plants, equipment and mineral interests, net

 

 

(36

)

 

 

2,607,407

 

 

 

8,376

 

 

 

—

 

 

 

2,615,747

 

Intercompany receivable (payable)

 

 

(182,742

)

 

 

(747,029

)

 

 

565,779

 

 

 

363,992

 

 

 

—

 

Investments in subsidiaries

 

 

2,252,883

 

 

 

—

 

 

 

—

 

 

 

(2,252,883

)

 

 

—

 

Other non-current assets

 

 

404,118

 

 

 

19,215

 

 

 

15,724

 

 

 

(368,500

)

 

 

70,557

 

Total assets

 

$

2,562,076

 

 

$

2,044,660

 

 

$

596,114

 

 

$

(2,257,391

)

 

$

2,945,459

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

$

27,850

 

 

$

122,990

 

 

$

5,008

 

 

$

(4,508

)

 

$

151,340

 

Long-term debt

 

 

538,579

 

 

 

21,238

 

 

 

—

 

 

 

—

 

 

 

559,817

 

Non-current portion of accrued reclamation

 

 

—

 

 

 

108,191

 

 

 

2,045

 

 

 

—

 

 

 

110,236

 

Non-current deferred tax liability

 

 

—

 

 

 

118,611

 

 

 

—

 

 

 

—

 

 

 

118,611

 

Other non-current liabilities

 

 

2,811

 

 

 

6,718

 

 

 

3,090

 

 

 

—

 

 

 

12,619

 

Stockholders' equity

 

 

1,992,836

 

 

 

1,666,912

 

 

 

585,971

 

 

 

(2,252,883

)

 

 

1,992,836

 

Total liabilities and stockholders' equity

 

$

2,562,076

 

 

$

2,044,660

 

 

$

596,114

 

 

$

(2,257,391

)

 

$

2,945,459

 

Unaudited Interim Condensed Consolidating Statements of Operations

  

Three Months Ended June 30, 2022

 
  

Parent

  

Guarantors

  

Non-Guarantors

  

Eliminations

  

Consolidated

 
  

(in thousands)

 

Revenues

 $11,323  $179,919  $—  $—  $191,242 

Cost of sales

  746   (116,653)  —   —   (115,907)

Depreciation, depletion, amortization

  —   (38,072)  —   —   (38,072)

General and administrative

  (4,497)  (5,036)  (159)  —   (9,692)

Exploration and pre-development

  (148)  (8,700)  (2,352)  —   (11,200)
Fair value adjustments, net  (1,553)  (4,231)  (10,644)  —   (16,428)

Equity in earnings of subsidiaries

  (12,559)  —   —   12,559   — 

Other expense

  (3,237)  (1,688)  (1,179)  (7,108)  (13,212)

Income (loss) before income taxes

  (9,925)  5,539   (14,334)  5,451   (13,269)

(Provision) benefit from income taxes

  (3,598)  (3,763)  —   7,107   (254)

Net income (loss)

  (13,523)  1,776   (14,334)  12,558   (13,523)

Preferred stock dividends

  (138)  —   —   —   (138)

Income (loss) applicable to common stockholders

 $(13,661) $1,776  $(14,334) $12,558  $(13,661)

Net income (loss)

  (13,523)  1,776   (14,334)  12,558   (13,523)

Changes in comprehensive income (loss)

  65,348   —   —   —   65,348 

Comprehensive income (loss)

 $51,825  $1,776  $(14,334) $12,558  $51,825 

60
Table of Contents

  

Six Months Ended June 30, 2022

 
  

Parent

  

Guarantors

  

Non-Guarantors

  

Eliminations

  

Consolidated

 
  

(in thousands)

 

Revenues

 $6,553  $371,188  $—  $—  $377,741 

Cost of sales

  1,796   (223,475)  —   —   (221,679)

Depreciation, depletion, amortization

  —   (73,370)  —   —   (73,370)

General and administrative

  (8,890)  (8,800)  (296)  —   (17,986)

Exploration and pre-development

  (294)  (19,346)  (4,368)  —   (24,008)
Fair value adjustments, net  (1,297)  (2,292)  (6,874)  —   (10,463)

Equity in earnings of subsidiaries

  (8,347)  —   —   8,347   — 

Other expense

  8,114   (23,574)  (381)  (17,879)  (33,720)

