Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
| Series B preferred stock, par value (in dollars per share) | $ 0.25 | $ 0.25 |
| Series B preferred stock, shares issued (in shares) | 157,776 | 157,776 |
| Series B preferred stock, shares outstanding (in shares) | 157,776 | 157,776 |
| Series B preferred stock, liquidation preference | $ 7,889 | $ 7,889 |
| Common stock, par value (in dollars per share) | $ 0.25 | $ 0.25 |
| Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
| Common stock, shares issued (in shares) | 610,490,740 | 607,619,495 |
| Treasury stock, shares (in shares) | 8,229,212 | 8,132,553 |
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands |
Total |
Preferred Stock |
Common Stock |
Capital Surplus |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss), net |
Treasury Stock |
|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2021 | $ 1,760,787 | $ 39 | $ 136,391 | $ 2,034,485 | $ (353,651) | $ (28,456) | $ (28,021) |
| Net (loss) income | 4,153 | 4,153 | |||||
| Common stock issued for 401(k) match | 927 | 44 | 883 | ||||
| Stock-based compensation expense | 1,271 | 1,271 | |||||
| Incentive compensation units distributed | (1,921) | 222 | (222) | (1,921) | |||
| Common stock ($0.00625 per share) and Series B Preferred Stock ($0.875 per share) dividends declared | (3,509) | (3,509) | |||||
| Other comprehensive income (loss) | (33,165) | (33,165) | |||||
| Balance at Mar. 31, 2022 | 1,728,543 | 39 | 136,657 | 2,036,417 | (353,007) | (61,621) | (29,942) |
| Balance at Dec. 31, 2022 | 1,978,967 | 39 | 151,819 | 2,260,290 | (403,931) | 2,448 | (31,698) |
| Net (loss) income | (3,173) | (3,173) | |||||
| Common stock issued for 401(k) match | 1,145 | 50 | 1,095 | ||||
| Stock-based compensation expense | 1,190 | 1,190 | |||||
| Incentive compensation units distributed | (482) | 125 | (125) | (482) | |||
| Common stock ($0.00625 per share) and Series B Preferred Stock ($0.875 per share) dividends declared | (3,891) | 3,891 | |||||
| Common stock issued under ATM program | 11,885 | 542 | 11,343 | ||||
| Other comprehensive income (loss) | 6,516 | 6,516 | |||||
| Balance at Mar. 31, 2023 | $ 1,992,157 | $ 39 | $ 152,536 | $ 2,273,793 | $ (410,995) | $ 8,964 | $ (32,180) |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) - $ / shares |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
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| Common stock dividends declared, per common share (in dollars per share) | $ 0.00625 | $ 0.00625 |
| Preferred stock dividends declared, per share (in dollars per share) | $ 0.875 | $ 0.875 |
| Common stock issued for 401(k) match, shares (in shares) | 199,623 | 180,000 |
| Incentive compensation units shares | 498,348 | 888,000 |
| Common stock issued under ATM program , shares | 2,173,274 | |
Note 1 - Basis of Preparation of Financial Statements |
3 Months Ended |
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Mar. 31, 2023 | |
| Disclosure Text Block [Abstract] | |
| Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | Note 1. Basis of Preparation of Financial Statements
The accompanying unaudited interim condensed consolidated financial statements of Hecla Mining Company and its subsidiaries (collectively, “Hecla,” “the Company,” “we,” “our,” or “us,” except where the context requires otherwise) have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required annually by accounting principles generally accepted in the United States of America (“GAAP”). Therefore, this information should be read in conjunction with Hecla Mining Company’s consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). The consolidated December 31, 2022 balance sheet data was derived from our audited consolidated financial statements. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. All such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three-month period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. |
Note 2 -Business Segments and Sales of Products |
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| Segment Reporting Disclosure [Text Block] | Note 2. Business Segments and Sales of Products
We discover, acquire and develop mines and other mineral interests and produce and market (i) concentrates, containing silver, gold, lead and zinc, (ii) carbon material containing silver and gold, and (iii) doré containing silver and gold. We are currently organized and managed in five segments: Greens Creek, Lucky Friday, Keno Hill, Casa Berardi and Nevada Operations.
General corporate activities not associated with operating mines and their various exploration activities, as well as idle properties and environmental remediation services in the Yukon, are presented as “other.” Interest expense, interest income and income and mining taxes are considered general corporate items, and are not allocated to our segments.
The following tables present information about our reportable segments metal sales for the three months ended March 31, 2023 and 2022 (in thousands):
The following table presents identifiable assets by reportable segment as of March 31, 2023 and December 31, 2022 (in thousands):
Our sales for the three month period ended March 31, 2023 are comprised of metal sales as described below and $0.5 million of environmental services revenue.
