Q3 2020 Hecla Mining Co Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and.
Welcome to the third quarter 21, Hecla mining company earnings conference call at.
At this time all participants are in a listen only mode. After the speakers presentation, there will be a question and answer session.
To ask a question during the session, we'll need to press star one on your telephone.
If you require any further assistance please press star zero.
I would now like to hand, the conference over to your Speaker today, Russell Mollen Treasurer will tackle I think.
Thank you. Please go ahead.
Thank you operator this is Russell I wouldn't Heclas treasurer welcome everyone and thank you for joining us for Heclas third quarter, 2020 financial and operational operations results Conference call.
Our financial results news release that was issued this morning before market opened along with todays presentation are available on Heclas website.
On todays call, we have Phil Baker, Heclas, President and CEO Lindsay Hall, Senior Vice President and Chief Financial Officer, Lorne, Robert C., Heclas, Senior Vice President and Chief Operating Officer, Kurt Allen Director of exploration and Keith layer Chief geologist any forward looking statements made today by the management team come under the private Securities Litigation Reform Act.
And involve risks as shown on slides two and three in our earnings release and in our 10-Q and 10-K filings with the SEC. These.
These and other risks could cause results to differ from those projected in the forward looking statements reconciliations of non-GAAP measures cited in this call and related slides and cautionary language for our use of the term resource incentive reserves are also found in those documents with that I will pass the call to Phil Baker.
Thanks, Russell good morning, everyone and thank you for joining our call I'm going to start on slide four and I want to start by commending or management and workforce to their resiliency and commitment to operating safely, including the way they've dealt with the exposure to covered this resiliency and commitment has really allowed heckled to deliver very strong.
Operating financial results this quarter, so strong that in our history, we've never generated as much EBITDA. This was $75 million this quarter and only four times in our history has the free cash flow been higher this reflects the quality of our silver mines, particularly Greens Creek part of the reason we generated some it's free.
Cash flow is that our capital requirements are generally low so with the $50 million of free cash flow, what we use that to repay our revolver, we put cash on the balance sheet, and we announced a 250% increase in this quarters dividend.
Thats, a 50% increase in the base and the rest is the fact that we triggered the the new levels for the Silverlink dividend.
Before I hand, it over to Lindsay I want to highlight two of our SG programs that focus on the social element of PSG that supports our communities and nothing is more important than that support.
Because frankly hecla has been part of these communities for for decades. The first program is something we call Hecla Bucks, where we support local business by giving employees vouchers that they can spend with the businesses.
They are in a local business organization. Most most of them are chamber of Commerce is.
A big success by providing an injection of spending into the local economy as they deal with the pandemic. The second program, which we are doing with Coeur mining is bringing COVID-19 lab that does PCR testing to Juneau, it's surprising that the capital of Alaska doesn't have adequate test.
Thing, but they don't when you get tested.
The test test again, the lower 48, so it takes three days to know the results. So we have brought a lab. The Juno. In addition to testing our employees, which is going to allow us to shorten our corn team time.
We are offering key government organizations like first responders the opportunity to get one day turnaround and this is going to be critical when the legislation less legislative session starts in January I think we.
We're making a real difference over and above being the largest largest private employers in these communities and with that I'm going to pass it over to Lindsey go ahead Lindsay.
Thanks, Phil and good morning, everyone.
Starting with slide six during the third quarter over third quarter, our assets performed quite well we recorded some 200 million in revenues for the quarter at a realized silver and gold price per ounce of just over $25 and $1929. So we capitalize on the favorable precious metals environment, we found ourselves in capturing much of the.
Creasing margins this quarter led.
Led by Greens Creek, we produced consolidated free cash flow of $49.7 million, resulting in our cash position of just less than $100 million at the end of the quarter.
Solid cash generation and a record high adjusted EBITDA combined to also reduce our net leverage ratio of less than two while providing a liquidity position of nearly $350 million.
