Management's Discussion and Analysis of Financial Condition and Results of Operations
In this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), "Hecla," "the Company," "we," "us" and "our" refer to Hecla Mining Company and its consolidated subsidiaries, except where the context requires otherwise. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K"), filed with the United States Securities and Exchange Commission (the "SEC"). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to "Forward-Looking Statements" above for further discussion). References to "Notes" are Notes included in our Notes to Condensed Consolidated Financial Statements (Unaudited). Throughout this MD&A, all references to income or losses per share are on a diluted basis.
Overview
Hecla Mining Company stands as North America's premier silver producer, with a rich heritage dating back to 1891. Our operations at Greens Creek, Lucky Friday and Keno Hill combined to produce 37% of 2025 silver production in the U.S. and Canada, complemented by significant gold production from Greens Creek and our former Casa Berardi operation. Our strategic positioning in the stable jurisdictions of the U.S. and Canada provides us with distinct operational advantages and reduced political risk compared to our global peers. Our operational and strategic framework centers on four core pillars:
Recent Developments
On March 25, 2026, we completed the sale of our Hecla Quebec Inc. ("Hecla Quebec") subsidiary which owns the Casa Berardi mine to Orezone Gold Corporation ("Orezone") for a fair value of $385.7 million ($601.7 million on an undiscounted basis) comprised of the following:
Orezone has a set-off right to reduce the unpaid balance of the Deferred Contingent Cash or the Contingent Cash Consideration payments by 50% of the amount by which the financial assurance required by the Quebec government under the updated Casa Berardi closure plan exceeds $150 million, excluding increases caused by Orezone's post-closing actions. Our current estimate of that excess has been included in determining the fair values of the Deferred Cash consideration and Contingent Cash Consideration for the first gold-priced payment.
The sale of Hecla Quebec represents a disciplined portfolio optimization and focuses capital allocation on our silver assets, which we believe to represent significant growth and value creation opportunities. We have solidified our revenue exposure to silver and we are focused on operating in what we view to be the most favorable jurisdictions. Subsequent to March 31, 2026, we used the
cash proceeds from the transaction for debt reduction and balance sheet strengthening, enhancing our financial flexibility and capacity to invest in strategic growth investments.
We determined that the sale of Hecla Quebec represents a strategic shift that has a major effect on our operations and financial results and therefore, beginning with this quarterly report on Form 10-Q for the period ending March 31, 2026, the Casa Berardi operation is no longer a reportable segment and its financial results are reflected in the Company's unaudited interim condensed consolidated financial statements as a discontinued operation for all periods presented. Unless otherwise specified, the discussion of financial results within this Item 2 (MD&A) will focus on our continuing operations, in relation to the respective comparative periods which have been recast to reflect the continuing operations of our business.
First Quarter 2026 Highlights
Operational Achievements:
Financial Performance:
External Factors that Impact our Results
Our financial results vary as a result of fluctuations in market prices primarily for silver and gold and, to a lesser extent, zinc, lead and copper. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. To date, tariffs have not materially impacted our financial results. However, future tariffs or other global trade restraints could impact our performance. Historically our US operations have had significant sales into China and Canada, and each of those countries is or could be subject to tariffs, and each has or may retaliate in kind. Notwithstanding these recent developments, we believe that the outlook for precious metals fundamentals is favorable due to macro-economic factors such as lower interest rate expectations, geopolitical uncertainty and global growth expectations, which have resulted in significant volatility in the financial and commodities markets, including the precious metals market. See Item 1A. "Risk Factors" contained in Part I of our 2025 Form 10-K for further discussion. Because we cannot control the price of our products, except to the extent we have entered into hedging transactions, the key measures that management focuses on in operating our business are production volumes, payable sales volumes, Cash Cost, After By-product Credits, per Ounce (non-GAAP) and All-In Sustaining Cost, After By-product Credits, per Ounce ("AISC") (non-GAAP), operating cash flows, capital expenditures, free cash flow (non-GAAP) and adjusted EBITDA (non-GAAP). The average realized prices for all metals sold by us continued to exhibit significant volatility during the period. We have also experienced significant cost inflation across our operations, principally associated with higher energy prices, increased costs for other consumables such as reagents, explosives and steel, and higher labor and contractor costs.
Consolidated Results of Continuing Operations
Total sales for the three months ended March 31, 2026 and 2025 were as follows:
Three Months Ended | ||||||||
(in thousands) | 2026 | 2025 | ||||||
Silver | $ | 295,633 | $ | 117,977 | ||||
Gold | 56,977 | 31,359 | ||||||
Lead | 22,297 | 22,106 | ||||||
Zinc | 36,873 | 33,125 | ||||||
Copper | 412 | 391 | ||||||
Less: Smelter and refining charges | (5,411 | ) | (6,712 | ) | ||||
Total metal sales | 406,781 | 198,246 | ||||||
Environmental remediation services | 4,652 | 7,088 | ||||||
Total sales | $ | 411,433 | $ | 205,334 | ||||
Environmental remediation services revenue is generated by performing remediation work in the historical Yukon Territory mining district on behalf of the Canadian government. The scope and estimated cost of all work is agreed to in advance by the Canadian
government, and the expenses incurred are passed through to the government for reimbursement with minimal margin generated by us in performing this work.
Total metal sales for the three months ended March 31, 2026 and 2025, and the approximate variances attributed to differences in metals prices, sales volumes and smelter terms, were as follows:
(in thousands) | Silver | Gold | Base metals | Less: smelter and refining charges | Total sales of products | |||||||||||||||
Three months ended March 31, 2025 | $ | 117,977 | $ | 31,359 | $ | 55,622 | $ | (6,712 | ) | $ | 198,246 | |||||||||
Variances - 2026 versus 2025: | ||||||||||||||||||||
Price | 175,587 | 22,460 | 3,683 | - | 201,730 | |||||||||||||||
Volume | 2,069 | 3,158 | 277 | - | 5,504 | |||||||||||||||
Smelter terms | - | - | - | 1,301 | 1,301 | |||||||||||||||
Three months ended March 31, 2026 | $ | 295,633 | $ | 56,977 | $ | 59,582 | $ | (5,411 | ) | $ | 406,781 | |||||||||
The fluctuation in sales for the three months ended March 31, 2026 compared to the same periods in 2025 was primarily due to the following:
Three Months Ended | ||||||||||
2026 | 2025 | |||||||||
Silver - | London PM Fix ($/ounce) | $ | 84.39 | $ | 31.91 | |||||
Realized price per ounce | $ | 82.70 | $ | 33.59 | ||||||
Gold - | London PM Fix ($/ounce) | $ | 4,875 | $ | 2,863 | |||||
Realized price per ounce | $ | 4,899 | $ | 2,940 | ||||||
Lead - | LME Final Cash Buyer ($/pound) | $ | 0.88 | $ | 0.89 | |||||
Realized price per pound | $ | 0.98 | $ | 0.92 | ||||||
Zinc - | LME Final Cash Buyer ($/pound) | $ | 1.47 | $ | 1.29 | |||||
Realized price per pound | $ | 1.41 | $ | 1.29 | ||||||
Copper - | LME Final Cash Buyer ($/pound) | $ | 5.82 | $ | 4.24 | |||||
Realized price per pound | $ | 5.72 | $ | 4.41 | ||||||
Average realized prices typically differ from average market prices primarily because concentrate sales are generally recorded as revenues at the time of shipment at forward prices for the estimated month of settlement, which differ from average market prices. Due to the time elapsed between shipment of concentrates and final settlement with the customers, we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices each period through final settlement. We recorded net positive price adjustments to provisional settlements of $0.8 million and $6.9 million for the three months ended March 31, 2026 and 2025, respectively. The price adjustments related to silver, gold, zinc, lead and copper contained in our concentrate shipments were partially offset by gains and losses on forward contracts and collars for those metals. See Note 9 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information. The gains and losses on these contracts are included in revenues and impact the realized prices for silver, gold, lead, and zinc. Realized prices are calculated by dividing gross revenues for each metal (which include the price adjustments and gains and losses on the forward contracts and collars discussed above) by the payable quantities of each metal included in concentrate, doré and carbon material shipped during the period.
