# Hecla Mining Co: Form 10-Q for the period ended Mar 31, 2024

- Company: [Hecla Mining Co](/companies/hl.md) (CIK 719413)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 12:00 ET
- Period: 2024-03-31
- Accession: 0000950170-24-056495
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/719413/000095017024056495/hl-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/719413/000095017024056495/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $189.5m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $170.4m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $19.2m | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $5.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $12.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $1.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$5.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 616,199,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $17.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $47.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $4.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $1.2m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $80.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $255.3m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $2.99bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $152.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $1.04bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | $1.96bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 73,798 characters.

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 2023 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 MD&A, all references to losses or income per share are on a diluted basis.

### Overview

Established in 1891, we are the oldest operating precious metals mining company in the United States. We are also the largest silver producer in the United States, producing over 45% of the U.S. silver production at our Greens Creek and Lucky Friday operations. We also produce gold at our Casa Berardi and Greens Creek operations. In addition, we are developing the Keno Hill mine in the Yukon Territory, Canada which we acquired on September 7, 2022 and began ramp-up during the second quarter of 2023. Based upon the jurisdictions in which we operate, we believe we have lower political and economic risk compared to other mining companies whose mines are located in other parts of the world. Our exploration interests are located in the United States, Canada and Mexico. Our operating and strategic framework is based on expanding our production and locating and developing new resource potential in a safe and responsible manner.

### First Quarter 2024 Highlights

Operational:

- Produced 4.2 million ounces of silver and 36,592 ounces of gold. See *Consolidated Results of Operations* below for information on total cost of sales, as well as cash costs and all in sustaining costs, each after by-product credits, per silver and gold ounce for the three-month periods ended March 31, 2024 and 2023.
- Restarted Lucky Friday on January 9, 2024 and ramped up to full production in March producing 1.1 million ounces.
- Keno Hill produced 0.6 million ounces of silver as ramp-up of production continued during the quarter.
- Advanced the underground development at Keno Hill mine by 2,339 feet.

Financial:

- Generated sales of $189.5 million.
- Invested in our operations by making capital expenditures of approximately $47.6 million, including $8.8 million at Greens Creek, $15.0 million at Lucky Friday, $13.3 million at Casa Berardi and $10.3 million at Keno Hill.
- Collected $17.4 million in insurance proceeds related to the Lucky Friday fire.
- Returned $4.0 million to our stockholders through dividend payments.
- Spent $4.3 million on exploration and pre-development activities.

### 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 and lead. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Beginning in 2020, with the onset of the COVID-19 pandemic, and continuing in 2024 because of a series of macro-economic factors, there has been significant volatility in the financial and commodities markets, including the precious metals market. We believe the outlook for precious metals fundamentals in the medium- and long-term are favorable. See Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K"), for further discussion. Because we cannot control the price of our products, 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 and adjusted EBITDA. The average realized prices for all metals sold by us continued to exhibit significant volatility period over 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 Operations

Total sales for the three months ended March 31, 2024 and 2023 were as follows:

*(in thousands)*

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Silver | $86,233 | $81,532 |
| Gold | 67,415 | 75,087 |
| Lead | 19,483 | 25,402 |
| Zinc | 24,964 | 32,943 |
| Less: Smelter and refining charges | (13,014) | (15,973) |
| Total metal sales | 185,081 | 198,991 |
| Environmental remediation services | 4,447 | 509 |
| Total sales | $189,528 | $199,500 |

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 of all work is agreed to in advance by the Canadian government, and it is essentially pass through in nature with minimal margin generated by the Company in performing this work.

Total metal sales for the three months ended March 31, 2024 and 2023, 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, 2023** | $81,532 | $75,087 | $58,345 | $(15,973) | $198,991 |
| Variances - 2024 versus 2023: |  |  |  |  |  |
| Price | 7,474 | 6,408 | (7,345) | — | 6,537 |
| Volume | (2,773) | (14,080) | (6,553) | 876 | (22,530) |
| Smelter terms | — | — | — | 2,083 | 2,083 |
| **Three months ended March 31, 2024** | $86,233 | $67,415 | $44,447 | $(13,014) | $185,081 |

The fluctuations in sales for the three months ended March 31, 2024 compared to the same period in 2023 were primarily due to the following two reasons:

- Higher average realized prices for silver and gold partially offset by lower average realized prices for lead and zinc during the three months ended March 31, 2024, compared to the same periods in 2023. The table below summarizes spot prices and our realized prices for the commodities we sell:

|  |  | Three Months Ended March 31, 2024 | 2023 |
| --- | --- | ---: | ---: |
| Silver – | London PM Fix ($/ounce) | $23.36 | $22.56 |
|  | Realized price per ounce | $24.77 | $22.62 |
| Gold – | London PM Fix ($/ounce) | $2,072 | $1,889 |
|  | Realized price per ounce | $2,094 | $1,902 |
| Lead – | LME Final Cash Buyer ($/pound) | $0.94 | $0.97 |
|  | Realized price per pound | $0.97 | $1.02 |
| Zinc – | LME Final Cash Buyer ($/pound) | $1.11 | $1.42 |
|  | Realized price per pound | $1.10 | $1.39 |

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 $3.5 million and $2.1 million for the three months ended March 31, 2024, and 2023, respectively. The price adjustments related to silver, gold, zinc and lead contained in our concentrate shipments were partially offset by gains and losses on forward contracts for those metals. See *Note 8* 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 discussed above) by the payable quantities of each metal included in concentrate, doré and carbon material shipped during the period.

- Lower quantities of all metals sold during the three months ended March 31, 2024 compared to the same periods in 2023. This was primarily due to lower gold production and related sales at Casa Berardi, partially offset by sales from Keno Hill during the quarter following production commencing in the second quarter of 2023. See *The Greens Creek Segment, The Lucky Friday Segment, The Keno Hill Segment, and Casa Berardi Segment* sections below for more information on metal production and sales volumes at each of our operating segments. Total metals production and sales volumes for each period are shown in the following table:

|  |  | Three Months Ended March 31, 2024 | 2023 |
| --- | --- | ---: | ---: |
| Silver - | Ounces produced | 4,192,098 | 4,041,878 |
|  | Payable ounces sold | 3,481,884 | 3,604,494 |
| Gold - | Ounces produced | 36,592 | 39,717 |
|  | Payable ounces sold | 32,189 | 39,473 |
| Lead - | Tons produced | 11,922 | 13,236 |
|  | Payable tons sold | 10,020 | 12,513 |
| Zinc - | Tons produced | 16,389 | 15,795 |
|  | Payable tons sold | 11,322 | 11,858 |