Sales by metal for the three month periods ended March 31, 2023 and 2022 were as follows (in thousands):
Sales of metals for the three month periods ended March 31, 2023 and 2022, included a net gain of $0.9 million and a net loss of $4.8 million, respectively, on financially-settled forward option contracts for silver, gold, lead and zinc. See Note 8 for more information. |
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Note 3 - Income and Mining Taxes |
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| Income Tax Disclosure [Text Block] | Note 3. Income and Mining Taxes
Major components of our income and mining tax benefit (provision) for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
The income and mining tax benefit (provision) for the three months ended March 31, 2023 and 2022 varies from the amounts that would have resulted from applying the statutory tax rates to pre-tax income due primarily to the impact of taxation in foreign jurisdictions, non-recognition of net operating losses and foreign exchange gains and losses in certain jurisdictions.
For the three month period ended March 31, 2023, we used the annual effective tax rate method to calculate the tax provision. Valuation allowances on Nevada, Mexico and certain Canadian net operating losses were treated as discrete adjustments to the tax calculation including losses incurred by the acquired Alexco Resource Corp. ("Alexco") entities, which were acquired on September 7, 2022, partially causing the increase in the income tax rate for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022. |
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Note 4 - Employee Benefit Plans |
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| Retirement Benefits [Text Block] | Note 4. Employee Benefit Plans
We sponsor three defined benefit pension plans covering substantially all U.S. employees. Net periodic pension cost for the plans consisted of the following for the three months ended March 31, 2023 and 2022 (in thousands):
For the three month periods ended March 31, 2023 and 2022, the service cost component of net periodic pension cost is included in the same line items of our condensed consolidated financial statements as other employee compensation costs. The net benefit related to all other components of net periodic pension cost of $1.0 million and $1.4 million for the three month period ended March 31, 2023, and 2022, respectively, is included in other (expense) income on our condensed consolidated statements of operations and comprehensive (loss) income. |
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Note 5 - (Loss) Income Per Common Share |
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| Earnings Per Share [Text Block] | Note 5. (Loss) Income Per Common Share
We calculate basic (loss) income per common share on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted income per share is calculated using the weighted average number of shares of common stock outstanding during the period plus the effect of potential dilutive common shares during the period using the treasury stock and if-converted methods.
Potential dilutive shares of common stock include outstanding unvested restricted stock awards, deferred restricted stock units, warrants and convertible preferred stock for periods in which we have reported net income. For periods in which we report net losses, potential dilutive shares of common stock are excluded, as their conversion and exercise would be anti-dilutive.
The following table represents net (loss) income per common share – basic and diluted (in thousands, except income (loss) per share):
For the three months ended March 31, 2023, all outstanding unvested restricted stock units, deferred restricted stock units, warrants and convertible preferred stock were excluded from the computation of diluted loss per share, as our reported net loss would cause their conversion and exercise to have an anti-dilutive effect on the calculation of diluted loss per share. For the three months ended March 31, 2022, the calculation of diluted income per common share included (i) 1,954,773 incentive compensation units |
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Note 6 - Stockholders' Equity |
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| Stockholders' Equity | Note 6. Stockholders’ Equity
At-The-Market Equity Distribution Agreement
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. 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 our share price, our cash resources, customary black-out restrictions, and whether we have any material inside information. The agreement can be terminated by us at any time. Any sales of shares under the equity distribution agreement are registered under the Securities Act of 1933, as amended, pursuant to a shelf registration statement on Form S-3. As of March 31, 2023 we had sold 6,033,473 shares under the agreement for proceeds of $29.2 million, net of commissions and fees of $0.5 million. Of this balance, 2,173,274 shares were sold during the three months ended March 31, 2023 for proceeds of $11.9 million, net of commissions and fees of $0.2 million.
Stock-based Compensation Plans
The Company has stock incentive plans for executives, directors and eligible employees, comprised of performance shares and restricted stock. Stock-based compensation expense for restricted stock unit and performance-based grants (collectively "incentive compensation") to employees and shares issued to non-employee directors totaled $1.2 million and $1.3 million for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, there was $5.2 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.2 years.
In connection with the vesting of incentive compensation, employees have in the past, at their election and when permitted by us, chosen to satisfy their minimum tax withholding obligations through net share settlement, pursuant to which the Company withholds the number of shares necessary to satisfy such withholding obligations and pays the obligations in cash. As a result, in the first three months of 2023, we withheld 96,659 shares valued at approximately $0.5 million, or approximately $4.98 per share.
Common Stock Dividends
The following table summarizes the dividends our Board of Directors have declared and we have paid during 2023 pursuant to our dividend policy:
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Note 7 - Debt, Credit Agreement and Leases |
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| Debt, Credit Facility and Leases | Note 7. Debt, Credit Agreement and Leases
Our debt as of March 31, 2023 and December 31, 2022 consisted of our 7.25% Senior Notes due February 15, 2028 (“Senior Notes”) and our Series 2020-A Senior Notes due July 9, 2025 (the “IQ Notes”) and any drawn amounts on our $150 million Credit Agreement, which is described separately below. The following tables summarize our long-term debt balances, excluding interest and borrowings under the Credit Agreement, as of March 31, 2023 and December 31, 2022 (in thousands):
The following table summarizes the scheduled annual future payments, including interest, for our Senior Notes, IQ Notes, and finance and operating leases as of March 31, 2023 (in thousands). The amounts for the IQ Notes are stated in U.S. dollars (“USD”) based on the USD/Canadian dollar (“CAD”) exchange rate as of March 31, 2023.
