Q1 2021 Hecla Mining Co Earnings Call
Yeah.
Yes.
[music].
Good day and thank you for standing by welcome to the Helga Mining Company Q1, 2021 earnings conference call. At this time, all participants are in a listen only mode.
For the speaker's presentation, there will be a question and answer session.
Ask a question during the session you will need to press star one on your telephone if you require any further assistance. Please press star Zero I would now like the hand, the conference over to your speaker today and VITAS for pill you may begin.
Thank you operator, and welcome everyone and thank you for joining us for Hecla is first quarter 2021 financial and operations results Conference call. This is on behalf of Hecla Assistant Treasurer, Our financial results news release type of issued this morning, along with today's presentation out of available in the Hecla's website on today's call.
We have Phil Baker, Hecla's, President and CEO not in Robert Hecla, Senior Vice President and Chief operating officer, and thus the Lauder Hecla Celiac Senior Vice President and Chief Financial Officer.
Any forward looking statements made today by the management team on the come under the private Securities Litigation Reform Act and involve risks.
Shown on slides two and three in our earnings release and in our 10-Q and 10-K filings for the SEC the.
These and other risks could cause results to differ from those projected in the forward looking statements second affiliations of for non-GAAP measure cited in this call and related slides of also found in those documents the dog.
The other pass the call to fill the Baker Crimson data. Good morning, everyone. Thank you for joining our call referring to slide four.
We had a very strong first quarter.
Very good operational financial performance, we recorded.
Quarterly adjusted EBITDA that was a record for the company was $12 million higher than our previous record we had the highest cash gross margin and we had the second highest revenues in our 130 year history and all of this was driven primarily by the strong production results and cost performance at all of our <unk>.
Operations.
At Greens Creek were lowering our cash cost and all in sustaining cash cost guidance for the year and Lawrence can speak more about that in a minute.
The fundamentals of our balance sheet reflects the success of quarters that we've had the.
Of improving performance.
Hecla, so our balance sheet is in very good shape.
One of the things I want to point out is that typically our first quarter is one of our smallest cash flow quarters.
I went back and looked at the last 30 years.
About.
The 20 of the 30 were the lowest.
There were about 10 were in the first quarter wasn't the lowest cash flow for the year.
It wasn't the lowest it was always the second lowest so when we consider our operating plans when we consider the reversal of that well half of the working capital buildup.
We're anticipating significant free cash flow generation over the rest of the year. So as good as the first quarter was we think the rest of the year will be stronger and as a result of that the board has announced an increase to our dividend.
Policy, our silver linked dividend payment that occurs at $25 will be increased by 50% to three cents per share annually and Russell is going to speak more about that.
This.
We're returning about 28% of our free cash flow in the first quarter to shareholders and of silver prices increase shareholders will have the ability to participate in the incremental free cash.
Cash flow generation that we'll have.
Yes.
We also had a very strong operating performance.
And despite that despite the good performance, we were able to maintain our low all in frequency rate about.
<unk> 71 for the first quarter.
In addition.
Our sustainability report, which we're going to release in May with the annual meeting highlight.
Highlights of our ESG performance that we've had.
The report its focus is in fact, the title of the reported something like small footprint big benefit.
Because we had these underground mines that are have an extraordinarily small footprint.
And theyre largely energized by alternative power, making our greenhouse gas emissions per ounce, probably the lowest or among the lowest in the industry.
And we've also focused on policies and activities that really make hecla of uniquely positive ESG investment. So we're going to we're going to focus a lot of attention on that at the annual meeting and also at the annual meeting we are going to update exploration. So we're going to wait for now we'll wait until the annual meeting, but let me just say that we've had some of the best drilling results in the history of the cash.
And as Youre going to see in a few weeks. The we're in the early days of some of these programs, but they have the potential to be extraordinarily accretive.
Really look forward for the rest of the year and with that ill pass the call the rest of it.
Turning to slide six Hecla continues to strengthen the balance sheet as we ended the first quarter was $140 million in cash.