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 units for the three months ended March 31, 2024 and 2023 were as follows (in thousands, except for Cash Cost and AISC):

| Three Months Ended March 31, 2024: | Silver Greens Creek | Lucky Friday | Keno Hill | Total Silver (2) | Gold and Other Casa Berardi | Other (3) | Total Gold and Other |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales | $97,310 | $35,340 | $10,847 | $143,497 | $41,584 | $4,447 | $46,031 |
| Total cost of sales | (69,857) | (27,519) | (10,847) | (108,223) | (58,260) | $(3,885) | (62,145) |
| Gross profit (loss) | $27,453 | $7,821 | $— | $35,274 | $(16,676) | $562 | $(16,114) |
| Cash Cost (1) | $3.45 | $8.85 | $— | $4.78 | $1,669 | $— | $1,669 |
| AISC (1) | $7.16 | $17.36 | $— | $13.10 | $1,899 | $— | $1,899 |
| **Three Months Ended March 31, 2023:** |  |  |  |  |  |  |  |
| Sales | $98,611 | $49,110 | $— | $147,721 | $50,998 | $781 | $51,779 |
| Total cost of sales | (66,288) | (34,534) | — | (100,822) | (62,998) | (732) | (63,730) |
| Gross profit (loss) | $32,323 | $14,576 | $— | $46,899 | $(12,000) | $49 | $(11,951) |
| Cash Cost (1) | $1.16 | $4.30 | $— | $2.14 | $1,775 | $— | $1,775 |
| AISC (1) | $3.82 | $10.69 | $— | $8.96 | $2,392 | $— | $2,392 |

(1) A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in *Reconciliation of Total Cost of Sales (GAAP) 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).*

(2) The calculation of AISC for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining capital.

(3) For the three months ended March 31, 2024, Other includes $4.4 million of sales and $3.9 million, of total cost of sales, from our environmental remediation services in the Yukon compared to $0.5 million of sales and $0.4 million of total cost of sales for the three months ended March 31, 2023.

While revenue from zinc, lead 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:

- silver has historically accounted for a higher proportion of revenue than any other metal and is expected to do so in the future;
- we have historically presented the Greens Creek and Lucky Friday units as primary silver producers, based on the original analysis that justified putting the project into production, and the same analysis applies to the Keno Hill unit. Further we believe that consistency in disclosure is important to our investors regardless of the relationships of metals prices and production from year to year;
- metallurgical treatment maximizes silver recovery;
- the Greens Creek, Lucky Friday and Keno Hill deposits are massive sulfide deposits containing an unusually high proportion of silver; and
- in most of their working areas, Greens Creek, Lucky Friday and Keno Hill utilize selective mining methods in which silver is the metal targeted for highest recovery.

Accordingly, we believe the identification of gold, lead and zinc 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 and gold 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 believe the identification of silver as a by-product credit is appropriate at Casa Berardi because of its lower economic value compared to gold and due to the fact that gold is the primary product we intend to produce there. In addition, we do not receive sufficient revenue from silver at the Casa Berardi to warrant classification of such as a co-product. Because we consider silver to be a by-product of our gold production at Casa Berardi, the value of silver offsets operating costs within our calculations of Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce.

We reported a net loss applicable to common stockholders of $5.9 million for the three months ended March 31, 2024, compared to a net loss applicable to common stockholders of $3.3 million in the comparable period in 2023. The following were the significant drivers of changes in net loss applicable to common stockholders compared to 2023:

- Consolidated gross profit decreased by $15.8 million. See *The Greens Creek Segment, The Lucky Friday Segment, The Keno Hill Segment, and The Casa Berardi Segment* sections below for a discussion on the key drivers by operating unit.
- Ramp-up and suspension costs increased by $3.2 million primarily due to $2.2 million related to the suspension of operations at Lucky Friday prior to the restart of operations on January 9, 2024 due to the underground fire that occurred in the #2 shaft and $8.7 million of Keno Hill ramp-up activities following the Alexco acquisition, partially offset by a reduction of care and maintenance costs at our non-operating sites.
- Other operating income (expense) increased by $16.9 million primarily due to the $17.4 million of insurance proceeds received during the quarter related to the Lucky Friday fire.
- Fair value adjustments, net losses increased by $5.0 million primarily due to higher unrealized losses on undesignated derivative contracts of $2.9 million and higher unrealized losses on our marketable equity securities portfolio of $2.1 million than in the comparable period in 2023.
- Net foreign exchange gain increased by $3.9 million to $4.0 million reflecting the continued strengthening of the US dollar against the Canadian dollar impact, and related impact on the revaluation of our Canadian monetary assets and liabilities.

### Greens Creek

| Dollars are in thousands (except per ounce and per ton amounts) | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Sales | $97,310 | $98,611 |
| Cost of sales and other direct production costs | (55,414) | (51,824) |
| Depreciation, depletion and amortization | (14,443) | (14,464) |
| Total cost of sales | (69,857) | (66,288) |
| Gross profit | $27,453 | $32,323 |
| Tons of ore milled | 232,188 | 233,167 |
| Production: |  |  |
| Silver (ounces) | 2,478,594 | 2,772,860 |
| Gold (ounces) | 14,588 | 14,885 |
| Lead (tons) | 4,834 | 5,202 |
| Zinc (tons) | 13,062 | 12,482 |
| Payable metal quantities sold: |  |  |
| Silver (ounces) | 2,090,449 | 2,292,035 |
| Gold (ounces) | 12,186 | 12,646 |
| Lead (tons) | 3,670 | 4,156 |
| Zinc (tons) | 9,564 | 9,244 |
| Ore grades: |  |  |
| Silver ounces per ton | 13.3 | 14.4 |
| Gold ounces per ton | 0.09 | 0.08 |
| Lead percent | 2.6% | 2.6% |
| Zinc percent | 6.3% | 6.0% |
| Total production cost per ton | $212.92 | $198.60 |
| Cash Cost, After By-product Credits, per Silver Ounce (1) | $3.45 | $1.16 |
| AISC, After By-Product Credits, per Silver Ounce (1) | $7.16 | $3.82 |
| Capital additions | $8,827 | $6,658 |

(1) A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in *Reconciliation of Total Cost of Sales (GAAP) 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 $4.9 million decrease in gross profit for the first quarter of 2024 compared to the same period in 2023 was primarily due to lower sales volumes for all metals produced except zinc and higher cost of sales and other direct production costs attributable to an increase in hourly labor rates during the quarter, higher contractor labor maintenance expense, partially offset by higher realized silver and gold prices and lower treatment and refining charges. Capital additions increased by $2.2 million in the same period primarily due to higher mobile equipment purchases and the mine infrastructure development.

The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, per Silver Ounce:

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Cash Cost, Before By-product Credits, per Silver Ounce | $25.13 | $21.80 |
| By-product credits | (21.68) | (20.64) |
| Cash Cost, After By-product Credits, per Silver Ounce | $3.45 | $1.16 |

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| AISC, Before By-product Credits, per Silver Ounce | $28.84 | $24.46 |
| By-product credits | (21.68) | (20.64) |
| AISC, After By-product Credits, per Silver Ounce | $7.16 | $3.82 |

The increase in Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the quarter compared to the same quarter in 2023 was primarily due to higher production costs and higher sustaining capital, respectively.

