10-K: Hecla Mining Reports Strong 2024 Results, Driven by Silver and Gold Production

Sentiment:

Annual Results 13 February 2025 4:35 PM

Hecla Mining Company announces record sales and net income for 2024, fueled by increased silver and gold production and higher realized metal prices.

Delay expectedPermitting and other delays and the lack of energy provided by Yukon Energy have prevented the company from reaching anticipated production levels at Keno Hill.

Capital raiseThe company raised $58.4 million through common stock sales under its ATM program, which were utilized to make repayments on our outstanding revolving credit facility balance.

Better than expectedThe company's net income of $35.8 million is a significant improvement compared to net losses in previous years.The company achieved record sales of $929.9 million.The Lucky Friday mine successfully returned to full production.

Summary

Hecla Mining Company reports a net income of $35.8 million for 2024, a significant improvement compared to net losses of $84.2 million in 2023 and $37.3 million in 2022.
The company achieved record sales of $929.9 million in 2024.
Silver production reached 16.2 million ounces, and gold production totaled 141,923 ounces.
The Lucky Friday mine returned to full production, contributing 4.9 million ounces of silver.
Keno Hill produced 2.8 million ounces of silver, meeting its production guidance.
Greens Creek added copper as a payable metal, generating $0.4 million in copper sales.
Capital expenditures totaled $214.5 million, with significant investments in Greens Creek, Lucky Friday, Keno Hill, and Casa Berardi.
Exploration and pre-development activities incurred costs of $27.3 million.
The company raised $58.4 million through common stock sales under its ATM program, used to repay revolving credit facility debt.
The company returned $24.9 million to common stockholders through dividend payments.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, driven by strong financial results and operational achievements. However, it also acknowledges ongoing challenges and risks, preventing a higher sentiment score.

Positives

Record sales of $929.9 million indicate strong market demand and effective sales strategies.
Return to full production at Lucky Friday after a fire demonstrates operational resilience.
Keno Hill meeting production guidance shows successful ramp-up progress.
Addition of copper as a payable metal at Greens Creek diversifies revenue streams.
Strategic investments in key operations through capital expenditures position the company for future growth.
The company's focus on exploration and pre-development suggests a commitment to long-term resource expansion.
The company's focus on strengthening the balance sheet to preserve financial position in varying metals price and operational environments, improve capital allocation framework with a focus on ROIC and increasing free cash flow.

Negatives

The Casa Berardi operation experienced a gross loss for the year, raising concerns about its profitability.
Power interruptions at Keno Hill have impacted operations and may continue to do so.
The company faces ongoing permitting delays at Keno Hill, which could hinder production growth.
The company is involved in ongoing legal disputes, which could have adverse financial effects.
The company's environmental and asset retirement obligations may exceed the provisions made.

Risks

A substantial or extended decline in metals prices could have a material adverse effect on the company.
Mining accidents or other adverse events at an operation could decrease anticipated production.
The company may be unable to generate sufficient cash to service all of its debt and meet its other ongoing liquidity needs.
The price of the company's stock has a history of volatility and could decline in the future.
The company's operations are subject to complex, evolving, and increasingly stringent environmental laws and regulations.
Legal challenges could prevent the company's projects in Montana from ever being developed.
The titles to some of the company's properties may be defective or challenged.
The company's information technology systems may be vulnerable to disruption, which could place its systems at risk from data loss, operational failure, or compromise of confidential information.

Future Outlook

The company projects 2025 silver production at Keno Hill to remain comparable to 2024 levels, with growth expected to resume in 2026. The company estimates a range of approximately $222 to $242 million will be spent in 2025 on capital expenditures, primarily for equipment, infrastructure, and development at our mines, before any lease financing. The company also estimates exploration and pre-development expenditures will total approximately $28 million in 2025.

Management Comments

The company is focused on operating properties safely and in an environmentally responsible and cost-effective manner.
The company is focused on strengthening the balance sheet to preserve financial position in varying metals price and operational environments, improve capital allocation framework with a focus on ROIC and increasing free cash flow.
The company is focused on improving and optimizing operations at all sites, which includes incurring costs for new technologies and equipment, and implementing standardized systems and processes.

Industry Context

The announcement reflects a positive trend in the precious metals mining industry, driven by increased demand for silver and gold as safe-haven assets and industrial applications. The company's performance aligns with broader industry trends of focusing on operational efficiency and strategic investments in key assets.

Comparison to Industry Standards

Hecla's silver production of 16.2 million ounces positions it as a leading silver producer in North America, comparable to companies like Pan American Silver and First Majestic Silver.
The company's all-in sustaining costs (AISC) for silver production are competitive with industry averages, but vary by mine. For example, Greens Creek's AISC was $5.65 per ounce, while Lucky Friday's was $16.50 per ounce.
The company's focus on exploration and pre-development is consistent with industry best practices for sustaining long-term production and replacing depleted reserves.
The company's strategic positioning in the stable jurisdictions of U.S. and Canada provides it with distinct operational advantages and reduced political risk compared to its global peers such as Fresnillo and Polymetal International.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
President and Chief Executive Officer	Catherine J. Boggs (Interim)	Rob Krcmarov	November 7, 2024	Permanent appointment

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Amendment to common stock dividend policy	The company revised its common stock dividend policy to eliminate the silver-linked component.	February 2025	The company intends to maintain the annual common stock dividend, however the declaration and payment of dividends remain in the sole discretion of our Board of Directors, and there can be no assurance it will declare any future dividend.
Amendment to Hecla Mining Company Post-2004 Supplemental Excess Retirement Plan	The Plan is amended to include the Committee provisions and procedures following a Change of Control from the prior rabbi trust agreement.	January 1, 2025	The Committee shall have the authority to invest and manage the assets of the Post-2004 Plan and rabbi trust agreement after a Change of Control.
Amendment to Hecla Mining Company Pre-2005 Supplemental Excess Retirement Plan	The Plan is amended to include the Committee provisions and procedures following a Change of Control from the prior rabbi trust agreement.	January 1, 2025	The Committee shall have the authority to invest and manage the assets of the Pre-2005 Plan and rabbi trust agreement after a Change of Control.

