Hecla Mining pany(HL) - 2025 Q2 - Quarterly Results

Hecla Q2 2025 Financial and Operational Results Second Quarter Highlights The company achieved record revenue, Adjusted EBITDA, and free cash flow, driven by significant increases in silver and gold production Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Change vs. Q1 2025 | | :--- | :--- | :--- | | Revenue | $304.0 million | +16% | | Net Income | $57.6 million | +101% | | Adjusted EBITDA | $132.5 million | +46% | | Free Cash Flow | $103.8 million | Record High (vs. -$18.4M) | | Net Leverage Ratio | 0.7x | Decreased from 1.5x | - Production volumes increased significantly quarter-over-quarter, with silver production up 10% to 4.5 million ounces and gold production up 34% to 45,895 ounces[5] - All-in Sustaining Costs (AISC) improved, with silver AISC at $5.19/oz and gold AISC at $1,669/oz, both after by-product credits[5] - Operational achievements included a new quarterly milling record of 114,475 tons at Lucky Friday and strong cost performance at Greens Creek[5] Strategic Priorities for 2025 Priorities include strengthening the balance sheet, optimizing the asset portfolio, advancing Keno Hill, and improving operational efficiency - Key strategic goals for 2025 include: - Balance Sheet: Strengthen through asset sales, free cash flow, and debt reduction - Capital Allocation: Target highest risk-adjusted return projects to increase free cash flow - Keno Hill: Advance permitting and infrastructure investment to achieve sustained profitability - Portfolio Optimization: Continue strategic review of non-core assets, highlighted by progress on the Casa Berardi review - Efficiency: Implement standardized enterprise systems and advanced analytics for better mine planning and cost management[8] Financial and Operational Overview Record sales of $304 million and a doubling of net income were driven by higher metal prices, leading to record free cash flow and significant debt reduction Consolidated Financial and Production Summary | Metric | Q2-2025 | Q1-2025 | | :--- | :--- | :--- | | Sales | $304.0M | $261.3M | | Gross Profit | $119.5M | $74.0M | | Net Income | $57.6M | $28.7M | | Adjusted EBITDA | $132.5M | $90.8M | | Free Cash Flow | $103.8M | ($18.4M) | | Silver Production (oz) | 4,520,510 | 4,112,394 | | Gold Production (oz) | 45,895 | 34,232 | | Silver AISC/oz | $5.19 | $11.91 | | Gold AISC/oz | $1,669 | $2,303 | - The increase in gross profit was primarily driven by a $28.9 million improvement at Casa Berardi and a $14.6 million increase at Greens Creek[11] - The net leverage ratio improved significantly to 0.7x from 1.5x in the prior quarter, resulting from strong EBITDA generation and a $276.8 million decrease in net debt[16] Capital Management and Hedging The company reduced debt through its ATM facility to lower interest expenses and actively manages commodity and currency risks via hedging programs - The company raised capital via its ATM facility to redeem $212 million of its $475 million 7.25% Senior Notes, aiming to reduce annual interest expense by an anticipated $17.8 million[20][21] - Hedging programs are in place for base metals and foreign currency, covering approximately 12% of zinc and 24% of lead production for 2025-2026 as of June 30, 2025[24] - Keno Hill's silver production is partially hedged with zero-cost collars covering 1.67 million ounces over the next three quarters to manage risk during its ramp-up[25][26] - The company has hedged approximately 29% of forecasted Canadian dollar denominated production costs through 2026 at an average CAD/USD rate of 1.35[27] Operations Overview All mining operations delivered strong results, highlighted by record milling at Lucky Friday and Keno Hill achieving its first positive free cash flow Greens Creek Mine - Alaska The mine delivered strong production growth and a 106% increase in free cash flow, leading to raised gold guidance and significantly lower cost projections Greens Creek Q2 2025 Performance | Metric | Q2-2025 | Q1-2025 | | :--- | :--- | :--- | | Silver Produced (oz) | 2,422,978 | 2,002,560 | | Gold Produced (oz) | 17,750 | 13,759 | | Gross Profit | $63.1M | $48.5M | | Free Cash Flow | $69.0M | $33.4M | | Cash Cost/oz (after credits) | ($11.91) | ($4.08) | | AISC/oz (after credits) | ($8.19) | ($0.03) | - The 2025 gold production guidance for Greens Creek was increased to 50.0-55.0 thousand ounces from 44.0-48.0 thousand ounces[35] - Cost