As Phil mentioned, our silver price linked dividend was triggered and our declared quarterly dividend increased by 250% returning some of these cash flows to our investors.
Turning to slide seven all of our assets generated positive free cash flow this quarter with the exception of Lucky Friday, which was expected given its ramp up activities. The.
The Lucky Friday ramp up is ahead of schedule and we expect to see positive free cash flow generation in the fourth quarter. This.
This is important to us financially.
Because in the first nine months of the year cash flows from Lucky Friday were a negative 24 million.
Net income for the third quarter was 13.5 million driven primarily by improved gross profit at all our assets, except kasper already which was impacted by longer than planned mill downtime early in the quarter for major maintenance activities.
Combined our operations generated 53.5 million gross profit with our low cost profile, enabling us to capture growing margins in this rising commodity price environment.
Cash provided by operating activities was approximately $74 million for the quarter and we spent some 24 million and capital expenditures as we continue to invest at our mine sites.
With no large capital expenditures and site low cash costs and a positive precious metals environment, we expect to continue to generate significant free cash flows.
Further deleverage the balance sheet invest in our assets and exploration properties, while returning an industry, leading silver dividend to our shareholders.
With that ill turn the call over to Lorne to go through our operations.
Thanks Lindsay.
First and most gratifying is that our safety performance continues to be exemplary. Despite the distractions caused by the pandemic.
As you can see on slide nine we have a year to date all injury frequency rate of 1.02, which is a 78% reduction over the past six years at a 14% reduction compared to the same metrics last quarter.
I'm very appreciative of the hard work and focus from our operations teams that delivered these results.
At the Greens Creek mine, we saw gold and silver production of 2.6 million ounces and 13000 ounces of gold at an all in sustaining cost of 784 per ounce.
As shown on slide 10 that generates a margin of 223% when compared to the realized price of 25 32.
As Phil mentioned earlier, we partnered with a cold wet lab to provide real time testing services for our employees.
We expect this service to shorten the quarantine period save money and reduce the burden on our employees.
We envision this being a short term solution until local testing capacity increases.
This will be the first commercial laboratory established in Juneau, while the capacity is dedicated to Hecla. There is room in the agreement to work with local authorities to address community needs as well.
I'm pleased to announce that ramp up activities at the Lucky Friday continued to be ahead of schedule and we anticipate hitting our full production rate in the fourth quarter.
At this pace, we expect production in excess of 3 million ounces of silver in 2021.
Great is expected to improve as we mine deeper increasing the projected production to around 5 million ounces annually over the next three to five years.
The best part is that no significant planned capital outlays required to achieve this goal.
In addition, we are looking at various mining method changes and other initiatives to improve safety, while increasing the productivity of the mine.
At the Casa Berardi mine, we saw production of 26000 ounces of gold at an all in sustaining cost of 1800 $68.
Lower gold production and higher costs in the quarter were due to planned mill maintenance activities and delayed access to high grade underground stopes.
Worked to improve the reliability of the mill is in full straight swing throughout the quarter. In July we took about 12 days to conduct planned heavy maintenance on both of the grinding mills.
The work with scheduled for about nine days, but brown long, primarily due to some complications with the in situ machine work and night shift coverage from some of the support contractors.
As you can see on slide 12, the work was extensive.
It included machining the feed in trunnion flange and replacing the trending on the Sag mill, replacing babbitt bearing fields on both mills.
Landing gear sets related work best conducted while the mills aren't operating.
Work was conducted in parallel in the crushing and conveying systems. The CIO trained on the detox system.
As we said before this is not a short term exercise, but it is an important one to set ourselves up for the future.
Through the biggest jobs and we are starting to realize the fruits of our labor.
In October the mill delivered 90% availability, including scheduled maintenance outages.
Okay.
Gold production also was impacted by Geo technical challenges that delayed several high grade stopes in the West mine, which now will be produced in the fourth quarter committed.
To mitigate this risk in Q4, we redirected development resources to focus on stope development more stopes available to secure the underground production.