Income (loss) before income taxes

  (2,365)  20,331   (11,919)  (9,532)  (3,485)

(Provision) benefit from income taxes

  (7,005)  (16,769)  11   17,878   (5,885)

Net income (loss)

  (9,370)  3,562   (11,908)  8,346   (9,370)

Preferred stock dividends

  (276)  —   —   —   (276)

Income (loss) applicable to common stockholders

 $(9,646) $3,562  $(11,908) $8,346  $(9,646)

Net income (loss)

  (9,370)  3,562   (11,908)  8,346   (9,370)

Changes in comprehensive income (loss)

  32,183   —   —   —   32,183 

Comprehensive income (loss)

 $22,813  $3,562  $(11,908) $8,346  $22,813 

61
Table of Contents

Unaudited Interim Condensed Consolidating Statements of Cash Flows

  

Six Months Ended June 30, 2022

 
  

Parent

  

Guarantors

  

Non-Guarantors

  

Eliminations

  

Consolidated

 
  

(in thousands)

 

Cash flows from operating activities

 $10,940  $65,524  $(3,189) $4,817  $78,092 

Cash flows from investing activities:

                    

Additions to properties, plants, and equipment

  —   (55,798)  (9)  —   (55,807)

Other investing activities, net

  146,768   (2,060)  (16,622)  (146,768)  (18,682)

Cash flows from financing activities:

                    

Dividends paid to stockholders

  (7,027)  —   —   —   (7,027)

Payments on debt

  —   (3,333)  —   —   (3,333)

Other financing activity

  (173,943)  11,652   16,591   141,949   (3,751)

Effect of exchange rate changes on cash

  —   843   (2,167)  3   (1,321)

Changes in cash, cash equivalents and restricted cash and cash equivalents

  (23,262)  16,828   (5,395)      (11,829)

Beginning cash, cash equivalents and restricted cash and cash equivalents

  175,108   15,135   20,820   —   211,063 

Ending cash, cash equivalents and restricted cash and cash equivalents

 $151,846  $31,963  $15,425  $—  $199,234 

46

 

 

Six Months Ended June 30, 2023

 

 

 

Parent

 

 

Guarantors

 

 

Non-Guarantors

 

 

Eliminations

 

 

Consolidated

 

 

 

(in thousands)

 

Revenues

 

$

9,057

 

 

$

368,574

 

 

$

—

 

 

$

—

 

 

$

377,631

 

Cost of sales

 

 

(1,966

)

 

 

(231,338

)

 

 

—

 

 

 

—

 

 

 

(233,304

)

Depreciation, depletion, amortization

 

 

—

 

 

 

(71,720

)

 

 

—

 

 

 

—

 

 

 

(71,720

)

General and administrative

 

 

(9,735

)

 

 

(12,450

)

 

 

(668

)

 

 

—

 

 

 

(22,853

)

Exploration and pre-development

 

 

(185

)

 

 

(10,169

)

 

 

(1,506

)

 

 

—

 

 

 

(11,860

)

Equity in earnings of subsidiaries

 

 

(16,762

)

 

 

—

 

 

 

—

 

 

 

16,762

 

 

 

—

 

Other (expense) income

 

 

14,571

 

 

 

(53,309

)

 

 

(1,776

)

 

 

(7,843

)

 

 

(48,357

)

Income (loss) before income taxes

 

 

(5,020

)

 

 

(10,412

)

 

 

(3,950

)

 

 

8,919

 

 

 

(10,463

)

(Provision) benefit from income taxes

 

 

(13,848

)

 

 

(2,400

)

 

 

—

 

 

 

7,844

 

 

 

(8,404

)

Net income (loss)

 

 

(18,868

)

 

 

(12,812

)

 

 

(3,950

)

 

 

16,763

 

 

 

(18,867

)

Preferred stock dividends

 

 

(276

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(276

)

Income (loss) applicable to common stockholders

 

$

(19,144

)

 

$

(12,812

)

 

$

(3,950

)

 

$

16,763

 

 

$

(19,143

)

Net income (loss)

 

 

(18,868

)

 

 

(12,812

)

 

 

(3,950

)

 

 

16,763

 

 

 

(18,867

)

Changes in comprehensive income (loss)

 

 

