Hecla Mining Reports 3Q Loss As Metals Prices Decline
(Kitco News) -Hecla MiningCo. (NYSE: HL) Thursday reported a net loss for the third quarter as silveroutput fell and the price of all four of the metals produced by the companydeclined.
The loss was$23.3 million, or 5 cents per share, comparedto net income of $0.2 million, or zero cents, for the same period a year ago.
The company reported lower silver and gold production at San Sebastian and GreensCreek, offset by the addition of Nevada sales. Consolidated silver output fellto 2.5 million ounces from 3.3 million in the same period a year ago, althoughgold production rose to 72,995 ounces from 63,046. Production of lead and zincas a by-product metal also declined.
The average realizedsilver price in the third quarter $14.68 per ounce, 14% lower than $17.01 inthe same period a year ago. The average gold price of $1,205 was down 6% year-on-year,while lead and zinc prices decreased by 13% and 22%, respectively.
The company reported a$19.5 million gain on base-metals derivativescontracts of $19.5 million, but also had a foreign-exchange loss of $2.2million due to a weaker Canadian dollar. Hecla reported a year-on-year increaseof $4.6 million in exploration and pre-development expenditures, mainly focusedon its Nevada and San Sebastian operations.
Hecla reported suspension-related costs of$6.5 million that included expenses at the Lucky Friday, where a lengthy strikeis occurring, as well as $1.1 million for curtailment of production from theMidas Mine in Nevada. Acquisition costs were $6.1 million.
While Heclaposted a net loss, the company also reported adjusted earnings before interest, tax, depreciation andamortization of $40.3 million, compared to $60.5 million in the third quarterof 2017, with the decrease mainly due to lower base-metals prices, higherexploration expense due to the addition of Hecla Nevada and acquisition costs. PhillipsS. Baker, Jr., president and chief executive officer, said the EBITDA “despitelow metals prices is a result of the improvements we made in our mines.”
Work bysalaried staff continues at Lucky Friday while miners remain on strike. Thecompany said the salaried workers will start focusing on limited production toreduce the financial impact of the strike, whereas they previously had beenfocused on development.
"Lucky Friday has thelongest mine life of all our properties, but at these silver prices and withthe work rules the union workers have clung to, even at full production themine doesn't generate significant free cash flow,” said Phillips S. Baker, Jr.,president and chief executive officer.
“So, we are operating tominimize the cash consumption before we go back into production, which we expectto be primarily from the RVM (Remote Vein Miner project).”
By Allen SykoraFor Kitco News
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asykora@kitco.com 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. |