Hi grades also anticipated from the east mine for the balance of the year.
Stripping is underway and progressing well at the new 165 initial ore production is expected from the pit late in 2021.
Fortunately the permits necessary to start were received about a month later than expected.
We utilized a contractor to strip the extension of Emcp pit during this time, which resulted in higher operating expenses compared to budget.
At San Sebastian mining concluded in the third quarter, and we anticipate the milling to be complete in the fourth quarter.
San Sebastian with its very low capital demand has been a successful operation for Hecla and I want to take this opportunity to thank the San Sebastian team for a job well done.
In Nevada, we have substantially completed mining of the developed oxide ore and currently our mining the refractory or bulk sample, which we anticipate delivering to a third party for processing.
Happy to report that the mining has progressed well with the ground conditions water inflow productivity and cost all being better than planned.
Youre as more structurally controlled unless disseminated the modeled which we view as positive.
Anticipate recognizing this mind doors produced in 2021 went through this process.
Both San Sebastian in Nevada provide rich exploration opportunities I will now turn the call over to Phil to give more detail on how these exploration programs are progressing.
Thanks, Lauren and we'll turn to slide 15.
Now we've increased our guidance for exploration to $16 million for the year with about $8 million in that being spent in the fourth quarter and 16 million is about what we had intended distant spend at the start of the year, but backed off because of Covance.
So in the fourth quarter, we'll spend about a million that kassa a million at San Sebastian and were San Sebastian We're following up on the new veins that have been discovered with the ore grade mineralization you can see that on the left hand part of the slide that shows San Sebastian.
Thats not very far from where we've been mining.
Now more than half of the fourth quarter spending will be in Nevada.
And with the majority of that being at Midas, which is shown on the slide on the left on the right Robert.
We can easily drill the midas targets from surface. So thats one of the reasons why it's been prioritized and we've we've already started drilling to the north in the south and color on the ground anything where most of my this is production has come from and where we've expanded the plan of operations. So we can drill the east.
Driving corridor, which has never been that never been explored.
So now looking to slide 16.
This is our update on guidance and this is a little different shows this a little differently than press release, because here, we're comparing the current guidance to what our guidance was before the pandemic.
Because our silver assets are in the United States, we've never had to shut them down and with the better grades at Greens Creek and the strong performance at the Lucky Friday were producing about a million and a half more ounces than than we thought we would at the beginning of the year.
Costs are slightly higher because its cozad, but the volume more than covers it gold is about 10000 ounces less about what we lost with the Quebec shutdown and costs are about $100 per ounce higher capital is down for the year, but up from last quarter's guidance overall I'm very very happy with.
The progress we've made this quarter.
The results that the company has.
Just reflects that and I expect the fourth quarter to be similar to the third quarter with more gold production and about the same level of silver production.
With that I'd like to open the lines for questions.
At this time, if you would like to ask a question. Please press star one the number one on your telephone keypad.
Well.
Compared with your new roster.
Our first question comes from the line of Michael Mueller with H.C. Wainwright.
Your line is now open.
Hey, guys. Thanks for taking my questions and congratulations on on on progressing through all this pretty well.
Thanks.
I guess part of that is also a common but just building a little bit on what Lindsey said earlier in regards to pricing I noticed your average gold and silver prices year to date through September on a 1972 and some of the 45 pounds per page five of the 10-Q.
Both of those prices are obviously well below what we currently carry even with today's call with vaccine.
Decreasing prices you.
You do have some hedging in place the in your Q lays out pretty well what it is but just thinking ahead should we expect.
More hedging in your future and building on that and your willingness to hedge increase given the high volatility we faced this year.
Well the short answer is Heiko, we've we've had a hedging program in place for precious for lead and zinc rather.
Since 2009.
And we've been very consistent with that program and I don't see any major change happening in that program Weve also consistently hedge the.
Shipments.
When they're leaving Greens Creek.
In order to take the revenue that has been booked and make sure that we we we don't lose that revenue should we have a drop in the in the future the.