Three Months Ended | ||||||||||
2026 | 2025 | |||||||||
Silver - | Ounces produced | 3,903,149 | 4,107,242 | |||||||
Payable ounces sold | 3,575,018 | 3,512,749 | ||||||||
Gold - | Ounces produced | 12,886 | 13,759 | |||||||
Payable ounces sold | 11,533 | 10,478 | ||||||||
Lead - | Tons produced | 13,093 | 14,007 | |||||||
Payable tons sold | 11,400 | 11,990 | ||||||||
Zinc - | Tons produced | 16,804 | 16,935 | |||||||
Payable tons sold | 13,456 | 12,847 | ||||||||
Copper | Tons produced | 462 | 411 | |||||||
Payable tons sold | 36 | 44 | ||||||||
The difference between what we report as "ounces/tons produced" and "payable ounces/tons sold" is attributable to the difference between the quantities of metals contained in the concentrates we produce versus the portion of those metals actually paid for by our customers according to the terms of our sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades which impact the amount of metals contained in concentrates produced and sold.
Sales, total cost of sales, gross profit (loss), Cash Cost, After By-product Credits, per Ounce ("Cash Cost") (non-GAAP) and AISC (non-GAAP) at our operating segments for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except for Cash Cost and AISC):
Silver | ||||||||||||||||||||||||
Greens Creek | Lucky Friday | Keno Hill | Total Silver (2) | Other (3) | Total Silver and Other | |||||||||||||||||||
Three Months Ended March 31, 2026: | ||||||||||||||||||||||||
Sales | $ | 250,999 | $ | 109,356 | $ | 46,426 | $ | 406,781 | $ | 4,652 | $ | 411,433 | ||||||||||||
Total cost of sales | (82,358 | ) | (48,782 | ) | (22,099 | ) | (153,239 | ) | $ | (4,939 | ) | $ | (158,178 | ) | ||||||||||
Gross profit (loss) | $ | 168,641 | $ | 60,574 | $ | 24,327 | $ | 253,542 | $ | (287 | ) | $ | 253,255 | |||||||||||
Cash Cost (1) | $ | (11.94 | ) | $ | 12.07 | $ | - | $ | (3.24 | ) | $ | - | $ | (3.24 | ) | |||||||||
AISC (1) | $ | (8.39 | ) | $ | 23.78 | $ | - | $ | 8.17 | $ | - | $ | 8.17 | |||||||||||
Three Months Ended March 31, 2025: | ||||||||||||||||||||||||
Sales | $ | 118,143 | $ | 63,194 | $ | 16,909 | $ | 198,246 | $ | 7,088 | $ | 205,334 | ||||||||||||
Total cost of sales | (69,638 | ) | (44,049 | ) | (15,871 | ) | (129,558 | ) | (7,095 | ) | (136,653 | ) | ||||||||||||
Gross profit (loss) | $ | 48,505 | $ | 19,145 | $ | 1,038 | $ | 68,688 | $ | (7 | ) | $ | 68,681 | |||||||||||
Cash Cost (1) | $ | (4.08 | ) | $ | 9.37 | $ | - | $ | 1.29 | $ | - | $ | 1.29 | |||||||||||
AISC (1) | $ | (0.03 | ) | ` | $ | 20.08 | $ | - | $ | 11.91 | $ | - | $ | 11.91 | ||||||||||
While revenue from zinc, lead, copper and gold by-products is significant, we believe that identification of silver as the primary product of Greens Creek, Lucky Friday and Keno Hill is appropriate because:
Accordingly, we believe the identification of gold, lead, zinc and copper as by-product credits at Greens Creek, Lucky Friday and Keno Hill is appropriate because of their lower economic value compared to silver and due to the fact that silver is the primary product we intend to produce at those locations. In addition, we have not consistently received sufficient revenue from any single by-product metal to warrant classification of such as a co-product.
We periodically review our revenues to ensure that reporting of primary products and by-products is appropriate. Because for Greens Creek, Lucky Friday and Keno Hill we consider zinc, lead, gold and copper to be by-products of our silver production, the values of these metals offset operating costs within our calculations of Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce. We currently do not report Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for our Keno Hill operation as it has not met our definition of commercial production. We define an operation as being in commercial production upon achievement of the following criteria:
Currently we meet only one of the above criteria - silver recoveries are at expected steady-state production levels. Determination of when these criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.
As Keno Hill has not yet been determined to be in commercial production, its costs and by-product credits are excluded from our consolidated Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce because (i) by definition it has not reached the sustaining stage and (ii) including its costs and by-product credits we believe would distort consolidated Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce of our operating silver mines that are in commercial production and operating as designed, and would not facilitate a meaningful comparison of our performance versus that of our peers who do not report such metrics for mines that are not in commercial production.
For the three months ended March 31, 2026, we reported net income from continuing operations of $164.7 million (2025: $24.3 million) and a net loss applicable to common stockholders of $19.2 million (2025 - $28.7 million). Net loss applicable to common stockholders is lower than net income from continuing operations, due to the recognition of a loss from discontinued operations of $183.7 million, primarily due to the loss of $192.5 million on the sale of Hecla Quebec. The following were the significant drivers of the increase in net income from continuing operations:
The positive movements mentioned above were partly offset by:
Greens Creek
Dollars are in thousands (except per ounce and per ton amounts) |
Three Months Ended | |||||||
2026 | 2025 | |||||||
Sales | $ | 250,999 | $ | 118,143 | ||||
Cost of sales and other direct production costs | (66,375 | ) | (56,049 | ) | ||||
Depreciation, depletion and amortization | (15,983 | ) | (13,589 | ) | ||||
Total cost of sales | (82,358 | ) | (69,638 | ) | ||||
Gross profit | $ | 168,641 | $ | 48,505 | ||||
Tons of ore milled | 208,922 | 212,899 | ||||||
Production: | ||||||||
Silver (ounces) | 2,177,142 | 2,002,560 | ||||||
Gold (ounces) | 12,886 | 13,759 | ||||||
Lead (tons) | 4,398 | 4,496 | ||||||
Zinc (tons) | 12,550 | 12,835 | ||||||
Copper (tons) | 462 | 411 | ||||||
Payable metal quantities sold: | ||||||||
Silver (ounces) | 2,024,531 | 1,744,652 | ||||||
Gold (ounces) | 11,533 | 10,478 | ||||||
Lead (tons) | 3,458 | 3,321 | ||||||
Zinc (tons) | 10,291 | 9,507 | ||||||
Copper (tons) | 36 | 44 | ||||||
Ore grades: | ||||||||
Silver ounces per ton | 13.0 | 11.8 | ||||||
Gold ounces per ton | 0.085 | 0.086 | ||||||
Lead percent | 2.5 | % | 2.6 | % | ||||
Zinc percent | 6.8 | % | 6.8 | % | ||||
Copper percent | 0.3 | % | 0.3 | % | ||||
Total production cost per ton | $ | 273.16 | $ | 240.00 | ||||
Cash Cost, After By-product Credits, per Silver Ounce (1) | $ | (11.94 | ) | $ | (4.08 | ) | ||
AISC, After By-Product Credits, per Silver Ounce (1) | $ | (8.39 | ) | $ | (0.03 | ) | ||
Capital investments | $ | 6,113 | $ | 10,759 | ||||
The $120.1 million increase in gross profit for the three months ended March 31, 2026, compared to the same period in 2025 was primarily due to higher realized sales prices for silver and gold, in addition to higher sales volumes for all metals produced.
