DOCSLIB.ORG

Hecla Mining Company 2015 Annual Report

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Hecla Mining Company 2015 Annual Report 2015 Annual Report Hecla Mining Company was founded in 1891 in North Idaho’s fabled Silver Valley. One hundred twenty-five years later, it’s the oldest U.S.-based precious metals mining company – and the largest primary silver producer in the United States. On the cover, three miners pose with hand tools in front of a jackleg drill lit by a single candle. They’re underground at the original Hecla mine in Burke, Idaho, which yielded more than nine million tons of ore before closing in 1944. Today, modern methods – such as this mechanized rock bolter at the Greens Creek mine – dramatically increase not only miner safety, but also efficiency and productivity. FINANCIAL HIGHLIGHTS (Dollars in thousands except in per share and per ounce amounts / as of December 31) FINANCIAL DATA & RATIOS 2015 2014 Sales of products $ 443,567 $ 500,781 Gross profit 38,511 85,201 Cash flow provided by operating activities 106,445 83,124 Net income (loss) (86,968) 17,824 Net income (loss) applicable to common shareholders (87,520) 17,272 Basic income (loss) per common shares (0.23) 0.05 Cash, cash equivalents and short-term investments 155,209 209,665 Capital expenditures 160,716 151,089 Total assets 2,221,925 2,262,064 YEAR-END DATA Common shares outstanding (in thousands) 378,113 367,377 Weighted average number of shares outstanding for the year – basic (in thousands) 373,954 353,442 Employees 1,404 1,354 OPERATIONAL DATA Silver production (oz) 11,591,603 11,090,506 Gold production (oz) 189,327 186,997 Lead production (tons) 39,965 40,255 Zinc production (tons) 70,073 67,969 Cash cost, after by-product credits, per silver ounce (1) $ 5.85 $ 4.81 Cash cost, after by-product credits, per gold ounce (1) $ 772 $ 826 Average silver price per ounce (London PM Fix) $ 15.70 $ 19.08 Average realized silver price per ounce $ 15.57 $ 18.46 Average gold price per ounce (London PM Fix) $ 1,160 $ 1,266 Average realized gold price per ounce $ 1,150 $ 1,262 SILVER PRODUCTION SILVER RESERVE GROWTH HIGH / LOW SILVER PRICE (millions oz.) (millions oz.) (2) (per oz.) 3.6 $ 48.70 high 175 $ 37.23 2.9 243% $ 32.23 2.5 2.6 low $ 22.05 $ 26.16 $ 26.67 $ 18.23 51 $ 18.61 $ 15.28 $ 13.71 Q1 / 15 Q2 / 15 Q3 / 15 Q4 / 15 2006 2015 2011 2012 2013 2014 2015 GOLD PRODUCTION GOLD RESERVE GROWTH HIGH / LOW GOLD PRICE (thousands oz.) (millions oz.) (2,3) (per oz.) 2.1 $ 1,895 60.4 $ 1,792 high $ 1,694 246% 44.7 43.6 $ 1,385 $ 1,296 40.7 low $ 1,540 $ 1,319 $ 1,192 $ 1,142 $ 1,049 0.6 Q1 / 15Q2 / 15 Q3 / 15 Q4 / 15 2006 2015 2011 2012 2013 2014 2015 (1) Cash costs, after by-product credits, per silver and gold ounce represent a non-U.S. generally accepted accounting principles (GAAP) measurement. A reconciliation of cash costs, after by-products credits per ounce, to cost of sales and other direct production costs and depreciation, depletion, and amortization (the most comparable GAAP measure) can be found in the Reconciliation of Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) to Cost of Sales and Other Direct ProductionCosts and Depreciation, Depletion, and Amortization (GAAP) section in the company’s Form 10-K, on pages 36 through 38. (2) Proven & Probable Reserves. For complete reserve and resource information, please refer to the Estimated Mineral Reserves and Resources section at the end of this report. (3) On June 1, 2013, we completed the acquisition of Aurizon Mines Ltd., which gave us 100 percent ownership of the Casa Berardi mine in Quebec, Canada. HL / 1 Dear Fellow Shareholder, 1891 was a remarkable year: the first car powered “Price volatility in the by gasoline; the motion picture and the radio were invented; the U.S. Forest Service was organized; precious metals market has Carnegie Hall opened; Stanford and Rice Universities been a reality for the past were founded; the first basketball game was played. And stepping right into this incredible year of 125 years, but Hecla has innovation, new businesses, and new ideas were the both the assets and the men who created Hecla Mining Company. long-term vision to invest, Past, Present, and Future grow, and thrive in these Around the time Hecla was founded, the mining conditions.” industry began making tremendous advances in safety and productivity: from steam to electrical power; from hand steel to drills; from visuals to detailed geologic maps. Hecla contributed its own advances – like being the first in the country to deliver paste underground and mine under backfill. HECLA LIQUIDITY And we’ve maintained that culture of innovation. (US$ millions) Right now we’re sinking the deepest underground shaft in the United States, which, when