Q4 2019 Earnings Call
[music] good morning, ladies and gentlemen, and welcome to the Hecla mining company fourth quarter.
You are in 2019.
Actual results school.
That's fine all participants are in listen only mode.
Later, we'll conduct a question answer session and instructions will follow that's fine.
If anyone should need.
Assistance during the conference Please press star.
Zero and your thoughts there in California.
I'd now like turn the conference over to your host.
Mr., Mike Westerlund, Sir the floor is yours.
Thank you operator this is Mike Westerlund, Vice President of Investor Relations. Good morning, everyone and thank you for joining us for Heclas fourth quarter and year end 2019 financial and operations.
Results Conference call our financial results news release that was issued this morning before the market open along with today's presentation and the reserves and resources press release from Wednesday will be made available on our website. Unfortunately the website is currently down and we're working on getting that six as soon as possible and we certainly apologize for anyone convenience.
On today's call.
Oh, Yeah, Phil Baker, President and CEO Lindsay Hall, Senior Vice President and Chief Financial Officer, Lorne Roberts Senior Vice President Chief Operating Officer, Chris Allen Director of exploration and keep Blair Chief geologist any forward looking statements made today by the management team come under the private Securities Litigation Reform Act and.
Forward looking information under Canadian Securities Law as shown on slide two such statements include projections and goals, which are likely to involve risks detailed in our form 10-K form 10-Q, one in the forward looking disclaimer included in the earnings and exploration releases and at the beginning of the presentation. These risks could cause results to differ from those projected in the forward looking.
These statements. In addition during this call we made disclose non-GAAP financial measurements you can find reconciliations of these measurements to their nearest GAAP measurements in the accompanying presentation, which will be made available on our website, a triple w. that hecla dash mining dot com finally in our filings with the FCC, we're only allowed to disclose mineral deposits. So we can.
We expect economically and legally extract or produce investors are cautioned but are you. Some terms such as measured indicated and inferred resources, which are not reserves and we urge you to consider the disclosures that we make in our FCC filings without I will pass the call to Phil Baker.
Thanks, Mike and good morning, everyone and let me also had my apology Oh for not.
Being able to reach our website that's.
Something that's a surprise just this morning, I will make reference to slides I'm doing that because there will be a replay.
And and so when people are listening to the replay will help them. So again apologize [laughter], so I'm going to start on.
Slide four which shows a list of accomplishments in 2019 in the first one I want to call out is reserved.
Fighting all starts with reserves, while our industry struggles to maintain reserves little grow them Hecla has not well talk more about it at the end of the a of our presentation, but let me just say the 11%.
Increase in silver reserves as well as the increases in lead and zinc and only a slight decline in gold is a major accomplishment for hecla.
Well 2019 was the tail what are the year of two hubs, we're very happy in the turnaround we've seen the second half the year and the key to that turnaround was to quickly recognized the plan.
We had for Nevada was not working and the best action was to stop that plan take the time to we evaluate and then we start and we had de risked the plant.
We're in the early stages of the revaluation, but our belief that these mines and exploration targets that we bought when the gold price was $1200 an ounce will have great value in the future.
Sure and that view has not diminished.
Greens Creek of course was the key to the great turnaround last year and they didn't just happened last year two years ago, We developed a new mine plan at Greens Creek that improved the grade and reduce development. It's important to remember that the performance at Greens Creek.
It is indeed.
Tended to be issues that we had in the company and 29 team we had already baked in that good performance. Two years earlier. This new plan allowed us to generate 107 million a free cash flow $22 million more than what we generated in 2018.
So we knew in June that we would generate.
Free cash flow and it turned out to be $62 million over the second half the year, which would enable us to fully repaid the revolver. Some market participants were skeptical, but we are adamant and we were proven right.
We also took action to strengthen our balance sheet and get our debt metrics to levels that we believe are appropriate for hecla.
Did a debt equity swap in a small ATM financing in the fourth quarter, which represented 6% dilution, but allowed us to end the year with 62 million in cash and reduce our net debt 136 million in the second half year.
Debt to EBITDA ratio is below three now we believe it's underway to being.
