false 0000719413 0000719413 2020-10-07 2020-10-07 0000719413 hl:CommonStockCustomMember 2020-10-07 2020-10-07 0000719413 hl:SeriesBCumulativeConvertiblePreferredStockCustomMember 2020-10-07 2020-10-07
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
 
FORM 8-K
 
Current Report
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): October 7, 2020
 
HECLA MINING COMPANY
(Exact name of registrant as specified in its charter)
 
Delaware 1-8491 77-0664171
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)    
 
6500 North Mineral Drive, Suite 200
Coeur d'Alene, Idaho 83815-9408
(Address of principal executive offices) (Zip Code)
 
(208) 769-4100
Registrant's telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.25 per share
HL
New York Stock Exchange
Series B Cumulative Convertible Preferred Stock, par value $0.25 per share
HL-PB
New York Stock Exchange
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 
 
 
Item 1.01 Entry Into a Material Definitive Agreement.
 
On October 7, 2020, Hecla Mining Company (the “Company”) revised its revolving credit agreement (the “Credit Agreement”) dated July 16, 2018 with the various financial institutions and other persons from time to time parties thereto as lender (the “Lenders”) and The Bank of Nova Scotia, as administrative agent for the Lenders and as letter of credit issuer. The Credit Agreement was previously amended by agreements dated May 8, 2019 (the “First Amendment”), July 15, 2019 (the “Second Amendment”), August 23, 2019 (the “Third Amendment”) and February 7, 2020 (the “Fourth Amendment”). The revision is in the form of a supplement executed by the Company which adds the Company as a party to the existing Fifth Amended and Restated Security Agreement entered into under the Credit Agreement by most of the Company’s subsidiaries and the Lenders to include substantially all personal property of the Company. Primarily this includes most cash and investment accounts of the Company and the equity of two additional subsidiaries, each of which will be added as new collateral under the Security Agreement. Previously the Company’s personal property did not secure borrowings under the Credit Agreement. The Supplement to the Fifth Amended and Restated Security Agreement is included as Exhibit 10.6 hereto and is incorporated by reference.
 
The Credit Agreement and the related amendments were each previously filed with the SEC as follows and each is incorporated herein by reference:
 
Document
SEC Filing
Date of Filing
Exhibit Number
       
Credit Agreement
Current Report on Form 8-K
July 17, 2018
10.1
First Amendment
Current Report on Form 8-K
July 18, 2019
10.2
Second Amendment
Current Report on Form 8-K
July 18, 2019
10.3
Third Amendment
Quarterly Report on Form 10-Q
November 7, 2019
10.2
Fourth Amendment
Current Report on Form 8-K
February 10, 2020
10.5
 
The Credit Agreement, as amended, contains representations and warranties we made. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that the Company has exchanged in connection with signing the Credit Agreement. While the Company does not believe that they contain information securities laws require it to publicly disclose other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Credit Agreement. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts since they are modified in important part by the underlying disclosure schedules. The Credit Agreement has been incorporated by reference herein to provide you with information regarding its terms. It is not intended to provide any other factual information about the Company. Such information about the Company can be found elsewhere in other public filings the Company has made with the SEC, which are available without charge at www.sec.gov.
 
The disclosure schedules contain information that has been included in the Company’s general prior public disclosures, as well as potential additional non-public information. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Credit Agreement, which subsequent information may or may not be fully reflected in public disclosures.
 
 
 
 
Item 2.02 Results of Operations and Financial Condition.
 
On October 8, 2020, the Company issued a news release (“Release”) announcing certain preliminary production and financial results for the third quarter ended September 30, 2020.  All measures of the Company's third quarter 2020 operating and financial results and conditions contained in the Release are preliminary and reflect the Company’s expected results as of the date of the Release. Actual reported third quarter 2020 results are subject to management's final review as well as review by the Company's independent registered accounting firm and may vary significantly from current expectations because of a number of factors, including, without limitation, additional or revised information and changes in accounting standards or policies or in how those standards are applied. A copy of the Release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference.  
 