### Lucky Friday

| Dollars are in thousands (except per ounce and per ton amounts) | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Sales | $35,340 | $49,110 |
| Cost of sales and other direct production costs | (19,608) | (24,079) |
| Depreciation, depletion and amortization | (7,911) | (10,455) |
| Total cost of sales | (27,519) | (34,534) |
| Gross profit | $7,821 | $14,576 |
| Tons of ore milled | 86,234 | 95,303 |
| Production: |  |  |
| Silver (ounces) | 1,061,065 | 1,262,464 |
| Lead (tons) | 6,689 | 8,034 |
| Zinc (tons) | 2,851 | 3,313 |
| Payable metal quantities sold: |  |  |
| Silver (ounces) | 953,891 | 1,306,013 |
| Lead (tons) | 5,992 | 8,357 |
| Zinc (tons) | 1,641 | 2,614 |
| Ore grades: |  |  |
| Silver ounces per ton | 12.9 | 13.8 |
| Lead percent | 8.2% | 8.8% |
| Zinc percent | 3.9% | 4.1% |
| Total production cost per ton | $233.10 | $210.72 |
| Cash Cost, After By-product Credits, per Silver Ounce (1) | $8.85 | $4.30 |
| AISC, After By-product Credits, per Silver Ounce (1) | $17.36 | $10.69 |
| Capital additions | $14,988 | $14,707 |

(1) A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in *Reconciliation of Total Cost of Sales (GAAP) 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).*

During August 2023, mining was suspended while repairing an unused station in the #2 ventilation shaft, which is also the secondary egress. While under repair, a fire occurred causing damage to the station and shaft. The operation remained suspended due to a fire at the unused station. By early September, the fire had been extinguished, normal ventilation was reestablished and the workforce recalled. Following evaluation of alternatives, it was determined that in order to safely bring the mine back into production in the most rapid and cost-effective way, a new secondary egress needed to be developed to bypass the damaged portion of the #2 shaft. The new egress extends an existing ramp 1,600 feet, installed a 290-foot-long manway raise, and developed an 850-foot ventilation raise. This work resulted in operations being suspended for the remainder of 2023, with the mine restarting production on January 9th, and ramping up to full production during March. The Company has property and business interruption insurance coverage with an underground sub-limit of $50.0 million, and to date has received $17.4 million in property damage and business interruption insurance proceeds. There can be no assurance that we will succeed in receiving the full $50 million.

Gross profit decreased by $6.8 million for the quarter ended March 31, 2024, compared to the same period in 2023, reflecting a combination of lower sales volumes for all metals produced as the mine ramped up to full production and higher maintenance, mining and milling costs, partially offset by higher realized silver prices.

During the first quarter of 2024, $2.2 million of site specific suspension costs were included within Ramp-up and suspension costs on our condensed consolidated statements of operations and comprehensive loss.

Capital additions increased by $0.3 million in the quarter ended March 31, 2024, compared to the same period in 2023, reflecting the costs incurred to finalize the secondary egress partially offset by completion of the coarse ore bunker and silver hoist projects during 2023.

The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, Per Silver Ounce:

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Cash Cost, Before By-product Credits, per Silver Ounce | $24.41 | $21.03 |
| By-product credits | (15.56) | (16.73) |
| Cash Cost, After By-product Credits, per Silver Ounce | $8.85 | $4.30 |

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| AISC, Before By-product Credits, per Silver Ounce | $32.92 | $27.42 |
| By-product credits | (15.56) | (16.73) |
| AISC, After By-product Credits, per Silver Ounce | $17.36 | $10.69 |

The increase 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 2023 was primarily due to a combination of lower production and lower by-product credits in 2024.

### Keno Hill

| Dollars are in thousands (except per ounce and per ton amounts) | Three Months Ended March 31, 2024 |
| --- | ---: |
| Sales | $10,847 |
| Cost of sales and other direct production costs | (7,245) |
| Depreciation, depletion and amortization | (3,602) |
| Total cost of sales | (10,847) |
| Gross profit | $— |
| Tons of ore milled | 25,165 |
| Production: |  |
| Silver (ounces) | 646,312 |
| Lead (tons) | 576 |
| Zinc (tons) | 298 |
| Payable metal quantities sold: |  |
| Silver (ounces) | 432,331 |
| Lead (tons) | 359 |
| Zinc (tons) | 116 |
| Ore grades: |  |
| Silver ounces per ton | 26.3 |
| Lead percent | 2.4% |
| Zinc percent | 1.3% |
| Capital additions | $10,346 |

We acquired our Keno Hill operations as part of the Alexco acquisition on September 7, 2022, and have focused on development activities and began initial operation of the mill during the second quarter of 2023. The average throughput during the first quarter of 2024 was 277 tons per day, with silver grades milled of 26.3 ounces per ton.

During 2024, Keno Hill recorded both sales and total cost of sales of $10.8 million, related to the concentrate produced and sold. The first quarter 2024 had $8.7 million of site-specific ramp up costs included in Ramp-up and suspension costs, compared to $5.9 million in the first quarter of 2023. Keno Hill recorded capital additions of $10.3 million, related to various mine underground development projects, mobile equipment purchases and deposits on long lead items for the the cemented tails batch plant.

### Casa Berardi

| Dollars are in thousands (except per ounce and per ton amounts) | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Sales | $41,584 | $50,998 |
| Cost of sales and other direct production costs | (35,309) | (48,962) |
| Depreciation, depletion and amortization | (22,951) | (14,036) |
| Total cost of sales | (58,260) | (62,998) |
| Gross loss | $(16,676) | $(12,000) |
| Tons of ore milled | 381,626 | 429,158 |
| Production: |  |  |
| Gold (ounces) | 22,004 | 24,686 |
| Silver (ounces) | 6,127 | 6,554 |
| Payable metal quantities sold: |  |  |
| Gold (ounces) | 20,003 | 26,826 |
| Silver (ounces) | 5,213 | 6,446 |
| Ore grades: |  |  |
| Gold ounces per ton | 0.07 | 0.07 |
| Silver ounces per ton | 0.02 | 0.02 |
| Total production cost per ton | $96.53 | $107.95 |
| Cash Cost, After By-product Credits, per Gold Ounce (1) | $1,669 | $1,775 |
| AISC, After By-product Credits, per Gold Ounce (1) | $1,899 | $2,392 |
| Capital additions | $13,316 | $17,086 |

(1) A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in *Reconciliation of Total Cost of Sales (GAAP) 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).*

As part of the transition of the Casa Berardi mine from a combined underground and open pit operation to an open pit only operation, the lower margin east mine underground operations were closed in July 2023 and only the higher margin stopes of the west underground mine will be mined throughout mid-2024, at which time most underground activity, except for exploration will cease. This strategic change has resulted in production and sales decreasing significantly compared to the three-month period ended March 31, 2023. Following the halt to underground mining, Casa Berardi is expected to only produce gold from the 160 open pit, and at lower volumes than historic production levels with production expected to conclude no later than 2027. We forecast a gap in production from at least 2028 to at least 2030 when no ore will be mined and there will be no revenue. During this hiatus, our focus will be on investing in infrastructure and equipment, and on permitting and stripping two expected new open pits, Principal and West Mine Crown Pillar.. We expect to resume open pit mining at Casa Berardi no earlier than 2030, and anticipate that the mine will generate significant free cash flow at current gold prices.

