Hecla Reports 24% Higher Revenues on Higher Production and Prices in Second Quarter 2020

COEUR D'ALENE, ID - "Despite the pandemic, Hecla Mining Company had its second highest quarterly silver production since 2016 which, combined with higher prices, resulted in almost 25% more revenue than a year ago and generated about $27 million of free cash flow," said Phillips S. Baker, Jr., President and CEO. "I am extremely proud of our workforce's adaptability and commitment in this challenging time which positions Hecla well to improve our cash flow generation in this higher silver and gold price environment. The Company currently produces about a third of all the silver mined in the U.S., almost three times larger than the next primary producer. That number is expected to grow as Lucky Friday ramps up. As the United States' largest and oldest silver producer with America's largest silver reserve and resource, Hecla gives investors unique exposure to higher silver prices."

Operations at Greens Creek in Alaska continue strongly, with higher silver production due to higher grades. The mill operated at an average of 2,366 tons per day (tpd), which was slightly higher than the second quarter of 2019. The per ounce silver costs were higher primarily due to lower by-products on a per ounce basis resulting from lower zinc and lead prices and higher silver production, higher treatment costs due to unfavorable changes in smelter terms and COVID-19 costs. The increased silver production means there is less by-product credit to apply to each ounce of silver, so the cost per ounce after by-products is higher.

The mine quickly implemented a 14-day quarantine for all employees before coming to Admiralty Island, where the mine is located. This proactive approach helped to protect the workforce from the potential spread of the COVID-19 virus and was consistent with the Governor's order. With the addition of strict testing protocols, the mine recently reduced the quarantine period to 7 days for workers traveling to Juneau to work at Greens Creek. This change is expected to continue to protect our people and the community, and reduce the cost associated with operating under the pandemic.

The reduced drilling program was focused on supporting active mining with limited pre-production drilling in the Southwest Zone and definition drilling in the East Ore Zone. Strong definition drilling assay results continue to confirm and upgrade the East Ore Zone resources. In the East OreZone, intersections targeting the middle portion of the zone along 600 feet of strike length, included 12.2 oz/ton silver, 0.09 oz/ton gold, 7.7% zinc and 2.8% lead over 7.0 feet, and 10.6 oz/ton silver, 0.12 oz/ton gold, 16.6% zinc and 5.0% lead over 3.0 feet. Once the current phase of definition drilling in the East Ore Zone is completed, the planned activity in the third quarter of 2020 is to further define and explore the 200 South Zone.

At the Casa Berardi mine, the decrease in gold ounces compared to the second quarter of 2019 is the result of the Government-mandated shutdown of operations due to COVID-19. The mine restarted operations on April 15, three weeks after the shutdown, and is performing well. The mill operated at an average of 3,595 tpd, which was 6% lower than the second quarter of 2019. The decrease in cash cost, after by-product credits, per gold ounce is mainly due to lower mine contractor costs as the contractor was re-mobilized slowly. The lower mining costs, along with lower capital and exploration spending, resulted in lower AISC, after by-product credits, of $1,077 per gold ounce, compared to $1,437 in the second quarter of 2019.

Despite COVID-19, process improvement activities focused on improving mill reliability, throughput and recovery continued. These efforts are expected to lead to reduced costs and increased cash flow when complete but are somewhat delayed by the COVID-19 restrictions. Production from Casa Berardi is expected to be higher in second half of the year as production from the higher-grade 148 Zone increases.

The drilling in the East Mine focused on defining continuity and expanding mineralization in the 160 Zone Pit area and expanding mineralization in the high-grade underground 148 Zone. Definition drilling in the 160 Zone targeted mineralization below the current 160 Pit shell to further define the continuity of the 160 lenses. Intersections from this drilling included 0.05 oz/ton gold over 42.6 feet including 0.18 oz/ton gold over 5.2 feet and confirms continuity of the mineralized 160 lenses. Exploration drilling in the East Mine occurred in the 148 Zone from underground targeting the eastern and western down-plunge trend of the known high-grade mineralization. At depth, the 148-01 lens appears to be splitting into two lenses, one north and one south of the Casa Berardi Fault. Intersections include 0.32 oz/ton gold over 19.7 feet including 0.78 oz/ton gold over 4.6 feet, 0.07 oz/ton gold over 13.4 feet including 0.38 oz/ton gold over 1.1 feet and 0.20 oz/ton gold over 31.2 feet including 1.15 oz/ton gold over 2.0 feet.