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any of the Company’s filings or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
 
Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit
Number
  Description
     
10.1
 
     
10.2
 
 
 
 
 
 
Exhibit
Number
  Description
     
10.3
 
     
10.4
 
     
10.5
 
     
10.6
 
     
99.1
 
     
104
 
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
     
    * Filed herewith
     
    ** Furnished herewith
 
 
 
 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
HECLA MINING COMPANY
       
By
/s/ David C. Sienko
David C. Sienko
Vice President and General Counsel
 
 
 
Dated: October 8, 2020
 

Exhibit 10.6

SUPPLEMENT TO

SECURITY AGREEMENT

 

This SUPPLEMENT by Hecla Mining Company, a Delaware corporation (the “Parent”), dated as of October 7, 2020 (this “Supplement”), is to the Fifth Amended and Restated Security Agreement dated as of February 14, 2014 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Security Agreement”), among the Grantors (such term, and other terms used in this Supplement, to have the meanings set forth in Article I of the Security Agreement) from time to time party thereto, in favor of THE BANK OF NOVA SCOTIA, as the administrative agent (together with its successor(s) thereto in such capacity, the “Administrative Agent”) for each of the Secured Parties.

 

W I T N E S S E T H :

 

WHEREAS, pursuant to that certain Fifth Amended and Restated Credit Agreement dated as of July 16, 2018 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”), among the Parent, the Borrowers, the other Obligors party thereto, the Lenders, and the Administrative Agent, the Lenders and the Issuers have extended Commitments to make Loans to the Borrower; and

 

WHEREAS, pursuant to the provisions of Section 7.6 of the Security Agreement, the undersigned is becoming a Grantor under the Security Agreement; and

 

WHEREAS, the undersigned desires to become a “Grantor” under the Security Agreement in order to induce the Secured Parties to continue to extend Loans and issue Letters of Credit under the Credit Agreement; and

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees, for the benefit of each Secured Party, as follows.

 

SECTION 1.      Party to Security Agreement, etc. In accordance with the terms of the Security Agreement, by its signature below the undersigned hereby irrevocably agrees to become a Grantor under the Security Agreement with the same force and effect as if it were an original signatory thereto and the undersigned hereby (a) agrees to be bound by and comply with all of the terms and provisions of the Security Agreement applicable to it as a Grantor and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct as of the date hereof, unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date. In furtherance of the foregoing, each reference to a “Grantor” and/or “Grantors” in the Security Agreement shall be deemed to include the undersigned. The information set forth on each of the schedules attached hereto is hereby added to the respective schedules attached to the Security Agreement.

 

SECTION 2.      Representations. The undersigned Grantor hereby represents and warrants that this Supplement has been duly authorized, executed and delivered by it and that this Supplement and the Security Agreement constitute the legal, valid and binding obligation of the undersigned, enforceable against it in accordance with its terms.

 

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SECTION 3.      Full Force of Security Agreement. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect in accordance with its terms.

 

SECTION 4.      Severability. Wherever possible each provision of this Supplement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Supplement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Supplement or the Security Agreement.

 

SECTION 5.      Governing Law, Entire Agreement, etc. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). This Supplement and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter thereof and supersede any prior agreements, written or oral, with respect thereto.

 

SECTION 6.      Counterparts. This Supplement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

 

2
 

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Supplement to be duly executed and delivered by its Authorized Officer as of the date first above written.

 

 

 

HECLA MINING COMPANY

 

 

 

 

 

 

         

 

 

 

 

 

 

By:

 

/s/ Luther J. Russell

 

 

 

Name:

Luther J. Russell

 

 

 

Title:

Vice President – External Affairs

 


 

 

 

 

ACCEPTED AND AGREED FOR ITSELF
AND ON BEHALF OF THE SECURED PARTIES:

 

THE BANK OF NOVA SCOTIA
     as Administrative Agent


By:    _________________________________

Name:

Title:

 

 

By:    _________________________________

Name:

Title:

 

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EX_206481IMG001.JPG NEWS RELEASE Exhibit 99.1

 

HECLA REPORTS THIRD QUARTER PRODUCTION

AND CASH POSITION

 

FOR IMMEDIATE RELEASE

October 8, 2020

 

COEUR D'ALENE, IDAHO -- Hecla Mining Company (NYSE:HL) today announced production results and its cash position at the end of the third quarter.

 

HIGHLIGHTS

 

●

Silver production of 3.5 million ounces and gold production of 41,174 ounces.

 

●

Equivalent production for silver of 9.0 million ounces or gold of 114,998 ounces.1

 

●

Lead production of 9,750 tons; zinc production of 17,997 tons.