Credit Agreement
On July 21, 2022, we entered into a revolving credit facility (the "Credit Agreement") with various financial institutions (the “Lenders”), Bank of Montreal and Bank of America, N.A. as letters of credit issuers, and Bank of America, N.A., as administrative agent for the Lenders and as swingline lender, to replace our prior credit agreement. The Credit Agreement is a $150 million senior secured revolving facility, with an option to be increased in an aggregate amount not to exceed $75 million. Any revolving loans under the Credit Agreement have a maturity date of July 21, 2026. Proceeds of the revolving loans under the Credit Agreement may be used for general corporate purposes. The interest rate on the outstanding loans under the Credit Agreement is based on the Company’s net leverage ratio and is calculated at (i) Term Secured Overnight Financing Rate ("SOFR") plus 2% to 3.5%; or (ii) Bank of America’s Base Rate plus 1% to 2.5% with Base Rate being the highest of (i) the Bank of America prime rate, (ii) the Federal Funds rate plus .50% or (iii) Term SOFR plus 1.00%. For each amount drawn, we elect whether we draw on a one, three or six month basis or annual basis for SOFR. If we elect to draw for greater than six months, we pay interest quarterly on the outstanding amount.
We are also required to pay a commitment fee of between 0.45% to 0.78750%, depending on our net leverage ratio. Letters of credit issued under the Credit Agreement bear a fee between 2.00% and 3.50% based on our net leverage ratio, as well as a fronting fee to each issuing bank at an agreed upon rate per annum on the average daily dollar amount of our letter of credit exposure.
Hecla Mining Company and certain of our subsidiaries are the borrowers under the Credit Agreement, while certain of our other subsidiaries are guarantors of the borrowers’ obligations under the Credit Agreement. As further security, the Credit Agreement is collateralized by a mortgage on the Greens Creek mine, the equity interests of subsidiaries that own the Greens Creek mine or are part of the Greens Creek Joint Venture and our subsidiary Hecla Admiralty Company (the “Greens Creek Group”), and by all of the Green Creek Group’s rights and interests in the Greens Creek Joint Venture Agreement, and in all assets of the joint venture and of any member of the Greens Creek Group.
At March 31, 2023, there was $6.7 million of outstanding letters of credit. Letters of credit that are outstanding reduce availability under the Credit Agreement.
We believe we were in compliance with all covenants under the Credit Agreement as of March 31, 2023. |
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Note 8 - Derivative Instruments |
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| Derivative Instruments | Note 8. Derivative Instruments
General
Our current risk management policy provides that up to 75% of five years of our foreign currency, lead and zinc metals price and silver and gold price exposure may be covered under a derivatives program with certain other limitations. Our program also utilizes derivatives to manage price risk exposure created from when revenue is recognized from a shipment of concentrate until final settlement.
These instruments expose us to (i) credit risk in the form of non-performance by counterparties for contracts in which the contract price exceeds the spot price of the hedged commodity or foreign currency and (ii) price risk to the extent that the spot price or currency exchange rate exceeds the contract price for quantities of our production and/or forecasted costs covered under contract positions.
Foreign Currency
Our wholly-owned subsidiaries owning the Casa Berardi operation and Keno Hill operation are USD-functional entities which routinely incur expenses denominated in CAD. Such expenses expose us to exchange rate fluctuations between the USD and CAD. We have a program to manage our exposure to fluctuations in the USD exchange rate for these subsidiaries' future operating and capital costs denominated in CAD. The program utilizes forward contracts to buy CAD, some of which are designated as cash flow hedges. As of March 31, 2023, we have 569 forward contracts outstanding to buy a total of CAD$604.8 million having a notional amount of USD$454.7 million. The CAD contracts that are related to forecasted cash operating costs at Casa Berardi to be incurred from 2023 through 2026 have a total notional value of CAD$393.9 million and have CAD-to-USD exchange rates ranging between 1.272 and 1.3757.
As of March 31, 2023 and December 31, 2022, we recorded the following balances for the fair value of the contracts (in millions):
Net unrealized losses of $6.1 million related to the effective portion of the hedges are included in accumulated other comprehensive income (loss) as of March 31, 2023. Unrealized gains and losses will be transferred from accumulated other comprehensive income (loss) to current earnings as the underlying operating expenses are recognized. We estimate $3.3 million in net unrealized losses included in accumulated other comprehensive income (loss) as of March 31, 2023 will be reclassified to current earnings in the next twelve months. Net realized losses of $0.9 million on contracts related to underlying expenses which have been recognized were transferred from accumulated other comprehensive income (loss) and included in cost of sales and other direct production costs for the three months ended March 31, 2023. Net gains of $0.7 million for the three months ended March 31, 2023 related to contracts not designated as hedges and no net unrealized gains or losses related to ineffectiveness of the hedges are included in fair value adjustments, net on our consolidated statements of operations and comprehensive income for the three months ended March 31, 2023
Metals Prices
We are currently using financially-settled forward contracts to manage the exposure to: • changes in prices of silver, gold, zinc and lead contained in our concentrate shipments between the time of shipment and final settlement; and • changes in prices of zinc and lead (but not silver and gold) contained in our forecasted future concentrate shipments.
