Hecla Reports 2015 Sales of $444 Million

Record silver production of 11.6 million ounces and gold production of 189,327 ounces in 2015; Record silver reserves for 10th consecutive year

COEUR D'ALENE, Idaho--()--Hecla Mining Company (NYSE:HL) today announced 2015 sales of $443.6 million and gross profit of $38.5 million, with net loss applicable to common stockholders of $87.5 million, or $0.23 per basic share, and an adjusted net loss applicable to common stockholders of $34.0 million, or $0.09 per basic share.¹

FOURTH QUARTER 2015 HIGHLIGHTS (comparison to Q4 2014)

  • Silver production increased 13% to 3.6 million ounces at a cash cost, after by-product credits, of $5.55 per silver ounce.2
  • Gold production increased 10% to 60,350 ounces, of which Casa Berardi produced 42,282 ounces of gold at a cash cost, after by-product credits, of $591 per gold ounce.2
  • San Sebastian began producing gold and silver, pouring first doré on December 22.
  • Operating cash flow of $27.5 million and adjusted EBITDA of $34.5 million.3

FULL YEAR 2015 HIGHLIGHTS (comparison to 2014) AND 2016 OUTLOOK

  • Silver equivalent production of 37.5 million ounces, the highest in the Company's history.4
  • Silver production increased 5% to 11.6 million ounces, the highest in the Company's history, at a cash cost, after by-product credits, per silver ounce of $5.85.2
  • Gold production increased 1% to 189,327 ounces, with 127,891 ounces produced at Casa Berardi at an average cash cost, after by-product credits, per gold ounce of $772.2
  • Highest year-end proven and probable silver reserve levels in Company history for the 10th consecutive year despite using $14.50/oz silver for the calculation.
  • Operating cash flow of $106.4 million and adjusted EBITDA of $116.8 million.3
  • Cash and cash equivalents of $155.2 million at December 31, 2015.
  • Proceeding with East Mine Crown Pillar (EMCP) pit at Casa Berardi, expect to produce ore from the new pit by year end.
  • Estimated 2016 silver production of 13.5-14.0 million ounces and gold production of approximately 207,000 ounces.
       

(1)

    Adjusted net income (loss) applicable to common stockholders represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement, a reconciliation of which to net income (loss) applicable to common stockholders, the most comparable GAAP measure, can be found at the end of the release.
 

(2)

Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measures, can be found at the end of this release.
 

(3)

Adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to net income, the most comparable GAAP measure, can be found at the end of this release.
 

(4)

2015 silver equivalent calculation is based on the following prices: $15.70 for silver, $1,160 for gold, $0.81 for lead, and $0.88 for zinc.
 

"We finished 2015 strongly, with robust performance at all our mines in the fourth quarter helping us set record silver and silver equivalent production for the year. And despite using probably the most conservative price assumptions in the industry, the Company had its 10th consecutive year of growing silver reserves to the most in our history," said Phillips S. Baker Jr., Hecla's President and CEO. "We believe we are one of few precious metals companies growing right now, not just in reserves but in production as well. Because our balance sheet allowed us to continue investing during the price decline of the last few years, we expect more than a 15% increase in silver production and about a 10% increase in gold production this year, positioning us to take advantage of the rally in prices we have seen in 2016."

SILVER AND GOLD RESERVE GROWTH

Proven and probable silver reserves of 175 million ounces increased by 1% over December 31, 2014 levels due to the addition of approximately 8 million silver ounces at San Sebastian using a price assumption of $14.50/oz, a 16% reduction from last year’s $17.25/oz assumption. Proven and probable gold reserves of 2.1 million ounces were unchanged over December 31, 2014 levels using an assumption of $1,100/oz, a 10% decline from last year’s $1,225/oz assumption.

Please refer to the reserves and resources table at the end of this press release, or to the press release entitled "Hecla Reports Record Silver Reserves," issued on February 16, 2016, for the breakdown between proven and probable reserve and resource levels as well as a detailed summary of the Company's exploration programs.

FINANCIAL OVERVIEW

    Fourth Quarter Ended     Twelve Months Ended
December 31,     December 31,     December 31,     December 31,
HIGHLIGHTS     2015     2014     2015     2014
FINANCIAL DATA (000s)                        
Sales $ 115,337 $ 121,985 $ 443,567 $ 500,781
Gross profit $ 11,735 $ 22,207 $ 38,511 $ 85,201
Income (loss) applicable to common stockholders $ (63,101 ) $ 16,767 $ (87,520 ) $ 17,272
Basic and diluted income (loss) per common share $ (0.17 ) $ 0.05 $ (0.23 ) $ 0.05
Net income (loss) $ (62,963 ) $ 16,905 $ (86,968 ) $ 17,824
Cash provided by operating activities $ 27,477 $ 24,356 $ 106,445 $ 83,124
Capital expenditures (excluding capitalized interest) $ 41,965 $ 37,732 $ 140,607 $ 131,607
Cash and cash equivalents as of year end $ 155,209 $ 209,665
 

Net loss applicable to common stockholders for the fourth quarter and full year of 2015, respectively, was $63.1 million and $87.5 million, or $0.17 and $0.23 per basic share, compared to net losses of $16.8 million and $17.3 million, or $0.05 per basic share for both the fourth quarter and full year of 2014. Among items impacting the results for the 2015 periods compared to 2014 were the following:

  • Revenue decreased by 5% for the fourth quarter and 11% for the year due to lower average silver, gold, lead and zinc prices in 2015 partially offset by higher production.
  • Exploration and pre-development expense decreased by $2.0 million for the quarter and increased by $2.3 million for the year.
  • Foreign exchange gains due to the weakness in the Canadian dollar.
  • Increase in the provision for closed operations and reclamation for historic properties to $12.0 million.
  • Net mark-to-market gains on base metal forward contracts of $0.0 million and $8.3 million for the fourth quarter and full year of 2015 compared to net losses of $11.7 million and net gains of $9.1 million for the same periods in 2014.
  • Impairment losses of $2.5 million for 2015 for investments in exploration companies.
  • Income tax provision of $56.3 million in 2015, largely due to a non-cash increase in the U.S. valuation allowance, against net operating loss carryforwards, as a result of this year’s lower metal prices, which was partially offset by the decrease in the Mexican valuation allowance related to net operating losses which are expected to be utilized as a result of San Sebastian’s operating activities.

Operating cash flow increased 28% to $106.4 million in 2015. Year end 2015 cash and cash equivalents of $155.2 million reduced $54.5 million over the prior year level as the Company undertook the second largest capital program in its history. Hecla's capital investments (excluding capitalized interest) at its existing operations were $42.0 million and $140.6 million for the fourth quarter and year ended December 31, 2015, respectively. The capital investment for the year at Lucky Friday was $55.9 million, including $39.5 million for the #4 Shaft Project. At Greens Creek, capital spending was $46.0 million, including $20.7 million for the tailings pond expansion. At Casa Berardi, capital investment was $35.3 million and was focused on mine development. At San Sebastian, capital investment was $3.4 million, focused on mill upgrades.

Metals Prices

Average realized silver prices in the fourth quarter and full year 2015 were $14.26 and $15.57 per ounce, 11% and 16% lower than the prior periods, respectively. Realized prices for gold for the fourth quarter and full year 2015 were $1,089 and $1,150 per ounce, both 9% lower than the prior periods. Realized prices for lead and zinc were lower for the 2015 periods than 2014.