 

●

Cash and cash equivalents of approximately $97 million at September 30, 2020.

 

●

Reaffirmed increased annual silver and gold production guidance.

 

●

Planned increase for fourth quarter exploration program.

 

“Hecla’s strong operating performance was from increasing silver production at Greens Creek and Lucky Friday and managing COVID-19 at all the mines,” said Phillips S. Baker, Jr., President and CEO. “This operating performance combined with higher silver prices allowed us to close the quarter with $97 million of cash and cash equivalents while fully repaying our revolving credit facility. Given our free cash flow generation, we expect to spend about $5 million more in exploration, and based on our realized silver price for the quarter being above $25, we expect the silver-linked dividend to be triggered.”

 

Performance Comparison and Updated Outlook

 

Silver (Moz)

 

Gold (Koz)

 

Greens

Creek

Lucky

Friday

San

Sebastian

Total

 

Greens

Creek

Casa

Berardi

Nevada

San

Sebastian

Total

First 9 months 2020

8.2

1.2

0.8

10.2

 

38

84

32

6

160

                     

2020 Updated Outlook

10-10.3

1.6-1.8

0.8-0.9

12.4-13.0

 

47-48

114-124

32

6

199-210

                     
 

Previous

Updated

           

Exploration

$11 million

$16 million

           

 

 

(1)

Silver and gold equivalent calculation based on average actual prices for each metal in the third quarter as follows: $24.39 for Ag, $1,911 for Au, $0.85 for Pb, and $1.06 for Zn.

 

Hecla Mining Company ● 1-800-432-5291 ● hmc-info@hecla-mining.com

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Greens Creek

 

At the Greens Creek mine, 2.6 million ounces of silver and 12,838 ounces of gold were produced in the quarter. Higher silver production compared to the third quarter of 2019 was due to slightly higher ore production and grades. The mill operated at an average of 2,340 tons per day (tpd).   

 

Greens Creek’s nine months production was higher than anticipated due to higher silver grades. The fourth quarter assumes planned grades.

 

Lucky Friday

 

At the Lucky Friday mine, 636,389 ounces of silver were produced in the quarter. The mine has continued normal operations during the pandemic, with the ramp-up proceeding as planned. Lucky Friday is expected to increase production in the fourth quarter to full throughput before the end of the year resulting in an estimated annual production of approximately 3 million ounces in 2021.

 

Casa Berardi

 

At the Casa Berardi mine, 26,405 ounces of gold were produced in the quarter, including 6,800 ounces from the East Mine Crown Pillar pit, with the decrease primarily due to lower mill throughput resulting from major planned mill maintenance activities. The mill operated at an average of 3,138 tpd.

 

Casa Berardi’s nine-month production was lower than anticipated because of the government-mandated shutdown and planned mill maintenance activities, but production in the fourth quarter should increase due to expected high-grade underground production from the East Mine.

 

San Sebastian

 

At the San Sebastian mine, 0.3 million ounces of silver and 1,931 ounces of gold were produced in the quarter. Mining was completed in the third quarter and milling is expected to be completed in the fourth quarter of 2020. The mill operated at an average of 512 tpd. The Company continues to explore this highly prospective land package and will evaluate further mining based on exploration success.

 

Nevada Operations

 

At the Nevada operations, ore mined during the quarter has been stockpiled for the third-party processing expected in the fourth quarter. Gold production may not be realized until the first quarter of 2021. Mining of non-refractory ore is substantially complete. Mining of refractory ore for the bulk sample test is expected to continue through the remainder of 2020. Production from this test is expected to be between 5 and 10 thousand ounces of gold.

 

Financing

 

In September, the Company repaid $50 million on its revolving credit facility and has no remaining balance outstanding. During the third quarter, the Company received C$37.5 million (US$27.6 million) of Investissement Quebec’s C$50 million (US$36.8 million) senior unsecured note proceeds. The remaining amount is expected in the fourth quarter.