Needed by our record margins from higher prices and strong operating performance with cash of almost doubled since the second quarter 2020 for consecutive quarters of strong free cash flow, we delivered a net debt to adjusted EBITDA ratio of 114 times well below our target of two times, while providing the liquidity position of $390 million.
Looking to slide seven of our realized silver margins have continued to increase the cost stay low silver prices increase with every dollar of margin translating the free cash flow. If you look at the gold portion of the bar you see that our margin. This quarter was about double of the second and fourth quarter of last year and about 50% more than the third quarter.
And it gets the only partially reflected in our free cash flow because of working capital changes for.
First quarter free cash flow was $16 5 million after the negative working capital changes of $29 3 million as the interest payments of $18 4 million and the timing of incentive compensation payments related to 2020 performance and higher accounts receivable from timing of concentrations.
But maybe more important is the trailing 12 months free cash flow of $121 million.
See the future 12 months of having the same or better free cash flow of current prices.
Moving to slide eight with the growth of anticipating our free cash flow over the remainder of the year. The board has approved an increase of our silver link dividends of <unk> <unk> per share of this equates to a 50% increase for the dividend rate at the $25 per ounce threshold of the three cents per year. This increase to the silverlake dividend reflects our confidence in hecla free cash flow generation.
At $25 per ounce realized price the enhanced dividend policy has an implied yield of seven 4% for the silver price for the return from this dividend policy, which is kind of the price of silver distinguishing hecla from investing in an ETF or the incremental and as you need for the industry.
Continued strong operational performance of the highest silver price of drive of our 2021 free cash flow expectations, which should continue to grow from our first quarter performance with that I'll turn the call it the longer to go through our operations.
Thanks, Russell I'll start on slide 10.
First and foremost is our focus on safety our teams continue their exemplary safety performance and our all injury frequency rate in the first quarter was $1 71, which is the reduction of 72% since implementing our revised safety and health management system in 2012.
Our operations teams have done an outstanding job of improving this aspect of the business, while we were a little higher than our 2020 full year results. We are focused on reducing it further.
On slide 11 at the Greens Creek mine, we produced two 6 million ounces of silver and $13 2000 ounces of gold at an all in sustaining cost of.
$1 59 per ounce for the quarter.
We are lowering the cash cost and all in sustaining cost guidance due to higher byproduct credits more favorable smelter terms and lower treatment charges and the reclassification of mine license tax to income tax.
While the smelter terms will be better for all of 2021, and the first quarter, we realized another benefit due to a customer meeting prior purchase obligations.
This benefit will not recur later in the year for.
With these changes updated cash cost guidance for Greens Creek has lowered to $1 50 to $2 25 per ounce and all in sustaining cash costs are lowered to $650 to $7 25 per ounce.
Greens creek's consistent delivery and low cost combined with high silver price is Jerry is very strong free cash flow.
Going to slide 12 for Lucky Friday achieve full production in the fourth quarter of 2020 and producer of <unk> 9 million ounces of silver in the first quarter of 2021.
Production at the mine is expected to exceed $3 4 million ounces. This year, we anticipate the grades to improve as we mine deeper increasing the projected production to around 5 million ounces annually by 2023, no significant planned outlay of capital is required to achieve these goals.
In addition, we are testing and optimizing various mining method changes and other initiatives to improve safety, while increasing productivity of the mine.
We've made no change for our outlook at the Lucky Friday, Unlike Greens Creek, the Lucky Friday produces a relatively small amount of zinc the dramatic improvement in zinc concentrate treatment charges as compared to last year, Therefore has less impact.
At the Casa Berardi mine as shown on slide 13, we had a strong first quarter with production of $36 2000 ounces of gold at an all in sustaining cost of $1272 per ounce.
Our investments in the mill to improve reliability of recovery are yielding great results and the mill has maintained greater than 90% availability since October of 2020.
Our business improvement activities will continue in 2021 and are expected to reduce costs further and to increase cash flow generation from the mine.