         
Fourth Quarter Ended Twelve Months Ended
December 31,     December 31, December 31,     December 31,
          2015     2014 2015     2014
AVERAGE METAL PRICES                    
Silver - London PM Fix ($/oz) $ 14.76 $ 16.47 $ 15.70 $ 19.08
Realized price per ounce $ 14.26 $ 16.00 $ 15.57 $ 18.46
Gold - London PM Fix ($/oz) $ 1,104 $ 1,200 $ 1,160 $ 1,266
Realized price per ounce $ 1,089 $ 1,195 $ 1,150 $ 1,262
Lead - LME Cash ($/pound) $ 0.76 $ 0.91 $ 0.81 $ 0.95
Realized price per pound $ 0.77 $ 0.93 $ 0.83 $ 0.98
Zinc - LME Cash ($/pound) $ 0.73 $ 1.01 $ 0.88 $ 0.98
Realized price per pound $ 0.71 $ 1.03 $ 0.86 $ 0.99
 

Base Metals Forward Sales Contracts

The following table summarizes the quantities of base metals committed under financially settled forward sales contracts at December 31, 2015:

       
Pounds Under
Contract (in
thousands) Average Price per Pound
      Zinc     Lead     Zinc     Lead
CONTRACTS ON PROVISIONAL SALES                        
2016 settlements 23,755     8,433 $ 0.71     $ 0.77
 

With the advanced settlement of the balance of financially settled base metal forward contracts in 2015, net proceeds of $16.5 million were generated during the year.

OPERATIONS

Overview

  • Greens Creek production of 2.6 million and 8.5 million ounces of silver in the fourth quarter and full year of 2015, respectively, an increase of 4% and 8% over the same periods of 2014.
  • Lucky Friday silver production of 985,698 and 3,028,134 ounces for the fourth quarter and full year of 2015, respectively, an increase of 32% and decrease of 7% over the same periods of 2014.
  • Casa Berardi gold production of 42,282 and 127,891 ounces for the fourth quarter and full year of 2015, respectively, a 7% increase and no change over production in the 2014 periods.
  • San Sebastian poured its first doré on December 22, producing 81,677 ounces of silver and 870 ounces of gold in the fourth quarter of 2015.

The following table provides the production and cash cost, after by-product credits, per silver and gold ounce summary for the fourth quarters and twelve months ended December 31, 2015 and 2014:

       
Fourth Quarter and Year Ended Fourth Quarter and Year Ended
      December 31, 2015 December 31, 2014
        Cash costs, after     Cash costs, after
by-product credits, by-product credits,
Increase/Decrease

per silver or gold

per silver or gold
      Production (ounces)     over 2014    

ounce(1, 2)

Production (ounces)    

ounce(1, 2)

      Q4     Year     Q4     Year     Q4     Year Q4     Year     Q4     Year
Silver 3,644,310     11,591,603 13 %     5 % $5.55     $5.85 3,213,096     11,090,506 $4.58     $4.81
Gold     60,350     189,327     10 %     1 %     $591     $772 54,674     186,997     $635     $826
Greens Creek
Silver 2,568,025 8,452,153 4 % 8 % $4.18 $3.91 2,459,092 7,826,341 $2.74 $2.89
Gold 17,198 60,566 12 % 3 % N/A N/A 15,289 58,753 N/A N/A
Lucky Friday 985,698 3,028,134 32 % (7 )% $9.02 $11.23 745,766 3,239,151 $10.65 $9.44
Casa Berardi
Gold 42,282 127,891 7 % % $591 $772 39,385 128,244 $635 $826
Silver 8,910 29,639 8 % 18 % N/A N/A 8,238 25,014 N/A N/A
San Sebastian3
Silver 81,677 81,677 N/A N/A $6.71 $6.71 N/A N/A N/A N/A
Gold 870 870 N/A N/A N/A N/A N/A N/A N/A N/A
 
        (1)     Cash cost, after by-product credits, per silver or gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found at the end of the release.
(2) Cash cost, after by-product credits, per gold ounce is only applicable to Casa Berardi production. Gold produced from Greens Creek and San Sebastian is used as a by-product credit against the silver cash cost.
(3) The first doré was poured at San Sebastian on December 22, 2015.
 

The following table provides the production summary on a consolidated basis for the fourth quarter and twelve months ended December 31, 2015 and 2014:

         
Fourth Quarter Ended Twelve Months Ended
December 31,     December 31, December 31,     December 31,
          2015     2014 2015     2014
PRODUCTION SUMMARY                    
Silver - Ounces produced 3,644,310 3,213,096 11,591,603 11,090,506
Payable ounces sold 2,866,156 2,531,083 10,171,896 9,499,221
Gold - Ounces produced 60,350 54,674 189,327 186,997
Payable ounces sold 53,431 49,469 178,400 177,584
Lead - Tons produced 11,439 9,787 39,965 40,255
Payable tons sold 9,341 7,422 33,409 32,632
Zinc - Tons produced 19,036 17,219 70,073 67,969
Payable tons sold 13,010 10,996 49,831 48,648
 

Greens Creek Mine - Alaska

Silver production at Greens Creek in 2015 was 2.6 million ounces for the fourth quarter and 8.5 million ounces for the year, the highest annual silver production since Hecla acquired 100% of the mine in 2008. Silver production increased over 2014 levels due to higher silver ore grades, particularly during the fourth quarter of 2015, as well as higher metallurgical recoveries. The mill operated at an average of 2,324 tons per day in the fourth quarter, and 2,231 tons per day in 2015.

Cash cost, after by-product credits, per silver ounce at Greens Creek was $4.18 and $3.91 for the fourth quarter and full year, respectively, compared to $2.74 and $2.89 for the same periods in 2014. The increase in cash costs, after by-product credits, per silver ounce for 2015 compared to 2014 is the result of lower by-product credits due to decreasing metal prices, partially offset by increased silver production.

Capital spending for Greens Creek in 2016 is estimated to be $48 million, of which approximately $14 million is for the tailings expansion project.

Lucky Friday Mine - Idaho

The Lucky Friday mine produced 985,698 ounces of silver in the fourth quarter and 3,028,134 ounces of silver for the full year 2015, compared to 745,766 ounces and 3,239,151 ounces for the same periods in 2014. The grades in the fourth quarter increased by more than 10% over the prior year period due to mine sequencing. The reduction in annual production is due to a failure in the underground ventilation system that was resolved on October 1. The mill averaged 926 tons per day in the fourth quarter and 815 tons per day for the year.

Cash cost, after by-product credits, per silver ounce at Lucky Friday was $9.02 and $11.23 in the fourth quarter and full year, respectively, compared to $10.65 and $9.44 for the same periods in 2014. The reduction in quarterly cash cost, after by-product credits, per silver ounce is attributable to the higher production level resulting from higher grades. The increase in annual cash cost, after by-product credits, per silver ounce is attributable to the necessity of mining lower grade material as the ventilation issue was being resolved.

The #4 Shaft Project is a key growth project that is currently excavated to the 8500 level. The #4 Shaft Project is more than 90% completed, and is expected to be finished in the fourth quarter of 2016, allowing access to higher-grade zones once the associated development is concluded. The #4 Shaft Project is expected to cost approximately $225 million, with approximately $20 million left to be spent over 2016.

Capital spending for Lucky Friday in 2016 is estimated to be $37 million, including the #4 Shaft Project.

The Collective Bargaining Agreement at the Lucky Friday, between the bargaining unit employees represented by the United Steel Workers and the Company, is scheduled to expire on April 30, 2016.

Casa Berardi Gold Mine - Quebec

The Casa Berardi mine produced 42,282 ounces of gold in the fourth quarter, the highest quarterly production since Hecla acquired the mine in 2013, and 127,891 ounces for the full year 2015, compared to 39,385 and 128,244 ounces of gold for the 2014 periods. The increased gold production during the quarter was due in part to higher grades and recoveries. The mill throughput rate averaged 2,488 tons per day in the fourth quarter and 2,313 tons per day over the year.