And 2.5 times.
No not the next major achievement is that a after almost three years the strike the Lucky Friday was resolved.
Just this week the first group to be called back started work every one on both sides is glad to have this behind us and its focus on safely getting the lucky Friday back to full production by.
We ended the year.
Now remember that that in the first quarter, we'll be focused on capital projects that requires the mine to be largely shut down for most of the quarter.
So the ramp up and recall starting Ernest in Q2.
With the new work rules, we believe we can improve both safety and productivity well.
During the workforce an opportunity for advancement.
I think the future for employees the mine in the community looks really bright.
Finally, the last accomplishment I will mention is our safety performance, which which we had a 20% reduction our all in frequency rate to 1.61, the lowest in our company's history well Lucky.
On Friday also received the citizens of Safety award from the National Mining Association, which is the first time would receive this award in our hundred 29 year history.
On the next slide I will get to the estimates for 2020, but let me just mentioned a few of our broader goals for for the coming for this year first we expect.
To refinance the senior notes interest rates and metal prices are attractive. So we are encouraged this can be done on on good terms.
This quarter, we should complete or study on the San Sebastian Sulfides, and then finally over the year cast birdies production is planned to start to come from the higher grade East mine and we expect to see improvements in the mill.
Now on slide five looking at EUR estimates for 2020, we estimate that we will produce 11.1 to 12.1 million ounces of silver, which is slightly less than 2019, primarily due to the lower production at the San Sebastian oxides, What's your mind out Lucky Friday is expected.
<unk> news.
A million ounces more in 2019 that it didn't 2020, making its almost flat.
As far as silver production goes gold production is estimated declined to 212 to 225000 ounces. This year, primarily doing to stopping production in Nevada.
But that allows the gold all in sustaining cost to be about $300 lower with the less profitable now Nevada production that no no longer being produced the silver all in sustaining cost. After byproduct credits is projected to be a dollar to higher due to lower prices.
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That we're assuming for our base metals production and weaker smelter terms as well as lower production.
Capital expenditures are estimated to be about 10 million lower than 2019 again due to less Nevada spending other estimates are about the same as in 2019, So I'll turn the call now over to Lindsay.
Thanks, Phil and good morning, everyone turning to slide seven we're pleased with the fourth quarter performance for assets, which combined with the strong third quarter has improved our balance sheet back to where it was at the start a 2019.
In Q4, we sold 4 million ounces of silver and 85000 ounces of gold, which was 79% and 22%.
Actively more than in the third quarter this year.
Combined with higher metals prices, we recorded a record 225 million a revenue in the fourth quarter, which after netting cash expenses resulted in 57 million up cash provided by operating activities, which was the highest for the year and after deducting the 24 million of quarterly capital.
The terms resulted in 33 million to free cash flow before financing transactions.
On slide seven you can see the financial results for the year that can be summed up as the tail two halves.
First six months of investing in Nevada, and the last six months pausing, Nevada, and using the cash flow generation from our other assets to restore financial position.
As you can see we generated 62 million or free cash flow over the last six months 75 million. If you exclude what we called discretionary expenditures. This demonstrates that our assets are resilient and can deliver financial results. It also shows a level disciplined by the company that we can make the needed decisions to improve our financial position.
When required.
While we focus on cash flows I'd like to mentioned that our GAAP loss for the year was heavily impacted by 65 million of additional depreciation year over year of which 56 million was due to the Nevada operations, having just recently purchased Nevada, and then paused on further investing the depreciation expense the sorts earnings.
As we Didnt have the anticipated gold production revenues offset the depreciation expenses as we now expect nevada's production to cease around mid year 2020, the depreciation will have a much less negative effect on the T.S. and 2020.
Turning to slide eight as you can see on slide eight silver margins continued to be strong gold margins.
For the last two quarters are substantially higher than they were they have been nearly early in 2019, when the gold margins were essentially eliminated primarily due to the investment that are in a battle operations. This was reflected in our EBITDA and cash flow generation results.
Turning to slide nine.
Phil mentioned, the 136 million.