Our ongoing focus to improve productivity and to reduce costs are underpinned by multiple factors and we are starting to see a downward trend in ASIC.
All of these efforts together with others in the pipeline are positioning of Casa berardi to deliver consistent production at lower costs.
Our 2021 guidance for Casa Berardi remains unchanged and production is expected to exceed 125000 ounces at all in sustaining cost of $11 85 to $12 75 per ounce.
Moving to slide 14 at the Nevada operations, we produced about 2500 ounces of gold from a stockpiled bulk sample of refractory ore that was processed out of third party roaster.
For the rest of the year of production is expected to be in the range of 17000 to 19000 ounces of gold from.
From the processing of oxide ore at the Midas mill and an additional 22000 tons of refractory ore through third party facilities.
12000 tonnes will be sent to our roaster and about 10000 tons to an autoclave.
We expect the fire Creek mine in the Midas mill will be placed on care and maintenance by the end of the second quarter.
We remain very excited about our Nevada properties and in addition to the exploration spend in Nevada, we will be investing another $5 million and pre development activities. This year at Hollister to access the Hatter graben.
With that I will return the call the bill.
Thanks, Lauren let's go to slide 16 in the.
This shows our consolidated production guidance for 2021 through 2023 and at this point nothing has changed in that guidance. So let's focus on.
For the slide shows our cost outlook.
You can see there that we've significantly lowered our silver cost outlook, primarily because of the byproduct credits in the lower zinc treatment charges at Greens Creek.
Lauren talked about now this new guidance. If you look at this it adds about $3 an ounce to our expected margin. So at current prices. We think we have about $10 an ounce of free cash flow generation just from the silver operations.
The other thing to point out is that the with the consistency that we have at Greens Creek and Lucky Friday at full production.
And the increasing grade that we see at Lucky Friday that are U S. Silver production is expected to reach about 15 million ounces by 2023 and this is double what we had in 2018.
Now but.
For we open the line for questions I want to talk for just a few moments about silver maybe a little more than we've done on these calls before and if you'll look at slide 17.
I wanted to do this because this time it is really like no other for silver.
Do you think about it the photographic demand decline, which was a governor on the total demand over the last 20 years is now long over.
Industrial demand has been growing at a 2% growth rate for the <unk>.
Last decade, and it's continuing to grow and we think we will be.
Fueled even more by the same factors that are fueling copper this energy transformation.
The industrial demand has generally been strong for the last 20 years and looks to be even stronger with the current fiscal and monetary policies.
And then finally miners are challenged the substantially reverse of five year annual decline in mine silver production, we actually mined 110 million ounces less than the high of 2016, so getting back to where we were going to be hard.
Now if just industrial demand continues to grow at the same rate as the last decade, so that 2% growth rate.
We think and we think this is going to understate it because of the energy demand, we're going to have the world's going to need 70 million more ounces of silver per year now this doesn't sound like much because it's only 7% of the current market until you realize that to meet that demand. Even if no mines are exhausted you need seven new <unk>.
Lines of year, then or the size of Greens Creek, which is the United States' largest silver mine or union president of year to produce about 150% more or you need codelco, who has a substantial byproduct.
Silver production to produce three times is as much silver and so it's our view is it's not likely that even combining all of the different companies in the industry. The theyre trying to grow their silver production that we're going to be able to produce silver that is equivalent to seven Greens Creek mines, but if we do.
There's going to be in riskier jurisdictions.
And we believe that over the next decade, we are in a market that's well positioned for a silver squeezed to happen now this is not the sort of silver squeezed the red at investors were thinking about but its the squeeze nonetheless, because its just that demand has already risen faster than supply and it's positioned to continue to do so the result of.
Of the squeeze in.
Prices will rise in the shortfall is going to be net by above ground stocks and I was struck if you look at what happened in 2020, when ETF and coin demand rose dramatically prices rose, 50% over the roughly average silver price of 2018 in 2019.