Cash cost, after by-product credits, per gold ounce was $591 for the fourth quarter and $772 for 2015, a 7% and 6% decrease, respectively, from 2014 periods. The lower costs were due in part to higher production as well as changes in the CAD/USD exchange rate.

The Company is moving forward with the East Mine Crown Pillar ("EMCP") pit, which is situated between the east and west mines. In a report prepared for the Company's use by Mine Development Associates, dated June 26, 2015, the project is estimated to have an NPV (12%) of C$37.51, and an IRR of 90% ($1,225/oz gold). The pit is expected to provide about 5.5 years of production which is meant to supplement the material coming from the underground operation, increasing the mill throughput to about 3,100 tons per day for the remaining mine life starting in 2017. Excavation of surface materials has begun, and production of about 5,000 ounces of gold is expected before year-end, increasing to approximately 30,000 ounces of gold in 2017. Capital investment for the EMCP pit project is estimated at $39 million over the life of the project, with $19 million to be spent in 2016.

Capital spending for Casa Berardi in 2016 is estimated to be $61 million.

(1)

    Reduction in consultant's estimate made for the installation of a rock breaker.
 

San Sebastian - Mexico

The San Sebastian mine began operations and poured its first doré on December 22, 2015. The mine produced 81,677 ounces of silver at a cash cost, after by-product credits, of $6.71 per ounce. The mine also produced 870 ounces of gold.

In January, San Sebastian produced 288,271 ounces of silver and 2,231 ounces of gold from 10,446 tons of mill feed. The feed averaged 0.23 oz/ton gold and 29.4 oz/ton silver, with corresponding recoveries of 91.8% and 93.8%.

Capital spending for San Sebastian in 2016 is estimated to be $2 million.

2016 GUIDANCE

For the full year 2016, the Company expects:

                   
    2016E(1) Silver     2016E Gold     Cash cost, after by-product
Mine     Production (Moz)     Production (oz)     credits, per silver/gold ounce(4)
Greens Creek 7.5 52,000 $6.00 per silver oz
Lucky Friday 3.0 $9.00 per silver oz
San Sebastian 3.0 20,000 $2.00 per silver oz
Casa Berardi2 135,000 $700 per gold oz
Total 13.5-14.0 207,000 $6.00 per silver oz
Silver Equivalent Production3 39.0-40.0
Gold Equivalent Production3 511,000-521,000
       

2016E capital expenditures (excluding capitalized interest)

    $150 million5
 
2016E pre-development and exploration expenditures     $15 million
 

(1)

    2016E refers to the Company's expectations for 2016.

(2)

Includes an estimated 5,000 gold ounces from the EMCP open pit.

(3)

Metal price assumptions used for calculations: Au $1,150/oz, Ag $15/oz, Zn $0.75/lb, Pb $0.80/lb; USD/CAD assumed to be $0.75, USD/MXN assumed to be $0.06.

(4)

Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement.

(5)

2016 capital spending estimated for Greens Creek to be $48 million, Lucky Friday to be $37 million, Casa Berardi to be $61 million and San Sebastian to be $2 million.
 

DIVIDEND

The Board of Directors declared a quarterly dividend of $0.0025 per share of common stock, payable on or about March 30, 2016, to shareholders of record on March 18, 2016. The Company's realized silver price was $14.26 in the fourth quarter and therefore did not satisfy the criteria for a larger dividend under the Company's dividend policy.

The Board of Directors also declared the regular quarterly dividend of $0.875 per share on the 157,816 outstanding shares of Series B Cumulative Convertible Preferred Stock. This represents a total amount to be paid of approximately $138,000. The cash dividend is payable April 1, 2016, to shareholders of record on March 15, 2016.

EXPECTED COST REDUCTIONS

Recognizing the ongoing weakness in the price of silver, the Company has enacted several measures to reduce costs and maintain its financial strength. The Company expects to reduce non-payroll costs by approximately $25 million in 2016. These cuts are expected to come from all areas of the business. In addition, senior management and board members have taken a 10% reduction in base salary and retainer fees, respectively, and the CEO has taken a 20% reduction in base salary.

BOARD UPDATE

The Board of Directors of Hecla has appointed Mr. George R. Johnson and Mr. Stephen F. Ralbovsky as Directors effective March 1, 2016. Mr. Johnson has over 45 years of experience in the mining industry, and was most recently Senior Vice President of Operations of B2 Gold Corporation. He has also held senior operations positions at Kinross Gold Corporation and Bema Gold Corporation and held various positions at Hecla from 1983 to 1999. Mr. Ralbovsky was a partner with PricewaterhouseCoopers, LLP from 1990 until his retirement in June 2014 where he was US Mining Leader (all lines of service), US Mining Tax Leader and Global Mining Tax Leader.

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held today, Tuesday, February 23, at 1:00 p.m. Eastern Time to discuss these results. You may join the conference call by dialing toll-free 1-855-760-8158 or for international by dialing 1-720-634-2922. The participant passcode is HECLA. Hecla's live and archived webcast can be accessed at www.hecla-mining.com under Investors or via Thomson StreetEvents Network.

ABOUT HECLA

Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska, Idaho and Mexico, and is a growing gold producer with an operating mine in Quebec, Canada. The Company also has exploration and pre-development properties in six world-class silver and gold mining districts in the U.S., Canada and Mexico, and an exploration office and investments in early-stage silver exploration projects in Canada.

Cautionary Statement Regarding Forward-Looking Statements, Including 2016 Outlook

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian securities laws. Such forward-looking statements may include, without limitation: (i) estimates of future production and sales, including as a result of the #4 Shaft Project; (ii) estimates of future costs including the expected cost of the #4 Shaft project and cash cost, after by-product credits per ounce of silver/gold; (iii) estimates for 2016 for silver and gold production, silver equivalent production, cash cost, after by-product credits, capital expenditures and exploration and pre-development expenditures (which assumes metal prices of gold at $1,150/oz, Ag $15/oz, Zn $0.75/lb, Pb $0.80/lb; USD/CAD assumed to be $0.75, USD/MXN assumed to be $0.06; (iv) expectations regarding the development, growth potential, financial performance and exploration potential of the Company’s projects, including the EMCP pits in Quebec and San Sebastian operations; (v) the Company’s mineral reserves and resources; Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political/regulatory developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) the exchange rate for the Canadian dollar to the U.S. dollar, being approximately consistent with current levels; (v) certain price assumptions for gold, silver, lead and zinc; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy of our current mineral reserve and mineral resource estimates; and (viii) the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements.” Such risks include, but are not limited to gold, silver and other metals price volatility, operating risks, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, community relations, conflict resolution and outcome of projects or oppositions, litigation, political, regulatory, labor and environmental risks, and exploration risks and results, including that mineral resources are not mineral reserves, they do not have demonstrated economic viability and there is no certainty that they can be upgraded to mineral reserves through continued exploration. For a more detailed discussion of such risks and other factors, see the Company’s 2015 Form 10-K, filed on February 23, 2016 with the Securities and Exchange Commission (SEC), as well as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors’ own risk.

Cautionary Statements to Investors on Reserves and Resources

Reporting requirements in the United States for disclosure of mineral properties are governed by the SEC and included in the SEC's Securities Act Industry Guide 7, entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” (Guide 7). However, the Company is also a “reporting issuer” under Canadian securities laws, which require estimates of mineral resources and reserves to be prepared in accordance with Canadian National Instrument 43-101 (NI 43-101). NI 43-101 requires all disclosure of estimates of potential mineral resources and reserves to be disclosed in accordance with its requirements. Such Canadian information is being included here to satisfy the Company's “public disclosure” obligations under Regulation FD of the SEC and to provide U.S. holders with ready access to information publicly available in Canada.