The thing that.
We've done just for a short period of time was the purchase of goods for.
Gold and silver we started that in 2019, we did it in anticipation of the need to do the refinancing we did that refinancing.
And we have not put in.
Really any positions since the second quarter of this year. So is it possible that we'll put in more puts it in the future it's possible.
The volatility in the precious metals quite high for the cost of those puts are very high so.
It's it's not a fundamental piece of our strategy. It is something that we will do and we.
We see a need to realize high can we don't have big capital outlays, we've got low cost.
We've got cash on the balance sheet, we have an undrawn revolver. So we have a lot of financial flexibility now that we didnt have when we put those puts in place a year ago.
Right.
A lot of sense.
I can't help myself to ask another question related to gold.
Assuming a vaccine start getting distributed that makes whatever it is 90 120 days will do anything to your old look at any of the sites on an asset by asset basis, I mean, it just this whole topic.
Dominate use that dominates politics even.
East what impact you think we'll see asset classes. Please.
Well I don't think there'll be much impact from a production standpoint.
I think we've.
Very very successful at putting in protocols that work.
I think where we'll see some benefit as a reduction in cost.
We won't have to incur all of the.
For example, the quarantine process that we go through Greens Creek, you know at this point, we have people that are having to quarantine for a week and of course, they get paid during that corn team period.
And so that would be a cost that would let be eliminated lauren anything to add to that.
Significant cost is that at Greens Creek and there are also some management costs at Casa but it would be.
Plus a reduction in costs, but I think basically.
The only other thing I would add is it de risks our business a bit for.
But arguably cycle world a little bit sorry.
Sorry go ahead.
Yes, no I just any other questions heiko.
No that was on my end, thank you very much.
Thanks, a lot appreciate it.
Our next question comes from Trevor Turnbull with Scotiabank. Your line is now open.
Hi, Phil.
Hey, John just wanted to ask about a little bit of a follow on on what HEICO or Heikki was asking.
With respect to.
Costs in your press release, you had a nice breakdown of your 2020 cost outlook.
Cost of sales by asset in millions of dollars and that's actually very helpful.
So when you look at something like Greens Creek.
Going forward.
You were budgeting I guess $215 million.
This year I'm, just wondering say in a in a year without corona virus.
What does that number look like going forward I mean have you seen something like 510% of your costs.
Attributable to what Youve had to do to mitigate the virus or.
On.
Or or kind of can you just speak a little bit to that to 15 number and how that looks going forward into into the future.
Sure I'll Lorne why don't you answer that sure. Thanks, Phil.
Driver.
Greens Creek I think one way to look at this it's round numbers about a million dollars a month for us to to managed covert the way, we're managing it additional cost and at Casa Berardi, it's around 300000.
When you lump in the rest of the mines, there's probably some knock on effect to call it a million and a half bucks a month.
Should come out of the cost structure I.
I think the only other thing I would add is that it does.
Impact our ability to operate as flexibly as we like so I think once the restrictions are removed, you'll see us be able to capitalize on opportunities more effectively.
Okay.
So then just looking at that like say take Greens Creek, which seem like it had a pretty normal year other than having to introduce these protocols and Casa are those numbers fairly.
Fairly steady I mean are they a good proxy forward to to think about for run rates.
Yes, I mean, it's in fact, if you go back and you look at US historically the cost structure in terms of the dollars that we have spent has been pretty consistent.
In the aggregate, including everything and capital the whole ball of wax and roughly you can help me with this is roughly around half a billion dollars is what we have had spent.
That's correct yes.
Okay. So so I think you can anticipate it's going to be something in that range in the future.
Okay and I appreciate your you're trying to speak a little bit high level and not get too granular, but but maybe just one last question on this on this.
It looks like kind of backing into your guidance and what's left to spend in Q4, the Lucky Friday.
Seems like it's about 17 million bucks or so for Q4.