Capital investments in the current quarter were $4.6 million lower compared to the same period in 2025. Current quarter costs included $3.1 million for primary ore access development, $1.0 million for definition drilling and $1.0 million for mining equipment.
Production of all metals other than silver was negatively impacted during the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower milled tons, partly offset by higher silver grades.
The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, per Silver Ounce for Greens Creek:
Three Months Ended March 31, | ||||||||
2026 | 2025 | |||||||
Cash Cost, Before By-product Credits, per Silver Ounce | $ | 28.04 | $ | 28.46 | ||||
By-product credits | (39.98 | ) | (32.54 | ) | ||||
Cash Cost, After By-product Credits, per Silver Ounce | $ | (11.94 | ) | $ | (4.08 | ) | ||
Three Months Ended March 31, | ||||||||
2026 | 2025 | |||||||
AISC, Before By-product Credits, per Silver Ounce | $ | 31.59 | $ | 32.51 | ||||
By-product credits | (39.98 | ) | (32.54 | ) | ||||
AISC, After By-product Credits, per Silver Ounce | $ | (8.39 | ) | $ | (0.03 | ) | ||
For the three months ended March 31, 2026, the decrease in Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce compared to the same period in 2025 was primarily due to an increase in gold by-product credits, reflecting higher realized gold prices, in addition to higher silver production, partly offset by higher production costs.
Lucky Friday
Dollars are in thousands (except per ounce and per ton amounts) |
Three Months Ended | |||||||
2026 | 2025 | |||||||
Sales | $ | 109,356 | $ | 63,194 | ||||
Cost of sales and other direct production costs | (35,173 | ) | (30,624 | ) | ||||
Depreciation, depletion and amortization | (13,609 | ) | (13,425 | ) | ||||
Total cost of sales | (48,782 | ) | (44,049 | ) | ||||
Gross profit | $ | 60,574 | $ | 19,145 | ||||
Tons of ore milled | 108,608 | 108,745 | ||||||
Production: | ||||||||
Silver (ounces) | 1,237,288 | 1,332,252 | ||||||
Lead (tons) | 8,250 | 8,480 | ||||||
Zinc (tons) | 3,832 | 3,681 | ||||||
Payable metal quantities sold: | ||||||||
Silver (ounces) | 1,131,692 | 1,268,845 | ||||||
Lead (tons) | 7,574 | 7,978 | ||||||
Zinc (tons) | 2,829 | 3,081 | ||||||
Ore grades: | ||||||||
Silver ounces per ton | 11.9 | 13.0 | ||||||
Lead percent | 8.0 | % | 8.2 | % | ||||
Zinc percent | 4.1 | % | 4.0 | % | ||||
Total production cost per ton | $ | 309.68 | $ | 258.59 | ||||
Cash Cost, After By-product Credits, per Silver Ounce (1) | $ | 12.07 | $ | 9.37 | ||||
AISC, After By-product Credits, per Silver Ounce (1) | $ | 23.78 | $ | 20.08 | ||||
Capital investments | 17,018 | $ | 15,446 | |||||
Gross profit increased by $41.4 million for the three months ended March 31, 2026 compared to the comparable period in 2025, reflecting higher realized prices for silver, zinc and lead, partly offset by lower sales volumes for all metals driven by lower production reflecting lower processed grade material, except for zinc.
Capital investments increased by $1.6 million for the three months ended March 31, 2026, compared to the same period in 2025. Significant capital expenditures during the three months ended March 31, 2026, included capital development of $7.4 million, $1.2 million for a shaft rehabilitation, $1.1 million for the surface cooling project, $0.8 million for definition drilling and $0.7 million for an underground truck replacement, $0.6 million on ramp work and $0.4 million on tailings facility pond 5 construction.
The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, Per Silver Ounce for Lucky Friday:
Three Months Ended March 31, | ||||||||
2026 | 2025 | |||||||
Cash Cost, Before By-product Credits, per Silver Ounce | $ | 30.33 | $ | 25.13 | ||||
By-product credits | (18.26 | ) | (15.76 | ) | ||||
Cash Cost, After By-product Credits, per Silver Ounce | $ | 12.07 | $ | 9.37 | ||||
Three Months Ended March 31, | ||||||||
2026 | 2025 | |||||||
AISC, Before By-product Credits, per Silver Ounce | $ | 42.04 | $ | 35.84 | ||||
By-product credits | (18.26 | ) | (15.76 | ) | ||||
AISC, After By-product Credits, per Silver Ounce | $ | 23.78 | $ | 20.08 | ||||
For the three months ended March 31, 2026, Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce are higher than the same period in 2025 primarily due to lower silver production and higher profit sharing and incentive compensation costs, partly offset by higher by-product credits.
Keno Hill
Dollars are in thousands (except per ounce and per ton amounts) |
Three Months Ended | |||||||
2026 | 2025 | |||||||
Sales | $ | 46,426 | $ | 16,909 | ||||
Cost of sales and other direct production costs | (17,923 | ) | (13,069 | ) | ||||
Depreciation, depletion and amortization | (4,176 | ) | (2,802 | ) | ||||
Total cost of sales | (22,099 | ) | (15,871 | ) | ||||
Gross profit | $ | 24,327 | $ | 1,038 | ||||
Tons of ore milled | 24,274 | 27,411 | ||||||
Production: | ||||||||
Silver (ounces) | 488,719 | 772,430 | ||||||
Lead (tons) | 445 | 1,031 | ||||||
Zinc (tons) | 422 | 419 | ||||||
Payable metal quantities sold: | ||||||||
Silver (ounces) | 418,795 | 499,252 | ||||||
Lead (tons) | 368 | 691 | ||||||
Zinc (tons) | 336 | 259 | ||||||
Ore grades: | ||||||||
Silver ounces per ton | 20.8 | 29.0 | ||||||
Lead percent | 2.0 | % | 4.0 | % | ||||
Zinc percent | 2.2 | % | 1.9 | % | ||||
Capital investments | $ | 15,025 | $ | 10,436 | ||||
We have not disclosed cost per ounce statistics for the Keno Hill operation as it has not met our definition of commercial production. See above "Consolidated Results of Operations" for our definition of commercial production. Determination of when those criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.
We acquired our Keno Hill operation as part of the Alexco Resource Corp. acquisition in September 2022 and have focused on development activities and began ramp-up of the mill during the second quarter of 2023. The average mill throughput during the three months ended March 31, 2026, was 276 tons per day (the mine is currently permitted to a maximum of an average of 440 tons per day), with silver grades milled of 20.8 ounces per ton. During the first three months of 2026, the mill has relied on existing ore stockpiles as the mine continues to focus on development and ramp up to higher tonnage rates with mining rates of 276 tons per day during the quarter, with material sourced from both the Bermingham and Flame and Moth deposits. Mill throughput, while currently steady, was negatively impacted in the first quarter by limited ore availability from the Bermingham deposit due to reduced output from the Bear zone and dilution control issues in narrow vein stopes caused by mining remnant areas as we depart that zone and transition into the Arctic zone, as well as by mine sequencing at the Flame and Moth deposit, which was altered as a result of power curtailments by Yukon Energy (the electric utility that supplies the Mine) lasting sixteen days in December 2025 and five days in January 2026 due to extreme cold weather. We expect these impacts to diminish throughout the remainder of the year.
During the three months ended March 31, 2026 and 2025, Keno Hill recorded sales of $46.4 million and $16.9 million, respectively, with the increase due to higher realized prices, partly offset by lower metals sales volumes. As a result of higher revenues, Keno Hill generated gross profit of $24.3 million during the three months ended March 31, 2026 (2025 - $1.0 million). During the quarter, Keno Hill recorded capital investments of $15.0 million, primarily related to $7.0 million of mine development, $1.9 million for underground haul trucks, and $0.8 million for surface equipment.