completed, will put $ 255 the Lucky Friday mine almost two miles below the $ 155 surface. $ 165 Much of our progress and innovation over the years $ 105 has come from the desire not only for more production, $ 100 but, more importantly, for a safer workplace. It’s why $ 60 we became an early and full adopter of the National 2009 2015 Mining Association’s CORESafety initiative, a program available credit facility cash and cash equivalents that has taken the insights and programs of the biggest mining companies and, at no cost, made them available to the entire industry. Having completed our third year in this program, we have reduced our injury rate 30 percent. In recent decades, mining companies have recognized the need to become ever more creative, innovative, and diligent on the environmental front in order to continue to prosper in the future. Long the target of environmental activists, we in the mining industry are what you might call active environmentalists – engineering solutions and paying for improvements that actually care for and protect the land we all love. It’s how our Greens Creek mine has safely operated within a national monument – in the middle of the densest per capita brown bear population in the world – for over 27 years. HL / 2 When I look at Hecla’s future, I see new opportunities to improve productivity and safety: battery-powered equipment operating with zero emissions, reducing refrigeration and ventilation requirements to enable us to go deeper than we ever imagined; semi- and fully autonomous equipment that can run faster and longer, increasing worker productivity; and mechanical mining – technology taken from tunneling and coal mining that could reduce drilling and blasting, resulting in a more continuous process. We will be a leader as we usher in the next revolution in narrow vein underground mining. Phillips S. Baker, Jr. president and chief executive officer Building Longevity Hecla’s longevity is no accident. While there is undoubtedly an element of luck involved, we believe our strategy is what’s behind our enduring success. and good judgment, the willingness to take risks and A key element is continuity, both in leadership experience failure, and even to face criticism – but all – I’m only the eleventh CEO in the company’s 125 with the goal of thriving over the long term. years – and in employees, many of whom have For a long time we have been focused on growing worked for Hecla for 30, 40, or more years. It’s also reserves, and it has paid dividends. 2015 was the in our relationship with the communities where we tenth consecutive year we set the record for the most live and work. Sometimes the community might silver reserves in our history – despite using a price initially oppose the mine, but then, in time, moves to assumption that was almost half that of 2012, and one acceptance, and finally to ownership. Wherever Hecla of the most conservative in the industry. operates, the communities own our mines. Not on Despite the lower prices, we continue to invest. paper – not legally – but in every other sense. It doesn’t We’re sinking a shaft to 8,600 feet below the mine happen overnight, of course. We started with long- entrance and 10,000 feet below the surface at the lived mines that provided good people with good jobs, Lucky Friday. It’s the largest capital project in our then supported their engagement in the community as history, costing about $225 million and taking almost part-time state legislators, presidents of United Way, a decade to complete. The shaft will give access to members of the Chamber of Commerce, trustees on the 1,400 vertical feet of mineralization in our 21- school boards. year mine plan. And the shaft could access another To provide consistent support in both good 1,000 feet of ground below the resource, of which the times and bad, we established the Hecla Charitable first 500 feet has known mineralization. Finally, this Foundation, which has contributed nearly $1.8 million shaft is a platform for exploring and producing from over the past seven years. We’ve created and funded exploration targets that are below mines that produced programs to keep at-risk kids in high school and half a billion ounces of silver. teacher internships to show educators the mining Our investments in improvements at Greens Creek industry. We’ve seen the payback in the loyalty of our increased recoveries almost 10 percent over the past communities and in their willingness to support us year. In just a few short months, we went from a when times are tough. production decision to mining at San Sebastian, a mine The second ingredient for longevity? Plan and invest that we expect to be a major cash-flow generator in for a long-term future.
