Hecla Mining Company ((HL)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Hecla Mining Company painted a mixed picture for investors. While the company celebrated record revenues and strong production figures, it also faced significant cost challenges at key operations. The sentiment was balanced, with optimism around financial improvements and strategic growth, tempered by ongoing operational hurdles.
Record Quarterly Revenues and Adjusted EBITDA
Hecla Mining reported record quarterly revenues of $261 million, with adjusted EBITDA surpassing $90 million. This achievement was largely driven by high metal prices and robust contributions from all four operating lines, showcasing the company’s ability to capitalize on favorable market conditions.
Strong Silver and Gold Production
The company produced an impressive 4.1 million ounces of silver and over 34,000 ounces of gold. These production figures align well with Hecla’s annual guidance, demonstrating the company’s solid positioning in the precious metals market.
Lucky Friday Milling Record
Lucky Friday continued its streak of strong performance by setting a consecutive quarterly milling record. This consistency highlights the operation’s exceptional production capabilities and its role as a key contributor to Hecla’s overall success.
Keno Hill’s First Profitable Quarter
Keno Hill delivered its first profitable quarter under Hecla’s ownership, producing nearly 800,000 ounces of silver. This milestone indicates the potential for future profitability, although further investment and permitting are required to fully realize this potential.
Improved Financial Position
Hecla’s financial position showed marked improvement, with the net leverage ratio decreasing from 2.7x to 1.5x and the net cash balance improving from negative $60 million to approximately $20 million. These improvements reflect the company’s strategic focus on financial health and stability.
Increased Costs at Lucky Friday
Despite its strong production performance, Lucky Friday faced increased cash costs of $9.37 per ounce and ASIC of $20.08 per ounce. These cost pressures were attributed to higher labor costs, profit sharing, and consumable expenses, posing challenges to maintaining profitability.
Cost Pressures and Challenges at Casa Berardi
Casa Berardi experienced elevated cash costs of $2,185 and ASIC of $23.03 per ounce, exceeding the full-year guidance range. These challenges were driven by increased stripping activities and reliance on contractors, highlighting areas for operational improvement.
Operational Challenges at Keno Hill
Keno Hill faced operational challenges, including lower than permitted mining rates and energy supply issues, which impacted throughput rates. Addressing these challenges will require further investment and permitting efforts.
Negative Free Cash Flow
The company reported a negative free cash flow of $18 million, influenced by a $12 million inventory build and a $29 million increase in accounts receivable. This financial strain underscores the need for careful cash flow management.
Forward-Looking Guidance
Looking ahead, Hecla Mining maintains its production and capital investment guidance for 2025, with a strong emphasis on operational excellence and financial discipline. The company aims to optimize its portfolio and maintain leadership in the silver market, despite minor adjustments to individual asset cost projections.
In summary, Hecla Mining’s earnings call reflected a balanced sentiment, with record revenues and strong production figures countered by cost challenges and operational hurdles. The company’s improved financial position and strategic focus on growth provide a positive outlook, but ongoing cost pressures will require careful management to sustain profitability.