Prior Period Disruptions and Ongoing Impacts
From commencement of production until late August 2024, ore production and mill throughput generally increased as planned, resulting in higher production levels, although still below the mill's permitted capacity. Beginning in mid-2024 and continuing into 2025, however, Keno Hill was impacted by external events that affected permitting, projects and production, and delayed our ability to achieve sustained, profitable operations.
In late June 2024, an unrelated third party, Victoria Gold, experienced a heap leach failure at its Eagle Mine located near Keno Hill. Due to the resulting focus of the Yukon Government ("YG") and the First Nation of Na-Cho Nyäk Dun ("FNNND") on the incident
response rather than routine permitting matters, we were required to suspend milling operations at Keno Hill between August 27 and October 26, 2024 while awaiting authorizations and permits.
Beginning in late October 2024, Keno Hill experienced power curtailments after Yukon Energy suffered a turbine failure at its Aishihik hydroelectric plant in Whitehorse. This failure, combined with Yukon Energy's focus on line maintenance and increased power demand due to cold winter temperatures, resulted in reduced power deliveries to Keno Hill and prevented us from fully powering the mine and mill on multiple occasions in late 2024 and the first quarter of 2025. These power constraints reduced silver production by approximately 130,000 ounces and resulted in approximately $0.5 million of labor costs for idled employees through September 30, 2025. Power conditions improved following the first quarter of 2025 and we do not expect additional curtailments due to the Aishihik turbine, which was successfully repaired in the third quarter of 2025. However, as mentioned above, we experienced power curtailments in the fourth quarter of 2025 and the first quarter of 2026. See the Risk Factor in our 2025 Form 10-K, "We may be subject to a number of unanticipated risks related to inadequate infrastructure."
Current Operational Challenges
Keno Hill continues to face operational challenges that constrain throughput and limit our ability to ramp up production. These challenges include: ore availability and dilution control issues during the transition from the Bear to the Arctic Zone; Flame and Moth mine sequencing; workforce availability and retention in a remote location; execution of infrastructure projects; limited camp capacity; and incremental demands on site infrastructure and resources associated with the ramp-up of our subsidiary's environmental remediation services activities at the Keno Hill site.
In addition, deliveries of certain equipment, including haul trucks, a bolter, a scissor deck, and a generator, were delayed during the first quarter. These delays affected capital development activities and, in the future, if delays occur and are not resolved on a timely basis, they could adversely impact mining flexibility and future ore availability.
Permitting and Infrastructure Constraints
Permitting remains one of the most significant factors affecting our ability to achieve sustained, profitable production at Keno Hill. Increasing production requires additional capacity across several operational areas, including tailings storage, waste rock disposal, water treatment and discharge limits, camp accommodation, and reliable power supply. Expanding these capacities requires obtaining new permits or amending existing ones, as well as capital investments to develop the associated infrastructure.
Although progress continues on these permitting matters, the pace of advancement has been affected by delays resulting from the Eagle Mine incident and heightened regulatory focus on the Yukon mining sector.
Tailings Storage
The currently permitted dry-stack tailings storage area at Keno Hill (Phase 2E) is expected to reach capacity in approximately October 2026. The Phase 2W dry-stack expansion requires final design approval from the Yukon Government ("YG"). We currently expect such approval by mid-2026, which would allow Phase 2W to become operational before Phase 2E reaches capacity. If these approvals are not received on a timely basis, milling operations could be curtailed or interrupted. Further in the future, at current mining rates, we project that we would run out of tailings storage space in late 2028. The construction season in the Yukon is approximately April through October, and if permits are received by the first half of 2029, it is possible that tailings expansion could be advanced far enough in 2029 to permit the mill to resume normal production levels, and begin ramping up to higher production levels by the end of 2029. If that were to occur and an alternative plan not developed, milling operations could be curtailed or interrupted.
Quartz Mining License and Water License Amendments
Keno Hill's mill is currently permitted to process up to 440 tons per day (and it has achieved that rate for multiple weeks during test run periods); however, several factors other than mill capacity limit actual throughput, including dry stack tailings capacity and restrictions on waste rock production and disposal. To sustain operations at or near this permitted capacity, we will need to amend our quartz mining license ("QML") and water license ("WL") to remove these constraints. The process for securing these amendments includes submission of a Project Proposal to the Yukon Environmental and Socio-economic Assessment Board ("YESAB"), which we intend to submit by year-end 2026.
The YG is required to consult with the FNNND on permitting matters, including the YESAB review process. FNNND previously entered into a Cooperation and Benefits Agreement for Keno Hill, and we believe it remains supportive of the project. However, there can be no assurance that such support will continue or that the timing or outcome of the YESAB review will not be affected by FNNND's position. In addition, FNNND has indicated interest in revisiting the existing Cooperation and Benefits Agreement
("CBA"), including unresolved wealth-sharing provisions. We do not currently believe that negotiating changes to the CBA would impede the YESAB review process, but it is possible it could.
The YESAB review process is expected to take approximately 12 months, after which applications for amendments to the QML and WL would be submitted to the applicable regulators. We currently estimate that this overall process could be completed by approximately mid-2029, although each sequential step in this process is subject to its own timing variability, and delays at any stage would affect the overall timeline. There can be no assurance, however, that any of these approvals or amendments will be obtained on this timeline or at all. Construction would commence after receiving the permits.
Waste Rock and Water Management Constraints
Our QML places limits on the cumulative amount of waste rock that may be produced during mining and on waste rock storage capacity and classification. At current mining rates, we project that the waste rock production limit could be reached by approximately mid-2027, at which point waste rock production would need to be curtailed absent receipt of a QML amendment. If we do not alter mining rates by a sufficient amount or receive changes to our QML (which we are seeking, independent of the QML amendment process described above), it is possible mine production would stop by approximately mid-2027 until the amended permits are received and related construction completed. Our QML also limits capacity in our waste rock disposal areas, which could become an operational challenge if we are successful in modifying the waste rock production limit.
As we develop new mining zones at Keno Hill, we have periodically encountered higher-than-expected groundwater inflows. While we currently remain within permitted water discharge limits, development of new zones could require an amendment to our WL. There can be no assurance that the YG would grant such an amendment. If we are unable to amend our WL on a timely basis and continued development would result in discharges exceeding permitted limits, we may be required to curtail production or adjust mine sequencing to remain in compliance.
See the Risk Factor in our 2025 Form 10-K, "We are required to obtain governmental permits and other approvals in order to conduct mining operations."
Strategic Focus and Path to 440 Tons Per Day
As stated above, Keno Hill has generated profits at current throughput rates and metal prices. Our near-term strategic focus is to advance permitting and execute key infrastructure projects to place the mine on a path toward achieving its currently permitted capacity of 440 tons per day. At that rate and at current prices, we expect Keno Hill would generate sustained positive free cash flow while preserving optionality for potential expansion beyond 440 tons per day. The mill is currently permitted to process up to 440 tons per day, but there are factors other than mill capacity that limit throughput (e.g. dry stack tailings capacity and restrictions on waste rock production and disposal). As discussed above, to sustain operations at or near this permitted capacity, we will need to amend our QML and WL to remove these constraints. Sustained production at this level would require ore from both the Bermingham deposit and the lower-grade Flame & Moth deposit, and, as discussed above, completion of infrastructure projects, receipt of required permit amendments, continued mine development, and maintenance of social license to operate.
If the prerequisites to continue mining through the mid-2027 to mid-2029 (or later) period - including receipt of QML and WL amendments are not met on a timely basis, our operations and financial results could be materially adversely affected. Even if amended permits are received on a timely basis, there will be a period of time required to construct the associated infrastructure. Given that the overall permitting process involves multiple sequential regulatory steps, each subject to its own timing variability, and risks inherent to construction in Yukon once permits are received, mining rates and continuous operation at Keno Hill between approximately 2027 and 2030 remains uncertain. It is likely that there will be times of curtailed production, if not outright halts to production during that period.