Load more

Recommended publications
  • HMC 125 Year Book Narrative 042816.Indd
    Celebrating 125 Years PERSISTENCE PERSPECTIVE POSITION Hecla’s management team, Burke, Idaho, ca. 1901. Left to right: Fremont Rowe, Doc Evans, Ed Torkelson, Chet Lawrence, Charles Foreman, Pete Ratoni, Ed “Spud” Murphy, Bert Sloan. Burke was the location of the original Hecla mine (as well as the Hercules and the Star); at its height, as many as 1,400 people lived along its single street at the bottom of Burke Canyon. On the cover, a 1927 photograph of workers from the Hecla mine is juxtaposed with a 2015 photo of miners at Hecla’s newest operating property: the Casa Berardi gold mine in Quebec. TABLE OF CONTENTS 02 05 11 19 34 36 40 Foreword Persistence: Perspective: Position: Mining in the Responsibility Milestones The First 100 Years The Last 25 Years The Future 21st Century Hecla’s management team, Burke, Idaho, ca. 1901. Left to right: Fremont Rowe, Doc Evans, Ed Torkelson, Chet Lawrence, Charles Foreman, Pete Ratoni, Ed “Spud” Murphy, Bert Sloan. Burke was the location of the original Hecla mine (as well as the Hercules and the Star); at its height, as many as 1,400 people lived along its single street at the bottom of Burke Canyon. On the cover, a 1927 photograph of workers from the Hecla mine is juxtaposed with a 2015 photo of miners at Hecla’s newest operating property: the Casa Berardi gold mine in Quebec. CAPITALIZED FOR HALF A MILLION DOLLARS AND INCORPORATED ON OCTOBER 14, 1891, HECLA MINING COMPANY STANDS TODAY AS THE LAST OF THE PIONEER MINING COMPANIES OF NORTH IDAHO’S FABLED SILVER VALLEY — THE OLDEST U.S.-BASED PRECIOUS METALS MINING COMPANY AND THE LARGEST PRIMARY SILVER PRODUCER IN THE UNITED STATES.
    [Show full text]
  • Idaho Mining and Exploration, 2011
    Idaho Mining and Exploration, 2011 Virginia S. Gillerman Earl H. Bennett Idaho Geological Survey Morrill Hall, Third Floor Staff Report S-12-3 University of Idaho November 2012 Moscow, Idaho 83844-3014 Idaho Mining and Exploration, 2011 Virginia S. Gillerman Earl H. Bennett Staff Reports present timely information for public distribution. This publication may not conform to the agency’s standards. Idaho Geological Survey Morrill Hall, Third Floor Staff Report S-12-3 University of Idaho November 2012 Moscow, Idaho 83844-3014 Contents Introduction ………………………………………………………………………….... 1 Metal Mining …………………………………………………………………………. 4 Phosphate Mining …………………………………………………………………….. 7 Other Industrial Minerals ………………………………………………………………10 Energy ………………………………………………………………………………….11 Exploration ……………………………………………………………………………..13 State Activities …………………………………………………………………………22 Figures Figure 1. Major mining areas in Idaho ………………………………………….…........2 Figure 2. Yearly non-fuel mineral production in Idaho ………………………….…......3 Figure 3. Value by commodity for 2010 production………...…………………………..3 Figure 4. Galloway at top of #4 shaft, Lucky Friday mine …………………………......5 Figure 5. Surface Exploration, U.S. Silver ………………………………………….6 Figure 6. Construction at New Jersey mill, Kellogg…………………………………….7 Figure 7. Construction at Monsanto’s new Blackfoot Bridge phosphate mine ….…......9 Figure 8. Simplot’s Smoky Canyon mine, Panel F, aerial view …….……………..…...9 Figure 9. Industrial mineral producers …………………………………………………10 Figure 10. Stratigraphic and seismic section, Bridge Resources well, Payette Co…......12 Figure 11. Mineral exploration in Idaho, 2011 …………………………………………13 Figure 12. Cross-section with location of Hecla’s projects, 2011 ……………………...15 Figure 13. Hecla’s Star-Morning exploration at Burke ………………………………...16 Figure 14. Orogrande Shear Zone, Premium Exploration project……………………....18 Figure 15. Formation Metals’ construction layout, Idaho Cobalt Project…....................18 Figure 16. Midas Gold’s Yellow Pine deposit map and drill section ………….….…..20 Figure 17.