Is that number kind of move around as you get to the full run rate in terms of having to bring on more people or anything or is that a pretty good number as well for the Q4 number for lucky.
We have a bit more capital than we would typically have in the in the quarter and we have just maybe slightly less production than we would typically have.
We were still well work up to sort of historic levels of production I mean, we'll be somewhere around 700 to 800 tonnes per day.
We can probably get to 850 tons a day.
In the in the future and what happens as we get the sand cycles, where we don't have the sand availability to do the backfill, which slows down the production and so we experienced that in the fourth quarter. It takes a bit of time of being in the operations for that to Smoothes out.
We always have a little bit of that but it's it's exacerbated when you restart.
No understood. Okay, Thats all I had thank you Phil.
Sure Kevin.
As a reminder, ladies and gentlemen, please press star one on your telephone keypad, if you would like to ask a question.
Our next question comes from the line of.
Good morning, Matt.
With RBC your line is now open.
Hi, Thanks, Good morning, guys and nice quarter early view.
Hi, good.
First off can you kind of walk us through how you're thinking about the longer term.
Central App is the dots in Nevada, all this year.
Spanning the exploration programs now.
When do you think we could get an update on potentially very but both of those operations.
And how you're thinking about them in the medium term.
So so with respect to San Sebastian it's gets much like where we were.
2013, 14, where we are in an exploration phase we have a base of.
Known resource, but we don't see it being economic enough to.
New the what we know forward so we're going to add more to the to the base and how long that will take is it is unclear certain.
Certainly the vertical.
RC drilling that we do where we go through the first 10 to.
30 meters Kurt.
Of topsoil.
And hit the bedrock and sample it where we're identifying veins in a way that we were not able to do five.
Five years ago, So I and that's so those veins has been discovered had been discovered just in the last quarter quarter and a half or so so we're optimistic that we'll find more mineralization we've hit.
With that the drilling that we've done there has been.
Ore grade hits, but we've not been able to piece together something that is.
As.
And ore body. So we're going to get this time, but we think it will be faster than it was the last time, we went into the exploration mode. There with respect to Tim Nevada, We're not we haven't stopped buying there we're continuing to mine the type two or.
We've got the stockpile is it's now ready to go to.
Nevada gold loans.
We're working through the process of doing that we would anticipate that that material be shipped before the end of the quarter.
And that it will be testing will get the results of it we'll have another shipment that we'll be prepared to to ship than in 2021, we'll see where we are once we do that we're also doing there is some continued exploration thats occurring.
We've got some development to do to be able to really put ourselves in position to the exploration that we did at fire Creek.
So just stay tuned we we knew.
What the future would would be with this type two more we would tell you, but it's it's still open we got to see what the results are actually processing the ore before we make a commitment as to as to where it's gone.
Okay perfect. Thanks.
Meantime, we'll continue to work in the meantime, we'll continue to combine it and stock pilot. It's there's some risk associated with that but it's not a huge risk.
Yeah, no that makes sense and thanks for the color on that I guess, it kind of it for kind of the gold digging into the San Sebastian a little bit more kind.
And how do you see like.
You were able to bring bringing the products are bringing initial operation back in or very limited capital.
Ill pull milling strategy that you employed there and how you see that.
Do you think thats still a viable alternative or the mill starting to fill up given where the gold prices are.
The bar might be a little bit higher because you need to.
In that in Euro infrastructure do you still think without via either preferred alternative.
I think it's very viable there are a number of mills that need to feed.
Yes, there is.
You double the prices, maybe its oh I don't know what the number is but you increased the prices maybe you do get to that point, but we're a long way from that point with the mills being being filled.
Okay.
And then.
Moving over to Hap.
Obviously.
Pretty big maintenance going on through the quarter.
And then I'll leave you with some of the issues kind of how are you commented that changes Youve made now are going to.
Get over the hump in terms of both.
Getting a little more consistent throughput in both.
Through the mill and.
Making sure you've got good stope availability, obviously, you're also moving into the East mine.
