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
Overview
Established in 1891 in northern
• concentrates containing silver, gold, lead and zinc, which are shipped to various smelters or sold to metal traders; 23
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Table of Contents • unrefined doré containing gold and silver, which is sold to refiners or further refined before sale of the metals to traders; and • carbon material containing gold and silver, which is sold to third-party processors.
Our operating properties comprise our five business segments for financial
reporting purposes: the
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Our current business strategy is to focus our financial and human resources in the following areas:
• rapidly responding to the threats from the COVID-19 pandemic to protect our workforce, operations and communities while maintaining liquidity; • operating our properties safely, in an environmentally responsible manner, and cost-effectively; • improving operations at our units, which includes incurring costs for new technologies and equipment that may not result in measurable benefits; • expanding our proven and probable reserves and production capacity at our units; • conducting our business with financial stewardship to preserve our financial position in varying metals price and operational environments; • advancing permitting of theRock Creek and Montanore projects; • maintaining and investing in exploration and pre-development projects in the vicinities of eleven mining districts and projects we believe to be under-explored and under-invested:North Idaho's Silver Valley in the historic Coeur d'Alene Mining District; ourGreens Creek unit onAlaska's Admiralty Island located nearJuneau ; the silver-producing district nearDurango, Mexico ; in the vicinity of ourCasa Berardi mine and the Heva-Hosco project in the Abitibi region of northwesternQuebec, Canada ; our projects located in two districts in northernNevada ; theRock Creek and Montanore projects in northwesternMontana ; the Kinskuch property inBritish Columbia, Canada ; the Republic district in northeasternWashington ; and theCreede district of southwesternColorado ; and • continuing to seek opportunities to acquire or invest in mining properties and companies.
The COVID-19 outbreak impacted our operations in 2020, including adversely
impacting our expected production of gold at Casa Berardi, and has continued to
impact our operations in 2021. We incurred additional costs of approximately
A number of key factors may impact the execution of our strategy, including regulatory issues and metals prices. Metals prices can be very volatile and are influenced by a number of factors beyond our control (except on a limited basis through the use of derivative contracts). See Item 7. Critical Accounting Estimates in our 2020 Form 10-K. The average realized prices of silver, gold lead and zinc were higher in the first six months of 2021 than in the comparable period last year, as illustrated by the table in Results of Operations below. While we believe longer-term global economic and industrial trends could result in continued demand for the metals we produce, prices have been volatile and there can be no assurance that current prices will continue.
Volatility in global financial markets and other factors can pose a significant
challenge to our ability to access credit and equity markets, should we need to
do so, and to predict sales prices for our products. To help mitigate this
challenge, we utilize forward contracts to manage exposure to declines in the
prices of (i) silver, gold, zinc and lead contained in our concentrates that
have been shipped but have not yet settled, and (ii) the zinc and lead content
that we forecast in future concentrate shipments. We have also utilized put
option contracts to manage exposure to declines in the prices of silver and gold
in our forecasted future sales of those metals. In addition, we have in place a
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We strive to achieve excellent mine safety and health performance. We seek to
implement this goal by: training employees in safe work practices; establishing,
following and improving safety standards; investigating accidents, incidents and
losses to avoid recurrence; involving employees in the establishment of safety
standards; and participating in the
Another challenge for us is the risk associated with environmental litigation and ongoing reclamation activities. As described in Item 1A. Risk Factors in our 2020 Form 10-K and in Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited), it is possible that our estimate of these liabilities (and our ability to estimate liabilities in general) may change in the future, affecting our strategic plans. We are involved in various environmental legal matters and the estimate of our environmental liabilities and liquidity needs, as well as our strategic plans, may be significantly impacted as a result of these matters or new matters that may arise. We strive for compliance with applicable laws and regulations and attempt to resolve environmental litigation on terms as favorable to us as possible.
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