Second highest silver revenues in company history

Hecla Mining Company ((HL) today announced first quarter 2023 financial and operating results.

FIRST QUARTER HIGHLIGHTS

Operational

Produced 4.0 million ounces of silver, a 10% increase over the fourth quarter of 2022 and more than any quarter since 2016.
Record quarterly gold production of 14,885 ounces at Greens Creek; lead production was the 2^nd highest in Company's history.
Greens Creek achieved record quarterly throughput of 2,591 tons per day ("tpd").
Keno Hill development 75% complete and remains on track for third quarter mill startup.
Achieved All-injury frequency rate ("AIFR") of 1.13, lowest since 2012 led by Lucky Friday's AIFR of 0.62, a safety record for the mine while at full production.

Financial

Sales of $199.5 million with silver revenues 38% and gold revenues 35%; silver revenues were 2^nd highest in Company history.
Consolidated silver total cost of sales of $100.8 million and cash cost and AISC per silver ounce (each after by-product credits) of $2.14 and $8.96, respectively.^3,4
Cash flow from operations of $40.6 million, silver operations generated $89.5 million in cash flow from operations, and $68.6 million in free cash flow.²
Net loss applicable to common stockholders of $3.3 million or $0.01 per share, and adjusted net income of $6.6 million or $0.01 per share.⁵
Adjusted EBITDA of $61.9 million, net debt to adjusted EBITDA ratio of 1.9.¹
Strong balance sheet with $95.9 million in cash and cash equivalents, credit facility undrawn, and $240 million in available liquidity.

Environmental, Social, Governance

Casa Berardi received Quebec's John T. Ryan safety award for lowest reportable injury frequency rate for the second time in three years.
Net zero in 2022 as scope 1&2 CO₂emissions offset with certified emission reduction credits.

Strategic

ATAC Resources acquisition announced for CAD $31 million; transaction expected to close in the third quarter.

"As we continue our growth in silver production, silver revenues are now exceeding gold revenues for the second consecutive quarter," said Phillips S. Baker Jr., President and CEO. "Greens Creek had excellent operational performance achieving record throughput and very strong silver and record gold production, and Lucky Friday exceeded 1.2 million ounces of silver production for third time out of the last four quarters."

Baker continued, "Greens Creek and Lucky Friday generated $69 million in free cash flow with both mines exceeding $31 million. Our first priority in capital allocation of this free cash flow is investing it in our mines – particularly Keno Hill, which remains on track to produce more than 2.5 million ounces of silver this year, Casa Berardi, where we are beginning the transition to a primarily open pit operation, and Lucky Friday, where we are completing the ore bunker and service hoist."

Baker concluded, "Hecla produced 45% of United States silver in 2022, making us the nation's largest silver producer. With almost 17 million ounces of silver production expected in 2023 and potentially increasing to 20 million ounces by 2025, Hecla is expected to become Canada's largest silver producer as well. Our production growth provides shareholders more exposure to silver from long-lived, low-cost mines that will help provide silver needed for solar power, the fastest growing renewable energy source."

FINANCIAL OVERVIEW

In the following table and throughout this release, "total cost of sales" is comprised of cost of sales and other direct production costs and depreciation, depletion and amortization.