The following tables summarize the quantities of metals committed under forward sales contracts at March 31, 2023 and December 31, 2022:
We recorded the following balances for the fair value of the forward contracts as of March 31, 2023 and December 31, 2022 (in millions):
Net realized and unrealized gains of $24.8 million related to the effective portion of the contracts designated as hedges were included in accumulated other comprehensive income (loss) as of March 31, 2023, and are net of related deferred taxes. Unrealized gains and losses will be transferred from accumulated other comprehensive income (loss) to current earnings as the underlying forecasted sales are recognized. We estimate $15.2 million in net realized and unrealized gains included in accumulated other comprehensive income (loss) as of March 31, 2023 would be reclassified to current earnings in the next twelve months. The realized gains arose due to cash settlement of zinc contracts prior to maturity in 2022 for net proceeds of $17.4 million. We recognized a net gain of $0.9 million, including a $3.0 million loss transferred from accumulated other comprehensive income (loss), and a net loss of $4.8 million, during the three months ended March 31, 2023 and 2022, respectively. These gains and losses were recognized on the contracts utilized to manage exposure to prices of metals in our concentrate shipments, which are included in sales. The net losses and gains recognized on the contracts offset gains and losses related to price adjustments on our provisional concentrate sales due to changes to silver, gold, lead and zinc prices between the time of sale and final settlement.
Credit-risk-related Contingent Features
Certain of our derivative contracts contain cross default provisions which provide that a default under our Credit Agreement would cause a default under the derivative contract. As of March 31, 2023, we have not posted any collateral related to these contracts. The fair value of derivatives in a net liability position related to these agreements was $14.0 million as of March 31, 2023, which includes accrued interest but excludes any adjustment for nonperformance risk. If we were in breach of any of these provisions at March 31, 2023, we could have been required to settle our obligations under the agreements at their termination value of $14.0 million. |
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Note 9 - Fair Value Measurement |
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| Fair Value Measurement | Note 9. Fair Value Measurement
Fair value adjustments, net is comprised of the following:
Accounting guidance has established a hierarchy for inputs used to measure assets and liabilities at fair value on a recurring basis. The three levels included in the hierarchy are:
Level 1: quoted prices in active markets for identical assets or liabilities;
Level 2: significant other observable inputs; and
Level 3: significant unobservable inputs.
The table below sets forth our assets and liabilities that were accounted for at fair value on a recurring basis and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category (in thousands).
Cash and cash equivalents consist primarily of money market funds and are valued at cost, which approximates fair value, and a small portion consists of municipal bonds having maturities of less than 90 days, which are recorded at fair value.
Current and non-current restricted cash balances consist primarily of certificates of deposit, U.S. Treasury securities, and other deposits and are valued at cost, which approximates fair value.
Our non-current available for sale securities consist of marketable equity securities of companies in the mining industry which are valued using quoted market prices for each security.
Trade accounts receivable from provisional concentrate sales are subject to final pricing and valued using quoted prices based on forward curves for the particular metals.
We use financially-settled forward contracts to manage exposure to changes in the exchange rate between USD and CAD, and the impact on CAD-denominated operating and capital costs incurred at our Casa Berardi operation and the Keno Hill operation (see Note 8 for more information). The fair value of each contract represents the present value of the difference between the forward exchange rate for the contract settlement period as of the measurement date and the contract settlement exchange rate.
We use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our concentrate shipments that have not reached final settlement. We also use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our forecasted future sales (see Note 8 for more information). The fair value of each forward contract represents the present value of the difference between the forward metal price for the contract settlement period as of the measurement date and the contract settlement metal price.
At March 31, 2023, our Senior Notes and IQ Notes were recorded at their carrying value of $470.6 million and $36.0 million, respectively, net of unamortized initial purchaser discount/premium and issuance costs. The estimated fair values of our Senior Notes and IQ Notes were $480.6 million and $35.7 million, respectively, at March 31, 2023. Quoted market prices, which we consider to be Level 1 inputs, are utilized to estimate fair values of the Senior Notes. Unobservable inputs which we consider to be Level 3, including an assumed current annual yield of 7.1%, are utilized to estimate the fair value of the IQ Notes. See Note 7 for more information. |
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Note 10 - Commitments, Contingencies and Obligations |
3 Months Ended |
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Mar. 31, 2023 | |
| Disclosure Text Block [Abstract] | |
| Commitments, Contingencies and Obligations | Note 10. Commitments, Contingencies and Obligations
Johnny M Mine Area near San Mateo, McKinley County and San Mateo Creek Basin, New Mexico
In August 2012, Hecla Limited and the U.S. Environmental Protection Agency (the “EPA”) entered into a Settlement Agreement and Administrative Order on Consent for Removal Action (“Consent Order”) regarding the Johnny M Mine Area near San Mateo, McKinley County, New Mexico. Mining at the Johnny M Mine was conducted for a limited period of time by a predecessor of Hecla Limited, and the EPA had previously asserted that Hecla Limited may be responsible under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) for environmental remediation and past costs incurred by the EPA at the site. Under the Consent Order, Hecla Limited agreed to pay (i) $1.1 million to the EPA for its past response costs at the site and (ii) any future response costs at the site under the Consent Order, in exchange for a covenant not to sue by the EPA. In December 2014, Hecla Limited submitted to the EPA the Engineering Evaluation and Cost Analysis (“EE/CA”) for the site which recommended on-site disposal of mine-related material. In January 2021, the parties began negotiating a new consent order to design and implement the on-site disposal response action recommended in the EE/CA. Based on the foregoing, we believe it is probable that Hecla Limited will incur a liability for the CERCLA removal action and we have accrued $9.0 million, primarily representing estimated current costs to design and implement the remedy, which are subject to change as fieldwork is performed. It is possible that Hecla Limited’s liability will be more than $9.0 million, and any increase in liability could have a material adverse effect on Hecla Limited’s or our results of operations or financial position.