    [Show full text]
  • Hecla Mining Company 2017 Annual Report
    CREATING VALUE THROUGH INNOVATIVE MINING 2017 ANNUAL REPORT Greens Creek Admiralty Island, Alaska Kinskuch Alice Arm, BC Opinaca / Wildcat Rock Creek James Bay, Quebec Silver Valley Noxon, Montana Wallace, Idaho Casa Berardi Vancouver, BC Montanore Val d’Or, Quebec Libby, Montana Val d’Or, Quebec Coeur d’Alene, Idaho Fayolle Val d’Or, Quebec Heva–Hosco Lucky Friday Val d’Or, Quebec Mullan, Idaho Monte Cristo Esmeralda County, Nevada San Juan Silver Creede, Colorado operating mine pre-development project San Sebastian Durango, Mexico exploration project corporate office Innovations such as the tele-remote load-haul-dump at Greens Creek and the automated shaft at Casa Berardi can increase productivity and safety, generating significant returns on investment. FINANCIAL HIGHLIGHTS (Dollars in thousands except in per-share and per-ounce amounts. As of December 31.) FINANCIAL DATA 2017 2016 Sales of products $ 577,775 $ 645,957 Gross profit 156,986 191,506 Cash flow provided by operating activities 115,878 225,328 Net income (loss) (23,519) 69,547 Net income (loss) applicable to common shareholders (24,071) 68,995 Basic income (loss) per common share (0.06) 0.18 Cash, cash equivalents, and short-term investments 219,865 198,894 Capital expenditures 105,393 163,128 YEAR-END DATA Common shares outstanding (in thousands) 399,176 395,287 Weighted average number of shares outstanding for the year – basic (in thousands) 397,394 386,416 Employees 1,431 1,396 OPERATIONAL DATA Silver production (oz) 12,484,844 17,177,317 Gold production (oz) 232,684
    [Show full text]
  • Protecting Research Values: the Day Mines Group of Record$ University of Idaho Library
    PROTECTING RESEARCH VALUES: THE DAYMINES GROUP OFRECORD$ UNIVERSITY OFIDAHO LIBRARY Richard C. Davis BARRY DAY, son of a general store operator in them, in several accessions, to the University of Idaho. the small mining town of Wardner, in the Coeur There they remained piled in the library basement until d'Alene mining region of northern Idaho, staked his resources could be found to process them and make Hercules lode claim atop a ridge above Burke Canyon them available to researchers. A collection this large in 1889. Continually for twelve years Harry and his was beyond the everyday processing capabilities of the partners labored before one of them struck rich ore on Special Collections Department. Since these records June 2, 1901.1. As if in a classic tale of the West, within were thought to have value greater than the local weeks the Hercules became a mine, and by the end of histories of the individual companies represented--parti­ the year the Days and their partners were rich. For over cularly so as the archival literature had previously given forty years thereafter, the Days expanded their mineral relatively little attention to the research values of indus­ ,holdings. The Hercules played out by 1925 but with trial records--two subvention grants were obtained. Hercules profits the Days gained control of Tamarack Under the first, from the National Historical Publica­ & Custer Consolidated, Dayrock, and Sherman Lead tions and Records Commission, the author was mines, which continued for decades as notable silver­ employed as project archivist from late '1986 into 1989; lead-zinc producers.
