Hecla Mining Company (NYSE:HL) has reported its second-quarter 2023 adjusted earnings per share of 3 cents, representing a 25% drop compared to the previous year. The Consensus Estimate for earnings had anticipated a break-even scenario.

Inclusive of exceptional items, the company unveiled a loss of 3 cents per share, unchanged from the equivalent quarter of the prior year.

The company’s revenues observed a 7% decline year over year, settling at approximately $178 million in the reviewed quarter. The decrease in HL’s top line was attributed to lower metal sales, coupled with diminished realized lead and zinc prices. These factors were partially mitigated by higher prices of precious metals. Notably, the reported figure missed the Consensus Estimate of $184 million. The revenue composition encompassed 45% from silver and the remaining 35% from gold.

During the quarter, gold realized prices witnessed a 6% increase, reaching $1,969 per ounce. The realized price for silver was $23.67 per ounce, marking a growth of 14.5% from the prior-year quarter’s $20.70 per ounce. While realized prices for lead exhibited a 2% rise, zinc realized prices declined by 21.5%.

The total cost of sales experienced a 9% reduction year over year, amounting to $140.5 million for the quarter. Gross profit inched up by 1%, reaching $37.7 million. The gross margin for the second quarter of 2023 stood at 21.1%, compared to 19.5% recorded in the same period of the previous year.

Noteworthy expenses incurred by the company in the second quarter of 2023 encompassed exploration and pre-development expenses amounting to $6.9 million. These activities primarily centered around underground targets at Greens Creek and Keno Hill.

Adjusted EBITDA for the quarter was approximately $68 million, down from $70.5 million reported in the second quarter of 2022.

Hecla Mining reported cash costs per silver ounce and all-in sustaining costs per silver ounce at $3.32 and $11.63, respectively, for the second quarter of 2023.

Production Figures and Operational Updates

Hecla Mining disclosed that silver production in the second quarter of 2023 reached 3.8 million ounces, marking a 5% increase compared to the previous year. For the first half of 2023, the company’s total silver output summed up to 7.9 million ounces, demonstrating a 13% growth year over year. This uptick in production was notably supported by favorable outcomes at Lucky Friday and Greens Creek. This marked the third-highest silver production during a six-month period in the company’s history. In contrast, gold production amounted to 35,251 ounces, experiencing a 23% decrease from the second quarter of 2022.

The Lucky Friday mine achieved a silver production of 1.3 million ounces in the second quarter, reaching its highest level since the first quarter of 2000. Additionally, the Keno Hill mine initiated its transition towards full production during the second quarter, resulting in silver production of 184,264 ounces. By the end of this year, the mine’s production capacity is projected to reach up to 440 tons per day. It is expected to contribute more than 2.5 million ounces to the company’s silver production.

Financial Position

By the conclusion of the second quarter of 2023, Hecla Mining held $107 million in cash, reflecting growth from the $105 million reported at the end of 2022. Cash flow generated from operating activities during the first six months of 2023 amounted to $64.4 million, showing a decline from the $78 million registered in the corresponding period of the previous year.

Guidance for 2023

Hecla Mining envisions silver production to range between 16 million and 17.5 million ounces in 2023. The company is setting its sights on achieving the milestone of 20 million ounces by 2025. With its current silver production contributing to 45% of U.S. silver, Hecla Mining is geared up to establish itself as Canada’s largest silver producer by 2024.

As for gold production, the company now anticipates output to range from 140,000 to 160,000 ounces. This outlook marks a revision from the earlier forecast of 160,000 to 170,000 ounces. The altered guidance reflects factors such as wildfires-related suspension affecting Casa Berardi operations in June, even as increased gold production is foreseen at Greens Creek.

Price Performance

Over the past year, Hecla Mining’s shares have gained 1.7%, displaying a contrasting performance compared to the industry’s decline of 12.7%.

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