In Thousands unless stated otherwise	1Q-2023			4Q-2022			3Q-2022			2Q-2022			1Q-2022			FY 2022
FINANCIAL AND PRODUCTION SUMMARY
Sales	$	199,500		$	194,825		$	146,339		$	191,242		$	186,499		$	718,905
Total cost of sales	$	164,552		$	169,807		$	137,892		$	153,979		$	141,070		$	602,749
Gross profit	$	34,948		$	25,018		$	8,447		$	37,263		$	45,429		$	116,156
Net income (loss) applicable to common stockholders	$	(3,311	)	$	(4,590	)	$	(23,664	)	$	(13,661	)	$	4,015		$	(37,900	)
Basic income (loss) per common share (in dollars)	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.03	)	$	0.01		$	(0.07	)
Adjusted EBITDA¹	$	61,901		$	62,261		$	26,554		$	70,474		$	58,202		$	217,492
Net Debt to Adjusted EBITDA¹																	1.9
Cash provided by operating activities	$	40,603		$	36,120		$	(24,322	)	$	40,183		$	37,909		$	89,890
Capital Expenditures	$	(54,443	)	$	(56,140	)	$	(37,430	)	$	(34,329	)	$	(21,478	)	$	(149,378	)
Free Cash Flow²	$	(13,840	)	$	(20,020	)	$	(61,752	)	$	5,854		$	16,431		$	(59,488	)
Silver ounces produced		4,041,878			3,663,433			3,549,392			3,645,454			3,324,708			14,182,987
Silver payable ounces sold		3,604,494			3,756,701			2,479,724			3,387,909			2,687,261			12,311,595
Gold ounces produced		39,717			43,634			44,747			45,719			41,707			175,807
Gold payable ounces sold		39,473			40,097			40,443			44,225			41,053			165,818
Cash Costs and AISC, each after by-product credits
Silver cash costs per ounce ³	$	2.14		$	4.79		$	3.43		$	(1.14	)	$	1.09		$	2.06
Silver AISC per ounce ⁴	$	8.96		$	13.98		$	12.93		$	8.08		$	7.37		$	10.66
Gold cash costs per ounce ³	$	1,775		$	1,696		$	1,349		$	1,371		$	1,516		$	1,478
Gold AISC per ounce ⁴	$	2,392		$	2,075		$	1,669		$	1,605		$	1,764		$	1,773
Realized Prices
Silver, $/ounce	$	22.62		$	22.03		$	18.30		$	20.68		$	24.68		$	21.53
Gold, $/ounce	$	1,902		$	1,757		$	1,713		$	1,855		$	1,880		$	1,803
Lead, $/pound	$	1.02		$	1.05		$	0.95		$	0.97		$	1.08		$	1.01
Zinc, $/pound	$	1.39		$	1.24		$	1.23		$	1.44		$	1.79		$	1.41

Net loss applicable to common stockholders decreased to $3.3 million in the first quarter of 2023 from $4.6 million in the fourth quarter of 2022 due to:

Increased gross profit of $9.9 million due to higher revenues arising from higher realized metals prices (except lead) and lower cost of sales.
Decreased general and administrative expenses of $2.3 million as a result of a higher incentive compensation accrued in the fourth quarter of 2022.
Decreased provision for closed operations and environmental matters of $3.6 million reflecting the Troy Mine accrual recorded in the fourth quarter of 2022.
Decreased exploration and pre-development expenses of $1.9 million reflecting lower expenditures across our portfolio.

The above items were partly offset by:

Decreased fair value adjustments, net of $6.8 million resulting from changes in our marketable securities portfolio.
Increased ramp-up and suspension costs of $3.8 million as a result of continued ramp-up at Keno Hill.
Increased income and mining tax expense of $7.2 million, reflecting increased taxable income from our U.S. assets

Consolidated silver total cost of sales in the first quarter decreased by 2% to $100.8 million from the prior quarter due to lower fuel prices partially offset by higher labor costs. Cash costs and AISC per silver ounce, each after by-product credits, were $2.14 and $8.96, respectively.^3,4 The decrease in cash costs per ounce was due to higher silver production, lower total cost of sales, higher by-product credits due to higher gold and lead production, and higher gold prices, with AISC further impacted by lower sustaining capital due to timing of expenditures ^3,4

Consolidated total gold cost of sales decreased by 2% to $63.7 million primarily due to lower labor and consumables costs attributable to lower underground tonnage at Casa Berardi. Cash costs and AISC per gold ounce, each after by-product credits, were $1,775 and $2,392, respectively.^3,4 The increase in cash costs per ounce was primarily due to lower gold production resulting from lower grades, with AISC further impacted by higher sustaining capital.