    [Show full text]
  • MAY 2021 INVESTOR FACT SHEET Investor Inquiries 800.HECLA91 (800.432.5291) [email protected]
    MAY 2021 INVESTOR FACT SHEET Investor Inquiries 800.HECLA91 (800.432.5291) [email protected] HECLA-MINING.COM Hecla Mining Company is the largest U.S. silver producer and the third largest U.S. producer of both zinc and lead. Hecla owns and operates mines on district-sized land packages in mining-friendly North American jurisdictions: Greens Creek in Alaska, one of the largest and highest-margin primary silver mines in the world; the Lucky Friday silver mine in North Idaho; and the Casa Berardi gold mine in Quebec. In addition to its diversified silver and gold operating and cash- flow generating base, Hecla has a number of exploration properties and pre-development projects in world-class silver and gold mining districts throughout North America. 2020 silver production was 13.5 million ounces and 208,962 ounces of gold production. 2021 estimated production is 12.9-14.0 million ounces of silver and 185,000-193,000 ounces of gold. The company is positioned to weather COVID-19 with strong assets, an established action plan, senior notes due in 2028, and solid liquidity. Multiple Secure Revenue Streams Share Performance NYSE: HL Strong Cash Flow Flexibility Low Political Risk Jurisdictions end of Q1: 03/31/21, (1) as of 05/10/21 (1) Share Price: $7.16 Strong (1) 52-Week Range: $2.47 – $8.45 Healthy Cash Margins Investment Established Work Force Basic Shares: 535.3 million Fundamentals Fully Diluted: 545.5 million Market Capitalization: $3.8B (1) Strong Financial Position Commitment to Safety High-Quality Operations OPERATING MINES Greens Creek – Admiralty Island, Alaska ■ One of the world’s largest and lowest-cost primary silver mines.
    [Show full text]
  • HMC Fact Sheet 05102017.Indd
    May 2017 Investor Fact Sheet www.hecla-mining.com Hecla Mining Company is not only the largest and one of the lowest-cost U.S. silver producers, and the third largest U.S. producer of both zinc and lead, but also a growing gold producer. Hecla owns and operates four mines on district-sized land packages in mining-friendly North American jurisdictions: Greens Creek in Alaska, one of the largest and highest-margin primary silver mines in the world; the newly revitalized Lucky Friday silver mine in North Idaho; the San Sebastian silver-gold mine near Durango, Mexico; and the Casa Berardi gold mine in Quebec. In addition to its diversified silver and Share Performance NYSE: HL gold operating and cash-flow generating base, Hecla has a number of exploration properties and pre- end of Q1: 03/31/17, (1) as of 04/27/17 development projects in seven world-class silver and gold mining districts in the U.S., Canada, and Mexico. Share Price: $ 5.33(1) 52-Week Range: $ 3.83 – $7.64(1) 2016 saw record silver production of 17.2 million ounces with 233,929 ounces of gold production, with Basic Shares: 395.8 million silver production exceeding the Company’s expectations for 2016. The Company is suspending Lucky Fully Diluted: 399.8 million Friday and Company-wide 2017 silver production estimates, because it is unable to predict when the Market Capitalization: $ 2.11B (1) ongoing strike at the Lucky Friday mine will be resolved. Multiple Secure Revenue Streams Strong Cash Flow Flexibility Low Political Risk Jurisdictions Strong Healthy Cash Margins Investment Established Work Force Fundamentals Strong Financial Position Commitment to Safety Four High-Quality Operations Operating Mines Greens Creek – Admiralty Island, Alaska ■ One of the world’s largest and lowest-cost primary silver mines.
    [Show full text]