Hecla Mining Reports Preliminary Production Results

COEUR D'ALENE, ID - Hecla Mining Company reported preliminary production results and its cash position at the end of the second quarter as well as a new investment by Investissement Quebec. All five mines in operation (Casa Berardi and San Sebastian were subjected to government-mandated shutdowns of 3 and 4 weeks, respectively in the quarter). Silver production of 3.4 million ounces, and gold production of 59,982 ounces - Silver equivalent production of 12.5 million ounces or gold equivalent production of 119,037 ounces. There was reduced borrowing under revolving credit facility from $200 million to $50 million, and cash position of approximately $76 million.

In the third quarter, to enable open market purchasing of some existing 7.25% coupon bonds and fund Casa Berardi’s capital expenditures, Hecla is issuing US$36.8 million of senior unsecured notes to Investissement Quebec with a five-year maturity yielding 5.74%.

Phillips S. Baker, Jr., President and CEO, said, “Our quick actions at the beginning of the pandemic minimized impact on our operations and finances, so production and cash flow generation were strong this quarter. Because U.S. mines are essential businesses and the other two mines returned to production in the quarter, we increased production and internally generated cash flow. This performance has allowed us to substantially reduce our revolving line of credit which we expect to be fully repaid by year end. Hecla produces one third of all the silver in the U.S., giving investors unique exposure to what we believe will be higher silver prices in the future. The announcement of the investment by Investissement Quebec is another example of why Quebec is one of the leading mining jurisdictions in the world. We are happy to have the province investing in five-year notes to fund Casa Berardi capital expenditures and replace existing bonds.”

Greens Creek exceeded expectations in the first half of the year due to higher grades. Lucky Friday is expected to increase production in the second half under the planned ramp-up to full throughput. San Sebastian production is as expected and should cease in the third quarter. Nevada has exceeded expectations due to higher grades but has limited non-refractory ore in the third quarter. Currently there is no estimate for the bulk sample production of refractory ore. Casa Berardi is expected to have higher production later in 2020 due to more high-grade underground production from the East Mine. Production outlook is unchanged at this time.

At the Greens Creek mine, 2.7 million ounces of silver and 13,104 ounces of gold were produced. Higher silver production compared to the second quarter of 2019, was due to higher ore grades as a result of mine sequencing. The mill operated at an average of 2,366 tons per day (tpd).

Operations at Greens Creek continue strongly, with the mine quickly implementing a 14-day quarantine for all visitors to Admiralty Island, where the mine is located. This has helped protect the workforce from the potential spread of the COVID-19 virus, and with the addition of strict testing protocols the mine has now reduced the quarantine period to 7 days. This is expected to reduce the cost associated with protecting the workforce as well as reducing workforce stress.

At the Casa Berardi mine, 30,756 ounces of gold were produced, including 5,681 ounces from the East Mine Crown Pillar pit. The mine restarted operations on April 15 after the Government-mandated shutdown of operations due to COVID-19. The decrease in gold ounces compared to the second quarter of 2019 was expected due to the shutdown. The project to optimize the mill operations is making progress on many fronts and results are expected over the coming several quarters. The mill operated at an average of 3,595 tpd.

At the San Sebastian mine, 0.2 million ounces of silver and 1,331 ounces of gold were produced. The mill restarted on May 29 and the mine on June 6 after a Government-mandated shutdown of operations due to COVID-19. Silver and gold production were lower compared to the second quarter of 2019 due to lower ore grades, as well as the shutdown. Mining of oxide material is expected to be completed in the third quarter and milling in the fourth quarter of 2020. The Company continues to assess the viability of mining the sulfide Hugh Zone. The mill operated at an average of 528 tpd.

At the Nevada operations, 14,791 ounces of gold and 15,988 ounces of silver were produced. Mining of non-refractory ore is expected to be completed in the third quarter. Mining of refractory ore for the bulk sample test is expected to continue through the remainder of 2020. Ore was processed at an average of 117 tpd.

At the Lucky Friday mine, 469,537 ounces of silver were produced in the quarter. The mine has continued normal operations during the pandemic, with the ramp-up proceeding as planned. The #2 shaft hoist upgrade project is proceeding on schedule. The mine is expected to reach its full tonnage throughput rate by the end of the year.