Reporting requirements in the United States for disclosure of mineral properties under Guide 7 and the requirements in Canada under NI 43-101 standards are substantially different. This document contains a summary of certain estimates of the Company, not only of proven and probable reserves within the meaning of Guide 7, which requires the preparation of a “final” or “bankable” feasibility study demonstrating the economic feasibility of mining and processing the mineralization using the three-year historical average price for any reserve or cash flow analysis to designate reserves and that the primary environmental analysis or report be filed with the appropriate governmental authority, but also of mineral resource and mineral reserve estimates estimated in accordance with the definitional standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. The terms “measured resources”, “indicated resources,” and “inferred resources” are Canadian mining terms as defined in accordance with NI 43-101. These terms are not defined under Guide 7 and are not normally permitted to be used in reports and registration statements filed with the SEC in the United States, except where required to be disclosed by foreign law. The term “resource” does not equate to the term “reserve”. Under Guide 7, the material described herein as “indicated resources” and “measured resources” would be characterized as “mineralized material” and is permitted to be disclosed in tonnage and grade only, not ounces. The category of “inferred resources” is not recognized by Guide 7. Investors are cautioned not to assume that any part or all of the mineral deposits in such categories will ever be converted into proven or probable reserves. “Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of such a “resource” will ever be upgraded to a higher category or will ever be economically extracted. Investors are cautioned not to assume that all or any part of a “resource” exists or is economically or legally mineable. Investors are also especially cautioned that the mere fact that such resources may be referred to in ounces of silver and/or gold, rather than in tons of mineralization and grades of silver and/or gold estimated per ton, is not an indication that such material will ever result in mined ore which is processed into commercial silver or gold.

Qualified Person (QP) Pursuant to Canadian National Instrument 43-101

Dean McDonald, PhD. P.Geo., Senior Vice President - Exploration of Hecla Mining Company, who serves as a Qualified Person under National Instrument 43-101, supervised the preparation of the scientific and technical information concerning Hecla’s mineral projects in this news release. Information regarding data verification, surveys and investigations, quality assurance program and quality control measures and a summary of sample, analytical or testing procedures for the Greens Creek Mine are contained in a technical report prepared for Hecla and Aurizon Mines Ltd. titled “Technical Report for the Greens Creek Mine, Juneau, Alaska, USA” effective date March 28, 2013, and for the Lucky Friday Mine are contained in a technical report prepared for Hecla titled “Technical Report on the Lucky Friday Mine Shoshone County, Idaho, USA” effective date April 2, 2014, for the Casa Berardi Mine are contained in a technical report prepared for Hecla titled "Technical Report on the Mineral Resource and Mineral Reserve Estimate for the Casa Berardi Mine, Northwestern Quebec, Canada" effective date March 31, 2014 (the "Casa Berardi Technical Report"), and for the San Sebastian Mine are contained in a technical report prepared for Hecla titled "Technical Report for the San Sebastian Ag-Au Property, Durango, Mexico" effective date September 8, 2015. Also included in these four technical reports is a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors. Copies of these technical reports are available under Hecla's profile on SEDAR at www.sedar.com.

The current Casa Berardi drill program was performed on core sawed in half and included the insertion of blanks and standards of variable grade in every 24 core samples. Standards were generally provided by Analytical Solutions Ltd and prepared in 30 gram bags. Samples were sent to the Swastika Laboratories in Swastika, Ontario, a registered accredited laboratory, where they were dried, crushed, and split for gold analysis. Analysis for gold was completed by fire assay with AA finish. Gold over-limits were analyzed by fire assay with gravimetric finish. Data received from the lab were subject to validation using in-built program triggers to identify outside limit blank or standard assays that require re-analysis. Over 5% of the original pulps and rejects are sent for re-assay to ALS Chemex in Val d’Or for quality control.

Dr. McDonald reviewed and verified information regarding drill sampling, data verification of all digitally-collected data, drill surveys and specific gravity determinations relating to the Casa Berardi mine. The review encompassed quality assurance programs and quality control measures including analytical or testing practice, chain-of-custody procedures, sample storage procedures and included independent sample collection and analysis. This review found the information and procedures meet industry standards and are adequate for Mineral Resource and Mineral Reserve estimation and mine planning purposes.

 
HECLA MINING COMPANY

Consolidated Statements of Income (Loss)

(dollars and shares in thousands, except per share amounts - unaudited)

 
    Fourth Quarter Ended     Twelve Months Ended
December 31,     December 31, December 31,     December 31,
2015 2014 2015 2014
Sales of products $ 115,337   $ 121,985   $ 443,567   $ 500,781  
Cost of sales and other direct production costs 72,762 68,986 293,567 304,446
Depreciation, depletion and amortization 30,840   30,792   111,489   111,134  
103,602   99,778   405,056   415,580  
Gross profit 11,735   22,207   38,511   85,201  
 
Other operating expenses:
General and administrative 7,724 7,554 34,201 31,538
Exploration 2,997 4,612 17,745 17,698
Pre-development 379 722 4,213 1,969
Other operating expense 1,040 442 3,177 2,295
Loss (gain) on disposition of property, plants, equipment and mineral interests 404 (25 ) 404 (25 )
Acquisition costs 2,162
Provision for closed operations and reclamation 1,237   6,489   12,220   10,098  
13,781   19,794   74,122   63,573  
(Loss) income from operations (2,046 ) 2,413   (35,611 ) 21,628  
Other income (expense):
Gain on derivative contracts 11,694 8,252 9,134
Loss on sale of investments (44 ) (44 )
Unrealized loss on investments (107 ) (474 ) (3,333 ) (3,224 )
Net foreign exchange gain 5,033 5,484 24,551 11,535
Interest and other income 743 78 916 286
Interest expense (6,039 ) (6,468 ) (25,389 ) (26,775 )
(414 ) 10,314   4,953   (9,044 )
(Loss) income before income taxes (2,460 ) 12,727 (30,658 ) 12,584
Income tax (provision) benefit (60,503 ) 4,178   (56,310 ) 5,240  
Net (loss) income (62,963 ) 16,905 (86,968 ) 17,824
Preferred stock dividends (138 ) (138 ) (552 ) (552 )
(Loss) income applicable to common stockholders $ (63,101 ) $ 16,767   $ (87,520 ) $ 17,272  
Basic (loss) income per common share after preferred dividends $ (0.17 ) $ 0.05   $ (0.23 ) $ 0.05  
Diluted (loss) income per common share after preferred dividends $ (0.17 ) $ 0.05   $ (0.23 ) $ 0.05  
Weighted average number of common shares outstanding basic 378,113   367,219   373,954   353,442  
Weighted average number of common shares outstanding diluted 378,113   367,653   373,954   357,435  
 
 
HECLA MINING COMPANY
Consolidated Balance Sheets
(dollars and share in thousands - unaudited)
 
      December 31, 2015     December 31, 2014
ASSETS            
Current assets:        
Cash and cash equivalents $ 155,209 $ 209,665
Accounts receivable 41,349 34,880
Inventories 45,542 47,473
Current deferred income taxes 17,980 12,029
Other current assets 9,453   12,312  
Total current assets 269,533 316,359
Non-current investments 1,515 4,920
Non-current restricted cash and investments 999 883
Properties, plants, equipment and mineral interests, net 1,896,811 1,831,564
Non-current deferred income taxes 36,589 98,923
Reclamation insurance 13,695
Other non-current assets and deferred charges 2,783   9,415  
Total assets $ 2,221,925   $ 2,262,064  
             