The Johnny M Mine is in an area known as the San Mateo Creek Basin (“SMCB”), which is an approximately 321 square mile area in New Mexico that contains numerous legacy uranium mines and mills. In addition to Johnny M, Hecla Limited’s predecessor was involved at other mining sites within the SMCB. The EPA appears to have deferred consideration of listing the SMCB site on CERCLA’s National Priorities List (“Superfund”) by removing the site from its emphasis list, and is working with various potentially responsible parties (“PRPs”) at the site in order to study and potentially address perceived groundwater issues within the SMCB. The EE/CA discussed above relates primarily to contaminated rock and soil at the Johnny M site, not groundwater and not elsewhere within the SMCB site. It is possible that Hecla Limited’s liability at the Johnny M Site, and for any other mine site within the SMCB at which Hecla Limited’s predecessor may have operated, will be greater than our current accrual of $9.0 million due to the increased scope of required remediation.
In July 2018, the EPA informed Hecla Limited that it and several other PRPs may be liable for cleanup of the SMCB site or for costs incurred by the EPA in cleaning up the site. The EPA stated it has incurred approximately $9.6 million in response costs to date. On May 2, 2022, Hecla Limited received a letter from a PRP notifying Hecla Limited that three PRPs will seek cost recovery and contribution from Hecla Limited under CERCLA for certain investigatory work performed by the PRPs at the SMCB site. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by the various PRPs.
Carpenter Snow Creek and Barker-Hughesville Sites in Montana
In July 2010, the EPA made a formal request to Hecla for information regarding the Carpenter Snow Creek Superfund site located in Cascade County, Montana. The Carpenter Snow Creek site is located in a historical mining district, and in the early 1980s Hecla Limited leased 6 mining claims and performed limited exploration activities at the site. Hecla Limited terminated the mining lease in 1988.
In June 2011, the EPA informed Hecla Limited that it believes Hecla Limited, and several other PRPs, may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA stated in the letter that it has incurred approximately $4.5 million in response costs and estimated that total remediation costs may exceed $100 million. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by various other PRPs.
In February 2017, the EPA made a formal request to Hecla for information regarding the Barker-Hughesville Mining District Superfund site located in Judith Basin and Cascade Counties, Montana. Hecla Limited submitted a response in April 2017. The Barker-Hughesville site is located in a historic mining district, and between approximately June and December 1983, Hecla Limited was party to an agreement with another mining company under which limited exploration activities occurred at or near the site.
In August 2018, the EPA informed Hecla Limited that it and several other PRPs may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA did not include an amount of its alleged response costs to date. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning past or anticipated future costs at the site and the relative contributions of contamination by various other PRPs.
Greens Creek and Lucky Friday Environmental Issues
On June 30, 2022, our Greens Creek mine received a Notice of Violation (“NOV”) from the EPA alleging that the mine treated, stored, and disposed of certain hazardous waste without a permit in violation of the Resource Conservation and Recovery Act (“RCRA”), relating to the alleged presence of lead outside the concentrate storage building and the alleged improper reuse/recycling of certain materials produced from the on-site laboratories. The NOV contained two other less significant alleged violations. We disagree with several of the EPA’s allegations on a factual and legal basis.
Currently, the EPA has not initiated any formal enforcement proceeding against our Greens Creek subsidiary. In civil judicial cases, EPA can seek statutory penalties up to $81,540 per day per violation and, in administrative settlements, the EPA can seek administrative penalties of up to $47,423 per day per violation plus the economic benefit of noncompliance. The EPA typically pursues administrative penalties and assesses lower penalties on a per day basis. At this time, we cannot reasonably assess the amount of penalties the EPA may seek, or predict the terms of any potential settlement with the EPA.
On July 12, 2022, our Lucky Friday mine received a NOV from the EPA alleging violations of the Clean Water Act (“CWA”) between 2018 and 2021 relating primarily to concentration levels of zinc and lead in the mine’s permitted water discharges. Currently, the EPA has not initiated any formal enforcement proceeding against our Lucky Friday subsidiary. In civil judicial cases, the EPA can seek statutory penalties up to $59,973 per day per violation and, in administrative actions, the EPA can seek administrative penalties up to $23,989 per day per violation with a maximum administrative penalty of $299,989 for all alleged violations. The EPA typically pursues administrative penalties. At this time, we cannot reasonably assess the amount of penalties the EPA may seek, or predict the terms of any potential settlement with the EPA.