So what do we think the high and low silver price will be over the coming decade, let's let's first give you. The lows. We think we will have higher lows. We don't think we'll have loads for any significant period of time to be below 18 to $20, an ounce and for the highs that Theres No reason silver highs, we will not do what golden copper of Diamond what's that day.
Both either exceeded.
Or have just come in just below their all time high so to see of $50 plus silver price is not unreasonable.
So one final thought on how you should think about silver.
It has become as the precious copper.
Or the industrial goals. The reason I say that is there's really no metal quite like silver.
It's needed in the applications similar to copper, but unlike copper, it's an investable metal with lots of investment options you have the above ground stock share of ETF share of coins.
And silver is like gold, but unlike gold only about 20% of the demand for silver is investment and for gold only about 10 percentage of industrial demand, so think of silver as precious copper or industrial gold.
And of course Hecla is in a unique position as the largest silver producer in the U S. We produce a third of all of the silver produced in the United States and that production is growing where the oldest silver mining company and we have a history of outperforming silver and every other mining company when the silver prices run up which obviously.
<unk>.
That's what's going to happen over.
Over the course of the coming decade, so with that operator, I'd like to open the line for questions.
Yes.
As a reminder, if you would like to ask a question for my Star One that is probably one for questions. We'll pause for just a moment to compile the Q&A roster.
We have a question from the line of Heiko Ihle with H C. Wainwright.
Hey, thanks for taking that Tycho.
I'd say of HEICO.
Got it.
Assume that's what it is.
Bill congratulations on the silver lining to the dividend increase and the.
The terrific day in the market for your shareholders and I assume yourself as well.
To the shareholder.
Well there you go.
The slightly lower silver grades at Greens Creek due to normal variations in the ore body as you put it.
Seems like a year of the whole will still be pretty unchanged, but do you anticipate the same trend in Q2.
In the second half for the better or is there already improvements in the current quarter.
Essentially halfway through it.
Well look we the guidance we gave on production is unchanged and so we will have variations quarter to quarter. That's one of the things I have discovered after 20 years of being associated with Greens Creek is the quarterly.
Of the fluctuations can be quite high but.
Almost every year.
Net either of the tonnage or grade.
The guidance our goals and I don't see this year as being different and let me ask you to give a little more color sure. Thanks, Bill of HEICO hope, you're having a good day.
Yes, so we we mined from a multiple.
The one the array of the at Greens Creek and consequently the.
The grade delivered to the mill can vary by where we happen to move mining at any point in time and of course, we build the plan for the year.
And we typically achieve the plan for the year, but internal to the year, we may make adjustments in the mining sequence and Thats why you see the variability of that Bill spoke of and Theres also some natural variability in the ore body, but that is a very consistent very reliable ore body and I would say on average delivers us a bit more.
For metal then we expect so.
See no reason for things to look different for the full year Heiko.
Very helpful. Thank you.
You mentioned the treatment charges.
Can you just sort of walk us through what youre seeing for impact wise in Q2, so far.
Well in Q1 had an unusual.
Situation in that we had a customer of that.
Filled obligations that really went back to 2019.
And the <unk>.
Treatment charges.
Were significantly lower in 2019, and 2000 20 million debt Big jump up and then now in 2021, we've had kind of.
Reduction.
So we had about a $4 million benefit in Q Q1, that's not going to be repeated so thats why you don't see costs even lower.
Russell do you want to add add to that.
Yes, just to just to add to that a little bit to what Phil had said is that we had the nonrecurring benefit of about $4 million in Q1 at Greens Creek, and then for the rest of the year the treatment charges at this point had been set so we should the.
Some relative stability in those treatment charges based on our shipments and do you recall, what the differences in the zinc treatment charges from $2020 to 21 does the 100 close to 150 Bucks a ton not quite but pretty close to that almost got cut in half.
And remember that the zinc and the lead treatment charges for 2021, we're not set until April.
Last month or so.
Got it and then just one quick clarification your provision for closed operations of environmental matters Youre at the $3 2 billion of it says it's due to an increase of the historic.