LIABILITIES            
Current liabilities:
Accounts payable and accrued liabilities $ 51,277 $ 41,869
Accrued payroll and related benefits 27,563 27,956
Accrued taxes 8,915 4,241
Current portion of capital leases 8,735 9,491
Current portion of accrued reclamation and closure costs 20,989 1,631
Current portion of debt 2,721
Other current liabilities 6,884   5,797  
Total current liabilities 127,084 90,985
Capital leases 8,841 13,650
Accrued reclamation and closure costs 74,549 55,619
Long-term debt 500,199 498,479
Non-current deferred tax liability 119,623 153,300
Non-current pension liability 46,513 43,348
Other non-current liabilities 6,190   9,709  
Total liabilities 882,999   865,090  
             
STOCKHOLDERS’ EQUITY            
Preferred stock 39 39
Common stock 95,219 92,382
Capital surplus 1,519,598 1,486,750
Accumulated deficit (232,565 ) (141,306 )
Accumulated other comprehensive loss (32,631 ) (32,031 )
Treasury stock (10,734 ) (8,860 )
Total stockholders’ equity 1,338,926   1,396,974  
Total liabilities and stockholders’ equity $ 2,221,925   $ 2,262,064  
Common shares outstanding 378,113   367,377  
 
 
HECLA MINING COMPANY

Consolidated Statements of Cash Flows

(dollars in thousands - unaudited)

 
    December 31,     December 31,
      2015     2014
OPERATING ACTIVITIES            
Net (loss) income $ (86,968 ) $ 17,824
Non-cash elements included in net (loss) income:

Depreciation, depletion and amortization

112,585 112,173
Loss on sale of investments 44
Unrealized loss on investments 3,333 3,224
Loss (gain) on disposition of properties, plants, equipment and mineral interests 404 (25 )
Provision for reclamation and closure costs 12,036 10,215
Deferred income taxes 54,978 1,895
Stock compensation 5,425 4,965
Amortization of loan origination fees 1,821 2,183
Gain on derivative contracts 11,630 (6,886 )
Foreign exchange gain (20,081 ) (10,482 )
Adjustment of inventory to market value 1,649
Other non-cash charges, net (35 ) (858 )
Change in assets and liabilities:
Accounts receivable (6,834 ) 3,091
Inventories (854 ) 1,119
Other current and non-current assets 1,195 (580 )
Accounts payable and accrued liabilities (4,211 ) (19,697 )
Accrued payroll and related benefits 7,325 16,422
Accrued taxes 4,653 (3,612 )
Accrued reclamation and closure costs and other non-current liabilities 8,350   (47,847 )
Cash provided by operating activities 106,445   83,124  
             
INVESTING ACTIVITIES            
Additions to properties, plants, equipment and mineral interests (137,443 ) (122,537 )
Purchase of a business, net of cash acquired (809 )
Proceeds from sale of investments 14
Proceeds from disposition of properties, plants and equipment 579 428
Change in restricted cash and investment balances 4,334
Purchases of investments (947 ) (580 )
Net cash used in investing activities (138,606 ) (118,355 )
             
FINANCING ACTIVITIES            
Proceeds from exercise of warrants 54,418
Acquisition of treasury shares (1,874 ) (3,740 )
Dividend paid to common stockholders (3,739 ) (3,547 )
Dividends paid to preferred stockholders (552 ) (552 )
Payments on debt (870 )
Debt issuance and loan origination fees paid (127 ) (938 )
Repayments of capital leases (9,981 ) (9,137 )
Net cash provided by financing activities (17,143 ) 36,504  
Effect of exchange rates on cash (5,152 ) (3,783 )
Net increase (decrease) in cash and cash equivalents (54,456 ) (2,510 )
Cash and cash equivalents at beginning of year 209,665   212,175  
Cash and cash equivalents at end of year $ 155,209   $ 209,665  
 
 
HECLA MINING COMPANY
Production Data
 
    Fourth Quarter Ended     Twelve Months Ended
December 31,     December 31,     December 31,     December 31,
      2015     2014     2015     2014
GREENS CREEK UNIT                        
Tons of ore milled 213,798 208,057 814,398 816,213
Mining cost per ton $ 67.09 $ 68.58 $ 71.50 $ 69.45
Milling cost per ton $ 31.56 $ 30.74 $ 30.32 $ 30.56
Ore grade milled - Silver (oz./ton) 15.14 15.37 13.50 13.24
Ore grade milled - Gold (oz./ton) 0.12 0.11 0.11 0.12
Ore grade milled - Lead (%) 3.34 3.27 3.30 3.22
Ore grade milled - Zinc (%) 8.76 8.47 8.74 8.38
Silver produced (oz.) 2,568,025 2,459,092 8,452,153 7,826,341
Gold produced (oz.) 17,198 15,289 60,566 58,753
Lead produced (tons) 5,900 5,249 21,617 20,151
Zinc produced (tons) 16,528 15,332 61,934 59,810
Cash cost, after by-product credits, per silver ounce (1) $ 4.18 $ 2.74 $ 3.91 $ 2.89
Capital additions (in thousands)     $ 13,978     $ 9,720     $ 45,962     $ 29,265
LUCKY FRIDAY UNIT                        
Tons of ore milled 85,226 70,623 297,347 309,070
Mining cost per ton $ 81.21 $ 93.13 $ 89.69 $ 87.90
Milling cost per ton $ 18.36 $ 20.78 $ 21.51 $ 21.56
Ore grade milled - Silver (oz./ton) 12.12 11.00 10.68 11.00
Ore grade milled - Lead (%) 6.93 6.75 6.55 6.87
Ore grade milled - Zinc (%) 2.30 2.89 2.98 2.93
Silver produced (oz.) 985,698 745,766 3,028,134 3,239,151
Lead produced (tons) 5,539 4,538 18,348 20,104
Zinc produced (tons) 2,508 1,887 8,139 8,159
Cash cost, after by-product credits, per silver ounce (1) $ 9.02 $ 10.65 $ 11.23 $ 9.44
Capital additions (in thousands)     $ 14,390     $ 15,476     $ 55,909     $ 51,992
CASA BERARDI UNIT                        
Tons of ore milled 228,919 222,711 844,090 827,580
Mining cost per ton $ 88.47 $ 89.54 $ 94.51 $ 103.53
Milling cost per ton $ 17.86 $ 20.45 $ 19.35 $ 20.75
Ore grade milled - Gold (oz./ton) 0.21 0.19 0.174 0.17
Ore grade milled - Silver (oz./ton) 0.041 0.041 0.04 0.034
Silver produced (oz.) 8,910 8,238 29,639 25,014
Gold produced (oz.) 42,282 39,385 127,891 128,244
Cash cost, after by-product credits, per gold ounce (1) $ 591 $ 635 $ 772 $ 826
Capital additions (in thousands)     $ 10,163     $ 12,536     $ 35,302     $ 50,350
SAN SEBASTIAN UNIT                        
Tons of ore milled 6,602 6,602
Mining cost per ton $ 129.91 $ $ 129.91 $
Milling cost per ton $ 44.76 $ $ 44.76 $
Ore grade milled - Silver (oz./ton) 13.70 13.70
Ore grade milled - Gold (oz./ton) 0.148 0.148
Silver produced (oz.) 81,677 81,677
Gold produced (oz.) 870 870
Cash cost, after by-product credits, per gold ounce (1) $ 6.71 $ $ 6.71 $
Capital additions (in thousands) $ 3,434 $ $ 3,434 $
 

(1)

    Cash cost, after by-product credits, per ounce represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement. A reconciliation of cash cost, after by-product credits to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the cash cost per ounce reconciliation section of this news release. Gold, lead and zinc produced have been treated as by-product credits in calculating silver costs per ounce. The primary metal produced at Casa Berardi is gold, with a by-product credit for the value of silver production.
 