Litigation Related to Klondex Acquisition
On May 24, 2019, a purported Hecla stockholder filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York against Hecla and certain of our executive officers, one of whom is also a director. The complaint, purportedly brought on behalf of all purchasers of Hecla common stock from March 19, 2018 through and including May 8, 2019, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks, among other things, damages and costs and expenses. Specifically, the complaint alleges that Hecla, under the authority and control of the individual defendants, made certain material false and misleading statements and omitted certain material information regarding Hecla’s Nevada Operations. The complaint alleges that these misstatements and omissions artificially inflated the market price of Hecla common stock during the class period, thus purportedly harming investors. The Court granted our Motion to Dismiss the lawsuit, without prejudice, in February 2023, and the plaintiffs filed an amended complaint in March 2023 which repeats the same claims. We cannot predict the outcome of this lawsuit or estimate damages if plaintiffs were to prevail. We believe that these claims are without merit and intend to defend them vigorously.
Related to this class action lawsuit, Hecla has been named as a nominal defendant in a shareholder derivative lawsuit which also names as defendants certain current and past (i) members of Hecla’s board of directors and (ii) officers of Hecla. The case was filed on May 4, 2022 in the Delaware Chancery Court. In general terms, the suit alleges breaches of fiduciary duties by the individual defendants, waste of corporate assets and unjust enrichment, and seeks damages, purportedly on behalf of Hecla.
Debt
See Note 7 for information on the commitments related to our debt arrangements as of March 31, 2023.
Other Commitments
Our contractual obligations as of March 31, 2023 included open purchase orders and commitments of approximately $15.2 million, $29.4 million, $1.3 million, $1.4 million and $3.7 million for various capital and non-capital items at Greens Creek, Lucky Friday, Casa Berardi, Nevada Operations and Keno Hill, respectively. We also have total commitments of approximately $20.7 million relating to scheduled payments on finance leases, including interest, primarily for equipment at our Greens Creek, Lucky Friday, Casa Berardi, and Keno Hill units, and total commitments of approximately $13.9 million relating to payments on operating leases (see Note 7 for more information). As part of our ongoing business and operations, we are required to provide surety bonds, bank letters of credit, and restricted deposits for various purposes, including financial support for environmental reclamation obligations and workers compensation programs. As of March 31, 2023, we had surety bonds totaling $192.8 million and letters of credit totaling $6.7 million in place as financial support for future reclamation and closure costs, self-insurance, and employee benefit plans. The obligations associated with these instruments are generally related to performance requirements that we address through ongoing operations. As the requirements are met, the beneficiary of the associated instruments cancels or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure of the sites. We believe we are in compliance with all applicable bonding requirements and will be able to satisfy future bonding requirements as they arise.
Other Contingencies
We also have certain other contingencies resulting from litigation, claims, EPA investigations, and other commitments and are subject to a variety of environmental and safety laws and regulations incident to the ordinary course of business. We currently have no basis to conclude that any or all of such contingencies will materially affect our financial position, results of operations or cash flows. However, in the future, there may be changes to these contingencies, or additional contingencies may occur, any of which might result in an accrual or a change in current accruals recorded by us, and there can be no assurance that their ultimate disposition will not have a material adverse effect on our financial position, results of operations or cash flows. |
Note 11 - Developments in Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2023 | |
| Disclosure Text Block [Abstract] | |
| Developments in Accounting Pronouncements | Note 11. Developments in Accounting Pronouncements
Accounting Standards Updates Adopted
In March 2020, ASU No. 2020-04 was issued which provides optional guidance for a limited period of time to ease the potential burden on accounting for contract modifications caused by reference rate reform. In January 2021, ASU No. 2021-01 was issued which broadened the scope of ASU No. 2020-04 to include certain derivative instruments. In December 2022, ASU No. 2022-06 was issued which deferred the sunset date of ASU No. 2020-04. The guidance is effective for all entities as of March 12, 2020 through December 31, 2024. The guidance may be adopted over time as reference rate reform activities occur and should be applied on a prospective basis. Certain of our derivative instruments reference London Interbank Offered Rate ("LIBOR") based rates and are in the process of being amended to eliminate the LIBOR-based rate references prior to July 1, 2023. We do not expect a significant impact to our financial results, financial position or cash flows from the transition from LIBOR to alternative reference interest rates, but we will continue to monitor the impact of this transition until it is completed. |
Note 12 - Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent events | Note 12. Subsequent Events