Is that the Walmart yet or is there any recurring.
Cash.
We would expect that this reflects the obligation that we will have at that property.
It's an old Rangers exploration property.
Uranium property and we think this will fully cover the obligation, but you never know.
But I do not anticipate it recurring.
Very helpful. Thank you all so much the batesville.
Hey.
Okay. Thanks.
The next question comes from the line of subscriber churn boom.
Scotiabank.
Yes, Thank you Phil.
I actually had another question about almost the same thing silver at Greens Creek, but looking a little further out.
We've noticed the silver the reserve grades haven't changed that much of the last few years as you update them, but certainly the head grades that you have been mining over the last several quarters or several of couple of years have moved progressively higher and are quite a bit higher than reserve grades and I just wondered if you could comment on.
How you expect that to play out in terms of a reverse.
The revision to the mean reversion to the mean I should say.
When we might expect silver grades too.
Come down closer to reserve grade in your sequencing plants.
Sure. So youll recall about three years ago, we announced that we had.
Designed in a new mine plan that was going to allow us to mine increased grades.
And so sure enough Thats whats happened.
<unk> been able to achieve that.
And clearly as time goes on we expect the grades to decline.
Like any good miner, we're going to mine the highest grades first.
But having having said that what we're going to be focused on the order to stay at the sort of 10 million ounce level of production is is trying to figure out how to increase the the throughput we started.
When we were the operator at $18 50 tons per day.
I do it in tons per day, and Loren does in the annual but but.
We're at 2300 tonnes per day, now and have been for the better part of five years I would I would say.
So the focus is going to be okay. How do we increase the throughput through the mine and its going to be a challenge because we have a fair amount of material that comes from long hole stopes and in law at some point, we'll we're the plan is to get it all cut and fill so it's going to be of challenge, but the.
The strength Creek operation the culture of that place.
As has consistently to figure out how to make that mine mine better.
So I'm confident that we'll be able to maintain the sort of production levels you see even with the declining grade learn what would you like to add.
I would just add debt.
We have plenty of time to work on the work on this issue.
The decline or the reversion to something more like the reserve, meaning as a number of years out.
And of course, we continue to drill there. So we may have some exploration success that.
It is helpful. But we will plan as if the grade reverse at some point and in order to compensate for that we will be looking to increase throughput and we will also put some effort into looking at recovery in some of the satellite zone, which could be a bit lower so we'll work on both of those things we have.
Got a number of years to work on it.
The good news is we've just completed some.
Detailed review of the mill the grinding circuit in the mill, which is typically the limiting factor and we're in really good shape on the grinding circuit.
So you mentioned recovering is interesting also to look at the recovery improvements that has happened over the course of the last decade I want to say, it's 10 recovery points and the idea of insignificant and but we're still only at 78% recovery of 80% covered in that range yet so.
So we've got some.
Is still quite low Trevor too.
To have an opportunity to improve things.
No I appreciate that and it's.
Good day know you've got some runway at these grades and certainly time to keep the continuous improvement going at Greens, which we have been noticing so I appreciate that thanks guys.
Thanks Trevor.
The next question comes from the line of Lucas pipes with B Riley.
Hey, good morning, everyone and like to add my.
<unk> on the very strong start to the year.
Thanks Lucas.
The first question from Lucky Friday, and maybe just to take a step back.
Obviously the.
A lot of things going on at the mall.
The higher levels of output over the coming year thing you mentioned the change of some more.
Mining methods and I'm wondering if you could elaborate on that.
What I will share with the themes.
The community.
What changes have taken for both on the ground and how that transition is progressing thank you.
Sure the Lucas so so.
The big limiting factor at the Lucky Friday of the seismicity.
Hum.
We have about 20% of our of our availability of our stopes.
They're not available about 20% of the time because of site seismicity and so we're looking at how do we solve that and we've got two approaches that were considering one of the drill and blast approach. The other is the remote vein minor.
And so we're testing the drill and blast approach.
Yeah.
Which is basically the idea is.
Is one where we are.