Adjusted EBITDA for the quarter was $61.9 million, in line with the prior quarter as higher gross profit and lower depreciation, depletion and amortization and general and administrative expenses in the quarter were offset by the monetization of zinc hedges in the prior quarter. The ratio of net debt (calculated as long-term debt and finance leases less cash) to adjusted EBITDA was unchanged at 1.9, with long-term debt and finance leases of $526.0 million and cash and equivalents of $95.9 million at the end of the quarter.¹The Company also issued stock under its ATM program in the first quarter for net proceeds of $11.9 million.

Cash provided by operating activities was $40.6 million, an increase of 12% over the prior quarter due to higher gross profit and favorable working capital changes partially offset by the monetization of zinc hedges in the prior quarter.

Capital expenditures, net of leases, totaled $54.4 million compared to $56.1 million in prior quarter. The decrease was due to timing related lower capital spend at Greens Creek, which was offset by higher capital spend at Casa Berardi primarily attributable to the tailings expansion, higher development, and equipment capital spend at Keno Hill as the mine prepares for mill startup in the third quarter of 2023, and higher capital spend at Lucky Friday with the service hoist and coarse ore bunker projects expected to be completed by the fourth quarter.

Free cash flow for the quarter was negative $13.8 million, compared to negative $20.0 million in the prior quarter due to higher gross profit, lower production costs, favorable working capital changes, and lower capital spending.²

Forward Sales Contracts for Base Metals and Foreign Currency

The Company uses financially settled forward sales contracts to manage exposures to zinc and lead price changes. On March 31, 2023, the Company had contracts covering approximately 29% of the forecasted payable zinc production for 2023 at an average price of $1.47 per pound, and 38% of the forecasted payable lead production (through 2025) at an average price of $0.99 per pound.

The Company also manages CAD exposure through forward contracts. On March 31, 2023, the Company had hedged approximately 47% of forecasted Casa Berardi CAD direct production costs through 2026 at an average CAD/USD rate of 1.32. The Company has also hedged approximately 21% of Casa Berardi capital costs through 2026 at 1.35. At Keno Hill, 70% of the total planned spend for 2023 and 2024 is hedged at an average CAD/USD rate of 1.36.

OPERATIONS OVERVIEW

Greens Creek Mine - Alaska

Dollars are in thousands except cost per ton	1Q-2023			4Q-2022			3Q-2022			2Q-2022			1Q-2022			FY 2022
GREENS CREEK
Tons of ore processed		233,167			230,225			229,975			209,558			211,687			881,445
Total production cost per ton	$	198.60		$	211.29		$	185.34		$	197.84		$	192.16		$	196.73
Ore grade milled - Silver (oz./ton)		14.4			13.1			13.6			14.0			13.8			13.6
Ore grade milled - Gold (oz./ton)		0.08			0.08			0.07			0.08			0.07			0.08
Ore grade milled - Lead (%)		2.6			2.6			2.4			3.0			2.8			2.7
Ore grade milled - Zinc (%)		6.0			6.7			6.3			7.2			6.6			6.7
Silver produced (oz.)		2,772,860			2,433,275			2,468,280			2,410,598			2,429,782			9,741,935
Gold produced (oz.)		14,885			12,989			11,412			12,413			11,402			48,216
Lead produced (tons)		5,202			4,985			4,428			5,184			4,883			19,480
Zinc produced (tons)		12,482			13,842			12,580			13,396			12,494			52,312
Sales	$	98,611		$	95,374		$	60,875		$	92,723		$	86,090		$	335,062
Total cost of sales	$	(66,288	)	$	(70,075	)	$	(52,502	)	$	(60,506	)	$	(49,636	)	$	(232,718	)
Gross profit	$	32,323		$	25,299		$	8,373		$	32,217		$	36,453		$	102,344
Cash flow from operations	$	43,346		$	44,769		$	7,749		$	41,808		$	56,295		$	150,621
Exploration	$	448		$	1,050		$	3,776		$	929		$	165		$	5,920
Capital additions	$	(6,658	)	$	(12,150	)	$	(6,988	)	$	(14,668	)	$	(3,092	)	$	(36,898	)
Free cash flow ²	$	37,136		$	33,669		$	4,537		$	28,069

Hecla Reports First Quarter 2023 Results