Mine, so should we really see a big inflection in Q4 is that to Q1 and how should we think about that in the near term.
Well certainly we feel confident that we will hit our guidance that we've given.
And Weve certainly seen a very strong October that in October doesn't make a year.
So, yes, let's let's give it some time to two.
See the performance and make sure that we've we've made the the modifications that need to be made to have that the consistency and that's been the everything out of the real issue with Canada. It's never been a drag on cash flow than it's been in consistently provided the positive cash flow they spend.
Few years, where it's.
Which rivaled Greens Creek.
But for the most part it's been it has not delivered the cash flow that we would expect and we think that by doing these things we are increasing the potential for that to happen and we think it could happen in 2021, but let's let's.
Lets wait and give it some time to get the the.
Prove itself Lauren anything that no.
No I think you captured it well.
Okay, and then just the final one for me.
Just down at Lucky Friday night the operation.
Humming, along and ramping up better than your that thing kind of how are you thinking about the remote remote been minor now is that still part of the medium term plan or kind of what's the update there.
Well with co bid, we've not been able to have people on the ground to see the work that the spin done and with coated.
The Swedes have really cut back their work schedule. So the amount of activity has been less so we are not.
Not pushing that where where it will we'll wait for things to.
Things to kind of clear so that people can get over there. So they can get their work done.
And.
I would anticipate in 2021 that will be completed and we'll be able to bring it over.
And then start testing at the Lucky Friday, but in the meantime, we're testing alternative mining methods at the Lucky Friday that.
Good.
Good on its own making improvement and could also be beneficial to the RPM.
When we bring it over warnings and add to that.
Let's get ourselves.
Okay.
Perfect. Thanks. Thanks.
Thanks, that's it for me.
Okay. Thanks Mark.
Our next question comes from the line of Lucas pipes with Riley security your.
Your line is now open.
Hey, good morning, everyone.
Very good job and.
Wanted to ask a little bit more about the capital allocation policy.
Very good to see the increase in the dividend and ill.
Silver price linked dividend on top of that.
Kind of going forward from here.
How should we think about your capital allocation priorities returning more capital to shareholders is that for the de leveraging and of course, you've done progress there too on could there be room for M&A. We just really appreciate your thoughts on that thank you.
Sure Lukas so the.
What you have seen over the last quarter is I think what you will see.
Last quarter, and what Weve guided for the fourth quarter is what you'll see in the future.
Well put more cash on the balance sheet.
If you think back of Hecla over the last decade, we have on average on on their had $150 million to $250 million of cash on the balance sheet. I think you can anticipate us having something in that order of magnitude. We've we've now gotten to just add 100 million, that's kind of our minimum level that we'd like.
To have we have the revolver undrawn, we don't like to utilize the revolver.
So so anticipate that number.
Number one number two we got these dividends that we've announced we'll hopefully see that silverlink dividend continuing to.
To pay number and may maybe in the future you will see even more as as Lucky Friday ramps up its kassa continues to improve if we're seeing.
Nevada, working maybe you'll see us being able to increase the dividend yield that we provide the innocence capex expanding exploration spend we're now back to about what we thought we would have at the beginning of the year. I think you can anticipate next year a bit more exploration spend.
Capital will will get a piece of things, but the reality is we don't have big capital needs at any of our operations. So don't don't expect.
Huge sort of capital spend and then as far as.
M&A goes we're.
We're certainly always considering it but frankly, we've never had as many opportunities within our own portfolio as we have today. So it's not the highest priorities.
Very good to hear thank you for that additional color Phil and then.
You touched on exploration and that that's my my second question you mentioned you have.
Quite a few opportunities internally.
If you had to rank the exploration opportunities.
They are an existing operations or or non develop one.
Can you do that what would really appreciate your thoughts on that thank you.
Yes, I'll I'll I'll, just say that we.
We've got the challenge of having a number of things that are almost of equal attractiveness to us.
We're fortunate in that we the exploration that we have.
At our existing operations.
