Hecla Mining Posts Loss For Fourth Quarter
(Kitco News) - Hecla Mining Co. (NYSE: HL)posted a net loss in the fourth quarter, hurt by a strike at the Lucky Fridaymine in Idaho, a number of special items and an income-tax provision due to newU.S. tax legislation, the company said Thursday.
Meanwhile, Hecla said the companyhas agreed to binding third-party arbitration with the United Steelworkers inan attempt to end the Lucky Friday strike in Idaho. This is subject to aratification vote by union members in March. Silver output at the mine in thefourth quarter was just 69,578 ounces, compared to 874,019 in the year-agoperiod.
In early May, three arbitrators wouldselect a three-year contract from either: the contract that Hecla submitted inDecember as its revised “last, best and final offer,” or the agreement thatexpired in April 2016 but was modified with certain changes agreed to by theunion and the company.
The company listed afourth-quarter net loss of $27.9 million, or 7 cents per share, compared to netincome of $20.1 million, or a nickel, in the same period a year ago. Thefull-year 2017 loss was put at $24.1 million, or 6 cents, compared to income of$69 million, or 18 cents, in 2016.
The full-year results were hurtby weaker sales due to lower output because of the ongoing strike at LuckyFriday, losses on base metal derivative contracts, foreign-exchange losses,higher interest expenses and higher exploration and development expenditures,Hecla said.
Lucky Friday had suspension costsof $5.6 million and $17.1 million, along with $1.3 million and $4.2 million innon-cash depreciation expense, for the fourth quarter and full-year 2017,respectively.
Meanwhile, income-tax provisionsfor the fourth quarters of 2017 and 2016 were $38.3 million and $4.8 million,respectively. Income-tax provisions for full-year 2017 and 2016 were $19.9million and $27.4 million, respectively. These resulted primarily from thechanges in the U.S. Tax Cuts and Jobs Act and the resulting revaluation of thedeferred tax asset, as well as current income and mining taxes in Mexico, Heclasaid.
"The fourth quarter andfull-year tax provisions were impacted by the recently enacted U.S. tax reformmeasures,” said Phillips S. Baker, Jr., president and chief executive officer.“While we were required to record a non-cash charge for the year, we seesignificant benefits to us in the future as a result of the elimination of thealternative minimum tax, the lower regular income-tax rate and our ability torepatriate earnings from our mining operations outside the U.S."
Cash provided by operatingactivities of $41.8 million for the fourth quarter was $10.5 million lower thanin the fourth quarter of 2016. For all of 2017, $115.9 million in cash wasprovided by operating activities, compared to $225.3 million in 2016.
Average realized silver prices inthe fourth quarter and full-year 2017 were $16.87 and $17.23 per ounce,respectively, both slightly higher than the same periods in 2016, Hecla said.Realized prices for gold in the fourth quarter and full year were $1,278 and$1,261 per ounce, respectively, 6% and 1% higher than the prior periods. Pricesof lead and zinc, mined by Hecla as a by-product, also rose.
Hecla pre-released its outputdata for the fourth quarter and full year last month. Company-wide silver productionin the fourth quarter was roughly 3 million ounces, down 25% year-on-year. Goldoutput of 60,964 ounces was down 4% from the same quarter of 2016. Output oflead and zinc also fell.
For all of 2017, silverproduction of 12.5 million ounces was down 27% from 2016, yet also was Hecla’ssecond highest behind the company record 17.2 million achieved in 2016.Full-year gold production of 232,684 ounces was marginally lower than 233,929the year before, but was the third highest in company history. Lead and zincoutput both fell.
For 2018, Hecla is projectingsilver output of 9.5 million to 10.5 million ounces. This figure includes nometal factored in for Lucky Friday. Projected gold output is listed at 218,000to 232,000 ounces. The company sees silver-equivalent production of 35 millionto 37.5 million ounces.
The board of directors declared aquarterly dividend of $0.0025 per share of common stock, payable around March13 to shareholders of record as of March 6. The company said the realizedsilver price of $16.87 was not high enough for a larger dividend under the board’sestablished policy.
By Allen SykoraFor Kitco News
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