Hecla announces 24% higher revenues, citing rising production and prices in Q2
The mining company saw silver production of 3.4 million ounces and gold production of 59,982 ounces. Annual silver and gold production and cost guidance remained unchanged.
Hecla highlighted higher gold and silver prices in its press release published Thursday: “The average realized silver price in the second quarter was $18.44 per ounce, 23% higher than the $15.01 in the second quarter of 2019. The average realized gold price increased 31%, to $1,736 per ounce. Average realized lead and zinc prices decreased 7% and 24%, respectively.”
The mining company’s gross profit was $34.1 million, an increase of $54.3 million.
“Despite the pandemic, Hecla had its second highest quarterly silver production since 2016 which, combined with higher prices, resulted in almost 25% more revenue than a year ago and generated about $27 million of free cash flow,” said Phillips S. Baker, Jr., Hecla's president and CEO. “I am extremely proud of our workforce's adaptability and commitment in this challenging time which positions Hecla well to improve our cash flow generation in this higher silver and gold price environment.”
Hecla’s adjusted net income applicable to common shareholders was $7.3 million, or $0.01 per share. Meanwhile, net loss applicable to common shareholders of $14.2 million, or $0.03 per share.
“Cash provided by operating activities was $37.5 million while there were $10.8 million additions to properties, plant, equipment and mineral interests, resulting in $26.7 million of quarterly free cash flow,” Hecla said in a press release.
The company’s balance sheet was strong: Cash and cash equivalents of $76 million, repaid $160 million of revolving line of credit, which left $50 million outstanding, the press release said. Hecla projects full repayment by year-end.
Silver production is also expected to grow going forward, Baker added.
“Hecla currently produces about a third of all the silver mined in the U.S., almost three times larger than the next primary producer. That number is expected to grow as Lucky Friday ramps up. As the United States' largest and oldest silver producer with America's largest silver reserve and resource, Hecla gives investors unique exposure to higher silver prices.”
It was also noted that all mines are in operation but “non-U.S. mines had government-mandated shutdowns of less than a month.”