In the West Mine area, drilling targeted the depth extensions of the 128 Zone. Recent high-grade intersections include 0.82 oz/ton gold over 11.2 feet including 2.11 oz/ton gold over 4.1 feet. These initial results show higher grades below the current resources and are open at depth for expansion.

In the third quarter of 2020, underground drilling is planned to expand and refine resources in the 123, 124, and 128 zones in the West Mine and the high-grade 148 Zone in the East Mine.

The Lucky Friday Mine ramp-up to full production is proceeding as expected. The #2 shaft hoist upgrade project was completed on schedule and below budget. The mine is on target to return to pre-strike production levels in the fourth quarter, so 2021 is anticipated to have a full year of production.

Underground testing and modification of the Remote Vein Miner (RVM) continues in Sweden, but the project is being negatively impacted by COVID-19, as travel restrictions has prevented Hecla oversight and Sweden is operating with a reduced work schedule. Acceptance testing in Sweden will continue until the machine meets requisite performance parameters. In parallel, the Company is pursuing additional initiatives to increase productivity at the mine.

At the San Sebastian mine, the mill restarted on May 30 after the Government-mandated shutdown of operations due to COVID-19. Silver and gold production were lower compared to the second quarter of 2019 due to lower ore grades, as well as the shutdown. The mill operated at an average of 528 tpd when it operated, which was slightly higher than the second quarter of 2019.

The cash cost, after by-product credits, decreased due to higher by-product gold credits on a per ounce basis primarily as a result of higher gold prices, partially offset by lower silver production. The AISC, after by-product credits, was lower due to the decrease attributed to the higher by-product credits, along with lower capital and exploration spending. Mining of oxide material is expected to be completed in the third quarter and milling in the fourth quarter of 2020. The Company continues to assess the viability of mining the sulfide Hugh Zone, and continues exploration of El Toro, but expects to idle the mine in the fourth quarter.

One surface reverse circulation drill rig completed the 2020 Short Vertical Reverse Circulation (SVRC) drilling grid designed to explore for new veins and near-surface oxide mineralization through cover by sampling overburden and bedrock west of the current El Toro resource area. Results to date are positive with the discovery of a new vein and two additional strong anomalies west of the El Toro vein. These positive results continue to demonstrate the effectiveness of using SVRC drilling to discover new veins under thick soil cover. Follow-up drilling for this new vein and anomalies is being evaluated.

Exploration drilling at El Toro targeted areas between known ore shoots within the El Toro Vein to expand mineralization laterally between known ore shoots. Intersections include 0.06 oz/ton gold and 8.4 oz/ton silver over 5.3 feet and 0.07 oz/ton gold and 7.8 oz/ton silver over 2.5 feet.

In the third quarter of 2020, exploration drilling is planned to follow-up on the new vein and the multiple anomalies west of the El Toro vein generated from the SVRC drilling program.

For the Nevada operations, very high grades were experienced in the material being processed at the Midas mill. Not all the material processed was sold in the second quarter, with the remainder sold in the third quarter. No further processing is currently anticipated in the Midas mill. Mining is now focused primarily on material for the 30,000-ton bulk sample test, of which approximately 16,000 tons have been accumulated to date, with mining expected to continue through the remainder of 2020. The bulk sample test is designed to provide information on alternate mining techniques, water management, and process recovery rates at a third-party facility. To date the geotechnical, hydrology, mining productivity and cost have all been better than anticipated. The grade and metallurgical parameters are in line with the model. The bulk sample is expected to be sent for third-party processing late in the third quarter with results expected around year end. Production from this test is expected to be between 5 and 10 thousand ounces of gold. Ore was processed at an average of 117 tpd compared to 642 tpd in the second quarter of 2019.