On April 6, 2023, we and ATAC Resources Ltd. ("ATAC") a Canadian publicly traded company, announced a definitive agreement for one of our subsidiaries to acquire ATAC and its Rackla and Connaught projects in Yukon, Canada. Under the proposed transaction, our wholly-owned subsidiary, Alexco Resource Corp., would acquire all of the issued and outstanding shares of ATAC for a consideration of CAD$31 million, or 0.0166 of a share of Hecla common stock per common share of ATAC (consisting of 3,693,516 shares of Hecla common stock in aggregate). Hecla would also invest CAD$2 million in seed capital, equal to a 19.9% interest, for a new exploration company Cascadia Minerals Ltd. (“Cascadia”), which would be spun-out with certain properties to ATAC’s shareholders as part of the transaction. The total consideration to the ATAC shareholders, including the implied value for the shares in Cascadia (CAD$0.036/share), is CAD$39 million. |
Note 2 -Business Segments and Sales of Products (Tables) |
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| Schedule of Segment Reporting Information, by Segment [Table Text Block] | The following tables present information about our reportable segments metal sales for the three months ended March 31, 2023 and 2022 (in thousands):
The following table presents identifiable assets by reportable segment as of March 31, 2023 and December 31, 2022 (in thousands):
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| Revenue from External Customers by Products and Services [Table Text Block] | Sales by metal for the three month periods ended March 31, 2023 and 2022 were as follows (in thousands):
Sales of metals for the three month periods ended March 31, 2023 and 2022, included a net gain of $0.9 million and a net loss of $4.8 million, respectively, on financially-settled forward option contracts for silver, gold, lead and zinc. See Note 8 for more information. |
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Note 3 - Income and Mining Taxes (Tables) |
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| Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | Major components of our income and mining tax benefit (provision) for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
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Note 4 - Employee Benefit Plans (Tables) |
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| Schedule of Net Benefit Costs [Table Text Block] | We sponsor three defined benefit pension plans covering substantially all U.S. employees. Net periodic pension cost for the plans consisted of the following for the three months ended March 31, 2023 and 2022 (in thousands):
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Note 5 - (Loss) Income Per Common Share (Tables) |
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| Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table represents net (loss) income per common share – basic and diluted (in thousands, except income (loss) per share):
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Note 6 - Stockholders' Equity (Tables) |
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| Summary of Dividends Declared Pursuant to Dividend Policy | The following table summarizes the dividends our Board of Directors have declared and we have paid during 2023 pursuant to our dividend policy:
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Note 7 - Debt, Credit Agreement and Leases (Tables) |
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| Schedule of Long-Term Debt Instruments |
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| Schedule of Maturities of Long Term Debt and Finance and Operating Lease Liabilities |
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Note 8 - Derivative Instruments (Tables) |
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| Schedule of Foreign Exchange Contracts, Statement of Financial Position [Table Text Block] | fair value of the contracts (in millions):
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| Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | The following tables summarize the quantities of metals committed under forward sales contracts at March 31, 2023 and December 31, 2022:
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| Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block] | We recorded the following balances for the fair value of the forward contracts as of March 31, 2023 and December 31, 2022 (in millions):
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Note 9 - Fair Value Measurement (Tables) |
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| Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block] | Fair value adjustments, net is comprised of the following:
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| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The table below sets forth our assets and liabilities that were accounted for at fair value on a recurring basis and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category (in thousands).
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Note 2 - Business Segments and Sales of Products (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
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| Environmental Services [Member] | ||
| Segment Reporting, Revenue Reconciling Item [Line Items] | ||
| Revenues | $ 0.5 | |
| Financially-settled Forward Contracts [Member] | ||
| Segment Reporting, Revenue Reconciling Item [Line Items] | ||
| Derivative, Gain (Loss) on Derivative, Net, Total | $ 0.9 | $ (4.8) |
Note 2 - Business Segments and Sales of Products - Sales of Products (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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| Segment Reporting, Revenue Reconciling Item [Line Items] | ||
| Net sales | $ 199,500 | $ 186,499 |
| Less: Smelter and refining charges | (15,973) | (12,203) |
| Net sales | 198,991 | 186,499 |
| Silver Contracts [Member] | ||
| Segment Reporting, Revenue Reconciling Item [Line Items] | ||
| Net sales | 81,532 | 66,332 |