11,748

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,748

 

Comprehensive income (loss)

 

$

(7,120

)

 

$

(12,812

)

 

$

(3,950

)

 

$

16,763

 

 

$

(7,119

)

47

Item 3.Quantitative and Qualitative Disclosures About Market Risk

The following discussion about our exposure to market risks and risk management activities includes forward-looking statements that involve risks and uncertainties, as well as summarizes the financial instruments held by us at June 30, 2022,2023, which are sensitive to changes in commodity prices and foreign exchange rates and are not held for trading purposes. Actual results could differ materially from those projected in the forward-looking statements. In the normal course of business, we also face risks that are either non-financial or non-quantifiable (See Item 1A. – Risk Factors of our 20212022 Form 10-K).

Metals Prices

Changes in the market prices of silver, gold, lead and zinc can significantly affect our profitability and cash flow. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see Item 1A – Risk Factors – A substantial or extended decline in metals prices would have a material adverse effect on us in our 20212022 Form 10-K). We utilize financially-settled forward and put option contracts to manage our exposure to changes in prices for silver, gold, zinc and lead.

Provisional Sales

Sales of all metals products sold directly to customers, including by-product metals, are recorded as revenues when all performance obligations have been completed and the transaction price can be determined or reasonably estimated. For concentrate sales, revenues are generally recorded at the time of shipment at forward prices for the estimated month of settlement. Due to the time elapsed between shipment to the customer and the final settlement with the customer we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices until final settlement by the customer. Changes in metals prices between shipment and final settlement will result in changes to revenues previously recorded upon shipment. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see Item 1A – Risk Factors –A substantial or extended decline in metals prices would have a material adverse effect on us in our 20212022 Form 10-K). At June 30, 2022,2023, metals contained in concentrate sales and exposed to future price changes totaled 2.2 1.845million ounces of silver, 2,8407,100 ounces of gold, 5,828 775tons of zinc, and 4,6693,825 tons of lead. If the price for each metal were to change by 10%, the change in the total value of the concentrates sold would be approximately $8.1$10.7 million. As discussed in Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited), we utilize a program designed and intended to mitigate the risk of negative price adjustments with limited mark-to-market financially-settled forward contracts for our silver, gold, zinc and lead sales.

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Commodity-Price Risk Management

See Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited) and Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 20212022 Form 10-K for a description of our commodity-price risk management program.

Foreign Currency Risk Management

We operate or have mining interests in Canada, and Mexico, which exposes us to risks associated with fluctuations in the exchange rates between the USD and the CAD and MXN, respectively.CAD. We have determined the functional currency for our Canadian and Mexican operations is the USD. As such, foreign exchange gains and losses associated with the re-measurement of monetary assets and liabilities from CAD and MXN to USD are recorded to earnings each period. For the three and six months ended June 30, 20222023, we recognized a net foreign exchange loss of $3.9 million and $3.7 million, respectively, compared to a net foreign exchange gain of $4.5 million and $2.4 million respectively, compared to a net foreign exchange loss of $1.9 million and $4.0 million, respectively for the comparable periods in 2021.three and six months ended June 30, 2022 respectively. Foreign currency exchange rates are influenced by a number of factors beyond our control. A 10% change in the exchange rate between the USD and CAD from the rate at June 30, 20222023 would have resulted in a change of approximately $7.7 million in our net foreign exchange gain or loss.  A 10% change in the exchange rate between the USD and MXN from the rate at June 30, 2022 would have resulted in a change of approximately $0.1$9.9 million in our net foreign exchange gain or loss. We do not hedge the remeasurement of monetary assets and liabilities. We do hedge some of our operating and capital costs denominated in foreign currency.

See Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited) and Note 119 of Notes to Consolidated Financial Statements in our 20212022 Form 10-K for a description of our foreign currency risk management.

48

Item 4.Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as required by Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were effective as of June 30, 2022,2023, in assuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported. There were no changes in our internal control over financial reporting during the quarter ended June 30, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

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Part II - Other Information

Hecla Mining Company and Subsidiaries

For information concerning legal proceedings, refer to Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited), which is incorporated by reference into this Item 1.

Item 1A.Risk Factors

Item 1A. –Risk Factors

Item 1A. – Risk Factors of our 20212022 Form 10-K setsset forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition or operating results.