Gross loss increased by $4.7 million to $16.7 million for the period ended March 31, 2024, compared to a gross loss of $12.0 million in the same period in 2023. The increase in gross loss includes $5.1 million in product inventory net realizable value write downs attributable to higher depreciation, depletion and amortization expense, reflecting the accelerated amortization of the west underground mine, the purchase of mobile equipment fleet in June and early July 2023 and the cessation of capitalization of any underground mine development costs effective July 2023. Processing of lower grade tonnage from both the underground and surface operations, higher costs related to mill maintenance and optimization activities, and higher fuel and other consumables costs, also contributed to the increased gross loss compared to the same period in 2023. Capital additions decreased by $3.8 million compared to the same period in 2023, primarily related to the cessation of capitalization of underground development.

The charts below illustrate the factors contributing to Cash Cost, After By-product Credits, Per Gold Ounce:

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Cash Cost, Before By-product Credits, per Gold Ounce | $1,675 | $1,780 |
| By-product credits | (6) | (5) |
| Cash Cost, After By-product Credits, per Gold Ounce | $1,669 | $1,775 |

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| AISC, Before By-product Credits, per Gold Ounce | $1,905 | $2,397 |
| By-product credits | (6) | (5) |
| AISC, After By-product Credits, per Gold Ounce | $1,899 | $2,392 |

The decrease in Cash Cost After By-product Credits, per Gold Ounce, for the first quarter 2024 compared to the same period for 2023 was primarily due to lower production costs from the cessation of underground mining of the east mine during July 2023, partially offset by lower production. Decreased sustaining capital for the first quarter of 2024, reflecting no underground development positively impacted AISC, After By-product Credits, per Gold Ounce.

### Corporate Matters

#### Income Taxes

During the three months ended March 31, 2024, an income and mining tax provision of $1.8 million resulted in an effective tax rate of negative 46.1%. This compares to an income and mining tax provision of $3.2 million for the three months ended March 31, 2023, which resulted in an effective tax rate of 4699.0%. 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, 2024 compared to the comparable periods in 2023 is primarily related to the reported consolidated loss as well as the losses incurred at the consolidated Alexco subsidiaries, and the 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 and taxable income* in *Item 1A - Risk Factors* in our 2023 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, 2024 and 2023.

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.

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.

Casa Berardi reports Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce for the production of gold, their primary product, and by-product revenues earned from silver, which is a by-product at Casa Berardi. Only costs and ounces produced relating to units with the same primary product are combined to represent Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce. Thus, the gold produced at Casa Berardi is not included as a by-product credit when calculating Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the total of Greens Creek and Lucky Friday, our combined silver properties. Similarly, the silver produced at our other two units is not included as a by-product credit when calculating the gold metrics for Casa Berardi.

| In thousands (except per ounce amounts) | Three Months Ended March 31, 2024 Greens Creek | Lucky Friday | Keno Hill (6) | Corporate (2) | Total Silver |
| --- | ---: | ---: | ---: | ---: | ---: |
| Total cost of sales | $69,857 | $27,519 | $10,847 | $— | $108,223 |
| Depreciation, depletion and amortization | (14,443) | (7,911) | (3,602) | — | (25,956) |
| Treatment costs | 9,724 | 3,223 | — | — | 12,947 |
| Change in product inventory | (2,196) | 611 | — | — | (1,585) |
| Reclamation and other costs | (655) | (102) | — | — | (757) |
| Exclusion of Lucky Friday cash costs (3) | — | (3,634) | — | — | (3,634) |
| Exclusion of Keno Hill cash costs (4) | — | — | (7,245) | — | (7,245) |
| Cash Cost, Before By-product Credits (1) | 62,287 | 19,706 | — | — | 81,993 |
| Reclamation and other costs | 785 | 222 | — | — | 1,007 |
| Sustaining capital | 8,416 | 12,051 | — | 66 | 20,533 |
| Exclusion of Lucky Friday sustaining costs (3) | — | (5,396) | — | — | (5,396) |
| General and administrative | — | — | — | 11,216 | 11,216 |
| AISC, Before By-product Credits (1) | 71,488 | 26,583 | — | 11,282 | 109,353 |
| By-product credits: |  |  |  |  |  |
| Zinc | (20,206) | (4,785) | — | — | (24,991) |
| Gold | (26,551) | — | — | — | (26,551) |
| Lead | (6,980) | (11,720) | — | — | (18,700) |
| Exclusion of Lucky Friday by-product credits (3) | — | 3,943 | — | — | 3,943 |
| Total By-product credits | (53,737) | (12,562) | — | — | (66,299) |
| Cash Cost, After By-product Credits | $8,550 | $7,144 | $— | $— | $15,694 |
| AISC, After By-product Credits | $17,751 | $14,021 | $— | $11,282 | $43,054 |
| Ounces produced | 2,479 | 1,061 |  |  | 3,540 |
| Exclusion of Lucky Friday ounces produced (3) | — | (253) |  |  | (253) |
| Divided by ounces produced | 2,479 | 808 |  |  | 3,287 |
| Cash Cost, Before By-product Credits, per Ounce | $25.13 | $24.41 |  |  | $24.95 |
| By-product credits per ounce | (21.68) | (15.56) |  |  | (20.17) |
| Cash Cost, After By-product Credits, per Ounce | $3.45 | $8.85 |  |  | $4.78 |
| AISC, Before By-product Credits, per Ounce | $28.84 | $32.92 |  |  | $33.27 |
| By-product credits per ounce | (21.68) | (15.56) |  |  | (20.17) |
| AISC, After By-product Credits, per Ounce | $7.16 | $17.36 |  |  | $13.10 |

31

| In thousands (except per ounce amounts) | Three Months Ended March 31, 2024 Gold - Casa Berardi | Other (4) | Total Gold and Other |
| --- | ---: | ---: | ---: |
| Total cost of sales | $58,260 | $3,885 | $62,145 |
| Depreciation, depletion and amortization | (22,951) | — | (22,951) |
| Treatment costs | 24 | — | 24 |
| Change in product inventory | 1,739 | — | 1,739 |
| Reclamation and other costs | (209) | — | (209) |
| Exclusion of Other costs | — | (3,885) | (3,885) |
| Cash Cost, Before By-product Credits (1) | 36,863 | — | 36,863 |
| Reclamation and other costs | 209 | — | 209 |
| Sustaining capital | 4,861 | — | 4,861 |
| AISC, Before By-product Credits (1) | 41,933 | — | 41,933 |
| By-product credits: |  |  |  |
| Silver | (143) | — | (143) |
| Total By-product credits | (143) | — | (143) |
| Cash Cost, After By-product Credits | $36,720 | $— | $36,720 |
| AISC, After By-product Credits | $41,790 | $— | $41,790 |
| Divided by ounces produced | 22 | — | 22 |
| Cash Cost, Before By-product Credits, per Ounce | $1,675 | $— | $1,675 |
| By-product credits per ounce | (6) | — | (6) |
| Cash Cost, After By-product Credits, per Ounce | $1,669 | $— | $1,669 |
| AISC, Before By-product Credits, per Ounce | $1,905 | $— | $1,905 |
| By-product credits per ounce | (6) | — | (6) |
| AISC, After By-product Credits, per Ounce | $1,899 | $— | $1,899 |