| Gold [Member] | ||
| Segment Reporting, Revenue Reconciling Item [Line Items] | ||
| Net sales | 75,087 | 77,168 |
| Lead [Member] | ||
| Segment Reporting, Revenue Reconciling Item [Line Items] | ||
| Net sales | 25,402 | 19,564 |
| Zinc [Member] | ||
| Segment Reporting, Revenue Reconciling Item [Line Items] | ||
| Net sales | $ 32,943 | $ 35,638 |
Note 3 - Income and Mining Taxes - Major Components of Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Domestic | $ (1,528) | $ (2,103) |
| Foreign | (1,174) | (1,741) |
| Total current income and mining tax provision | (2,702) | (3,844) |
| Domestic | (5,341) | (5,091) |
| Foreign | 4,801 | 3,304 |
| Total deferred income and mining tax provision | (540) | (1,787) |
| Total income and mining tax provision | $ 3,242 | $ 5,631 |
Note 4 - Employee Benefit Plans (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Nonoperating Income (Expense) [Member] | ||
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
| Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component | $ 1.0 | $ 1.4 |
Note 4 - Employee Benefit Plans - Net Periodic Pension Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||
| Defined Benefit Plan, Service Cost | $ 949 | $ 1,566 |
| Defined Benefit Plan, Interest Cost | 1,993 | 1,369 |
| Expected return on plan assets | (3,107) | (3,363) |
| Defined Benefit Plan, Amortization of Prior Service Cost (Credit) | 125 | 128 |
| Amortization of net loss | 47 | 512 |
| Net periodic pension cost | $ 87 | $ 212 |
Note 5 - (Loss) Income Per Common Share (Details Textual) |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
shares
| |
| Earnings Per Share [Abstract] | |
| Incremental Common Shares Attributable to Dilutive Effect of Share-Based Payment Arrangements (in shares) | 1,954,773 |
| Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants (in shares) | 1,506,950 |
| Incremental Common Shares Attributable to Dilutive Effect of Deferred Shares (in shares) | 2,109,056 |
Note 5 - (Loss) Income Per Common Share - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Notes To Financial Statements [Abstract] | ||
| Net (loss) income | $ (3,173) | $ 4,153 |
| Preferred stock dividends | (138) | (138) |
| Net (loss) income applicable to common shares | $ (3,311) | $ 4,015 |
| Basic weighted average common shares (in shares) | 600,075,000 | 538,490,000 |
| Dilutive restricted stock units, warrants and deferred shares | 5,571,000 | |
| Diluted weighted average common shares (in shares) | 600,075,000 | 544,061,000 |
| Basic (loss) income per common share (in dollars per share) | $ (0.01) | $ 0.01 |
| Diluted (loss) income per common share (in dollars per share) | $ (0.01) | $ 0.01 |
Note 6 - Stockholders' Equity - Summary of Dividends Declared Pursuant to Dividend Policy (Detail) - First Quarterly Dividends [Member] |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
$ / shares
| |
| Subsidiary or Equity Method Investee [Line Items] | |
| Prior Quarter Realized Silver Price | $ 22.03 |
| Silver-linked component | 0.0025 |
| Minimum component | 0.00375 |
| Total dividend per share | $ 0.00625 |
Note 7 - Debt, Credit Agreement and Leases - Debt Summary (Details) - Senior Notes [Member] - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Line of Credit Facility [Line Items] | ||
| Long-Term Debt, Gross | $ 510,643 | $ 510,614 |
| Unamortized discount/premium and issuance costs | (4,059) | (4,248) |
| Long-term debt balance | 506,584 | 506,366 |
| The 2028 Senior Notes [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Long-Term Debt, Gross | 475,000 | 475,000 |
| Unamortized discount/premium and issuance costs | (4,415) | (4,640) |
| Long-term debt balance | 470,585 | 470,360 |
| IQ Notes [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Long-Term Debt, Gross | 35,643 | 35,614 |
| Unamortized discount/premium and issuance costs | 356 | 392 |
| Long-term debt balance | $ 35,999 | $ 36,006 |
Note 8 - Derivative Instruments - Foreign Currency (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Derivative [Line Items] | ||
| Non-current derivatives assets | $ 80 | $ 40 |
| Foreign Exchange Contract [Member] | ||
| Derivative [Line Items] | ||
| Current derivatives assets | 160 | 110 |
| Current derivatives liabilities | 360 | 400 |
| Non-current derivatives liabilities | $ 310 | $ 360 |
Note 8 - Derivative Instruments - Fair Value of Forward and Put Option Contracts (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Other Current Assets [Member] | ||
| Derivative [Line Items] | ||
| Current derivatives assets | $ 5,300 | $ 1,200 |
| Contracts in liability position | 0 | 0 |
| Net asset (liability) | 5,300 | 1,200 |
| Other Noncurrent Assets [Member] | ||
| Derivative [Line Items] | ||
| Current derivatives assets | 1,300 | 100 |
| Contracts in liability position | 0 | 0 |
| Net asset (liability) | 1,300 | 100 |
| Current derivatives liability [Member] | ||
| Derivative [Line Items] | ||
| Current derivatives assets | 0 | 0 |
| Contracts in liability position | 4,600 | 12,100 |
| Net asset (liability) | (4,600) | (12,100) |
| Other Noncurrent Liabilities [Member] | ||
| Derivative [Line Items] | ||
| Current derivatives assets | 0 | 0 |
| Contracts in liability position | 50 | 2,500 |
| Net asset (liability) | $ (100) | $ (2,500) |
Subsequent events (Additional Information) (Details) - Apr. 06, 2023 - Subsequent Event [Member] $ in Thousands |
CAD ($)
shares
|
$ / shares |
|---|---|---|
| Alexco Resource Corp | ||
| Subsequent Event [Line Items] | ||
| Common stock value | $ 31,000 | |
| Common stock per share | $ / shares | $ 0.0166 | |
| Shareholders Implied Value | 36 | |
| Total Implied Value | 39,000 | |
| Hecla | ||
| Subsequent Event [Line Items] | ||
| Capital Invest | $ 2,000 | |
| Interest Rate | 19.90% | |
| Canada | Alexco Resource Corp | ||
| Subsequent Event [Line Items] | ||
| Common stock outstanding shares | shares | 3,693,516 |