We continue to study the aforementioned issues to develop a plan to optimize Keno Hill for the periods described herein. Such a plan could result in accelerated production schedules and an earlier transition to care and maintenance. Alternatively, such a plan could result in slower mining rates so that curtailment periods are minimized, or possibly eliminated, until permits are received and sustained, profitable production at higher throughput rates is achievable.
If any one of the prerequisites described above is not achieved on a timely basis, or if metal prices decrease materially from current levels, Keno Hill could be placed on care and maintenance. See the Risk Factor in our 2025 Form 10-K, "We may not realize all of the anticipated benefits from our acquisitions, including our 2022 acquisition of Alexco."
Corporate Matters
Income Taxes
During the three months ended March 31, 2026, an income and mining tax provision of $50.9 million, resulted in an effective tax rate of 23.6%. This compares to an income and mining tax provision of $15.6 million, which resulted in an effective tax rate of 35.8% for the three months ended March 31, 2025. The comparability of our income and mining tax provision and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) foreign exchange rates including non-recognition of foreign exchange gains and losses; (v) percentage depletion; and (vi) the non-recognition of tax assets. The effective tax rate will fluctuate, sometimes significantly, period to period. The change in the effective tax rate during the three months ended March 31, 2026, compared to the comparable period in 2025 is primarily related to the reported consolidated income as well as the losses incurred at our consolidated Alexco subsidiaries (that own the Keno Hill mine assets), and our Nevada subsidiaries, for which no tax benefit is recognized due to uncertainty surrounding our ability to utilize these future tax benefits.
Each reporting period we assess our deferred tax balances based on a review of long-range forecasts and quarterly activity. A valuation allowance is provided for deferred tax assets for which it is more likely than not the related tax benefits will not be realized. We analyze our deferred tax assets and, if it is determined that we will not realize all or a portion of our deferred tax assets, we record or increase a valuation allowance. Conversely, if it is determined we will ultimately more likely than not be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact our ability to realize our deferred tax assets. Valuation allowances are provided on deferred tax assets in Nevada, Mexico, and certain Canadian jurisdictions. For additional information, please see risk factors Our accounting and other estimates may be imprecise and Our ability to recognize the benefits of deferred tax assets related to net operating loss carryforwards and other items is dependent on future cash flows generating taxable income in Item 1A - Risk Factors in our 2025 Form 10-K.
Reconciliation of Total Cost of Sales to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)
The tables below present reconciliations between the most comparable GAAP measure of total cost of sales to the non-GAAP measures of (i) Cash Cost, Before By-product Credits, (ii) Cash Cost, After By-product Credits, (iii) AISC, Before By-product Credits and (iv) AISC, After By-product Credits for our operations and for the Company for the three months ended March 31, 2026 and 2025.
Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce are measures developed by precious metals companies (including the Silver Institute and the World Gold Council) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that these non-GAAP measures as we report them are the same as those reported by other mining companies.
Cash Cost, After By-product Credits, per Ounce is an important operating statistic that we utilize to measure each mine's operating performance. We use AISC, After By-product Credits, per Ounce as a measure of our mines' net cash flow after costs for reclamation and sustaining capital. This is similar to the Cash Cost, After By-product Credits, per Ounce non-GAAP measure we report, but also includes reclamation and sustaining capital costs. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce also allow us to benchmark the performance of each of our mines versus those of our competitors. As a silver and gold mining company, we also use these statistics on an aggregate basis - aggregating the Greens Creek and Lucky Friday mines to compare our performance with that of other silver mining companies. Similarly, these statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.
We have not disclosed cost per ounce statistics for the Keno Hill operation as it has not met our definition of commercial production. See above "Consolidated Results of Operations" for our definition of commercial production. Determination of when those criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.
Cash Cost, Before By-product Credits and AISC, Before By-product Credits include 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 expense, on-site general and administrative costs, royalties and mining production taxes. AISC, Before By-product Credits for each mine also includes reclamation and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense and sustaining capital costs. By-product credits include revenues earned
from all metals other than the primary metal produced at each unit. As depicted in the tables below, by-product credits comprise an essential element of our silver unit cost structure, distinguishing our silver operations due to the polymetallic nature of their orebodies.
In addition to the uses described above, Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce provide management and investors an indication of operating cash flow, after consideration of the average price received from production. We also use these measurements for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. We currently do not report Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for our Keno Hill operation as it is in the ramp-up phase of production and accordingly it is excluded from our consolidated Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce.
In thousands (except per ounce amounts) | Three Months Ended March 31, 2026 | |||||||||||||||||||||||
Greens Creek | Lucky Friday | Keno Hill (4) | Corporate (2) | Other (3) | Total Silver and Other | |||||||||||||||||||
Total cost of sales | $ | 82,358 | $ | 48,782 | $ | 22,099 | $ | - | $ | 4,939 | $ | 158,178 | ||||||||||||
Depreciation, depletion and amortization | (15,983 | ) | (13,609 | ) | (4,176 | ) | - | - | (33,768 | ) | ||||||||||||||
Treatment costs | 895 | 2,553 | - | - | - | 3,448 | ||||||||||||||||||
Change in product inventory | (5,383 | ) | (1 | ) | - | - | - | (5,384 | ) | |||||||||||||||
Reclamation and other costs | (846 | ) | (195 | ) | - | - | - | (1,041 | ) | |||||||||||||||
Exclusion of Keno Hill cash costs (4) | - | - | (17,923 | ) | - | (17,923 | ) | |||||||||||||||||
Exclusion of Other costs (3) | - | - | - | - | (4,939 | ) | (4,939 | ) | ||||||||||||||||
Cash Cost, Before By-product Credits (1) | 61,041 | 37,530 | - | - | - | 98,571 | ||||||||||||||||||
Reclamation and other costs | 934 | 225 | - | - | - | 1,159 | ||||||||||||||||||
Sustaining capital | 6,795 | 14,263 | - | 1,008 | - | 22,066 | ||||||||||||||||||
General and administrative | - | - | - | 15,753 | - | 15,753 | ||||||||||||||||||
AISC, Before By-product Credits (1) | 68,770 | 52,018 | - | 16,761 | - | 137,549 | ||||||||||||||||||
By-product credits: | ||||||||||||||||||||||||
Zinc | (25,369 | ) | - | - | - | - | (25,369 | ) | ||||||||||||||||
Gold | (55,214 | ) | - | - | - | - | (55,214 | ) | ||||||||||||||||
Lead | (6,037 | ) | (22,591 | ) | - | - | - | (28,628 | ) | |||||||||||||||
Copper | (433 | ) | - | - | - | - | (433 | ) | ||||||||||||||||
Total By-product credits | (87,053 | ) | (22,591 | ) | - | - | - | (109,644 | ) | |||||||||||||||
Cash Cost, After By-product Credits | $ | (26,012 | ) | $ | 14,939 | $ | - | $ | - | $ | - | $ | (11,073 | ) | ||||||||||
AISC, After By-product Credits | $ | (18,283 | ) | $ | 29,427 | $ | - | $ | 16,761 | $ | - | $ | 27,905 | |||||||||||
Ounces produced | 2,177 | 1,237 | 3,414 | |||||||||||||||||||||
Cash Cost, Before By-product Credits, per Ounce | $ | 28.04 | $ | 30.33 | $ | 28.87 | ||||||||||||||||||