32

| In thousands (except per ounce amounts) | Three Months Ended March 31, 2024 Total Silver | Total Gold and Other | Total |
| --- | ---: | ---: | ---: |
| Total cost of sales | $108,223 | $62,145 | $170,368 |
| Depreciation, depletion and amortization | (25,956) | (22,951) | (48,907) |
| Treatment costs | 12,947 | 24 | 12,971 |
| Change in product inventory | (1,585) | 1,739 | 154 |
| Reclamation and other costs | (757) | (209) | (966) |
| Exclusion of Lucky Friday cash costs (3) | (3,634) | — | (3,634) |
| Exclusion of Keno Hill cash costs (6) | (7,245) | — | (7,245) |
| Exclusion of Other costs | — | (3,885) | (3,885) |
| Cash Cost, Before By-product Credits (1) | 81,993 | 36,863 | 118,856 |
| Reclamation and other costs | 1,007 | 209 | 1,216 |
| Sustaining capital | 20,533 | 4,861 | 25,394 |
| Exclusion of Lucky Friday sustaining costs (8) | (5,396) | — | (5,396) |
| General and administrative | 11,216 | — | 11,216 |
| AISC, Before By-product Credits (1) | 109,353 | 41,933 | 151,286 |
| By-product credits: |  |  |  |
| Zinc | (24,991) | — | (24,991) |
| Gold | (26,551) | — | (26,551) |
| Lead | (18,700) | — | (18,700) |
| Silver | — | (143) | (143) |
| Exclusion of Lucky Friday by-product credits (8) | 3,943 | — | 3,943 |
| Total By-product credits | (66,299) | (143) | (66,442) |
| Cash Cost, After By-product Credits | $15,694 | $36,720 | $52,414 |
| AISC, After By-product Credits | $43,054 | $41,790 | $84,844 |
| Ounces produced | 3,540 | 22 |  |
| Exclusion of Lucky Friday ounces produced (8) | (253) | — |  |
| Divided by ounces produced | 3,287 | 22 |  |
| Cash Cost, Before By-product Credits, per Ounce | $24.95 | $1,675 |  |
| By-product credits per ounce | (20.17) | (6) |  |
| Cash Cost, After By-product Credits, per Ounce | $4.78 | $1,669 |  |
| AISC, Before By-product Credits, per Ounce | $33.27 | $1,905 |  |
| By-product credits per ounce | (20.17) | (6) |  |
| AISC, After By-product Credits, per Ounce | $13.10 | $1,899 |  |

33

| In thousands (except per ounce amounts) | Three Months Ended March 31, 2023 (5) Greens Creek | Lucky Friday | Corporate (2) | Total Silver |
| --- | ---: | ---: | ---: | ---: |
| Total cost of sales | $66,288 | $34,534 | $— | $100,822 |
| Depreciation, depletion and amortization | (14,464) | (10,455) | — | (24,919) |
| Treatment costs | 10,368 | 5,277 | — | 15,645 |
| Change in product inventory | (1,615) | (2,409) | — | (4,024) |
| Reclamation and other costs | (129) | (409) | — | (538) |
| Cash Cost, Before By-product Credits (1) | 60,448 | 26,538 | — | 86,986 |
| Reclamation and other costs | 722 | 285 | — | 1,007 |
| Sustaining capital | 6,641 | 7,784 | — | 14,425 |
| General and administrative | — | — | 12,070 | 12,070 |
| AISC, Before By-product Credits (1) | 67,811 | 34,607 | 12,070 | 114,488 |
| By-product credits: |  |  |  |  |
| Zinc | (24,005) | (6,816) | — | (30,821) |
| Gold | (25,286) | — | — | (25,286) |
| Lead | (7,942) | (14,299) | — | (22,241) |
| Total By-product credits | (57,233) | (21,115) | — | (78,348) |
| Cash Cost, After By-product Credits | $3,215 | $5,423 | $— | $8,638 |
| AISC, After By-product Credits | $10,578 | $13,492 | $12,070 | $36,140 |
| Divided by ounces produced | 2,773 | 1,262 |  | 4,035 |
| Cash Cost, Before By-product Credits, per Ounce | $21.80 | $21.03 |  | $21.56 |
| By-product credits per ounce | (20.64) | (16.73) |  | (19.42) |
| Cash Cost, After By-product Credits, per Ounce | $1.16 | $4.30 |  | $2.14 |
| AISC, Before By-product Credits, per Ounce | $24.46 | $27.42 |  | $28.38 |
| By-product credits per ounce | (20.64) | (16.73) |  | (19.42) |
| AISC, After By-product Credits, per Ounce | $3.82 | $10.69 |  | $8.96 |

34

| In thousands (except per ounce amounts) | Three Months Ended March 31, 2023 (5) Gold - Casa Berardi | Other | Total Gold and Other |
| --- | ---: | ---: | ---: |
| Total cost of sales | $62,998 | $732 | $63,730 |
| Depreciation, depletion and amortization | (14,036) | (47) | (14,083) |
| Treatment costs | 467 | — | 467 |
| Change in product inventory | (2,417) | — | (2,417) |
| Reclamation and other costs | (217) | — | (217) |
| Exclusion of Casa Berardi cash costs (5) | (2,851) | — | (2,851) |
| Exclusion of Other costs | — | (685) | (685) |
| Cash Cost, Before By-product Credits (1) | 43,944 | — | 43,944 |
| Reclamation and other costs | 217 | — | 217 |
| Sustaining capital | 15,015 | — | 15,015 |
| AISC, Before By-product Credits (1) | 59,176 |  | 59,176 |
| By-product credits: |  |  |  |
| Silver | (127) | — | (127) |
| Total By-product credits | (127) | — | (127) |
| Cash Cost, After By-product Credits | $43,817 | $— | $43,817 |
| AISC, After By-product Credits | $59,049 | $— | $59,049 |
| Divided by ounces produced | 25 | — | 25 |
| Cash Cost, Before By-product Credits, per Ounce | $1,780 | $— | $1,780 |
| By-product credits per ounce | (5) | — | (5) |
| Cash Cost, After By-product Credits, per Ounce | $1,775 | $— | $1,775 |
| AISC, Before By-product Credits, per Ounce | $2,397 | $— | $2,397 |
| By-product credits per ounce | (5) | — | (5) |
| AISC, After By-product Credits, per Ounce | $2,392 | $— | $2,392 |

