8-K: Hecla Mining Reports Strong Exploration Results, Second Highest Silver Reserves in History

Hecla Mining Company announced exploration results and year-end reserves, highlighting the second-highest silver reserves and the largest gold resource in the company's history.

Summary

• Hecla Mining Company reported its exploration results and year-end reserves as of December 31, 2023.
• The company's silver reserves are the second highest in its 133-year history, totaling 238 million ounces, just 1% less than the all-time high from the previous year.
• Hecla's gold resource is the largest in its history.
• The 2023 exploration program successfully expanded reserves at Keno Hill and Lucky Friday, and expanded mineralization at Greens Creek.
• Keno Hill's reserves increased by 11% in 2023 and are now 45% higher since the acquisition.
• Drilling at Keno Hill has encountered high-grade mineralization more than 1,000 feet deeper than any previous drilling.
• Greens Creek has consistently yielded strong results in both grade and width across silver, gold, zinc, and lead.
• Hecla now has 20 district-sized properties with excellent exploration potential, primarily in the US and Canada, following the acquisition of ATAC.
• Hecla produces almost half of the silver in the U.S. and expects to be Canada's largest silver producer in 2024.
• The company replaced 11 million ounces of silver produced during the year.
• Gold reserves decreased by 16% due to the strategic shift to a surface operation at Casa Berardi.
• Measured and indicated gold resources increased by 21% following the acquisition of ATAC Resources Ltd.
• Inferred gold resources increased by 11% to 6.3 million ounces.
• Reserve metal price assumptions for 2023 were $17/oz silver, $1,650/oz gold, $1.15/lb zinc, and $0.90/lb lead.
• Resource metal price assumptions for 2023 were $21/oz silver, $1,750/oz gold, $1.35/lb zinc, $1.15/lb lead, and $3.00/lb copper.

Sentiment

Score: 8

Explanation: The document is very positive due to the strong exploration results, near-record silver reserves, and record gold resources. The company's strategic acquisitions and production outlook are also favorable. However, there are some risks and a decrease in gold reserves that temper the overall sentiment slightly.

Positives

• Hecla's silver reserves are near an all-time high, demonstrating strong performance in silver production.
• The company has the largest gold resource in its history, indicating a strong position in gold mining.
• Exploration programs have successfully expanded reserves at Keno Hill and Lucky Friday.
• The acquisition of ATAC has significantly increased the company's resource base and exploration potential.
• Hecla is a major silver producer in the U.S. and is poised to become the largest in Canada.
• Drilling results show high-grade and wide intercepts, suggesting potential for further resource expansion.
• The company replaced 11 million ounces of silver produced during the year.

Negatives

• Gold reserves decreased by 16% due to the strategic shift at Casa Berardi to a surface operation.
• Greens Creek saw a 10% drop in silver reserves due to depletion and other changes not offset by drilling additions.
• Inferred silver resources decreased slightly, by less than 1%, due to decreases at Greens Creek and Lucky Friday.

Risks

• The company's future results are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from forward-looking statements.
• These risks include gold, silver, and other metal price volatility, operating risks, currency fluctuations, and increased production costs.
• There are also risks related to community relations, litigation, political, regulatory, labor, and environmental issues.
• Exploration risks and the uncertainty of converting mineral resources to mineral reserves are also present.
• Inflation could cause costs to rise more than expected.

Future Outlook

Hecla expects fourth quarter 2023 exploration drilling should grow the reserves at Keno Hill, to grow its resource base primarily in the U.S. and Canada, to be Canada's largest silver producer in 2024, and to play a key role in mining the silver the world needs.

Management Comments

• Hecla's silver reserves are the second highest in our 133-year history at 238 million silver ounces and only 1% less than last year's all-time highest reserve, and gold resource is the highest in our history, said Phillips S. Baker, Jr., President and CEO.
• Keno Hills 2023 exploration provided an 11% increase in reserves, now 45% higher since the acquisition, and does not reflect much of the drilling reported this quarter, so we expect the reserve to grow, said Phillips S. Baker, Jr., President and CEO.
• At Greens Creek, Hecla's exploration efforts spanning 37 years consistently yield remarkable results in both grade and width across the four key metals: silver, gold, zinc, and lead, and we still have many potential targets to drill, said Phillips S. Baker, Jr., President and CEO.
• With the recent acquisition of ATAC and its massive 700 square mile land package, we now have 20 district-sized properties with excellent exploration potential to explore and grow our resource base, primarily in the US and Canada, said Phillips S. Baker, Jr., President and CEO.

Industry Context

This announcement highlights Hecla's strong position in the silver and gold mining industry, particularly in North America. The company's focus on exploration and strategic acquisitions positions it well for future growth and production. The increasing demand for silver in solar technology also underscores the importance of Hecla's role in the industry.

Comparison to Industry Standards

• Hecla's silver reserves of 238 million ounces are significant, placing them among the top silver producers globally, comparable to companies like Pan American Silver and First Majestic Silver.
• The increase in gold resources, driven by the ATAC acquisition, positions Hecla to compete with mid-tier gold producers such as Yamana Gold and Eldorado Gold.
• The 11% reserve increase at Keno Hill is a strong result, indicating successful exploration and resource expansion, which is a key metric for mining companies.
• The company's focus on high-grade intercepts at Keno Hill and Greens Creek is consistent with industry best practices for maximizing resource value.
• The strategic shift at Casa Berardi to open-pit mining is a common industry practice to reduce costs and extend mine life, although it resulted in a short-term decrease in gold reserves.

Stakeholder Impact

• Shareholders will likely react positively to the strong exploration results and increased resource base.
• Employees may benefit from the company's growth and expansion.
• Customers will have a reliable supply of silver and gold.
• Suppliers will see increased business opportunities.
• Creditors will have confidence in the company's financial stability.

Next Steps

• The company will continue exploration programs at Keno Hill, Greens Creek, and other properties.
• Hecla will focus on converting mineral resources to mineral reserves.
• The company will integrate the ATAC acquisition into its operations.
• Hecla will file its 2023 Annual Report on Form 10-K on February 15, 2024.

Key Dates

Keywords

silver, gold, mining, exploration, reserves, resources, Keno Hill, Greens Creek, Lucky Friday, ATAC, Casa Berardi