 

Hecla Mining Company ● 1-800-432-5291 ● hmc-info@hecla-mining.com

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PRODUCTION SUMMARY

 

 

Third Quarter Ended

 

Nine Months Ended

 
 

September 30,

2020

September 30,

2019

 

September 30,

2020

September 30,

2019

 

PRODUCTION

   

Increase/

(Decrease)

   

Increase/

(Decrease)

Silver (oz)

3,541,371

3,251,350

9%

10.190.620

9,193,246

11%

Gold (oz)

41,174

77,311

(47)%

159,948

198,100

(19)%

Lead1 (tons)

9,750

6,107

60%

24,620

17,406

41%

Zinc (tons)

17,997

15,413

17%

48,700

42,672

14%

Greens Creek – Silver (oz)

2,634,436

2,544,018

4%

8,164,061

7,149,035

14%

Greens Creek – Gold (oz)

12,838

13,684

(6)%

38,215

41,269

(7)%

Lucky Friday - Silver1 (oz)

636,389

115,682

450%

1,201,673

416,455

1,885%

San Sebastian – Silver (oz)

266,691

541,636

(51)%

772,158

1,446,450

(47)%

San Sebastian – Gold (oz)

1,931

4,699

(59)%

6,064

11,776

(49)%

Casa Berardi - Gold2 (oz)

26,405

36,547

(28)%

83,913

99,616

(16)%

Nevada Operations - Silver (oz)

- -

43,377

N/A

37,443

160,264

(77)%

Nevada Operations - Gold (oz)

- -

22,381

N/A

31,756

45,439

(30)%

 

 

(1)

Union workers at Lucky Friday were on strike in 2019.

 

(2)

Casa Berardi also produced 3,856 ounces of silver in the third quarter 2020 compared to 6,637 ounces of silver for third quarter 2019.

 

Hecla Mining Company ● 1-800-432-5291 ● hmc-info@hecla-mining.com

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ABOUT HECLA

 

Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska, Idaho and Mexico, and is a growing gold producer with operating mines in Quebec and Nevada. The Company also has exploration and pre-development properties in eight world-class silver and gold mining districts in the U.S., Canada, and Mexico.

 

Cautionary Statements Regarding Forward-Looking Statements

 

Statements made or information provided in this news release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of Canadian securities laws. Words such as “may”, “will”, “should”, “expects”, “intends”, “projects”, “believes”, “estimates”, “targets”, “anticipates” and similar expressions are used to identify these forward-looking statements. Forward-looking statements in this news release may include, without limitations, (i) estimates of annual silver and gold production for 2020 on a consolidated basis and at each of the Greens Creek, Lucky Friday, Casa Berardi, San Sebastian, and Nevada Operations mines; (ii) planned increased exploration spending in the fourth quarter of 2020; (iii) Lucky Friday expected to increase production in the fourth quarter and in 2021, with the latter anticipated to be 3 million ounces for the year; (iv) expected increased production at Casa Berardi in the fourth quarter of 2020 due to expected high-grade production; (v) at the Nevada Operations: (1) stockpiled ore is expected to be processed by a third party in the fourth quarter, (2) gold production may not be realized until the first quarter of 2021, and (3) mining of refractory ore for the bulk sample is expected to continue through the remainder of 2020, and is expected to yield production of between 5,000 and 10,000 ounces of gold; (vi) expectation that management will ask the Board to declare a dividend to common stockholders in the fourth quarter of 2020; (vii) Greens Creek’s production in the fourth quarter of 2020 expected to be at planned, not higher, grades; (viii) completion of milling at San Sebastian in the fourth quarter of 2020; and (ix) the Company will receive in the fourth quarter the final installment of proceeds from Investissement Quebec’s C$50 million (US$36.8 million) senior unsecured note purchase. The material factors or assumptions used to develop such forward-looking statements or forward-looking information include that the Company’s plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated, to which the Company’s operations are subject.

 

Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected, or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, litigation, regulatory and environmental risks, operating risks, project development risks, political risks, labor issues, ability to raise financing and exploration risks and results. Refer to the Company's Form 10-K and 10-Q reports for a more detailed discussion of factors that may impact expected future results. The Company undertakes no obligation and has no intention of updating forward-looking statements other than as may be required by law.

 

For further information, please contact:

 

Russell Lawlar

Treasurer

 

Jeanne DuPont

Corporate Communications Coordinator

 

800-HECLA91 (800-432-5291)

Investor Relations

Email: hmc-info@hecla-mining.com

Website: www.hecla-mining.com

 

Hecla Mining Company ● 1-800-432-5291 ● hmc-info@hecla-mining.com

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