Our building off of.
Of existing infrastructure and so those are attractive straight for no. Other reason than the capital efficiency is so high.
Well I, let Curt response from.
Yes, a geologic.
Perspective, I think from a geologic perspective, Nevada, obviously ranks high.
Location, whether its Midas fire Creek Hollister, even Aurora.
San Sebastian has.
It is located right in the heart of the Mexican silver belt.
And geologically is it is very exciting and some of the things that we've been finding your orders are going to go forward in the future.
Kasper already fabulous exploration potential to build on the castle Berardi information zone. So I think we've got some really good exploration projects. Some are near mine and some are more grassroots.
The last thing I'll mention Lucas on the exploration is we're anticipating receiving.
The authority to be able to go underground at.
Rock Creek, and Montanore are really on the Montanore side and.
If that occurs then what you'll see us do is develop.
The incline to allow us to do the drilling there and and while you might not view that as pure exploration because it really is moving a resource into reserves I. Just think we believe in this not mentioning mentioning that.
Now that that's good to hear and appreciate that.
Everybody best of luck in that keep up the good work.
Thanks Lucas.
Our next question comes from housing Glynn with Flinker and company. Your line is now open.
Hi, Phil Lindsey Lauren.
I have a question and then two comments.
What did you say about Capex Kasper already I didn't hear it clearly.
Thanks.
I didn't say anything specific about.
Fedex at Casa Berardi, but.
In all of our operations have a pretty minimal amount of capital expenditures in the future, including Kasper already.
Okay.
And two comments one I picked up from conference call before you have a fertilizer company called mosaic.
And they had a shot for $100 million of savings and expenses.
Okay got so many useful suggestions from their employees.
They're not only going to overshoot to 100 million for the next two years.
They think they can find another $200 million. So my my point is.
Your employees at Casa Berardi for some ideas you'd be surprised they said these things.
Very little or no capital costs, you might be surprised by.
Okay, I know you'll be surprised.
By what the employees suggest to save money at Casa Berardi.
And the second is.
As to hedging gold and silver when it goes down after the fact people ask why you Didnt do it and then if you did hedge people ask well why are you hedged you Miss all the upside so.
Got it don't don't be.
Don't be so there will be sensitive to the second guessing.
Questions about hedging any you do or you don't you can't have it both ways.
Yes, So let me let me respond to the second thing first and that is that when you do not sell upside on our.
Number four.
Full stop we just don't do it with respect with the exception of stuff. That's on a shift otherwise there is no. There is no real hedging of the where we sell side, we don't do a costless collar.
I'm going to call it that morning.
I was going to cost us.
We don't do a costless collar, we 'cause it's not costless.
If prices go up.
We don't sell sell forward.
The precious metal so thats number one number number two with respect to asking the employees and prudently kassa.
We certainly do that and in fact, we have a very structured program that we're we're still.
Hi on there were probably halfway through the implementation of it and what.
We'll see we'll we'll see what we conclude the results will be and we'll we'll inform everyone of that.
And the next.
Next quarter, the following quarter I would expect or mid year next year, one way or the other for I don't think the shale.
There will be lots of little suggestions.
That don't have to be massive but when they add up the way. They think about mosaic said you'd be surprised they were surprised so.
And none of them have acquired a big Capex.
So it sounds like.
Double win for you guys when these.
When these people are incentivized.
Yes, we've got that thanks.
Okay. Thanks, guys.
There are no further questions in queue at this time ill turn the call back to Philip will begin for closing comments.
Okay, well, thanks, everybody for participating on the call as I said this was a very good quarter for the company I anticipate the fourth quarter.
To look similar to this quarter end.
So so with that ill, obviously be very pleased to be talking to you again at the end of the quarter. So to announce that so thanks very much for your participation and if you do have any questions.
Free to give me a call or Russell a call.
And we'd be happy to walk through things thanks, everybody.
This concludes today's conference call now disconnect.
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Okay.
Yes.
Hello.
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