And the net debt from the second quarter I wanted to provide some background for the strong cash flow generation enabled the complete repayment of the revolver by year end deposited some cash on the balance sheet. It was supplemented by 49 million by drawing on the ATM. The at the market facility, we have in the fourth quarter, leaving us with $62 million.
Cash on the balance sheet at year end, an increase of 34 million from year end 2018.
Additionally, we swapped 31 million of death from resources go back into equity.
And all told we reduced our net debt EBITDA to below three times from approximately six times in the second quarter.
We took these actions to position ourselves to refinance.
Our outstanding senior notes.
We recently received an upgrade from Moody's and we're working with her bankers to free up 100 million of the available 250 million revolver to help pay for the existing bonds should we determined that we want to refinance less than the 500 million of existing bonds outstanding.
Additional flexibility is nice to have as an option to consider when you're deciding.
Moving on to our approach to the market.
We ended the year financially stronger than when we started in 2019, which is our financial discipline on display sending us well up well for 2020.
With that I'll turn it over to Lorne.
Thank you Wendy and good morning, everyone.
As we've said before it all starts we see.
Safety and I'm happy to show the chart on Slide 11, and would you see is steadily declining all injury frequency rate over the past five years. In fact, the 2019 rate of just 1.61 is the lowest in our company's history want to congratulate the operating teams at each of the mines for making safety their top priority.
Moving onto the mines I'll start with Greens Creek on Slide 12, which continues to perform well.
Last year, we unveiled a new mine plan, which reflects the continuous improvement culture at Greens Creek.
Through the year, we saw the benefit of this plan, including higher production and strong cash flow as well as record mill throughput.
20.
20 production is expected to be slightly lower with mill throughput more typical of preceding years and lower grades as per the mine plan.
Cost of sales and unit cost per ounce are expected to be higher as a result of anticipated power generation due to dry conditions increased maintenance activities increased treatment charges.
Reduced byproduct credits.
My hats off to the exploration team has significantly increased the reserves and resources at Greens Creek, which we expect to extend the my life and free cash flow generation from our best outside.
For 2020, we anticipate another strong year by historical standards of about 8.9 to 9.3 million ounces.
Silver at 46 to 48000 ounces of gold.
Turning to Casa Berardi. This is another very important mine for the company as shown on slide 13.
Last quarter, we talked about turning our attention to improving the mills reliability through enhanced operations and maintenance practices.
We.
Back to expand these efforts into other areas in order to help us generate incremental throughput recovery and cost games.
Costs are expected to be lower in 2020, because of reduced waste movement in the open pits and less tailings construction.
Production is expected to be higher largely due to anticipated increases in mill throughput and.
Every as a result of our improvement initiatives, partially offset by planned lower grades.
Turning to slide 14 for the past several quarters, we've been talking about strong intersections, we're seeing in the east mind 148, and 160 zones.
Historically these mine has been higher grade than the mass mine.
This is reflected in the 148 zone, which has about 50% higher grade than the average underground grade.
We expect to start producing previously developed 148 zone or in the first quarter and to access newly developed or by the ended the year.
Moving onto San Sebastian on Slide 15.
We are completing our study of the Hughes on sulfide or an expected decision on development in the first quarter, which could allow production to begin by the ended the year.
Test mining performed well with the test stopes, yielding 90% of the anticipated tonnage at 114% of the anticipated NSR.
Told.
The thing of the sulfide ore at a mill set up to produce to concentrate streams zinc and bulk yielded recoveries in line with expectations and marketable concentrate.
We are undertaking work this quarter to investigate another option that would allow us to produce three concentrates zinc wed and copper instead of two which would end.
Hence economics, if it proves to be feasible.
2020 is a transition year for San Sebastian as the remaining oxide material is depleted and we work toward a production decision for the Hughes on.
They use on project goes ahead, we anticipate limited production and cash flow from it in 2020 due to the development.
To set it up for mining.
Starting in 2021, it should be a solid cash flow contributor to the portfolio for about another six years.
Turning to the Lucky Friday on slide 16.
Phil mentioned the workforce is returning we started by recalling electricians mechanics, and hoist operators and expect most.
Most of the workers to receive call back notices by the end of the first quarter.