35

| In thousands (except per ounce amounts) | Three Months Ended March 31, 2023 (5) Total Silver | Total Gold and Other | Total |
| --- | ---: | ---: | ---: |
| Total cost of sales | $100,822 | $63,730 | $164,552 |
| Depreciation, depletion and amortization | (24,919) | (14,083) | (39,002) |
| Treatment costs | 15,645 | 467 | 16,112 |
| Change in product inventory | (4,024) | (2,417) | (6,441) |
| Reclamation and other costs | (538) | (217) | (755) |
| Exclusion of Casa Berardi cash costs (5) | — | (2,851) | (2,851) |
| Exclusion of Nevada Operations and other costs | — | (685) | (685) |
| Cash Cost, Before By-product Credits (1) | 86,986 | 43,944 | 130,930 |
| Reclamation and other costs | 1,007 | 217 | 1,224 |
| Sustaining capital | 14,425 | 15,015 | 29,440 |
| General and administrative | 12,070 | — | 12,070 |
| AISC, Before By-product Credits (1) | 114,488 | 59,176 | 173,664 |
| By-product credits: |  |  |  |
| Zinc | (30,821) | — | (30,821) |
| Gold | (25,286) | — | (25,286) |
| Lead | (22,241) | — | (22,241) |
| Silver | — | (127) | (127) |
| Total By-product credits | (78,348) | (127) | (78,475) |
| Cash Cost, After By-product Credits | $8,638 | $43,817 | $52,455 |
| AISC, After By-product Credits | $36,140 | $59,049 | $95,189 |
| Divided by ounces produced | 4,035 | 25 |  |
| Cash Cost, Before By-product Credits, per Ounce | $21.56 | $1,780 |  |
| By-product credits per ounce | (19.42) | (5) |  |
| Cash Cost, After By-product Credits, per Ounce | $2.14 | $1,775 |  |
| AISC, Before By-product Credits, per Ounce | $28.38 | $2,397 |  |
| By-product credits per ounce | (19.42) | (5) |  |
| AISC, After By-product Credits, per Ounce | $8.96 | $2,392 |  |

(1) Includes all direct and indirect operating costs related to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs and royalties, before by-product revenues earned from all metals other than the primary metal produced at each operation. AISC, Before By-product Credits also includes reclamation and sustaining capital costs.

(2) AISC, Before By-product Credits for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining capital.

(3) Lucky Friday operations were suspended in August 2023 following the underground fire in the #2 shaft secondary egress and resumed on January 9, 2024. The portion of cash costs, sustaining costs, by-product credits, and silver production incurred during the suspension period are excluded from the calculation of total cost of sales, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

(4) Other includes $3.9 million and $0.5 million of total cost of sales for the three months ended March 31, 2024, and 2023 respectively, related to the environmental services business acquired as part of the Alexco acquisition.

(5) During the three months ended March 31, 2023, the Company completed the necessary studies to conclude usage of the F-160 pit as a tailings storage facility after mining is complete. As a result, a portion of the mining costs have been excluded from Cash Cost, Before By-product Credits and AISC, Before By-product Credits.

(6) Keno Hill is in the ramp-up phase of production and is excluded from the calculation of total cost of sales, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

### 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 net 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, 2024, we had $80.2 million in cash and cash equivalents, of which $5.5 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, 2024, we had utilized $140.0 million drawn on our credit facility of $150 million, with $6.8 million used for letters of credit and the remainder available as 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 U.S. operations are adequate to fund our U.S. operations and corporate activities.

Pursuant to our common stock dividend policy described in *Note 12* of *Notes to Consolidated Financial Statements* in our 2023 Form 10-K, our Board of Directors declared and paid dividends on our common stock of $3.9 million and $3.8 million, in the first quarters of 2024 and 2023, respectively. Our dividend policy has a silver-linked component which ties the amount of declared common stock dividends to our realized silver price for the preceding quarter. Another component of our common stock dividend policy anticipates paying an annual minimum dividend.

For illustrative purposes only, the table below summarizes potential dividend amounts under our dividend policy.

| Quarterly Average Realized Silver Price ($ per ounce) | Quarterly Silver-Linked Dividend ($ per share) | Annualized Silver-Linked Dividend ($ per share) | Annualized Minimum Dividend ($ per share) | Annualized Dividends per Share: Silver-Linked and Minimum ($ per share) |
| ---: | ---: | ---: | ---: | ---: |
| Less than $20 | $— | $— | $0.015 | $0.015 |
| $20 | $0.0025 | $0.01 | $0.015 | $0.025 |
| $25 | $0.010 | $0.04 | $0.015 | $0.055 |
| $30 | $0.015 | $0.06 | $0.015 | $0.075 |
| $35 | $0.025 | $0.10 | $0.015 | $0.115 |
| $40 | $0.035 | $0.14 | $0.015 | $0.155 |
| $45 | $0.045 | $0.18 | $0.015 | $0.195 |
| $50 | $0.055 | $0.22 | $0.015 | $0.235 |

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 2023 Form 10-K, 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, 2024 and December 31, 2023, 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 6* of *Notes to Condensed Consolidated Financial Statements (Unaudited)* pursuant to an equity distribution agreement dated February 18, 2021, we may offer and sell up to 60 million shares of our common stock from time to time to or through sales agents 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. During the three months ended March 31, 2024, we sold 248,561 shares under the agreement for proceeds of $1.1 million, net of commissions and fees of $0.04 million.

As a result of our current cash balances, the performance of our current and expected operations, current metals prices, proceeds from potential at-the-market sales of common stock, and availability under our New Credit Agreement, we believe we will be able to meet our obligations and other potential cash requirements during the next 12 months and beyond. Our obligations and other uses of cash may include, but are not limited to: debt service obligations related to the Senior Notes and IQ Notes; principal and interest payments under our Credit Agreement; care-and-maintenance; capital expenditures 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 $190 to $210 million (before any lease financing) will be spent in 2024 on capital expenditures, primarily for equipment, infrastructure, and development at our mines, including $47.6 million already incurred as of March 31, 2024. We also estimate exploration and pre-development expenditures will total approximately $32.5 million in 2024, including $4.3 million already incurred as of March 31, 2024. Our expenditures for these items and our related plans for 2024 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.

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 also may 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, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Cash and cash equivalents held in U.S. dollars | $74.7 | $98.8 |
| Cash and cash equivalents held in foreign currency | 5.5 | 7.6 |
| Total cash and cash equivalents | 80.2 | 106.4 |
| Marketable equity securities - non-current | 32.9 | 33.7 |
| Total cash, cash equivalents and investments | $113.1 | $140.1 |

Cash and cash equivalents decreased by $26.2 million in the first three months of 2024. Cash held in foreign currencies represents balances in Canadian dollars and Mexican Pesos. The value of non-current marketable equity securities decreased by $0.8 million.

|  | Three Months Ended March 31, 2024 | March 31, 2023 |
| --- | ---: | ---: |
| **Cash provided by operating activities (in millions)** | **$17.1** | **$40.6** |

Cash provided by operating activities for the three months ended March 31, 2024 of $17.1 million represented a $23.5 million decrease compared to the $40.6 million provided in the same period for 2023. $14.7 million of the variance was attributable to a higher income adjusted for non-cash items, reflecting higher non-cash depreciation, depletion and amortization expense and higher inventory write downs. The remaining variance was attributable to negative net working capital changes resulting from the resumption of operations following suspension at Lucky Friday consuming working capital, higher accounts receivable balances reflecting the timing of sales at Greens Creek and Keno Hill and an increase in inventory at Keno Hill

|  | Three Months Ended March 31, 2024 | March 31, 2023 |
| --- | ---: | ---: |
| **Cash used in investing activities (in millions)** | **$(47.5)** | **$(54.4)** |