HECLA MINING COMPANY

Reconciliation of Non-GAAP Measures to GAAP

(Unaudited)

This release contains references to a non-GAAP measure of cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce. Cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce represent non-U.S. Generally Accepted Accounting Principles (GAAP) measurements that the Company believes provide management and investors an indication of net cash flow. Management also uses this measurement for the comparative monitoring of performance of mining operations period-to-period from a cash flow perspective. Cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce are measures developed by precious metals companies (including the Silver Institute) in an effort to provide a uniform standard for comparison purposes; however, there can be no assurance that our reporting of these non-GAAP measures is similar to those reported by other mining companies. Cost of sales and other direct production costs and depreciation, depletion and amortization is the most comparable financial measure calculated in accordance with GAAP to cash cost, before by-product credits and cash cost, after by-product credits per ounce of silver/gold.

As depicted in the Greens Creek Unit, Lucky Friday Unit and San Sebastian Unit tables below, by-product credits comprise an essential element of our silver unit cost structure. By-product credits constitute an important competitive distinction for our silver operations due to the polymetallic nature of their orebodies. By-product credits included in our presentation of cash cost, after by-product credits, per silver ounce include:

   
Total, Greens Creek, Lucky Friday and San Sebastian

 

Three Months Ended     Twelve Months Ended

In thousands (except per ounce amounts)

December 31, December 31,
2015     2014 2015     2014
By-product value, all silver properties:    
Zinc $ 19,619 $ 25,063 $ 87,383 $ 95,701
Gold 16,725 15,298 59,019 61,871
Lead 15,339   15,149   55,955   66,082
Total by-product credits $ 51,683   $ 55,510   $ 202,357   $ 223,654
 
By-product credits per silver ounce, all silver properties
Zinc $ 5.40 $ 7.82 $ 7.56 $ 8.65
Gold 4.59 4.76 5.10 5.59
Lead 4.22   4.73   4.84   5.97
Total by-product credits $ 14.21   $ 17.31   $ 17.50   $ 20.21
 

By-product credits included in our presentation of cash cost, after by-product credits, per gold ounce for our Casa Berardi Unit include:

   
Casa Berardi
Three Months Ended     Twelve Months Ended
In thousands (except per ounce amounts) December 31, December 31,
2015     2014 2015     2014
       
Silver by-product value $ 130 $ 134 $ 457 $ 464
Silver by-product credits per gold ounce $ 3.07 $ 3.40 $ 3.57 $ 3.62
 

The following table calculates cash cost, before by-product credits, per ounce and cash cost, after by-product credits, per ounce:

   
Total, Greens Creek, Lucky Friday and San Sebastian
Three Months Ended     Twelve Months Ended

In thousands (except per ounce amounts)

December 31,     December 31,
2015     2014     2015     2014
Cash cost, before by-product credits (1) $ 71,868     $ 70,189 $ 269,971     $ 276,842
By-product credits (51,683 ) (55,510 ) (202,357 ) (223,654 )
Cash cost, after by-product credits 20,185 14,679 67,614 53,188
Divided by silver ounces produced 3,636 3,205 11,562 11,065
Cash cost, before by-product credits, per silver ounce $ 19.76 $ 21.89 $ 23.35 $ 25.02
By-product credits per silver ounce $ (14.21 ) $ (17.31 ) $ (17.50 ) $ (20.21 )
Cash cost, after by-product credits, per ounce $ 5.55   $ 4.58   $ 5.85   $ 4.81  
Reconciliation to GAAP:
Cash cost, after by-product credits $ 20,185 $ 14,679 $ 67,614 $ 53,188
Depreciation, depletion and amortization 18,083 19,230 67,815 72,936
Treatment costs (22,495 ) (21,293 ) (80,239 ) (82,639 )
By-product credits 51,683 55,510 202,357 223,654
Change in product inventory (3,412 ) (5,617 ) 1,632 (1,649 )
Reclamation and other costs 397   176   1,319   2,046  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 64,441   $ 62,685   $ 260,498   $ 267,536  
 
   
Greens Creek Unit
Three Months Ended     Twelve Months Ended

In thousands (except per ounce amounts)

December 31,     December 31,
2015     2014     2015     2014
Cash cost, before by-product credits (1) $ 50,760     $ 51,828 $ 196,443     $ 199,247
By-product credits (40,018 ) (45,088 ) (163,394 ) (176,650 )
Cash cost, after by-product credits 10,742 6,740 33,049 22,597
Divided by silver ounces produced 2,568 2,459 8,452 7,826
Cash cost, before by-product credits, per silver ounce $ 19.77 $ 21.08 $ 23.24 $ 25.46
By-product credits per silver ounce $ (15.59 ) $ (18.34 ) $ (19.33 ) $ (22.57 )
Cash cost, after by-product credits, per ounce $ 4.18   $ 2.74   $ 3.91   $ 2.89  
Reconciliation to GAAP:
Cash cost, after by-product credits $ 10,742 $ 6,740 $ 33,049 $ 22,597
Depreciation, depletion and amortization 15,164 16,803 56,553 63,505
Treatment costs (17,181 ) (17,255 ) (63,284 ) (63,313 )
By-product credits 40,018 45,088 163,394 176,650
Change in product inventory (700 ) (5,295 ) 4,222 (1,706 )
Reclamation and other costs 471   169   1,342   1,949  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 48,514   $ 46,250   $ 195,276   $ 199,682  
 
   
Lucky Friday Unit
Three Months Ended     Twelve Months Ended

In thousands (except per ounce amounts)

December 31,     December 31,
2015     2014     2015     2014
Cash cost, before by-product credits (1) $ 19,632     $ 18,361 $ 72,052     $ 77,595
By-product credits (10,737 ) (10,422 ) (38,035 ) (47,004 )
Cash cost, after by-product credits 8,895 7,939 34,017 30,591
Divided by silver ounces produced 986 746 3,028 3,239
Cash cost, before by-product credits, per silver ounce $ 19.91 $ 24.62 $ 23.79 $ 23.95
By-product credits per silver ounce $ (10.89 ) $ (13.97 ) $ (12.56 ) $ (14.51 )
Cash cost, after by-product credits, per ounce $ 9.02   $ 10.65   $ 11.23   $ 9.44  
Reconciliation to GAAP:
Cash cost, after by-product credits $ 8,895 $ 7,939 $ 34,017 $ 30,591
Depreciation, depletion and amortization 2,919 2,427 11,262 9,431
Treatment costs (5,274 ) (4,038 ) $ (16,915 ) (19,326 )
By-product credits 10,737 10,422 38,035 47,004
Change in product inventory (1,276 ) (322 ) $ (1,154 ) 57
Reclamation and other costs (74 ) 6   (23 ) 97  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 15,927   $ 16,434   $ 65,222   $ 67,854  
 
   
San Sebastian Unit (2)
Three Months Ended     Twelve Months Ended

In thousands (except per ounce amounts)

December 31,     December 31,
2015     2014     2015     2014
Cash cost, before by-product credits (1) $ 1,476     - $ 1,476     -
By-product credits (928 ) - (928 ) -
Cash cost, after by-product credits 548 - 548 -
Divided by silver ounces produced 82 - 82 -
Cash cost, before by-product credits, per silver ounce $ 18.07 - $ 18.07 -
By-product credits per silver ounce $ (11.36 ) - $ (11.36 ) -
Cash cost, after by-product credits, per ounce $ 6.71   - $ 6.71   -
Reconciliation to GAAP:
Cash cost, after by-product credits $ 548 - $ 548 -
Depreciation, depletion and amortization - -
Treatment costs (40 ) - $ (40 ) -
By-product credits 928 - 928 -
Change in product inventory (1,436 ) - $ (1,436 ) -
Reclamation and other costs   -   -
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $   $ $   $
 
   
Casa Berardi Unit (3)
Three Months Ended     Twelve Months Ended

In thousands (except ounce and per ounce amounts)

