Record annual revenue and 2^nd highest cash flow from operations and free cash flow

Hecla Mining Company ((HL) today announced fourth quarter and full-year 2021 financial and operating results.

ANNUAL HIGHLIGHTS

Operational

Produced 12.9 million silver ounces and 201,327 gold ounces, meeting production and cost guidance.
Developed the Underhand Closed Bench (UCB) mining method at Lucky Friday, which contributed to the 75% increase in silver production and showed improvements in managing seismicity.
Casa Berardi achieved record throughput and recoveries improved by 4%, producing 134,511 gold ounces.
Second highest reserves for both silver and gold in Company history.

Financial

Record sales of $807.5 million with net income of $35.1 million.
Record Adjusted EBITDA of $278.8 million.¹
Second highest cash flow from operations of $220.3 million and free cash flow of $111.3 million.
Record exploration and pre-development expenditures of $47.9 million.
Returned $20.7 million, or 19%, of free cash flow to our common and preferred shareholders through dividends.

Environmental, Social, Governance

Strong safety performance with an All-Injury Frequency Rate of 1.45, 40% below the U.S. average.
Net neutral for scope 1 & 2 emissions with only 76,000 tonnes that were offset by carbon credits.
Successfully managed the impacts of COVID-19.

"2021 was an outstanding year for Hecla as we generated record revenues and adjusted EBITDA resulting in the second highest free cash flow in our 130-year history," said Phillips S. Baker Jr., President and CEO. "The year also positions Hecla for future success with our exploration program delivering our highest silver reserves in more than 20 years and the Lucky Friday's establishment of a new, innovative mining method that should be both safer and more productive. This method, which we call the Underhand Closed Bench method will allow the Lucky Friday to increase projected production in 2022 by almost a million silver ounces over 2021, which was a million and half more than 2020."

Baker continued, "Since Hecla is not only the largest producer of silver in the United States but also has the largest silver reserve base in the U.S., our stakeholders are uniquely positioned to benefit from the growing demand for silver in the transition to clean energy."

FINANCIAL OVERVIEW

In Thousands unless stated otherwise	4Q-2021			3Q-2021			2Q-2021			1Q-2021			4Q-2020			FY 2021			FY 2020
FINANCIAL AND PRODUCTION SUMMARY
Sales	$	185,078		$	193,560		$	217,983		$	210,852		$	188,890		$	807,473		$	691,873
Cost of Sales*	$	131,837		$	158,332		$	156,052		$	143,451		$	137,978		$	589,672		$	530,773
Gross profit	$	53,241		$	35,228		$	61,931		$	67,401		$	50,912		$	217,801		$	161,100
Income (loss) applicable to common stockholders	$	11,737		$	(1,117	)	$	2,610		$	21,313		$	2,967		$	34,543		$	(10,009	)
Basic income (loss) per common share (in dollars)	$	0.02		$	—		$	0.05		$	0.04		$	0.01		$	0.06		$	(0.02	)
Adjusted EBITDA ¹	$	58,249		$	49,414		$	84,507		$	86,610		$	57,773		$	278,780		$	230,684
Net Debt to Adjusted EBITDA¹																	1.1			1.7
Cash provided by operating activities	$	53,355		$	42,742		$	86,304		$	37,936		$	64,901		$	220,337		$	180,793
Capital expenditures	$	(28,838	)	$	(26,899	)	$	(31,898	)	$	(21,413	)	$	(36,634	)	$	(109,048	)	$	(91,016	)
Free Cash Flow ²	$	24,517		$	15,843		$	54,406		$	16,523		$	28,267		$	111,289		$	89,777
Silver ounces produced		3,226,927			2,676,084			3,524,783			3,459,446			3,352,336			12,887,240			13,542,957
Silver payable ounces sold		2,606,622			2,581,690			3,415,464			3,030,026			3,227,951			11,633,802			12,305,917
Gold ounces produced		47,977			42,207			59,139			52,004			49,014			201,327			208,962
Gold payable ounces sold		44,156			53,000			47,168			57,286		$	43.144			201,610			202,694

*Cost of sales is comprised of cost of sales and other direct production costs and depreciation, depletion and amortization referred to herein as "cost of sales".

Consolidated silver cost of sales for 2021 were $310.9 million; cash cost and all-in sustaining costs ("AISC") per silver ounce, after by-product credits, for the year were $1.37 and $9.19, respectively.^3,4 The year over year decrease in cash cost and AISC per silver ounce (each after by-product credits) was due to higher silver production and by-product credits as well as lower treatment charges, partially offset by higher operating costs and additional sustaining capital.^3,4 Consolidated gold cost of sales for the year were $278.8 million, cash cost and AISC per gold ounce (each after by-product credits), were $1,127 and $1,374, respectively.^3,4 The year over year increase in cash cost was due to higher production costs partially offset by higher gold production with AISC also impacted by lower sustaining capital.

Income applicable to common stockholders increased in the fourth quarter 2021 over the third quarter due to:

Gross profit increased by 51% due primarily to increased production at all three operations.
Exploration and pre-development expense decreased by $4.2 million due to third-party assays being delayed and the completion of seasonal exploration programs in the prior quarter.
Increase in benefit from income and mining taxes of $21.1 million due to a partial release of the deferred tax asset valuation allowance.
Partially offsetting these increases are realized and unrealized losses on derivatives of $25.1 million compared to a third quarter gain of $9.3 million.