During the first quarter, we have contractors working on to capital projects, the number to shop poised and the 53 70 loading pocket upgrades.
These two projects are expected to total about 5 million in capital and it is more efficient to complete.
Before the bulk or bulk of the workers return.
Ramp up in production is planned to begin in Q2 and to extend through the fourth quarter, when we anticipate reaching full production.
From a cash flow perspective. This is a building here will be better off than last year, but do not anticipate the mine to become cash flow positive during the.
Start.
At full production as we might deeper we will access higher grades and expect the average grades to increase about half an ounce per year for about five years.
Moving onto the RV in machine. It is back in the tests mine in Sweden, We will continue with acceptance testing until we are satisfied that it is sufficiently robust.
Yes, and reliable to be sent underground at the Lucky Friday.
Current planning has the RPM, arriving at the Lucky Friday around the end of year, but that is subject to a completing the testing phase satisfactorily.
Turning to slide 11 in Nevada, or 17, excuse me in Nevada, We continue to mine out the developed oxide ore at.
Fire Creek and expect to complete this task around the end of the second quarter.
Hey, Scoping study is underway to help define the conditions necessary for a potential restart.
We also need to means a processing refractory ore, which would require third party processing agreements and we would expect to restart to require a permitting cycle.
These actions will take time, but it is important for us to get them right.
Dr. Phil Thanks Lauren.
Well, we take questions I'd like to come back to where we started with reserves to look at slide 18, So often reserves just the seem to be given but they are the life blood of a mining company in a very hard to come by.
This year was remarkable and that would just $15 million of exploration spending we replace what we mine in added 22 million silver ounces, but.
This is what this suite of assets can do in 2013, we had almost a 150 million ounces of silver reserves, we mined half of that and then exploration added 150 million more.
More ounces.
While calculating those reserves that what I Ics expect to be the lowest price assumption in the industry for gold. We have mine we acquired in 2013 and added three times, what we had at that time.
Well I don't think we'll do this year in and year out we I do think we'll do it every.
Two years, which means we can whether the obstacles that come our way and had the staying power to realize long term value for shareholders and with that operator, I'd like to open the lines for questions.
Thank you, Sir ladies and gentlemen, if you have a question at this time.
The spread far then the number one and your thoughts.
Just on telephone.
If your question has been answered or do you wish to remove yourself from the Q the spreads are the pad.
Your first question comes from the line Jade Skalsky Your line is hoping.
Hey, Philippines.
Thanks for taking my questions.
Sure thing at San Sebastian You mentioned the undertaking of the study at the U.S own is this something we should expect to see results on shortly or is this more in internal scoping study figure I'm fill it is internal but you will see something in the first.
Quarter, where you know it's been a sort of a three step process. The first one was couldn't we long hole second was can the mill.
Deliver products that are marketable in the third is can we.
At a third circuit to the middle in order to make those products more economic.
And so we're at the third stage and yeah, we should be completing that over the course of the coming month month, and a half and with that will come the a the study in the final determination Lauren anything dead No. Phil you captured it perfectly we will start got test in the next few weeks.
Got it so we should see something by the end of the first quarter just to kind of wrap our heads around what it might look like and 2021 at the port Yeah. That's that's right realize that what we're anticipating is.
A moving to the to the sulfides will not require significant capital.
We would think that San Sebastian would largely.
The oxide production would largely pay for the capital required might not pay for all of that but it would certainly pay for the lion share. So theres no no big.
The capital outlay that we're anticipating.
[noise].
Got it that's helpful. And then just briefly at Lucky Friday.
Are you able to breakout the restart costs and maybe touch on a few milestones over the next few quarters that we should be keeping an eye out before do you guys.
During the project Fullscope production.
Well the first first milestone of course is the completion of these.
Two projects.
And the and the recall of the of the workforce and.
We'll have have those two projects and the recall for the most part completed by the time, we released first quarter earnings.
So we should be able to give you great visibility and then at that.
Point, we would anticipate the restart to look similar to two what you saw in 2013. After we did the clean down of the of the silver shaft and.
In order of magnitude it's 100.