By-product credits per ounce | (39.98 | ) | (18.26 | ) | (32.11 | ) | ||||||||||||||||||
Cash Cost, After By-product Credits, per Ounce | $ | (11.94 | ) | $ | 12.07 | $ | (3.24 | ) | ||||||||||||||||
AISC, Before By-product Credits, per Ounce | $ | 31.59 | $ | 42.04 | $ | 40.28 | ||||||||||||||||||
By-product credits per ounce | (39.98 | ) | (18.26 | ) | (32.11 | ) | ||||||||||||||||||
AISC, After By-product Credits, per Ounce | $ | (8.39 | ) | 23.78 | $ | 8.17 | ||||||||||||||||||
In thousands (except per ounce amounts) | Three Months Ended March 31, 2025 | |||||||||||||||||||||||
Greens Creek | Lucky Friday | Keno Hill (4) | Corporate (2) | Other (3) | Total Silver and Other | |||||||||||||||||||
Total cost of sales | $ | 69,638 | $ | 44,049 | $ | 15,871 | $ | - | $ | 7,095 | $ | 136,653 | ||||||||||||
Depreciation, depletion and amortization | (13,589 | ) | (13,425 | ) | (2,802 | ) | - | - | (29,816 | ) | ||||||||||||||
Treatment costs | 2,143 | 3,963 | - | - | - | 6,106 | ||||||||||||||||||
Change in product inventory | (901 | ) | (839 | ) | - | - | - | (1,740 | ) | |||||||||||||||
Reclamation and other costs | (307 | ) | (273 | ) | - | - | - | (580 | ) | |||||||||||||||
Exclusion of Keno Hill cash costs (4) | - | - | (13,069 | ) | - | - | (13,069 | ) | ||||||||||||||||
Exclusion of Other costs (3) | - | - | - | - | (7,095 | ) | (7,095 | ) | ||||||||||||||||
Cash Cost, Before By-product Credits (1) | 56,984 | 33,475 | - | - | - | 90,459 | ||||||||||||||||||
Reclamation and other costs | 757 | 195 | - | - | - | 952 | ||||||||||||||||||
Sustaining capital | 7,368 | 14,070 | - | 1,025 | - | 22,463 | ||||||||||||||||||
General and administrative | - | - | - | 11,999 | - | 11,999 | ||||||||||||||||||
AISC, Before By-product Credits (1) | 65,109 | 47,740 | - | 13,024 | - | 125,873 | ||||||||||||||||||
By-product credits: | ||||||||||||||||||||||||
Zinc | (23,374 | ) | (6,950 | ) | - | - | - | (30,324 | ) | |||||||||||||||
Gold | (34,977 | ) | - | - | - | - | (34,977 | ) | ||||||||||||||||
Lead | (6,091 | ) | (14,043 | ) | - | - | - | (20,134 | ) | |||||||||||||||
Copper | (729 | ) | - | - | - | - | (729 | ) | ||||||||||||||||
Total By-product credits | (65,171 | ) | (20,993 | ) | - | - | - | (86,164 | ) | |||||||||||||||
Cash Cost, After By-product Credits | $ | (8,187 | ) | $ | 12,482 | $ | - | $ | - | $ | - | $ | 4,295 | |||||||||||
AISC, After By-product Credits | $ | (62 | ) | $ | 26,747 | $ | - | $ | 13,024 | $ | - | $ | 39,709 | |||||||||||
Divided by ounces produced | 2,003 | 1,332 | 3,335 | |||||||||||||||||||||
Cash Cost, Before By-product Credits, per Ounce | $ | 28.46 | $ | 25.13 | $ | 27.13 | ||||||||||||||||||
By-product credits per ounce | (32.54 | ) | (15.76 | ) | (25.84 | ) | ||||||||||||||||||
Cash Cost, After By-product Credits, per Ounce | $ | (4.08 | ) | $ | 9.37 | $ | 1.29 | |||||||||||||||||
AISC, Before By-product Credits, per Ounce | $ | 32.51 | $ | 35.84 | $ | 37.75 | ||||||||||||||||||
By-product credits per ounce | (32.54 | ) | (15.76 | ) | (25.84 | ) | ||||||||||||||||||
AISC, After By-product Credits, per Ounce | $ | (0.03 | ) | $ | 20.08 | $ | 11.91 | |||||||||||||||||
Financial Liquidity and Capital Resources
We have a disciplined cash management strategy of maintaining financial flexibility to execute our capital priorities and provide long-term value to our stockholders. Consistent with that strategy, we aim to maintain an acceptable level of debt and sufficient liquidity to fund debt service costs, operations, capital expenditures, exploration and pre-development projects, while returning cash to stockholders through dividends and potential share repurchases.
At March 31, 2026, we had $587.6 million in cash and cash equivalents, of which $14.8 million was held in foreign subsidiaries' local currency that we anticipate utilizing for near-term operating, exploration or capital costs by those foreign subsidiaries. At March 31, 2026, we had no amount drawn on our $225 million credit facility, with $8.0 million used for letters of credit, leaving $217.0 million available for borrowings. We also have USD cash and cash equivalent balances held by our foreign subsidiaries that, if repatriated, may be subject to withholding taxes. We expect that there would be no additional tax burden upon repatriation after considering the cash cost
associated with the withholding taxes. We believe that our liquidity and capital resources from our continuing operations are adequate to fund our operations and corporate activities.
Pursuant to our common stock dividend policy described in Note 12 of Notes to Consolidated Financial Statements in our consolidated financial statements and notes for the year ended December 31, 2025, our Board of Directors declared and paid dividends on our common and preferred stock of $2.8 million (2025: $2.5 million) during the three months ended March 31, 2026. Our common stock dividend policy anticipates paying an annual minimum dividend of $0.015 per share.
The declaration and payment of dividends on our common stock is at the sole discretion of our Board of Directors, and there can be no assurance that we will continue to declare and pay common stock dividends in the future.
Pursuant to our stock repurchase program described in Note 12 of Notes to Consolidated Financial Statements in our consolidated financial statements and notes for the year ended December 31, 2025, we are authorized to repurchase up to 20 million shares of our outstanding common stock from time to time in open market or privately negotiated transactions, depending on prevailing market conditions and other factors. The repurchase program may be modified, suspended or discontinued by us at any time. Whether or not we engage in repurchases from time to time may depend on a variety of factors, including not only price and cash resources, but customary black-out restrictions, whether we have any material inside information, limitations on share repurchases or cash usage that may be imposed by our credit agreement or in connection with issuances of securities, alternative uses for cash, applicable law, and other investment opportunities from time to time. As of March 31, 2026 and December 31, 2025, 934,100 shares had been purchased in prior periods at an average price of $3.99 per share, leaving 19.1 million shares that may yet be purchased under the program. We have not repurchased any shares since June 2014.
As discussed in Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) pursuant to an equity distribution agreement dated February 18, 2021, as of March 31, 2026, there were 197,988 remaining shares of our common stock that we may offer and sell from time to time in "at-the-market" offerings. Sales of the shares, if any, will be made by means of ordinary brokers transactions or as otherwise agreed between the Company and the agents as principals. Whether or not we engage in sales from time to time may depend on a variety of factors, including share price, our cash resources, customary black-out restrictions, and whether we have any material inside information. The equity distribution agreement can be terminated by us at any time. Any sales of shares under that agreement are registered under the Securities Act of 1933, as amended, pursuant to a shelf registration statement on Form S-3.
As a result of our current cash balances, the expected performance of our operations, current metals prices, proceeds from potential at-the-market sales of common stock, and availability under our Credit Agreement, we believe we will be able to meet our obligations and other potential cash requirements during the next 12 months and beyond. While the formerly held Casa Berardi operation was a significant part of our operations, we don't believe its divestiture will have an impact on our ability to meet future obligations due to projected cash flow generation from our remaining operations, as the proceeds were utilized to repay our Senior Notes and eliminate our debt service costs on April 9, 2026. Our obligations and other uses of cash may include, but are not limited to: debt service obligations related to the Senior Notes; interest payments under our Credit Agreement; care and maintenance costs; capital investments at our operations; potential acquisitions of other mining companies or properties; regulatory matters; litigation; potential repurchases of our common stock under the program described above; and payment of dividends on common stock, if declared by our Board of Directors.