I'll just call it sort of the big blast.
<unk> is kind of what we're doing we're inducing the seismicity when we won induced over a larger area of the mine rather than.
Sort of cut by.
Heading by heading kept by Cat.
Drill.
Drilling each day. So we're we're doing something that's larger than that it's still early days on on whether thats going to be <unk>.
Successful theres lots of challenges, but you can see with the results that we're on track with what we have had said we would do and so I don't see that changing but I do see the potential for a lot of upside if you can eliminate that.
Net seismicity.
Of the unavailability of the stopes. So so we will do that during the course of 2021, we would anticipate in 2022, we can start testing the RPM.
But one way or the other we're going to improve the the throughput through the mine. We think there is the potential you have infrastructure that you could produce.
<unk>.
Roughly 50% more ore tonnes than what we have kind of traditionally done. So we think if we can figure out how the control of the seismicity better Lauren what would you like to add to that I think it's all about the seismicity and getting the heading availability up.
And.
This work began.
As a means to improve the safety performance in the mining and the management of seismicity and.
In the course of pursuing that work a typical blast of.
<unk> Friday.
The under the previous mining method.
That's a round by round thing, which maybe is a few hundred pounds of explosives out of time.
And we've been we've been doing some big distress rounds to relieve the seismicity.
Sort of tens of thousands of pounds of explosive at a time.
And what we observed is that it generated some positive effect in terms of delivery of of broken mark to the to the mill.
So we're capitalizing on the outcome.
As a potential means to improve productivity and production of both.
And that's the path that we're moving down now.
As Phil said, there's much to be done in terms of experimentation and refinement of the method, but the early results are quite promising.
And Lucas the other thing I'll add is the seismicity is not of new issue for the Lucky Friday you go back to $87 88, there was a change in the mining method to deal with the seismicity than and so this is this is an ongoing issue that this mine has had and I suspect 30 years from now four years from now.
Somebody will say Oh, we can improve the mining method in some fashion so.
And deal with seismicity, so very much an evolution yes.
Very helpful very helpful overview.
Of course best of luck as you continue to improve.
<unk> the.
The output of fees.
They're very attractive operation of the long term so I appreciate that.
Okay.
The second question is on.
Montana.
There were some.
Comments in the release.
The.
I just wanted to go back there and maybe elaborate on.
What.
What you anticipate in terms of potential development at the.
Properties, you have and how much of the priority business from the current spot.
Well Lucas.
The big priority for Hecla, because it's our largest single resource.
Any of our properties.
It's the third largest undeveloped copper asset as well as being this large silver asset 330 million ounces of silver resource.
And so we're trying as to go as rapidly as possible to get underground. So that we can do the drilling to prove that we will not have a negative environmental impact and to develop the mine plan to the best mine. This.
These ore bodies.
There was a court decision that has caused us to say, okay, we probably need to.
Evaluate.
Whether everything is.
As in the right place for being able to accelerate getting underground and we havent come to a conclusion with that but.
It's certainly hear more over the course of the next coming on the two or three months.
What what course of action will take but I can assure you.
There is no priority that's higher for Hecla outside of our existing operations, then the Montana assets.
Very very helpful and with the court case, so instead of challenge to the record of decision.
Yes.
So theres two properties Lucas Theres, the rock Creek and there is of the mountain or it's actually the St. More body has just been faulted off but.
And we bought two separate companies. So it has been on two separate tracks and so it was a core of opinion on the rock Creek property.
That would suggest that the biological opinion necessary for the permit needs to consider.
The mine is if it's in production rather than just the exploration of the rock.
<unk> Creek mines. So that's what we're evaluating is what does that mean for the.
The work that's being done on the biological opinion for mountain, where and of course, it's not just our decision. It's the decision of the department of interior and the for service.
Very helpful in terms of.
The potential of timing impacts you mentioned this is a very high priority to get on the ground like north.
Kate how much.
Extra time with.
One of the resolution of this quarter.
Lucas Lucas I don't have.