5000 75000.
Of production over the course of the year learn.
What would you add to that whereas we're anticipating hitting our full production pace in the November to December timeframe and of course will do everything we can to accelerate that but I think it is a pretty reasonable ramp up curve based on our previous experience.
I mean that one of their offices, we have one of the positives. We have this time compared to then is that then we went in and we re bolted.
Just a basically the whole mine and we don't have that this time around because instead of it being.
For the mine being shut down for year.
The we have continued to operate with our salaried staff and they've done a great job that's keeping the mine in the in good good condition, which wasn't possible back in 2012, because we weren't in the mine at all.
Got it that's all in my thanks again.
Thank you.
Thank you. Your next question comes from the line that you feel your line is open.
Hey, guys.
Hey, Matt Appreciate you took 'em you know what in my view is where the prudent steps to do that debt for equity swap and the equity raise to pay off revolver, while managing.
Bring free cash flow neutral for the year, so congratulations on that.
Now that you're kind of in a better positioned to look for re Fi.
What kind of transaction structure. We're looking at is this just a straight re five of all 500 bonds.
Splitting something up and what kind of what does the transaction look like and kind of.
Can we expect for timing on that.
Well the I guess, all I can say is that as far as timing is that we'll do it is and as soon as its appropriate.
The the bonds are not due until may of 2021, but we don't want to wait till the last minute to do those and we really don't want to wait for those.
Just to go current.
So we would would want to pour that happens.
As far as the structure goes I mean that will be a decision made at the time that we go into the market and it will be determined by the the.
The conditions, we clearly have the capability.
We have doing.
Less remember what's outstanding is 507 million, we have the ability to do less than that because we have cash on the balance sheet and we have.
We expect to have an arrangement with the revolving banks, where we could use.
Some of that revolving capacity.
So so it should should the market conditions be such that that it's not appropriate to do all 500 million. We have these these options lynsey what would you like to add to those.
No I think you captured fill all the options are open to listen the high yield market itself as you know.
As a come back and it's much stronger today than it was maybe us midway during 2019, so feeling good about our options to refinance the bonds.
Okay, great. That's it for me thanks very much.
Thank you. Your next question comes from the line of Adam Graf.
Your line is open.
Thank you.
Hey, guys congratulations.
On all the success there.
Two quick questions.
On your comments on I'm Lucky Friday as far as the grades can you can you give us some more color there because the.
The average or reserve grades at 14.4.
<unk> ounces per ton silver.
Suggest that.
Stepping up half an ounce per year for multiple years is is not sustainable. So if you can give us some more color there on the lucky great expectations.
And then on the on the cast.
A mill and.
And open pit versus underground profile, maybe you can you can give us some more color there on where the bottlenecks are.
Now while the open pit versus underground is going to shape up and in 2020.
Okay, so starting with the lucky.
Friday.
I think what happens with the Lucky Friday is that as we go deeper we don't have as many holds then and as a result.
Yes, we eventually see the reserves declined because the strike of this higher grade is.
Is reduced and that and we're talking sort of 10 years out right. This is not something that happens immediately but.
Over the course of the next 15 20 years, we have five years, where we ramp up with higher grade stays at that for a period of.
Four or five.
Years, and then it starts to decline.
And the in the out years.
But that's I think theres, a reasonable expectation that with infill drilling that might not be the case that we might actually see higher grade and we might see higher grade for the resource that we're planning to mine beyond beyond that so.
I think you can feel pretty comfortable with respect to the next.
Sort of 10 years.
That said that we'll see those the grades being higher than the reserve grade.
Anything to add to to that is that fair characterization.
Okay, Great and then and then as far as the mill I'm going to throw that to learn from the get go.
So your question was that the transition from underground predominantly underground production to open pit production.
And I think the way to look at this is the higher grades come from underground.
So we will always deliver the maximum amount of underground tonnage to the mill that we can because it higher grade material.
Then we layer in open pit production to fill the balance of the mills capacity.
And in Twentytwenty that production comes from East mine Crown pillar pit.