We currently estimate a range of approximately $204 to $223 million will be spent in 2026 on capital expenditures,
primarily for equipment, infrastructure, and development at our mines, before any lease financing. We also estimate exploration and pre-development expenditures will total approximately $55 million in 2026. Our expenditures for these items and our related plans for 2026 may change based upon our financial position, metals prices, and other considerations. Our ability to fund the activities described above will depend on our operating performance, metals prices, our ability to estimate revenues and costs, sources of liquidity available to us, including the revolving credit facility, and other factors. A sustained downturn in metals prices, significant increase in operational or capital costs or other uses of cash, our inability to access the credit facility or the sources of liquidity discussed above, or other factors beyond our control could impact our plans. See the Risk Factor in our 2025 Form 10-K "An extended decline in metals prices, an increase in operating or capital costs, or treatment charges, mine accidents or closures, increasing regulatory obligations, or our inability to convert resources or exploration targets to reserves may cause us to record write-downs, which could negatively impact our results of operations."
We may defer some capital investment and/or exploration and pre-development activities, engage in asset sales or secure additional capital if necessary to maintain liquidity. We may also pursue additional acquisition opportunities, which could require additional equity issuances or other forms of financing. There can be no assurance that such financing will be available to us.
Our liquid assets include (in millions):
March 31, 2026 | December 31, 2025 | |||||||
Cash and cash equivalents held in U.S. dollars | $ | 572.8 | $ | 215.1 | ||||
Cash and cash equivalents held in foreign currency | 14.8 | 26.5 | ||||||
Total cash and cash equivalents | 587.6 | 241.6 | ||||||
Marketable equity securities - current and non-current | 178.0 | 107.5 | ||||||
Total cash, cash equivalents and investments | $ | 765.6 | $ | 349.1 | ||||
Cash and cash equivalents increased by $346.0 million in the first three months of 2026 from cash generated from operations, the proceeds received for disposing of Hecla Quebec, Minera Hecla and marketable securities. Cash held in foreign currencies represents balances in Canadian dollars. The value of our current and non-current marketable equity securities increased by $70.5 million.
Three Months Ended | ||||||||
March 31, 2026 | March 31, 2025 | |||||||
Cash provided by operating activities from continuing operations (in millions) | $ | 182.9 | $ | 27.6 | ||||
Cash provided by operating activities from continuing operations for the three months ended March 31, 2026, of $182.9 million represents a $155.3 million increase compared to the $27.6 million of cash provided by operating activities from continuing operations during the same period of 2025. $168.6 million of the variance was attributable to higher income adjusted for non-cash items, reflecting higher net income driven by higher revenues, partly offset by a $13.3 million working capital and other asset and liability movement.
Three Months Ended | ||||||||
March 31, 2026 | March 31, 2025 | |||||||
Cash provided by (used in) investing activities of continuing operations (in millions) | $ | 174.4 | $ | (37.8 | ) | |||
During the three months ended March 31, 2026, cash provided by investing activities of continuing operations increased by $212.2 million, primarily due to the sales of Hecla Quebec and Minera Hecla for total proceeds of $173.3 million, net of transaction costs paid. In addition, we made net investment sales related to our marketable securities portfolio (which includes our SERP assets which are held in a Rabbi Trust) of $39.7 million. Capital investments of $39.3 million across our operations were consistent with the same period in 2025.
Three Months Ended | ||||||||
March 31, 2026 | March 31, 2025 | |||||||
Cash (used in) provided by financing activities of continuing operations (in millions) | $ | (5.1 | ) | $ | 15.9 | |||
Cash used in financing activities of continuing operations was lower than the same period in 2025 primarily due to the prior period containing net borrowings of $20.0 million on our revolving credit facility. In addition, the following impacted cash used in investing activities for the three months ended March 31, 2026 and 2025:
Three Months Ended | ||||||||
March 31, 2026 | March 31, 2025 | |||||||
Cash provided by operating activities from discontinued operations (in millions) | $ | 11.3 | $ | 8.1 | ||||
During the three months ended March 31, 2026 and 2025, cash provided by operating activities from discontinued operations was $11.3 million and $8.1 million, respectively. The increase in cash provided by operating activities related to higher operating income due to higher realized prices.
Three Months Ended | ||||||||
March 31, 2026 | March 31, 2025 | |||||||
Cash used in investing activities of discontinued operations (in millions) | $ | (8.8 | ) | $ | (16.3 | ) | ||
During the three months ended March 31, 2026 and 2025, cash used in investing activities from discontinued operations was $8.8 million and $16.3 million, respectively. The decrease in investing activities related to the seasonal variations in our investments at Casa Berardi.
Three Months Ended | ||||||||
March 31, 2026 | March 31, 2025 | |||||||
Cash used in financing activities of discontinued operations (in millions) | $ | (8.4 | ) | $ | (0.7 | ) | ||
During the three months ended March 31, 2026 and 2025, cash used in financing activities from discontinued operations was $8.4 million and $0.7 million, respectively, with the increase used in financing activities related to the early repayment of finance leases.
Contractual Obligations, Contingent Liabilities and Commitments
The table below presents our fixed, non-cancelable contractual obligations and commitments primarily related to our Senior Notes, credit facility, outstanding purchase orders (including certain capital expenditures) and lease arrangements as of March 31, 2026 (in thousands):
Payments Due By Period | ||||||||||||||||||||
Less than 1 year | 1-3 years | 4-5 years |
More than | Total | ||||||||||||||||
Purchase obligations (1) | $ | 29,507 | $ | - | $ | - | $ | - | $ | 29,507 | ||||||||||
Credit facility(2) | 1,628 | 2,123 | - | - | 3,751 | |||||||||||||||
Finance lease commitments (3) | 3,747 | 579 | - | - | 4,326 | |||||||||||||||
Operating lease commitments (4) | 3,948 | 7,860 | 6,702 | 5,235 | 23,745 | |||||||||||||||
Senior Notes (5) | 19,068 | 279,769 | - | - | 298,837 | |||||||||||||||
Total contractual cash obligations | $ | 57,898 | $ | 290,331 | $ | 6,702 | $ | 5,235 | $ | 360,166 | ||||||||||
We record liabilities for costs associated with mine closure, reclamation of land and other environmental matters. At March 31, 2026, our liabilities for these matters totaled $126.4 million. Future expenditures related to closure, reclamation and environmental expenditures at our sites are difficult to estimate, although we anticipate we will incur expenditures relating to these obligations over the next 30 years. For additional information relating to our environmental obligations, see Note 12 of Notes to Condensed Consolidated Financial Statements (Unaudited).
Off-Balance Sheet Arrangements
At March 31, 2026, we had no existing off-balance sheet arrangements, as defined under SEC regulations, that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Guarantor Subsidiaries
Presented below are Hecla's unaudited interim condensed consolidating financial statements as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended, resulting from the guarantees by certain of Hecla's subsidiaries of the Senior Notes (see Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information). The Guarantors consist of the following of Hecla's 100%-owned subsidiaries: Hecla Limited; Silver Hunter Mining Company; Rio Grande Silver, Inc.; Hecla MC Subsidiary, LLC; Hecla Silver Valley, Inc.; Burke Trading, Inc.; Hecla Montana, Inc.; Revett Silver Company; RC Resources, Inc.; Troy Mine Inc.; Revett Exploration, Inc.; Revett Holdings, Inc.; Mines Management, Inc.; Newhi, Inc.; Montanore Minerals Corp.; Hecla Alaska LLC; Hecla Greens Creek Mining Company; Hecla Admiralty Company; Hecla Juneau Mining Company; Klondex Holdings Inc.; Klondex Gold & Silver Mining Co.; Klondex Midas Holdings Limited; Klondex Aurora Mine Inc.; Klondex Hollister Mine Inc.; and Alexco Resource Corp. We completed the offering of the Senior Notes on February 19, 2020 under our shelf registration statement previously filed with the SEC.
