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

Part I. Financial Information Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements detail the company's performance for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations and Comprehensive Income Significant year-over-year sales growth for the three and six-month periods drove substantial increases in gross profit and net income Q2 & H1 2025 vs 2024 Performance Highlights (in thousands, except per-share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales | $304,027 | $245,657 | $565,366 | $435,185 | | Gross Profit | $119,524 | $51,430 | $193,528 | $70,590 | | Net Income | $57,705 | $27,870 | $86,577 | $22,117 | | Net Income to Common Stockholders | $57,567 | $27,732 | $86,301 | $21,841 | | Diluted EPS | $0.09 | $0.04 | $0.14 | $0.04 | Condensed Consolidated Statements of Cash Flows Operating cash flow more than doubled, and a significant inflow from financing activities substantially increased the company's cash position Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $197,534 | $95,798 | | Net cash used in investing activities | $(108,314) | $(96,808) | | Net cash provided by (used in) financing activities | $180,004 | $(79,593) | | Net increase (decrease) in cash | $269,703 | $(81,783) | | Cash at end of period | $297,748 | $25,756 | - Financing activities were primarily driven by $174.1 million in net proceeds from the sale of common stock and net debt borrowings of $16.0 million ($133M borrowed, $117M repaid)[13] Condensed Consolidated Balance Sheets The company's balance sheet strengthened significantly due to a large increase in cash, leading to higher total assets and stockholders' equity Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $296,565 | $26,868 | | Total current assets | $514,860 | $214,152 | | Total assets | $3,309,355 | $2,981,060 | | Total current liabilities | $192,962 | $197,838 | | Long-term debt including finance leases | $521,568 | $508,927 | | Total liabilities | $999,322 | $941,546 | | Total stockholders' equity | $2,310,033 | $2,039,514 | Notes to Condensed Consolidated Financial Statements The notes detail segment performance, debt, derivative use, and significant subsequent events like stock sales and debt repayments - The company is organized into four segments: Greens Creek, Lucky Friday, Keno Hill, and Casa Berardi, with performance evaluated based on segment gross profit or loss[23][24] Sales by Metal - Six Months Ended June 30 (in thousands) | Metal | 2025 | 2024 | | :--- | :--- | :--- | | Silver | $240,814 | $198,925 | | Gold | $210,909 | $149,884 | | Lead | $43,582 | $43,411 | | Zinc | $64,263 | $57,460 | - During Q2 2025, the company sold 29,008,536 shares under its At-The-Market (ATM) equity program for net proceeds of $174.1 million[48] - Subsequent to the quarter end, the company sold an additional 6,949,792 shares for net proceeds of $42.1 million, fully repaid its IQ notes for $33.6 million, and issued a notice to redeem $212 million of its Senior Notes[102][103][105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial performance, highlighting record sales, operational achievements, segment results, and a strengthened liquidity position Overview The company reports record sales, strong production, and a strengthened balance sheet for the second quarter of 2025 - Generated record sales of $304 million in Q2 2025, a 24% increase over the comparable period[111] - Produced 4.5 million ounces of silver and 45,895 ounces of gold in Q2 2025[113] - Strengthened the balance sheet by raising net proceeds of $174.1 million through the ATM program[113] - Keno Hill achieved its second consecutive quarter of gross profit, and Lucky Friday set a new quarterly milling record[111][113] Consolidated Results of Operations Higher realized metal prices drove significant year-over-year increases in sales, gross profit, and net income for Q2 and H1 2025 Sales Variance Analysis - Q2 2025 vs Q2 2024 (in thousands) | Factor | Variance Impact | | :--- | :--- | | Price | $44,595 | | Volume | $3,023 | | Smelter terms | $7,510 | Average Realized Prices - Q2 2025 vs Q2 2024 | Metal | 2025 | 2024 | | :--- | :--- | :--- | | Silver ($/oz) | $34.82 | $29.77 | | Gold ($/oz) | $3,314 | $2,338 | | Lead ($/lb) | $0.92 | $1.06 | | Zinc ($/lb) | $1.31 | $1.51 | - The increase in net income for Q2 2025 was driven by a $68.1 million increase in consolidated gross profit, partially offset by a $16.7 million increase in other operating expense and a $23.5 million increase in income tax expense[131] Segment Analysis Performance varied by segment, with Greens Creek and