On July 4, 2022, we entered into an arrangement agreement with Alexco Resource Corp. (“Alexco”) pursuant to which we would acquire all of the issued and outstanding common stock of Alexco. See Note 12 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information. The proposed acquisition is subject to approval by Alexco’s stockholders and receipt of certain regulatory approvals. The information below includes additional risk factors related to the potential acquisition.

Risk Factors Relating to the Acquisition

The acquisition of Alexco may not be completed on the terms or timeline currently contemplated or at all. Failure to complete the acquisition could negatively impact our stock price and future business and financial results.

The completion of the transactions contemplated by the arrangement agreement is subject to certain conditions, including (1) approval and adoption by Alexco shareholders, (2) approval by the Supreme Court of British Columbia and receipt of certain other regulatory approvals, (3) the absence of certain legal impediments and (4) other customary closing conditions. There can be no assurance the acquisition will be consummated on the terms or timeline currently contemplated, or at all. We have expended and will continue to expend a significant amount of time and resources on the acquisition, and a failure to consummate the acquisition as currently contemplated, or at all, could have a material adverse effect on our business and results of operations.

If the acquisition is not completed, our ongoing business may be adversely affected and we will be subject to several risks, including the following:

•

having to pay substantial other costs and expenses relating to the proposed transaction, such as legal, accounting, financial advisor, filing, printing and mailing fees and integration costs that have already been incurred and will continue to be incurred until closing;

•

the focus of our management on the acquisition instead of on pursuing other opportunities that could be beneficial to us; and

•

the market price of our common stock could decline to the extent that the current market price reflects a market assumption that the acquisition will be completed;

in each case, without realizing any of the anticipated benefits of having the acquisition completed. In addition, if the acquisition is not completed, we may experience negative reactions from the financial markets and from our employees and other stakeholders. We could also be subject to litigation related to any failure to complete the acquisition or to perform our obligations under the arrangement agreement. If the acquisition is not completed, we cannot assure our stockholders that these risks will not materialize and will not materially affect our business, financial results and stock price.

The agreement for the acquisition of Alexco may be terminated by us in certain circumstances, including in the event of the occurrence of an Alexco material adverse effect.

Both we and Alexco have the right to terminate the arrangement agreement in certain circumstances. Accordingly, there can be no assurance that the arrangement agreement will not be terminated by either us or Alexco before the completion of the acquisition. For example, we have the right, in certain circumstances, to terminate the arrangement agreement if an Alexco material adverse effect, as defined in the agreement, occurs.

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The exchange ratio is fixed and will not be adjusted in the event of any change in either our or Alexco’s stock price.

Upon the closing of the acquisition, each share of Alexco common stock (other than shares already owned by us) will be converted into the right to receive 0.116 of a share of our common stock. This exchange ratio was fixed in the arrangement agreement and will not be adjusted for changes in the market price of either our common stock or Alexco common stock. Changes in the price of our common stock prior to the acquisition will affect the market value that Alexco shareholders will receive on the date of the acquisition. Stock price changes may result from a variety of factors (many of which are beyond the control of us orAlexco), including, without limitation, the following:

•

changes in our or Alexco’s businesses, operations, performance and prospects;

•

changes in market assessments of the business, operations and prospects of us or Alexco;

•

investor behavior and strategies, including market assessments of the likelihood that the acquisition will be completed;

•

interest rates, metals prices, general market and economic conditions and other factors generally affecting the price of our and Alexco’s common stock; and

•

federal, state, provincial and local legislation, governmental regulation and legal developments in the businesses in which we and Alexco operate.

The price of our common stock at the closing of the acquisition may vary from its price on the date the arrangement agreement was executed, on the date of this Form 10-Q and on the date of the shareholder meeting of Alexco. As a result, the market value represented by the exchange ratio will also vary.

Any delay in completing the acquisition may reduce or eliminate the expected benefits from the acquisition.

In addition to the required Alexco shareholder approval and adoption, the acquisition is subject to a number of other conditions beyond our and Alexco’s control that may prevent, delay or otherwise materially adversely affect its completion. We and Alexco cannot predict whether and when these other conditions will be satisfied. Furthermore, obtaining the required approval and adoption could delay the completion of the acquisition for a significant period of time or prevent it from occurring. Any delay in completing the acquisition could cause us not to realize some or all of the benefits that we expect to achieve if the acquisition is successfully completed within its expected time frame.