December 31,     December 31,
2015     2014     2015     2014
Cash cost, before by-product credits (1) $ 25,107     $ 25,145 $ 99,129     $ 106,438
By-product credits (130 ) (134 ) (457 ) (464 )
Cash cost, after by-product credits 24,977 25,011 98,672 105,974
Divided by gold ounces produced 42,282 39,385 127,891 128,244
Cash cost, before by-product credits, per gold ounce $ 593.81 $ 638.44 $ 775.11 $ 829.97
By-product credits per gold ounce $ (3.07 ) $ (3.40 ) $ (3.57 ) $ (3.62 )
Cash cost, after by-product credits, per gold ounce $ 590.74   $ 635.04   $ 771.54   $ 826.35  
Reconciliation to GAAP:
Cash cost, after by-product credits $ 24,977 $ 25,011 $ 98,672 $ 105,974
Depreciation, depletion and amortization 12,757 11,562 43,674 38,198
Treatment costs (221 ) (227 ) (670 ) (564 )
By-product credits 130 134 457 464
Change in product inventory 1,409 414 1,970 3,151
Reclamation and other costs 109   199   455   820  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 39,161   $ 37,093   $ 144,558   $ 148,043  
 
   
Total, All Locations
Three Months Ended     Twelve Months Ended

In thousands

December 31,     December 31,
2015     2014     2015     2014
Reconciliation to GAAP:        
Cash cost, after by-product credits $ 45,162 $ 39,690 $ 166,286 $ 159,162
Depreciation, depletion and amortization 30,840 30,792 111,489 111,134
Treatment costs (22,716 ) (21,520 ) (80,909 ) (83,203 )
By-product credits 51,813 55,644 202,814 224,118
Change in product inventory (2,004 ) (5,203 ) 3,602 1,502
Reclamation and other costs 507   375   1,774   2,867  
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 103,602   $ 99,778   $ 405,056   $ 415,580  
 
(1)     Includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, net of by-product revenues earned from all metals other than the primary metal produced at each unit.
(2) Commercial production began at the San Sebastian unit in the fourth quarter of 2015. See The San Sebastian Unit for more information on the property.
(3) On June 1, 2013, we completed the acquisition of Aurizon Mines Ltd., which gave us 100% ownership of the Casa Berardi mine in Quebec, Canada. The information presented reflects our ownership of Casa Berardi commencing as of that date. The primary metal produced at Casa Berardi is gold, with a by-product credit for the value of silver production.
 
 
HECLA MINING COMPANY

Reconciliation of Net Income (Loss) Applicable to Common Stockholders (GAAP) to Adjusted Net Income (Loss)(1)

(dollars and ounces in thousands, except per share amounts - unaudited)

 
    Three Months Ended       Twelve Months Ended
December 31,       December 31,
2015       2014       2015       2014
Net (loss) income applicable to common stockholders (GAAP) $ (63,101 )       $ 16,767 $ (87,520 )       $ 17,272
Adjusting items:
Gains on derivatives contracts (11,694 ) (8,252 ) (9,134 )
Environmental accruals 255 5,640 8,953 6,623
Provisional price (gains)/losses (73 ) 213 (634 ) 2,277
Acquisition costs 2,162
Foreign exchange gain (5,033 ) (5,484 ) (24,551 ) (11,535 )
Change in deferred tax asset valuation allowance 76,354 76,354
Income tax effect of above adjustments (42 ) 2,336   (513 ) 94  
Adjusted net (loss) income applicable to common stockholders $ 8,360   $ 7,778   $ (34,001 ) $ 5,597  
Weighted average shares - basic 378,113 367,219 373,954 353,442
Weighted average shares - diluted 379,094 367,653 373,954 357,435
Basic adjusted net (loss) income per common share $ 0.02 $ 0.02 $ (0.09 ) $ 0.02
Diluted adjusted net (loss) income per common share $ 0.02 $ 0.02 $ (0.09 ) $ 0.02
 
(1)     Adjusted net income (loss) applicable to common stockholders and adjusted net income (loss) per share are non-GAAP measures which are indicators of our performance. They exclude certain impacts of a nature that we believe are not reflective of our underlying performance. Management believes that adjusted net income (loss) per common share provides investors with the ability to better evaluate our underlying operating performance.
 

HECLA MINING COMPANY

Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA

(dollars and ounces in thousands, except per share amounts - unaudited)

This release refers to a non-GAAP measure of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), which is a measure of our operating performance. Adjusted EBITDA is calculated as net income before the following items: interest expense, income tax provision (benefit), depreciation, depletion, and amortization expense, exploration expense, pre-development expense, acquisition costs, foreign exchange gains, gains on derivative contracts, provisional price gains and losses, provisions for closed operations expense, stock-based compensation, and unrealized losses on investments. Management believes that, when presented in conjunction with comparable GAAP measures, Adjusted EBITDA is useful to investors in evaluating our operating performance. The following table reconciles net income (loss) to Adjusted EBITDA:

       
Dollars are in thousands Three Months Ended     Twelve Months Ended
December 31,     December 31, December 31,     December 31,
2015     2014     2015     2014
Net (loss) income $ (62,963 ) $ 16,905 $ (86,968 ) $ 17,824
Plus: Interest expense, net of amount capitalized 6,039 6,468 25,389 26,775
Plus/(Less): Income taxes 60,503 (4,178 ) 56,310 (5,240 )
Plus: Depreciation, depletion and amortization 30,840 30,792 111,489 111,134
Plus: Exploration expense 2,997 4,612 17,745 17,698
Plus: Pre-development expense 379 722 4,213 1,969
Plus: Acquisition costs 2,162
Less: Foreign exchange gain (5,033 ) (5,484 ) (24,551 ) (11,535 )
Less: Gains on derivative contracts (11,694 ) (8,252 ) (9,134 )
Plus/(Less): Provisional price (gains)/losses (73 ) 213 (634 ) 2,277
Plus: Provision for closed operations and environmental matters 1,008 6,569 12,036 10,215
Plus: Stock-based compensation 1,389 1,138 5,425 9,494
Plus: Unrealized losses on investments 107 474 3,333 3,224
Less: Other (699 ) (78 ) (872 ) (286 )
Adjusted EBITDA $ 34,494   $ 46,459   $ 116,825   $ 174,415  
 
 

Reserves and Resources - 12/31/2015

 
Proven Reserves
        Silver     Gold     Lead     Zinc     Silver     Gold     Lead     Zinc     Copper
Asset     Tons (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     Tons     Tons     (Tons)
Greens Creek (a)     10     20.8     0.12     3.7     9.0     210     1     370     910    
Lucky Friday (a)     3,510     16.5         9.8     3.2     57,961         344,610     111,210    
Casa Berardi (1)     2,119         0.11                 234            
San Sebastian (a)     5     14.5     0.21             72     1            
Total     5,644                             58,243     236     344,980     112,120    
                                                             
Probable Reserves
Silver Gold Lead Zinc Silver Gold Lead Zinc Copper
Asset     Tons (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)     (Tons)
Greens Creek (a)     7,204     12.3     0.09     3.0     8.1     88,523     676     218,030     581,730    
Lucky Friday (a)     1,557     13.3         0.1     2.9     20,721         124,950     45,080    
Casa Berardi (1)     8,104         0.14                 1,098            
San Sebastian (a)     284     28.0     0.22             7,943     63            
Total     17,149                             117,187     1,837     342,980     626,810    
                                                             
Proven and Probable Reserves
Silver Gold Lead Zinc Silver Gold Lead Zinc Copper
Asset     Tons (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)     (Tons)
Greens Creek (a)     7,214     12.3     0.09     3.0     8.1     88,733     677     218,400     582,640    
Lucky Friday (a)     5,067     15.5         9.3     3.1     78,681         469,560     156,290    
Casa Berardi (1)     10,222         0.13                 1,332            
San Sebastian (a)     289     27.7     0.22             8,015     64            
Total     22,792                             175,429     2,073     687,960     738,930    
                                                             