Casa Berardi showing strong profit growth, while Keno Hill began contributing positively Segment Gross Profit (Loss) - Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Greens Creek | $63,081 | $38,873 | | Lucky Friday | $21,987 | $21,548 | | Keno Hill | $240 | $0 | | Casa Berardi | $34,245 | $(8,717) | - Greens Creek: Gross profit increased by $24.2 million in Q2 2025 due to higher realized prices for silver and gold and higher sales volumes[134] - Lucky Friday: Gross profit was stable as higher sales volumes and prices were offset by increased contractor, consumables, and maintenance costs[145] - Keno Hill: Generated a gross profit of $0.2 million in Q2 2025, though the ramp-up continues to face challenges related to permitting, power, and workforce availability[158][163] - Casa Berardi: Gross profit increased by $43.0 million in Q2 2025, driven by higher realized prices, increased gold ounces sold, and lower depreciation expense[167][169] Reconciliation of Non-GAAP Measures This section reconciles non-GAAP metrics like Cash Cost and AISC to their nearest GAAP equivalents to assess operational performance - The company provides reconciliations for non-GAAP measures like Cash Cost and All-In Sustaining Cost (AISC) to the nearest GAAP measure (Total Cost of Sales)[181][182] Consolidated AISC, After By-product Credits, per Ounce - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Silver AISC ($/oz) | $5.19 | $12.54 | | Total Gold AISC ($/oz) | $1,669 | $1,825 | - Cost per ounce statistics are not disclosed for the Keno Hill operation as it is still in the production ramp-up phase[184] Financial Liquidity and Capital Resources The company's liquidity improved dramatically due to strong operating cash flow and proceeds from its equity program Liquidity Position (in millions) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $296.6 | $26.9 | | Marketable equity securities | $43.4 | $33.2 | | Total liquid assets | $340.0 | $60.1 | - As of June 30, 2025, the company had $179.3 million available for borrowing under its $225 million credit facility[202] - The company estimates total 2025 capital expenditures to be between $222 million and $242 million, with $112.1 million already incurred as of June 30, 2025[208] - Cash from operating activities increased by $101.7 million to $197.5 million for the first six months of 2025 compared to the same period in 2024[213] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to market risks from fluctuations in metals prices and foreign currency exchange rates - The company's primary market risks are from changes in the prices of silver, gold, lead, zinc, and copper, and fluctuations in the USD/CAD foreign exchange rate[228][229][232] - A hypothetical 10% change in metal prices would alter the value of provisionally priced concentrate sales by approximately $7.3 million as of June 30, 2025[230] - A 10% change in the USD/CAD exchange rate would have resulted in a change of approximately $7.2 million in the company's net foreign exchange gain or loss[232] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[234] - No material changes in internal control over financial reporting occurred during the quarter[234] Part II. Other Information Item 1. Legal Proceedings This section refers to Note 11 of the financial statements for details on legal matters and environmental contingencies - Information regarding legal proceedings is incorporated by reference from Note 11 of the Notes to Condensed Consolidated Financial Statements[238] Item 1A. Risk Factors The company highlights risks related to tariffs and international trade disputes that could adversely affect its business - The company identifies risks related to tariffs and trade disputes, particularly with countries like Japan and South Korea, which are key markets for its products[240][241] - Reciprocal tariffs could make it more expensive to export products, potentially leading customers to renegotiate or terminate agreements, which could materially impact business and financial results[241] Item 4. Mine Safety Disclosures Mine safety violation information required by the Dodd-Frank Act is provided in Exhibit 95 of the report - Mine safety disclosures required by the Dodd-Frank Act are provided in Exhibit 95 to the Form 10-Q[243] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[244] Item 6. Exhibits This section lists all exhibits filed with the report, including officer certifications and mine safety data - Lists all exhibits filed with the report, such as officer certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and mine safety information (Exhibit 95)[246]