Timing the timing of it to be able to give that to you.
It seems they do we will.
Everyone.
Terrific.
The team really appreciate all the detail.
Best of luck.
Okay. Thanks.
The next question comes from the line of Ryan <unk> with.
With BMO.
Hey, guys. Thanks for the.
Just a couple of questions for me.
Maybe just the.
First one Nevada your guidance of 17 to 19000 ounces for the rest of the year can you just.
Sort of walk us through how we should be modeling.
For the quarter by quarter end with timing of when.
Refractory arc. Thank you for your perusal.
The short answer is majority of it comes in Q2, because we're running the materials to the Midas mill.
The the.
The remainder is really in the hands of the third party processor as to when Theyre going to blended in with there.
Normal material.
And so I think you can anticipate that over the second half of the year the.
Juruti of debt.
Or that's going through the third party processors.
I don't know in terms of ounces Lauren do you have any recollection of of.
I would expect.
The majority of the ounces in Q2, probably two thirds or three quarters of the ounces.
Q2.
Perfect that's true.
Really helpful and maybe the sort of more of a high level of question you made some.
Very interesting comments on the silver market in your view on the silver price.
Can you maybe the high that into.
The discussion.
Growth in silver and we've seen a couple of your peers recently make acquisitions. The gold mining your last couple of acquisitions with <unk> and cash flow for both gold mining can you maybe the tie that into a discussion of M&A and sort of what youre seeing in the market and how youre thinking about the company is sort of.
The silver to gold.
New mix.
Well.
M&A is always something that youre considering.
For us, though it's not the highest priority because we do have this growth that's built into the Lucky Friday. In addition to the higher grade we think the mining method, where we're better managing the seismicity will allow that to grow.
On that we.
Also have things like the Montana assets.
That would be a.
Look at it can produce as much of the two properties together you can produce as much from rock Creek and nor as you could as you came from the rest of Hecla combined so so those those are the things that we have other we have other assets in the mix that we have acquired over the course of the.
Last number of years and so my view is that whether it's silver or gold.
Youre going to see.
Somewhere between three and five properties come into production of the course of the coming decade.
And certainly to the extent that it could be silver because we do have such of.
The.
Strong view on the strength of that market for this decade.
We will do that but we think those will do well is also.
So we're not we're.
We're not going to not put the tension to gold and Youll hear more in a couple of weeks about the exploration that we're doing in Nevada very exciting.
Gold with a fair amount of of <unk>.
The silver.
But it is primarily goals. So we like we like both metals, but we do think.
Silver is relatively better than gold.
Perfect.
That's all I had backlog for the uptake.
Sure thing.
Again, if you would like to asking the question Press Star one the next.
Question comes from the line of Matt Pfau.
Hi, Matt Farwell of Roth capital.
Thanks for taking my question.
Just a quick question on inflation.
Sort of the macro.
The.
Discussion out there is debt.
It's focused on inflation as well as lower interest rates, but it seems to me that your costs are in check and I was wondering if you can.
Kind of just comment on what buckets of costs might be of factor going forward. If the commodity rally continues for Ya.
And also maybe comment on how the lower interest rate environment. Despite.
Despite the concerns about inflation and the lower interest rate environment.
It's really helping to improve the credit your cost of credit your cost of capital.
And the has ultimately resulted in improvement in your rating by the.
The credit rating agencies.
Well with respect to inflation, if you think about our cost structure, roughly 50% between 45 and 50% of our cost of labor and so and energy is about 10%.
Everything else is pretty small.
Because of the nature of our mines.
So so where are we exposed that would be really on the on.
On wage inflation.
I think I think we are watching that very carefully we're going to be competitive we've got lots of.
Of opportunities, where we have the advantage of being in great places that people want to live.
So attracting people is as non.
Not an issue, but I will say one of the things that I was at the.
The Lucky Friday, and one of the things that was interesting was the the cost of housing.
Growing up in the availability of housing.
So there are there are issues that go beyond.
Just the specific costs.
Of the.