The unaudited interim condensed consolidating financial statements below have been prepared from our financial information on the same basis of accounting as the unaudited interim condensed consolidated financial statements set forth elsewhere in this report. Investments in the subsidiaries are accounted for under the equity method. Accordingly, the entries necessary to consolidate Hecla, the Guarantors, and our non-guarantor subsidiaries are reflected in the intercompany eliminations column. In the course of preparing consolidated financial statements, we eliminate the effects of various transactions conducted between Hecla and its subsidiaries and among the subsidiaries. While valid at an individual subsidiary level, such activities are eliminated in consolidation because, when taken as a whole, they do not represent business activity with third-party customers, vendors, and other parties. Examples of such eliminations include the following:
Separate financial statements of the Guarantors are not presented because the guarantees by the Guarantors are joint and several and full and unconditional, except for certain customary release provisions, including: (1) the sale or disposal of all or substantially all of the assets of the Guarantor; (2) the sale or other disposition of the capital stock of the Guarantor; (3) the Guarantor is designated as an unrestricted entity in accordance with the applicable provisions of the indenture; (4) Hecla ceases to be a borrower as defined in the indenture; and (5) upon legal or covenant defeasance or satisfaction and discharge of the indenture.
Unaudited Interim Condensed Consolidating Balance Sheets
As of March 31, 2026 | ||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||
(in thousands) | ||||||||||
Assets | ||||||||||
Cash and cash equivalents | $399,934 | $3,401 | $184,215 | $- | $587,550 | |||||
Other current assets | 38,359 | 324,451 | 14,873 | (7,592) | 370,091 | |||||
Property, plants, equipment and mine development, net | 296 | 2,122,421 | 492 | - | 2,123,209 | |||||
Intercompany receivable (payable) | (691,491) | (101,324) | 784,522 | 8,293 | - | |||||
Investments in subsidiaries | 2,902,908 | (52) | - | (2,902,856) | - | |||||
Other non-current assets | 430,028 | 61,547 | 356,044 | (552,176) | 295,443 | |||||
Total assets | $3,080,034 | $2,410,444 | $1,340,146 | $(3,454,331) | $3,376,293 | |||||
Liabilities and Stockholders' Equity | ||||||||||
Current liabilities | $72,237 | $128,802 | $17,582 | $(24,772) | $193,849 | |||||
Long-term debt | 262,073 | 573 | - | - | 262,646 | |||||
Non-current portion of accrued reclamation | - | 113,997 | 5 | - | 114,002 | |||||
Non-current deferred tax liability | 151,006 | 181,651 | 12,219 | (150,807) | 194,069 | |||||
Other non-current liabilities | 23,908 | 207,515 | 185,337 | (375,846) | 40,914 | |||||
Stockholders' equity | 2,570,810 | 1,777,906 | 1,125,003 | (2,902,906) | 2,570,813 | |||||
Total liabilities and stockholders' equity | $3,080,034 | $2,410,444 | $1,340,146 | $(3,454,331) | $3,376,293 | |||||
As of December 31, 2025 | ||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||
(in thousands) | ||||||||||
Assets | ||||||||||
Cash and cash equivalents | $210,465 | $18,559 | $12,534 | $- | $241,558 | |||||
Other current assets | 56,469 | 336,575 | 46,258 | (92,301) | 347,001 | |||||
Property, plants, equipment and mine development, net | 296 | 2,122,194 | 8,091 | - | 2,130,581 | |||||
Intercompany receivable (payable) | (685,894) | (367,211) | 667,695 | 385,410 | - | |||||
Investments in subsidiaries | 2,842,226 | (52) | - | (2,842,174) | - | |||||
Other non-current assets | 672,380 | 15,646 | 200,970 | (799,220) | 89,776 | |||||
Assets of discontinued operations | - | 751,729 | - | - | 751,729 | |||||
Total assets | $3,095,942 | $2,877,440 | $935,548 | $(3,348,285) | $3,560,645 | |||||
Liabilities and Stockholders' Equity | ||||||||||
Current liabilities | $86,837 | $166,108 | $46,907 | $(108,646) | $191,206 | |||||
Long-term debt | 261,947 | 1,224 | - | - | 263,171 | |||||
Non-current portion of accrued reclamation | - | 111,027 | 1,464 | - | 112,491 | |||||
Non-current deferred tax liability | 131,136 | 27,039 | (590) | - | 157,585 | |||||
Other non-current liabilities | 24,376 | 207,966 | 198,983 | (397,413) | 33,912 | |||||
Liabilities of discontinued operations | - | 210,634 | - | - | 210,634 | |||||
Stockholders' equity | 2,591,646 | 2,153,442 | 688,784 | (2,842,226) | 2,591,646 | |||||
Total liabilities and stockholders' equity | $3,095,942 | $2,877,440 | $935,548 | $(3,348,285) | $3,560,645 | |||||
Unaudited Interim Condensed Consolidating Statements of Operations
Three Months Ended March 31, 2026 | ||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues | $ | (10,205 | ) | $ | 423,277 | $ | - | $ | (1,639 | ) | $ | 411,433 | ||||||||
Cost of sales | - | (125,715 | ) | - | 1,305 | (124,410 | ) | |||||||||||||
Depreciation, depletion, amortization | - | (33,768 | ) | - | - | (33,768 | ) | |||||||||||||
General and administrative | (4,877 | ) | (9,923 | ) | (953 | ) | - | (15,753 | ) | |||||||||||
Exploration and pre-development | (223 | ) | (4,729 | ) | 336 | - | (4,616 | ) | ||||||||||||
Equity in earnings of subsidiaries | 171,727 | - | - | (171,727 | ) | - | ||||||||||||||
Other income (expense) | 58,429 | (18,537 | ) | 5,438 | (62,663 | ) | (17,333 | ) | ||||||||||||
Income before income and mining taxes | 214,851 | 230,605 | 4,821 | (234,724 | ) | 215,553 | ||||||||||||||
Income and mining tax provision | (50,198 | ) | (59,054 | ) | (4,647 | ) | 62,999 | (50,900 | ) | |||||||||||
Net income from continuing operations | 164,653 | 171,551 | 174 | (171,725 | ) | 164,653 | ||||||||||||||
Net loss from discontinued operations, net of taxes | (183,681 | ) | - | - | - | (183,681 | ) | |||||||||||||
Preferred stock dividends | (132 | ) | - | - | - | (132 | ) | |||||||||||||
Net loss applicable to common stockholders | $ | (19,160 | ) | $ | 171,551 | $ | 174 | $ | (171,725 | ) | $ | (19,160 | ) | |||||||
Net income from continuing operations | 164,653 | 171,551 | 174 | (171,725 | ) | 164,653 | ||||||||||||||
Other comprehensive loss | (2,157 | ) | - | - | - | (2,157 | ) | |||||||||||||
Comprehensive income from continuing operations | $ | 162,496 | $ | 171,551 | $ | 174 | $ | (171,725 | ) | $ | 162,496 | |||||||||
Comprehensive loss from discontinued operations | (183,681 | ) | - | - | - | (183,681 | ) | |||||||||||||
Comprehensive loss | $ | (21,185 | ) | $ | 171,551 | $ | 174 | $ | (171,725 | ) | $ | (21,185 | ) | |||||||
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Hecla Mining Company published this content on May 05, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 05, 2026 at 22:20 UTC.
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