Income applicable to common stockholders increased in 2021 over 2020 due to:

Gross profit increased by 35% due to higher metal prices and a full year of production at Lucky Friday.
Lower interest expense by $7.6 million as a result of the revolving credit facility being undrawn in 2021 and 2020 debt refinancing expenses.
Income tax benefits of $29.6 million, compared to the 2020 provision of $8.2 million through the use of tax loss carryforwards and a partial release of the deferred tax asset valuation allowance.

The above items were partially offset by:

Increase in exploration and pre-development expense of $29.6 million.
Combined realized and unrealized losses on derivatives and investments of $35.8 million in 2021, compared to a loss of $11.8 million in 2020.
Provision for closed operations and environmental matters of $14.6 million, an increase of $10.6 million over 2020 primarily due to a $6.5 million lawsuit settlement payment for a 1989 indemnification agreement and a $5.0 million increase for estimated reclamation costs at two closed sites.

Cash provided by operating activities increased $39.5 million year over year and $10.6 million in the fourth quarter compared to the third quarter of 2021 due to increased gross margin, partially offset by unfavorable working capital changes. The yearly increase was also impacted by higher exploration and pre-development spending, which declined quarter over quarter due to seasonal variances.

Adjusted EBITDA increased $8.8 million in the fourth quarter compared to the third quarter of 2021, and was $278.8 million for the full-year 2021, an increase of $48.1 million over 2020, due to higher sales margins partially offset by higher exploration and pre-development spending.¹

Fourth quarter capital expenditures totaled $28.8 million, including $9.5 million at Greens Creek, $9.5 million at Casa Berardi, and $9.1 million at Lucky Friday. Capital expenditures for the year 2021 totaled $109.0 million compared to $91.0 million in 2020.

Forward Sales Contracts for Base Metals and Foreign Currency

The Company uses financially settled forward sales contracts to manage exposures to changes in prices of zinc and lead. At December 31, 2021, the Company had contracts covering approximately 62% of the forecasted payable zinc production (through 2024) at an average price of $1.29 per pound, and 49% of the forecasted payable lead production (through 2024) at an average price of $0.99 per pound. Effective November 1, 2021, the Company elected to apply hedge accounting for all then open and future financially settled forward sales contracts, which will reduce income statement volatility for unrealized gains and losses on open positions.

The Company also enters into foreign exchange forward contracts to buy Canadian dollars. At December 31, 2021, the Company had hedged approximately 76% of forecasted Canadian dollar direct production costs for 2022 at an average CAD/USD rate of 1.30, 51% for 2023 at 1.30, 18% for 2024 at 1.31, and 5% for 2025 at 1.28. The Company has also hedged approximately 34% of capital costs for 2022 at 1.29.

OPERATIONS OVERVIEW

Greens Creek Mine - Alaska

Dollars are in thousands except cost per ton	4Q-2021			3Q-2021			2Q-2021			1Q-2021			4Q-2020			FY 2021			FY 2020
GREENS CREEK
Tons of ore processed		221,814			211,142			214,931			194,080			189,092			841,967			818,408
Total production cost per ton	$	174.55		$	181.60		$	171.13		$	182.61		$	195.02		$	177.30		$	179.37
Ore grade milled - Silver (oz./ton)		12.60			11.14			14.52			16.01			15.17			13.51			15.65
Ore grade milled - Gold (oz./ton)		0.07			0.07			0.08			0.09			0.07			0.08			0.08
Ore grade milled - Lead (%)		2.61			2.68			3.14			3.06			2.84			2.87			3.13
Ore grade milled - Zinc (%)		6.28			7.05			7.57			7.62			6.96			7.11			7.58
Silver produced (oz.)		2,262,635			1,837,270			2,558,447			2,584,870			2,330,664			9,243,222			10,494,726
Gold produced (oz.)		10,229			9,734			12,859			13,266			10,276			46,088			48,491
Lead produced (tons)		4,731			4,591			5,627			4,924			4,404			19,873			21,400
Zinc produced (tons)		12,457			13,227			14,610			13,354			11,956			53,648			56,814
Sales	$	87,865		$	84,806		$	113,763		$	98,409		$	95,602		$	384,843		$	327,820
Cost of sales	$	(49,252	)	$	(55,193	)	$	(55,488	)	$	(53,180	)	$	(57,252	)	$	(213,113	)	$	(210,748	)
Gross profit	$	38,613		$	29,613		$	58,275		$	45,229		$	38,350		$	171,730		$	117,072
Cash flow from operations	$	51,328		$	43,098		$	69,821		$	44,468		$	58,268		$	208,715		$	176,975
Capital expenditures	$	(9,544	)	$	(6,228	)	$	(6,339	)	$	(1,772	)	$	(7,155	)	$	(23,883	)	$	(19,685	)
Free cash flow	$	41,784		$	36,870		$	63,482		$	42,696		$	51,113		$	184,832		$	157,290

Cost of sales in 2021 increased to $213.1 million compared to $210.7 million in 2020 due to higher mining costs, as lower capitalized development footage resulted in an increased portion of costs allocated to production, and higher concentrate freight costs, as rates increased due to market conditions. Cash cost and AISC per silver ounce (each after by-product credits) were $(0.65) and $3.19, respectively, decreasing year over year due to higher by-product credits and lower treatment costs. ^3,4

Lucky Friday Mine - Idaho

Dollars are in thousands except cost per ton

4Q-2021

3Q-2021

2Q-2021

1Q-2021

4Q-2020

FY 2021

FY 2020

LUCKY FRIDAY

Tons of ore processed

80,097

78,227

82,442

Hecla Reports Fourth Quarter and Full-year 2021 Results