During the three months ended March 31, 2024, we invested $47.6 million in capital expenditures, a decrease of $6.9 million compared to the same period in 2023. The variance was primarily due to lower capital spending at Keno Hill and Casa Berardi.

|  | Three Months Ended March 31, 2024 | March 31, 2023 |
| --- | ---: | ---: |
| **Cash provided by financing activities (in millions)** | **$4.9** | **$5.0** |

During the three months ended March 31, 2024, we had net draws of $12.0 million on our revolving credit facility resulting in $140.0 million outstanding at an interest rate of 8.0% on March 31, 2024. During the periods ended March 31, 2024 and 2023:

- we paid cash dividends on our common and preferred stock totaling $4.0 million and $3.9 million, respectively.
- we issued stock under our ATM program described above for net proceeds of $1.1 million and $11.9 million, respectively,and
- we made repayments on our finance leases of $3.0 million and $2.5 million, respectively.

### Contractual Obligations, Contingent Liabilities and Commitments

The table below presents our fixed, non-cancelable contractual obligations and commitments primarily related to our Senior Notes, IQ Notes, credit facility, outstanding purchase orders, certain capital expenditures and lease arrangements as of March 31, 2024 (in thousands):

|  | Payments Due By Period Less than 1 year | 1-3 years | 4-5 years | More than 5 years | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Purchase obligations (1) | $42,084 | $— | $— | $— | $42,084 |
| Credit facility(2) | 140,024 | 55 | — | — | 140,079 |
| Finance lease commitments (3) | 9,669 | 12,289 | 3,404 | 1,027 | 26,389 |
| Operating lease commitments (4) | 2,431 | 3,126 | 1,182 | 6,736 | 13,475 |
| Senior Notes (5) | 34,438 | 68,876 | 505,131 | — | 608,445 |
| IQ Notes (6) | 2,322 | 38,605 | — | — | 40,927 |
| Total contractual cash obligations | $230,968 | $122,951 | $509,717 | $7,763 | $871,399 |

(1) Consists of open purchase orders and commitments of approximately $11.1 million, $17.5 million, $10.2 million, $2.5 million and $0.8 million for various capital and non-capital items at Greens Creek, Lucky Friday, Keno Hill, Casa Berardi and Other Operations, respectively.

(2) The Credit Agreement provides for a $150 million revolving credit facility. We had net draws of $140.0 million and $6.8 million in letters of credit outstanding as of March 31, 2024. The amounts in the table above assume no additional amounts will be drawn in future periods, and include only the standby fee on the current undrawn balance and accrued interest. For more information on our credit facility, see *Note 7* of *Notes to Condensed Consolidated Financial Statements (Unaudited).*

(3) Includes scheduled finance lease payments of $6.3 million, $5.7 million, $7.9 million, and $6.5 million for equipment at Greens Creek, Lucky Friday, Casa Berardi, and Keno Hill, respectively.

(4) We enter into operating leases in the normal course of business. Substantially all lease agreements have fixed payment terms based on the passage of time. Some lease agreements provide us with the option to renew the lease or purchase the leased property. Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional operating lease arrangements.

(5) On February 19, 2020, we completed an offering of $475 million in aggregate principal amount of our Senior Notes due February 15, 2028. The Senior Notes bear interest at a rate of 7.25% per year, with interest payable on February 15 and August 15 of each year. See *Note 7* of *Notes to Condensed Consolidated Financial Statements (Unaudited)* for more information.

(6) On July 9, 2020, we entered into a note purchase agreement pursuant to which we issued our IQ Notes for CAD$50 million (approximately USD$36.8 million at the time of the transaction) in aggregate principal amount. The IQ Notes bear interest on amounts outstanding at a rate of 6.515% per year, payable on January 9 and July 9 of each year. See *Note 7* of *Notes to Condensed Consolidated Financial Statements (Unaudited)* for more information.

We record liabilities for costs associated with mine closure, reclamation of land and other environmental matters. At March 31, 2024, our liabilities for these matters totaled $121.3 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 10* of *Notes to Condensed Consolidated Financial Statements (Unaudited).*

### Critical Accounting Estimates

There have been no significant changes to the critical accounting estimates disclosed in *Management's Discussion and Analysis of Financial Condition and Results of Operations* in our 2023 Form 10-K.

### Off-Balance Sheet Arrangements

At March 31, 2024, 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 and IQ Notes (see *Note 7* 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.; Hecla Quebec, 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. We issued the IQ Notes in four equal tranches between July and October 2020.

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:

- ***Investments in subsidiaries***. The acquisition of a company results in an investment in debt or equity capital on the records of the parent company and a contribution to debt or equity capital on the records of the subsidiary. Such investments and capital contributions are eliminated in consolidation.
- ***Capital contributions***. Certain of Hecla's subsidiaries do not generate cash flow, either at all or that is sufficient to meet their capital needs, and their cash requirements are routinely met with inter-company advances from their parent companies. Generally on an annual basis, when not otherwise intended as debt, the Boards of Directors of such parent companies declare contributions of capital to their subsidiary companies, which increase the parents' investment and the subsidiaries' additional paid-in capital. Occasionally, parent companies may also subscribe for additional common shares of their subsidiaries. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.
- ***Debt.*** At times, inter-company debt agreements have been established between certain of Hecla's subsidiaries and their parents. The related debt liability and receivable balances, accrued interest expense (if any) and income activity (if any), and payments of principal and accrued interest amounts (if any) by the subsidiary companies to their parents are eliminated in consolidation.
- ***Dividends.*** Certain of Hecla's subsidiaries which generate cash flow routinely provide cash to their parent companies through inter-company transfers. On at least an annual basis, the Boards of Directors of such subsidiary companies declare dividends to their parent companies, which reduces the subsidiaries' retained earnings and increases the parents' dividend income. In consolidation, such activity is eliminated.
- ***Deferred taxes***. Our ability to realize deferred tax assets and liabilities is considered for two consolidated tax groups of subsidiaries within the United States: The Nevada U.S. Group and the Hecla U.S. Group. Within each tax group, all subsidiaries' estimated future taxable income contributes to the ability of their tax group to realize all such assets and liabilities. However, when Hecla's subsidiaries are viewed independently, we use the separate return method to assess the realizability of each subsidiary's deferred tax assets and whether a valuation allowance is required against such deferred tax assets. In some instances, a parent company or subsidiary may possess deferred tax assets whose realization depends on the future taxable incomes of other subsidiaries on a consolidated-return basis, but would not be considered realizable if such parent or subsidiary filed on a separate stand-alone basis. In such a situation, a valuation allowance is assessed on that subsidiary's deferred tax assets, with the resulting adjustment reported in the eliminations column of the guarantor and parent's financial statements, as is the case in the unaudited interim financial statements set forth below. The separate return method can result in significant eliminations of deferred tax assets and liabilities and related income tax provisions and benefits. Non-current deferred tax asset balances are included in other non-current assets on the consolidating balance sheets and make up a large portion of that item, particularly for the guarantor balances.