The acquisition will involve substantial costs.

We and Alexco have incurred and expect to continue to incur substantial costs and expenses relating directly to the transaction, including fees and expenses payable to legal, accounting and financial advisors and other professional fees relating to the transaction, insurance premium costs, fees and costs relating to regulatory filings and notices, printing and mailing costs and other transaction-related costs, fees and expenses.

Risk Factors Relating to Us Following the Acquisition

We will incur transaction and integration costs in connection with the acquisition.

We and Alexco expect to incur transaction fees and other costs related to the acquisition. In addition to transaction costs related to the acquisition, we will incur integration costs following the completion of the acquisition as we integrate the Alexco business with that of ours.

After completion of the acquisition, we may fail to realize anticipated benefits.

The success of the acquisition will depend, in part, on our ability to realize the anticipated benefits from the acquisition of Alexco. If we are not able to successfully integrate Alexco into our operations within the anticipated time frame, or at all, the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected.

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The market price of our common stock following the acquisition may decline as a result of the acquisition.

The market price of our common stock following the acquisition may decline as a result of the acquisition for a number of reasons, including the unsuccessful integration of Alexco and our business, our failure to achieve the perceived benefits of the acquisition, including financial results, or declines in the mining industry, the market price of silver, our business or the economy as a whole. These factors are, to some extent, beyond our control.

Uncertainties associated with the acquisition may cause a loss of management personnel and other key employees of Alexco which could adversely affect future business and operations following the acquisition.

Hecla and Alexco are dependent on the experience and industry knowledge of their officers, other key employees and hourly employees at the mine sites to execute their business plans and conduct operations. Success after the acquisition will depend in part upon its ability to retain key employees of Alexco, as well as hourly employees. Current and prospective employees of Alexco may experience uncertainty about their future roles with Hecla following the acquisition, which may materially adversely affect the ability of Alexco to attract and retain key personnel during the pendency of the acquisition. Accordingly, no assurance can be given that Hecla will be able to retain key employees or hourly employees of Alexco. Losses of such personnel could adversely affect the business and operations of Hecla after the acquisition is complete.

The Alexco properties and any others we may acquire may not produce as expected and may not generate additional reserves, and may come with liabilities beyond those known at the time of acquisition.

The properties we acquire in the acquisition of Alexco, if consummated, or in other acquisitions may not produce as expected, may not generate reserves beyond those known at the time of acquisition, may be in an unexpected condition and we may be subject to increased costs and liabilities, including environmental liabilities. Although we review properties prior to acquisition in a manner consistent with industry practices, such reviews are not capable of identifying all potential adverse conditions. Generally, it is not feasible to review in depth every individual property involved in each acquisition. Even a detailed review of records and properties may not necessarily reveal existing or potential problems or permit a buyer to become sufficiently familiar with the properties to fully assess their condition, any deficiencies, and development potential.

Our number of outstanding common shares will increase as a result of the acquisition and the stream termination agreement and our stock price could be affected.

As indicated in Note 12, we have also entered into an agreement with Wheaton Precious Metals ("WPM") to terminate WPM’s silver streaming interest at Alexco’s Keno Hill property in exchange for $135 million of our common stock, conditional upon completion of the acquisition. As a result, if the acquisition is completed, it will result, together with the stream termination agreement, in the issuance of common stock that is expected to represent approximately [__]% of our outstanding common stock following completion of the transactions. This increase in the number of shares of our common stock outstanding could have a negative effect on our stock price.

Item 2. Unregistered Sales of Securities and Use of Proceeds

On May 19, 2022, we issued 290,0000 unregistered shares of our common stock to the Lucky Friday Pension Plan Trust and 900,000 shares to the Hecla Mining Company Retirement Plan Trust in private placements in order to fund those defined benefit pension plans. The private placements were exempt from registration under the Securities Act of 1933 pursuant to section 4(a)(2) of that Act. The shares will be registered for resale on a registration statement on Form S-3 to be filed with the SEC within 120 days of May 19, 2022. We did not receive any cash proceeds from the issuance of the shares. The shares had a value of approximately $5.6 million at the time of issuance.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95 to this Quarterly Report.

