Hecla Profit Declines As Lucky Friday Strike Dents Revenues
(Kitco News) - Hecla Mining Co. (NYSE: HL) Tuesday reported a decline in third-quarter net income, with revenue falling from a year ago due to a strike at an Idaho mine and also the result of lower prices for precious metals.
Net income was $1.3 million, or zero cents per share, down from $25.7 million, or 7 cents, for the same period a year ago. Excluding special items, adjusted net income was $16 million, or 4 cents per share.
The company blamed the decline in net income on several factors, starting with the ongoing strike at the Lucky Friday Mine in Idaho and a build-up of product inventory during the quarter of approximately $12.9 million, primarily due to the timing of concentrate shipments at Greens Creek in Alaska. Realized silver and gold prices were lower – with silver averaging $17.01 per ounce and gold $1,283, down 13% and 4%, respectively -- although this was partially offset by higher zinc and lead prices, Hecla said. All of this led to quarterly sales of $140.8 million, down from $179.4 million in the year-ago period.
Hecla also reported a mark-to-market loss on base-metal derivatives contracts of $11.2 million, a net foreign-exchange loss of $4.8 million, plus increased interest and exploration/pre-development expenses.
The company reported Lucky Friday suspension costs of $3.7 million. While the strike continues, limited production and capital improvements are being performed by salaried staff, Hecla said.
Phillips S. Baker Jr., president and chief executive officer, said the company’s operating performance, coupled with higher prices for by-product metals zinc and lead, resulted in third-quarter silver cash costs of 63 cents per share after by-product credits. This was the lowest in seven years and allowed the company to lower cost guidance, he added.
"Both Casa Berardi and Greens Creek set records for throughput, and San Sebastian had its strongest silver production of the year,” the CEO said.
Hecla pre-reported mine output last month. July-September silver output was 3.3 million ounces, down from 4.3 million a year ago. Gold production climbed to 63,046 ounces from 52,126. Silver-equivalent production of 11.1 million ounces was the highest quarterly production this year, Hecla added. The company also listed by-product output of 5,370 tons of lead and 14,497 tons of zinc.
All-in sustaining costs, after by-product credits, were $6.65 per silver ounce, down 47%.
Hecla listed full-year silver-equivalent guidance of 40.6 million to 42 million ounces. Silver output is expected to be 11.6 million to 12.5 million, while gold output is listed at 230,000 to 235,000 ounces.
The board of directors declared a quarterly cash dividend of $0.0025 per share, payable around Dec. 1 to stockholders of record on Nov. 21. The realized silver price was $17.01 in the third quarter did not satisfy the criteria for a larger dividend under the company's policy, Hecla said.