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

*(in thousands)*

| Assets | As of March 31, 2024 Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated |
| --- | ---: | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | $72,059 | $7,417 | $693 | $— | $80,169 |
| Other current assets | 15,761 | 145,794 | 13,526 | — | 175,081 |
| Properties, plants, equipment and mineral interests, net | — | 2,654,819 | 8,336 | — | 2,663,155 |
| Intercompany receivable (payable) | (84,511) | (904,893) | 595,872 | 393,532 | 0 |
| Investments in subsidiaries | 2,186,720 | — | — | (2,186,720) | — |
| Other non-current assets | 443,643 | 20,798 | 27,546 | (416,134) | 75,853 |
| **Total assets** | $2,633,672 | $1,923,935 | $645,973 | $(2,209,322) | $2,994,258 |
| **Liabilities and Stockholders' Equity** |  |  |  |  |  |
| Current liabilities | $27,454 | $134,650 | $13,134 | $(22,601) | $152,637 |
| Long-term debt | 647,309 | 15,173 | 0 | (0) | 662,482 |
| Non-current portion of accrued reclamation | — | 109,575 | 2,093 | — | 111,668 |
| Non-current deferred tax liability | 279 | 97,732 | — | — | 98,011 |
| Other non-current liabilities | — | 10,830 | — | — | 10,830 |
| Stockholders' equity | 1,958,630 | 1,555,975 | 630,746 | (2,186,721) | 1,958,630 |
| **Total liabilities and stockholders' equity** | $2,633,672 | $1,923,935 | $645,973 | $(2,209,322) | $2,994,258 |

### Unaudited Interim Condensed Consolidating Statements of Operations

*(in thousands)*

|  | Three Months Ended March 31, 2024 Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenues | $3,057 | $186,471 | $— | $— | $189,528 |
| Cost of sales and other direct production costs | (433) | (121,028) | — | — | (121,461) |
| Depreciation, depletion, amortization | — | (48,907) | — | — | (48,907) |
| General and administrative | (4,446) | (6,396) | (374) | — | (11,216) |
| Exploration and pre-development | (165) | (3,387) | (790) | — | (4,342) |
| Equity in earnings of subsidiaries | (18,252) | — | — | 18,252 | — |
| Other (expense) income | 19,746 | (13,768) | (9,446) | (4,072) | (7,540) |
| Income before income and mining taxes | (493) | (7,015) | (10,610) | 14,180 | (3,938) |
| Income and mining tax expense | (5,260) | (625) | — | 4,070 | (1,815) |
| Net income (loss) | (5,753) | (7,640) | (10,610) | 18,250 | (5,753) |
| Preferred stock dividends | (138) | — | — | — | (138) |
| Net income (loss) applicable to common stockholders | $(5,891) | $(7,640) | $(10,610) | $18,250 | $(5,891) |
| Net income (loss) | (5,753) | (7,640) | (10,610) | 18,250 | (5,753) |
| Changes in comprehensive income (loss) | (5,403) | — | — | — | (5,403) |
| Comprehensive income (loss) | $(11,156) | $(7,640) | $(10,610) | $18,250 | $(11,156) |

41

## Market risk

As filed, 4,416 characters.

The following discussion about our exposure to market risks and risk management activities includes forward-looking statements that involve risks and uncertainties, as well as summarizes the financial instruments held by us at March 31, 2024, which are sensitive to changes in commodity prices and foreign exchange rates and are not held for trading purposes. Actual results could differ materially from those projected in the forward-looking statements. In the normal course of business, we also face risks that are either non-financial or non-quantifiable (See *Item 1A. – Risk Factors* of our 2023 Form 10-K).

#### Metals Prices

Changes in the market prices of silver, gold, lead and zinc can significantly affect our profitability and cash flow. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see *Item 1A – Risk Factors – A substantial or extended decline in metals prices would have a material adverse effect on us* in our 2023 Form 10-K). We utilize financially-settled forward and put option contracts to manage our exposure to changes in prices for silver, gold, zinc and lead.

#### Provisional Sales

Sales of all metals products sold directly to customers, including by-product metals, are recorded as revenues when all performance obligations have been completed and the transaction price can be determined or reasonably estimated. For concentrate sales, revenues are generally recorded at the time of shipment at forward prices for the estimated month of settlement. Due to the time elapsed between shipment to the customer and the final settlement with the customer we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices until final settlement by the customer. Changes in metals prices between shipment and final settlement will result in changes to revenues previously recorded upon shipment. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see *Item 1A – Risk Factors – A substantial or extended decline in metals prices would have a material adverse effect on us* in our 2023 Form 10-K). At March 31, 2024, metals contained in concentrate sales and exposed to future price changes totaled 2.6 million ounces of silver, 9,060 ounces of gold and 5,450 tons of lead. If the price for each metal were to change by 10%, the change in the total value of the concentrates sold would be approximately $9.6 million. As discussed in *Note 8* of *Notes to Condensed Consolidated Financial Statements (Unaudited)*, we utilize a program designed and intended to mitigate the risk of negative price adjustments with limited mark-to-market financially-settled forward contracts for our silver, gold, zinc and lead sales.

#### Commodity-Price Risk Management

See *Note 8* of *Notes to Condensed Consolidated Financial Statements (Unaudited)* and *Item 7A. Quantitative and Qualitative Disclosures About Market Risk* in our 2023 Form 10-K for a description of our commodity-price risk management program.

#### Foreign Currency Risk Management

We operate or have mining interests in Canada, which exposes us to risks associated with fluctuations in the exchange rates between the USD and the CAD. We determined the functional currency for our Canadian operations is the USD. As such, foreign exchange gains and losses associated with the re-measurement of monetary assets and liabilities from CAD to USD are recorded to earnings each period. For the three months ended March 31, 2024, we recognized a net foreign exchange gain of $4.0 million, compared to a net foreign exchange gain of $0.1 million for the three months ended March 31, 2023. Foreign currency exchange rates are influenced by a number of factors beyond our control. A 10% change in the exchange rate between the USD and CAD from the rate at March 31, 2024 would have resulted in a change of approximately $7.3 million in our net foreign exchange gain or loss. We do not hedge the remeasurement of monetary assets and liabilities. We do hedge some of our operating and capital costs denominated in foreign currency.

See *Note 8* of *Notes to Condensed Consolidated Financial Statements (Unaudited)* and *Note 9* of *Notes to Consolidated Financial Statements* in our 2023 Form 10-K for a description of our foreign currency risk management.

## Controls and procedures

As filed, 1,503 characters.

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as required by Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were effective as of March 31, 2024, in assuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported. There were no changes in our internal control over financial reporting during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

## Risk factors

As filed, 210 characters.

*Item 1A. – Risk Factors* of our 2023 Form 10-K set forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition or operating results.

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-056495. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.