And we're doing a bit of stripping on the extension to that pit, but over time, we start layering in additional additional pits and we're in the process right now of looking at what that optimal sequence of pit mining is such that we maximize cash flow in the near years, that's still a work in ERP.
Progress.
But as we have success with our underground exploration and we continue to add underground mine life. It takes pressure off of the pits and gives us the opportunity to do a good job of optimizing our planning.
And maybe talk a little bit about just the mill.
Itself for 2020.
Your what you're kind of contemplating there absolutely. So we had a what I would characterize is relatively disappointing performance in the mill in 2019 in two areas one of them as throughput we missed our throughput target slightly and the other is recovery, which has been off.
And of course, those things are a matter of great interest to us.
So we put together a focus work group on those on those topics and in terms of throughput.
Main issue that I see is reliability of the plant.
We have begun work to improve the reliability about plant and have <unk>.
Increased availability in the plant in the fourth quarter.
By over five percentage points, that's a that is quite a shift in one quarter and we'll continue to drive that effort through 2020 into 2021 in order to bring that plant into what I would consider to be first.
Your.
Availability and of course that drives throughput.
I'm recovery, we had some mechanical challenges that impacted recovery.
In the grinding circuits was related to psych phone and screen maintenance in the gravity circuit.
And in the lead strain, where we needed to replace some drive units in the.
Strain.
Mechanical availability is also important in terms of recovery because when the mill is not in steady state it's difficult to optimize recovery. It so improving mechanical reliability in the plant is is an important factor in achieving higher recoveries.
We.
Also think theres, an opportunity to improve the gravity gold recovery and the plant and we've got Nelson.
In there in fact, this month doing UN audited the system.
Well look to implement their recommendations because getting the gold out of the circuit as early as possible is advantageous from a recovery perspective.
I guess lastly, I'd say, we have certain stopes in certain areas and the mind that generate higher sulfide and or higher arsenic and or higher carbon then other stopes.
So we're looking to do a better job of providing the mill at forward look at the feed that we're sending them in order for us to do a better job.
Blending.
And we're undertaking a range of metallurgical test work right now looking at things, we can do to improve performance of the plant when we're in those materials.
And in fact, I'm correct me as.
I think on site. This week if not this weakness next week, helping us with some real time.
Whitman to look at how we adjust the circuit to react to those kind of changes grams, a consortium of Abitibi operators, who cooperate and collaborate on mill performance.
So we're bringing a lot of pressure to bear and I'm I'm expecting to see considerable improvement in 2020 and in saying that.
Just to be clear.
Kasper already generated 20 million of free cash flow. It has been a free cash flow generating mine for us every year that we have owned it with the exception a one and I think that was negative $16 million.
So so it is a it is a mind that we think can do better.
It's not a it's not a amine that's a problem, but it's a mine that has lots of opportunity has lots of opportunity because of the reserves in the resources that it has it has lots of opportunity because it this infrastructure that was built 30 years ago.
Yeah, there's the opportunity improve those practices and the way to operate it.
So there is nothing but upside yes, it's not broken just can be more yeah.
Yes, the the correct me if I'm wrong here, Mike My recollection was that the capacity.
Of the mill was supposed to be roughly 4500 tonnes a day.
And.
What do you guys think you can.
You can get it.
To win in 2020 kind of where your near term goals there.
It's about 4000 tonnes, a day and that's about where we think we can get to 39, yeah. Those are.
Longtime so yes, I think the than what we expect to get.
Long term out of the plant is about 1.4 million.
Annually.
I will make a big will close that gap substantially in 2020.
And and and how do you see the the.
The throughput splitting from open pit to to.
Yes.
Going forward I know, you're transitioning to open pit, but.
More to open pit, but how much you think you're going to be able to bring from underground.
In 2000, so it's it's it has been will continue to be roughly half and half.
So we get remember we've been operating open.
The open pit for two years now yeah.
So.
So we've been it's been this half and half them. We just found is that that you have a mill that has operated with lots of excess capacity and as a result operating practices have not been.
As good as they need to be when you're running the ball mill Phil full out. So that's that's part of what we're talking about absolutely. We're chasing bottlenecks now and that's a good place to be.
Excellent. Thank you.