Measured Resources
Silver Gold Lead Zinc Silver Gold Lead Zinc Copper
Asset     Tons (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)     (Tons)
Greens Creek (b)                                        
Lucky Friday (2)(b)     13,762     6.1         4.1     2.3     83,711         569,190     319,810    
Casa Berardi (3)     1,769         0.18                 326            
San Sebastian (4)(b)                                        
Heva (5)     5,480         0.06                 304            
Hosco (5)     33,070         0.04                 1,296            
San Juan Silver (6)(b)                                        
Star (7)(a)                                        
Total     54,081                             83,711     1,926     569,190     319,810    
                                                             
Indicated Resources
Silver Gold Lead Zinc Silver Gold Lead Zinc Copper
Asset     Tons (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)     (Tons)
Greens Creek (b)     1,227     10.6     0.10     3.0     7.5     13,015     128     36,710     92,260    
Lucky Friday (2)(b)     7,067     6.3         4.4     2.1     44,436         308,260     149,830    
Casa Berardi (3)     9,225         0.11                 985            
San Sebastian (4)(b)     1,561     5.9     0.07             9,257     116     14,570     18,980     8,400
Heva (5)     5,570         0.07                 369            
Hosco (5)     31,620         0.04                 1,151            
San Juan Silver (6)     516     14.8         2.1     1.1     7,620         10,760     5,820    
Star (7)(b)     1,074     3.0         6.4     7.6     3,221         68,700     81,200    
Total     57,860                             77,549     2,749     439,000     348,090     8,400
                                                             
Measured & Indicated Resources
Silver Gold Lead Zinc Silver Gold Lead Zinc Copper
Asset     Tons (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)     (Tons)
Greens Creek (b)     1,227     10.6     0.10     3.0     7.5     13,015     128     36,710     92,260    
Lucky Friday (2)(b)     20,829     6.2         4.2     2.3     128,147         877,450     469,640    
Casa Berardi (3)     10,993         0.12                 1,312            
San Sebastian (4)(b)     1,561     5.9     0.07             9,257     116     14,570     18,980     8,400
Heva (5)     11,050         0.06                 672            
Hosco (5)     64,690         0.04                 2,447            
San Juan Silver (6)     516     14.8         2.1     1.1     7,620         10,760     5,820    
Star (7)(b)     1,074     3.0         6.4     7.6     3,221         68,700     81,200    
Total     111,940                             161,260     4,675     1,008,190     667,900     8,400
 
Inferred Resources
        Silver     Gold     Lead     Zinc     Silver     Gold     Lead     Zinc     Copper
Asset     Tons (000)     (oz/ton)     (oz/ton)     %     %     (000 oz)     (000 oz)     (Tons)     (Tons)     (Tons)
Greens Creek (b)     3,255     12.8     0.09     2.8     6.7     41,730     300     89,630     219,540    
Lucky Friday (8)(b)     4,451     7.7         5.7     1.9     34,302         254,080     85,850    
Casa Berardi (3)     2,854         0.18                 510            
San Sebastian (9) (b)     2,677     5.5     0.03             14,846     93     22,550     32,070     18,860
Heva (5)     4,210         0.08                 350            
Hosco (5)     7,650         0.04                 314            
San Juan Silver (10)     3,078     10.7     0.01     1.3     1.1     33,097     36     40,990     34,980    
Star (11)(b)     2,957     3.1         5.9     5.6     9,128         173,500     166,100    
Monte Cristo (12)     913     0.3     0.14             271     131            
Rock Creek (13)     136,601     1.7                 228,616                 1,010,770
Total     168,646                             361,990     1,734     580,750     538,540     1,029,630
 
 
Note: All estimates are in-situ except for the proven reserves at Greens Creek and San Sebastian which are in surface stockpiles. Resources are exclusive of reserves.
 
(a)   Mineral reserves are based on $1100 gold, $14.50 silver, $0.90 lead and $0.90 zinc, unless otherwise stated.
(b) Mineral resources are based on $1300 gold, $20 silver, $0.95 lead, $0.90 zinc and $3.00 copper, unless otherwise stated.
(1) Mineral reserves are based on $1100 gold and a US$/CAN$ exchange rate of 1:1.37 Reserve diluted to an average of 34.7% to minimum width of 9.8 feet (3 m)
Open pit mineral reserves of the East Mine were estimated in May 2015 based on $1225 gold and a US$/CAN$ exchange rate of 1:1.10. Reserve block diluted.
Open pit mineral reserves of the Principal Mine were estimated in February 2011 based on $950 gold and a US$/CAN$ exchange rate of 1:1. Reserve diluted to 10%
(2) Measured and indicated resources from Gold Hunter and Lucky Friday vein systems are diluted and factored for expected mining recovery.
(3) Measured, indicated and inferred resources are based on $1,300 gold and a US$/CAN$ exchange rate of 1:1.37 Underground resources are reported at a minimum mining width of 6.6 feet to 9.8 feet (2 m to 3 m)
Open pit mineral resources of the Principal Mine were estimated based on $950 gold and a US$/CAN$ exchange rate of 1:1
Open pit mineral resources of the 160 Zone were based on $1,250 gold and a US$/CAN$ exchange rate of 1:1, Resources diluted to 12%
(4) Indicated resources reported at a minimum mining width of 6.6 feet (2 m) for Hugh Zone and 4.9 feet (1.5 m) for Andrea Vein, Middle Vein, and North Vein. East Francine resources reported at actual vein width.
San Sebastian Hugh Zone also contains 8,400 tons of copper at 1.7% Cu within 492,700 tons of indicated resource.
(5) Measured, indicated and inferred resources are based on $1,300 gold and a US$/CAN$ exchange rate of 1:1. The resources are in-situ without dilution and material loss. Resource model completed in 2011.
(6) Indicated resources reported at a minimum mining width of 6.0 feet for Bulldog; resources based on $26.5 Ag, $0.85 Pb, and $0.85 Zn
(7) Indicated resources reported at a minimum mining width of 4.3 feet.
(8) Inferred resources from Gold Hunter and Lucky Friday vein systems are diluted and factored for expected mining recovery.
(9) Inferred resources reported at a minimum mining width of 6.6 feet (2 m) for Hugh Zone and 1.5 meters for Andrea Vein, Middle Vein, and North Vein. East Francine resources reported at actual vein width.
San Sebastian Hugh Zone also contains 18,860 tons of copper at 1.5% within 1,255,100 tons of inferred resource.
(10) Inferred resources reported at a minimum mining width of 6.0 feet for Bulldog, 5.0 feet for Equity & North Amethyst veins; resources based on $1400 Au, $26.5 Ag, $0.85 Pb, and $0.85 Zn.
(11) Inferred resources reported at a minimum mining width of 4.3 feet.
(12) Inferred resource reported at a minimum mining width of 5.0 feet; resources based on $1400 Au, $26.5 Ag.
(13) Inferred resource reported at a minimum thickness of 16.0 feet; resources based on $7 Ag and $1 Cu.
Rock Creek also contains 1,010,770 tons of copper at 0.7% within stated inferred resource tonnage.
 
* Totals may not represent the sum of parts due to rounding

Contacts

Hecla Mining Company
Mike Westerlund, 800-HECLA91 (800-432-5291)
Vice President – Investor Relations
hmc-info@hecla-mining.com
http://www.hecla-mining.com

Release Summary

Hecla Mining Company today announced 2015 sales of $443.6 million and gross profit of $38.5 million.

Contacts

Hecla Mining Company
Mike Westerlund, 800-HECLA91 (800-432-5291)
Vice President – Investor Relations
hmc-info@hecla-mining.com
http://www.hecla-mining.com