Legal Proceedings

The company is involved in ongoing legal disputes, including a putative class action lawsuit filed against the company and certain current and former directors and officers involving the company's Nevada Operations.
The complaint was dismissed by the Federal District Court with prejudice on September 30, 2024.
On October 28, 2024, the plaintiffs filed a notice of appeal with the United States Court of Appeals for the Second Circuit.
Related to this class action lawsuit, Hecla has been named as a nominal defendant in a shareholder derivative lawsuit which also names as defendants certain current and past members of Hecla's Board of Directors and certain past officers of Hecla.
The case was filed on May 4, 2022 in the Delaware Chancery Court.
Effective on October 16, 2024, Hecla Limited and the EPA are parties to a Consent Agreement and Final Order (the Settlement) resolving certain liabilities of Hecla Limited under the Clean Water Act involving the Lucky Friday mines permitted water discharges between 2018 and 2024.
Under the Settlement, Hecla Limited will pay the EPA $ 174,300 and undertake a Supplemental Environmental Project involving river habitat restoration on the South Fork of the Coeur dAlene River estimated to cost $ 299,000 .

Stakeholder Impact

Shareholders benefit from increased profitability and dividend payments.
Employees benefit from the company's commitment to safety and health, as well as competitive compensation and benefits.
Customers benefit from the company's reliable production of silver, gold, and other metals.
Communities benefit from the company's economic activity and commitment to environmental responsibility.

Next Steps

The company will continue to focus on operating properties safely and in an environmentally responsible and cost-effective manner.
The company will continue to focus on strengthening the balance sheet to preserve financial position in varying metals price and operational environments, improve capital allocation framework with a focus on ROIC and increasing free cash flow.
The company will continue to focus on improving and optimizing operations at all sites, which includes incurring costs for new technologies and equipment, and implementing standardized systems and processes.
The company will focus on stakeholder outreach and ensuring local support for increasing production levels at Keno Hill by 2026, as well as permitting, infrastructure and capital projects.

Key Dates

Date	Description
1891	Hecla Mining Company founded.
1958	Hecla Mining Company has owned and operated the Lucky Friday mine since 1958.
2006	Current holding company structure dates from the incorporation of Hecla Mining Company in 2006.
January 2010	Hecla Mining Company has paid all regular quarterly dividends on its Series B preferred stock since January 2010.
January 2016	Robert D. Brown was appointed Vice President Corporate Development of Hecla Canada Ltd. from January 2016 to August 2021.
January 2017	Catherine Cassie J. Boggs has served as a director since January 2017.
March 13, 2017	The unionized employees at Lucky Friday were on strike from March 13, 2017 until January 7, 2020.
February 2018	Russell D. Lawlar was the Treasurer from February 2018 to March 2021.
July 2018	Michael L. Clary served as Director Human Resources and Senior Counsel from July 2018 to March 2020.
October 2019	Kurt D. Allen was Director of Exploration from October 2019 to July 2021.
January 7, 2020	The union ratified a new collective bargaining agreement (CBA) at Lucky Friday, which expired on January 6, 2023.
February 19, 2020	Hecla Mining Company completed an offering of $475 million in aggregate principal amount of its Senior Notes.
March 2020	Michael L. Clary was Vice President Human Resources and Senior Counsel from March 2020 to June 2021.
July 9, 2020	Hecla Mining Company entered into a note purchase agreement pursuant to which it issued its IQ Notes for CAD$50 million.
January 2021	The union approved a new six year CBA at Lucky Friday.
March 2021	Russell D. Lawlar was appointed Senior Vice President and Chief Financial Officer in March 2021.
July 2021	Kurt D. Allen was appointed Vice President Exploration in July 2021.
August 2021	Robert D. Brown was appointed Vice President Corporate Development & Sustainability in August 2021.
September 2022	Hecla Mining Company completed the acquisition of Alexco and gained ownership of the Keno Hill project.
June 2023	Production ramp-up commenced at Keno Hill in June 2023.
August 2023	Production at the Lucky Friday mine was suspended due to a fire.
January 9, 2024	The Lucky Friday mine restarted production.
May 3, 2024	Hecla Mining Company entered into a First Amendment to Credit Agreement.
May 22, 2024	Catherine J. Boggs served as Hecla's Interim President and CEO from May 22, 2024 to November 7, 2024.
August 2024	David C. Sienko was appointed Senior Vice President and General Counsel in August 2024.
November 7, 2024	Rob Krcmarov was appointed President and Chief Executive Officer in November 2024.
February 7, 2025	The Board of Directors declared a common stock dividend under the policy described above.

Keywords

Hecla Mining, silver, gold, production, mining, reserves, resources, Keno Hill, Lucky Friday, Greens Creek, Casa Berardi, financial results

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