The wages that we have to think about.
Anything you guys Russell Lorne you guys want to add on inflation in terms of the cost structure that you mentioned, Phil the large portion is labor, but we're not exposed to significant degree to save fuel for example, because of the operations that we have.
A lot of our power comes from the hydro power of our renewable sources.
See the inflation, there where others might be generating power.
From that aspect, we are not seeing that inflationary pressure.
I think structurally because we operate high grade underground mining predominantly.
We're not as exposed to shifts in commodity prices of some other companies as Russell said.
Fuels relevant but it's not.
A huge factor, whereas the.
Large open pit operations that might be moving hundreds of thousands of tons of day. It is of much larger factor our reagent consumption is modest our steel consumption is modest so we pay attention to those things and.
Where we can be strategic and protect ourselves, we do but they are not huge exposures.
And then with respect to.
Sure.
Our debt.
Net and in the way I'm going to answer this question as well.
We're looking forward to.
On the call when we have the opportunity to start the call some of those bonds.
It's the.
Okay.
The deal that we needed to do and we did it but we think that it can be ultimately replaced with something thats.
A bit less expensive, but we are of a non call three were I.
I guess two years into it.
Year end of it so we got two years to go.
So I would anticipate youll see at some point of the refinancing when we can call the bonds.
We think the rating agencies with all due respect for them are a little bit behind the curve.
With respect to where our ratings should be maybe that's no surprise to you of them.
I would say that but.
We would anticipate over time, they should be improving our ratings and I know I know Russell and the that definitely think of them.
Okay, great. Thanks, a lot of for taking my questions.
Sure Matt.
The next question comes from the line.
<unk> Buckley.
Okay.
Are you there.
We are at Mt.
First of all you have done an excellent job you've done an excellent job, but boy how did you run on and pick up that Nevada property. That's the goal in mind.
Okay.
Well, that's yet to be done, but we're working on it and.
And we're very excited about the opportunities at all for properties that we acquired in the context.
Acquisition realized that we acquired them.
We saw the potential for very high grade.
Mineralization you take the Midas, it's history was.
The 25 to 30 years of producing at an average grade of close to eight tenths of an ounce. So we think there's more of that to be found and we're excited by the exploration that we're seeing.
Well.
You've done an excellent job and boy I agree with Phil.
Mr. Baker that of the two of horses silvers the faster the horse.
It's the fastest horse and I think he's absolutely right with the solar panels, requiring silver electric cars, requiring silver the phone where even stay cannot have silver in it.
He's spot on.
But.
Montana discovery drilled the well up there oil and gas where all of the Wildcat in Montana I know man.
10 of very well.
And that deal.
Silver and copper you found out of Montana.
That is the doozy.
If you guys get where you don't want that maybe you could put up for sale of there'll be at least 50 entities that would try to buy debt from you.
Alright, well I can assure you that.
Mr. Baker agrees with everything you've said so thanks, thanks very much for yes, theres kind of.
On his homework Keystone his homework and I have done my homework.
I will tell you it's great. Thank you very much.
The only problem is that I don't understand why your stock is as low as it is it is because.
If the twice the price it is into the share I'll eat this desk.
Alright, well, thank you very much of it.
We guide we should either go onto the next call or think of thanks.
Thanks very much.
Again, if you would like to ask a question press star one.
Yeah.
Okay, well operator, there are no other.
The other people in the queue.
There are no further questions.
Okay. Thank you very much so.
I really appreciate your participation on the call.
Should you have a question that you weren't able to ask please reach out to us.
There is the information on the press release.
The Russell can talk to you or I can talk to you. So please feel free to reach out and.
Please standby for our annual meeting I think it is on the 19th of May and at that time, we'll we will be giving the presentation on our ESG and our environmental.
Of our exploration. So thanks very much I hope to see you out of the 19. Thanks Bye.
Ladies and gentlemen, this does conclude today's conference call you may now disconnect.
Yes.
Sure.
Yes.
Okay.
Okay.
Okay.