guidance for 2025 was substantially lowered, with AISC per silver ounce now projected at $0.00-$1.50, down from $6.50-$7.25[35] Lucky Friday Mine - Idaho The mine achieved a new quarterly milling record of 114,475 tons while maintaining consistent silver production and reducing unit costs Lucky Friday Q2 2025 Performance | Metric | Q2-2025 | Q1-2025 | | :--- | :--- | :--- | | Tons of Ore Processed | 114,475 | 108,745 | | Silver Produced (oz) | 1,340,877 | 1,332,252 | | Gross Profit | $22.0M | $19.1M | | Free Cash Flow | $4.9M | $8.4M | | AISC/oz (after credits) | $19.07 | $20.08 | - The mine set a new quarterly milling record, beating the previous record set in Q1 2025 by over 5%[39] - The 2025 production and cost guidance for Lucky Friday remains unchanged, though the third quarter is expected to have lower production[43] Keno Hill - Yukon Territory The mine reached a major milestone by generating its first positive free cash flow quarter while advancing an optimized, self-financing operational plan Keno Hill Q2 2025 Performance | Metric | Q2-2025 | Q1-2025 | | :--- | :--- | :--- | | Silver Produced (oz) | 750,712 | 772,430 | | Gross Profit | $0.2M | $1.0M | | Cash Flow from Ops | $16.4M | ($9.7M) | | Free Cash Flow | $2.7M | ($18.4M) | - The second quarter marked the first positive free cash flow quarter for Keno Hill under Hecla's ownership[48] - The operational plan has been optimized to target 440 tons per day, which is expected to be near self-financing at current silver prices[50][51] Casa Berardi - Quebec The asset demonstrated a significant turnaround with a 37% increase in gold production, a sharp cost reduction, and strong free cash flow generation Casa Berardi Q2 2025 Performance | Metric | Q2-2025 | Q1-2025 | | :--- | :--- | :--- | | Gold Produced (oz) | 28,145 | 20,473 | | Gross Profit | $34.2M | $5.3M | | Free Cash Flow | $31.8M | ($6.4M) | | Cash Cost/oz (after credits) | $1,578 | $2,195 | | AISC/oz (after credits) | $1,669 | $2,303 | - Cash costs and AISC per gold ounce both decreased by over $600 compared to the prior quarter, driven by higher production volumes[60][61] - The company is advancing a strategic review for Casa Berardi and expects to provide an update in the coming weeks[65] Exploration and Pre-Development An $8.3 million investment in exploration yielded positive early results at the Midas project and extended mineralization at existing mine sites - Total investment in exploration was $8.3 million in Q2 2025[67] - At the Midas project, early drilling results were positive, with two new vein intercepts showing visible gold[68] - Exploration at Greens Creek extended mineralization by 550 feet in the Gallagher Zone and 150 feet in the 200S Zone[69] - At Keno Hill, a wide, high-grade intercept identified new mineralization 500 feet down plunge from existing reserves[70] Dividends The Board declared quarterly cash dividends for both common and Series B preferred stock Declared Quarterly Dividends | Stock Type | Dividend per Share | | :--- | :--- | | Common Stock | $0.00375 | | Series B Preferred Stock | $0.875 | 2025 Guidance The company increased its 2025 gold production forecast and significantly lowered its consolidated silver cost guidance due to strong operational performance Revised 2025 Production Guidance | Metal | 2025 Guidance (Revised) | Previous Guidance | | :--- | :--- | :--- | | Silver (Moz) | 15.5 - 17.0 | Unchanged | | Gold (Koz) | 126.0 - 137.0 | 120 - 130 | Revised 2025 Consolidated Silver Cost Guidance | Metric (per silver ounce) | 2025 Guidance (Revised) | Previous Guidance | | :--- | :--- | :--- | | Cash Cost (after by-products) | ($1.25) - ($0.75) | $3.00 - $3.25 | | AISC (after by-products) | $11.50 - $13.50 | $15.75 - $17.00 | - Consolidated capital investment guidance for 2025 remains unchanged at $222-$242 million[84] Financial Statements and Disclosures This section presents unaudited consolidated financial statements and reconciliations of non-GAAP measures to their GAAP equivalents - The report includes the Consolidated Statements of Operations, detailing revenues, costs, and net income for the three and six months ended June 30, 2025[107] - The Consolidated Statements of Cash Flows outline cash movements from operating, investing, and financing activities[109] - Detailed reconciliations are provided for non-GAAP measures to their most comparable GAAP measures, including Total Cost of Sales to Cash Cost and AISC[113][132]