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Table

Item 5. Other Information

Item 5(c)During the three months ended June 30, 2023, no director or officer of Contents

the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

49

Item 6.Exhibits

Hecla Mining Company and Wholly Owned Subsidiaries

Form 10-Q – June 30, 2022March 31, 2023

Index to Exhibits

4.1

Exhibit

Number

Description

2.1

Registration RightsArrangement Agreement dated as of May 19, 2022, among Hecla Mining Company, as Issuer,April 5, 2023, by and the Hecla Mining company Retirement Plan Trust, which is the funding vehicle for the Hecla Mining Company Retirement Plan, a tax-qualified employee benefit pension plan sponsored by Hecla Mining Company, and the Lucky Friday Pension Plan Trust, which is the funding vehicle for the Lucky Friday Pension Plan.*

10.1Credit Agreement dated as of July 21, 2022, among Hecla Mining Company, Hecla Limited, Hecla Alaska LLC , Hecla Greens Creek Mining Company, and Hecla Juneau Mining Company, as the Borrowers, Bank of America, N.A., as Administrative Agent for the Lenders, and various Lenders. Filed as exhibit 10.1 to Registrant’s Form 8-K filed on July 21, 2022 and incorporated herein by reference.
10.2Assignment and Amendment Agreement dated as of July 25, 2022, among Hecla Mining Company, Alexco Resource Corp., and 1080980 B.C.ATAC Resources Ltd. *Filed as exhibit 2.1 to Registrant’s Current Report on Form 8-K filed on April 6, 2023 (File No. 1-8491) and incorporated herein by reference.

3.1

Restated Certificate of Incorporation of the Registrant. Filed as exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on May 26, 2023 (File No. 1-8491) and incorporated herein by reference.

31.1

3.2

Bylaws of the Registrant as amended to date. Filed as exhibit 3.2 to Registrant’s Current Report on Form 8-K filed on May 26, 2023 (File No. 1-8491) and incorporated herein by reference.

31.1*

Certification pursuantof Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2*

31.2

Certification pursuantof Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1*

32.1

Certification pursuantof Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2*

32.2

Certification pursuantof Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

95*

95

Mine safety information listed in Section 1503 of the Dodd-Frank Act. *

101.INS

99.1

Contribution Agreement, dated as of May 19, 2022, among Hecla Mining Company, as sponsor of the Hecla Mining Company Retirement Plan, the Retirement Committee, as the named fiduciary of the Hecla Mining Company Retirement Plan, and U.S. Bank National Association, as trustee of the Hecla Mining Company Retirement Plan Trust.*
99.2Contribution Agreement, dated as of May 19, 2022, among Hecla Mining Company, Hecla Limited as sponsor of the Lucky Friday Pension Plan, the Pension Committee, as the named fiduciary of the Lucky Friday Pension Plan, and U.S. Bank National Association, as trustee of  the Hecla Mining Company Retirement Plan Trust. *
101.INS

Inline XBRL Instance Document - The– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. **

101.SCH

101.SCH

Inline XBRL Taxonomy Extension Schema.**Schema Document **

101.CAL

101.CAL

Inline XBRL Taxonomy Extension Calculation.**Calculation Linkbase Document **

101.DEF

101.DEF

Inline XBRL Taxonomy Extension Definition.**Definition Linkbase Document **

101.LAB

101.LAB

Inline XBRL Taxonomy Extension Labels.**Label Linkbase Document **

101.PRE

101.PRE

Inline XBRL Taxonomy Extension Presentation.**Presentation Linkbase Document **

104

104

Cover Page Interactive Data File (formatted as(embedded within the Inline XBRL and contained in Exhibit 101)document) **

___________________

* Filed herewith.herewith

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

Items 3, 5(a), and 55(b) of Part II are not applicable and are omitted from this report.

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Table of Contents

SIGNATURES50

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HECLA MINING COMPANY

(Registrant)

Date:

August 4, 20229, 2023

By:

/s/ Phillips S. Baker, Jr.

Phillips S. Baker, Jr., President,

Chief Executive Officer and Director

Date:

August 4, 2022

By:

Date:

August 9, 2023

By:

/s/ Russell D. Lawlar

Russell D. Lawlar, Senior Vice President,

Chief Financial Officer and Treasurer

68

51