Thank you.
Again, ladies and gentlemen, if you wish to ask a question that define the spread alright, then the number one thing or touchstone telephone.
Your next question comes from the line of Trevor Turnbull Your line is open.
Yes, I just wondered if you could.
Give us a bit of the capex breakdown.
For the different assets.
We saw the guidance for the full year and just wondered.
Where the bulk of that is going which between say Greens Lucky and Casa.
Yes, we did.
Let's.
I don't have that handy does I've got it okay learn learnt has very shortly here at any rate [laughter].
Yeah.
Okay roughly.
But you're.
The majority of the of the capital.
As you would expect is going to the two large producers and I would say it's sort of.
40, 647 million to cast to about 38 million.
Greens Creek.
22 ish to Lucky Friday, and that's the bulk of it.
Okay and.
We're in the driver in the those numbers you've got some tailings facility work that they're doing a cas and you've got the remote vein minor Lucky Friday.
Yes, what goes on though the entirety of capital.
And and just with respect to Lucky Yeah. I was kind of curious is that a fairly even spread or is a bit front end loaded as you get get prepared to ramp that thing back up.
So are we expecting kind of more of that come in early in the year.
Well it at the Lucky Friday that.
First quarter is with respect to those two projects is about six $7 million.
And then it it's pretty stuff yeah.
Steady build up it because you get have the people and you got to have the the places for them to work to to spend the money for the yet for.
The underground capital so.
You know it after the first six $7 million for the first quarter. Then you can take the rest and spread it out pretty evenly I believe.
Okay.
And I can't remember kind of how it's been treated.
<unk>.
While youve been running it on.
You know more with with management as opposed to the full complement of workers.
But should we consider everything that you do this year.
On a full commercial production or is it going to be treated any differently, while you're getting up to speed.
In terms of.
And it through the income statement or or just netting that against.
The capital and so forth, yes, the the we're not really.
As you if you look at our our earnings release.
Yield you'll see on the cost outlook, there's a there's a footnote.
Caustic sales during full production Lucky Friday cash cost and.
All in our calculated using only Q4 production and cost.
Okay.
I'm sorry, that's that's for the 2020 guidance.
Correct, Okay got it perfect.
And then just one last thing switching gears back to Nevada for a second.
Did I Miss it do you know what the timing of your study is in terms of Oh.
Fire Creek, and then with respect to that you talked about.
And is also something you need do you need to pursue.
Can you just remind us kind of what what that what you're looking to permit at at this point.
For the new study.
Sure I'm just roughly speaking the.
The studies themselves will take one to two years and it sort.
It depends on what we find as we do the studies as to how long it will end up being but it's in that order of magnitude, we'll start with a scoping study and then from that Scoping study will will do a a feasibility study to make sure. We get this right, we're not going to rush and back into.
Something where we're we're spending money without having a clear ability to get a return on that investment.
The the permitting itself.
Is primarily around brown water right and so that will depends on whether it's an E are in <unk>.
And that will depend upon what we determined from the study so that could be a year. If it was and it could be two years. If it's in the is and and then of course you got to.
Understand whatever the the environment, we're in more broadly in the in the U.S. This.
As to how long those things might might take.
Because that does make a difference.
And can you.
Can you kind of get that permitting ball rolling.
Once you have the scoping study or do you need to have everything tied down with the feasibility before you can really move that.
Had quickly.
It depends on what we see from the scoping stays good my my expectation my experience would suggest that we need the the the feasibility before we're going to be ready. It maybe it's not completely done, but it's going to be pretty close to being finished.
Okay Fair Lorne I think so.
Okay, Great I appreciate it thanks guys.
Okay sure.
Thank you I'm showing no further questions. The fine I would now like during the conference back to Mr. Phil Baker.
Okay, well, thanks very much for attending the a this call again, we apologize for the.
Website being down.
Hopefully it will be up soon and people can get access to the slides.
It should you have any questions. Please call, Mike westerlund or or myself. Thanks, very much have a great day.
Ladies and gentlemen, this concludes.
Today's conference. Thank you for your participation and have a wonderful day.
Ill discuss.
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