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Hecla Posts 1Q Profit; Higher Prices Lift Sales Despite Lower Output

Kitco News

(Kitco News) - Hecla Mining Co. (NYSE: HL) reported a jump in its first-quarter profit Monday as revenue from sales of metals rose due to higher prices, even though silver output declined.

Meanwhile, Hecla said it was suspending production guidance for 2017 until a nearly two-month-old strike is resolved at the Lucky Friday Mine in Idaho.

Net income was $26.7 million, or 7 cents per share, compared to a loss of $756,000 in the same period of 2016.

Hecla saw strong profits in the first quarter of 2017

The company said the result was helped by higher sales revenue despite lower silver production, thanks to higher average silver prices. Hecla also reported a $29.1 million tax benefit after Internal Revenue Service approval on timing for deductions for development costs at a Lucky Friday mine shaft, plus a smaller net foreign-exchange loss than in the same period a year ago.

Excluding special items, adjusted earnings were $16.7 million, or 4 cents per share.

Sales climbed to $142.5 million from $131 million. Average realized silver prices in the first quarter were $17.90 per ounce, which Hecla said were 20% higher than $14.93 price in the first quarter of 2016. Gold, lead and zinc prices also increased 3%, 36%, and 59%, respectively, the company said.

First-quarter silver production fell to 3.4 million ounces from 4.6 million in the same period of 2016. Production at the Greens Creek Mine in Alaska and San Sebastian in Mexico was less due to lower grades, while Lucky Friday output in Idaho fell due to a strike that began March 13.

By-product lead output fell to 8,636 tons from 11,038, and zinc output was down to 15,537 tons from 17,364. However, gold production rose to 56,113 ounces from 55,688.

"While the increase of cost of sales over last year reflected the higher throughput from the Casa Berardi open pit operations, our cash cost, after by-product credits, declined 73% to $0.84 per silver ounce, and our AISC (all-in sustaining costs), after by-product credits, declined 24% to $7.60 per silver ounce,” said Phillips S. Baker, Jr., president and chief executive officer.

The board of directors declared a quarterly cash dividend of $0.0025 per share of common stock, payable around June 2 to shareholders of record on May 24.

“For the remainder of 2017, our focus is on growing reserves and resources, investing in new technologies that will increase productivity, mine life and margins, and advancing the underground at San Sebastian as well as optimizing the open pits at Casa Berardi,” Baker said.

“In addition, we are focused on working to end the strike at Lucky Friday. In the meantime, we are suspending our Lucky Friday and company-wide estimates for silver production and cost, until it is resolved."

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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